Registration No. 33-85182
811-8820
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No.
Post-Effective Amendment No. 6
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and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 8
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Markman MultiFund Trust
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(Exact Name of Registrant as Specified in Charter)
6600 France Avenue South, Suite 565, Edina, Minnesota 55435
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (612) 920-4848
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Robert J. Markman
Markman MultiFund Trust
6600 France Avenue South, Suite 565
Edina, Minnesota 55435
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(Name and Address of Agent for Service)
Copies of all correspondence to:
David M. Leahy, Esq.
Sullivan & Worcester LLP
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036
It is proposed that this filing will become effective:
/ X/ immediately upon filing pursuant to Rule 485(b)
/ / on ( ) pursuant to Rule 485(b)
/ / 60 days after filing pursuant to Rule 485(a)
/ / on ( ) pursuant to Rule 485(a)
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933, as amended, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended. Registrant's Rule 24f-2 Notice for the fiscal
year ended December 31, 1997 was filed with the Commission on January 30, 1998.
<PAGE>
MARKMAN MULTIFUND TRUST
Cross Reference Sheet
Pursuant to Rule 481(a)
Under the Securities Act of 1933
PART A
REGISTRATION STATEMENT CAPTION IN
CAPTION PROSPECTUS
Item No.
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1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Financial Highlights;
Information Other Information
4. General Description Cover Page; The
of Registrant Portfolios; Investment
Objectives; Investment
Policies and
Restrictions; How We
Invest; Risks and Other
Considerations; Other
Information; Appendix A;
Appendix B
5. Management of Fund The Portfolios; How We
Invest; Management of the
Trust; Other Information
6. Capital Stock The Portfolios;
Dividends, Distributions
and Taxes
7. Purchase of Securities How to Purchase Shares;
Being Offered Management of the Trust;
Shareholder Services
8. Redemption or Repurchase How to Redeem Shares;
Shareholder Services
9. Pending Legal Proceedings Inapplicable
<PAGE>
PART B
REGISTRATION STATEMENT CAPTION IN STATEMENT
CAPTION OF ADDITIONAL INFORMATION
Item No.
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10. Cover Page Cover Page
11. Table of Contents Cover Page; Table of
Contents
12. General Information Investment Objectives and
and History Policies; Description of
the Trust
13. Investment Objectives Investment Objectives and
and Policies Policies; Investment
Restrictions
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Security
Principal Holders of Holders; Description of
Securities the Trust; Investment
Manager; Trustees and
Officers
16. Investment Advisory and Investment Manager;
Other Services Custodian; Transfer Agent
and Administrator; How to
Purchase Shares
(Prospectus); Performance
Information
17. Brokerage Allocation and Portfolio Transactions
Other Practices
18. Capital Stock and Other Description of the Trust
Securities
19. Purchase, Redemption and How to Purchase Shares
Pricing of Securities (Prospectus); Shareholder
Being Offered Services (Prospectus);
Redemption of Shares; Special
Redemptions
20. Tax Status Dividends, Distributions
and Taxes (Prospectus)
21. Calculations of Performance Information
Performance Data
22. Financial Statements Financial Statements
<PAGE>
PART C
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
<PAGE>
The Markman
MultiFunds
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Prospectus
March 31, 1998
<PAGE>
TABLE OF CONTENTS
Expense Information ......................... 2
Financial Highlights ........................ 3
The Portfolios .............................. 4
Investment Objectives ....................... 4
Risk and Others Considersations ............. 5
How We Invest ............................... 5
Investment Policies and Restrictions ........ 6
Management of the Trust ..................... 7
Determination of Net Asset Value ............ 8
How to Purchase Shares ...................... 8
Shareholder Services ........................ 9
How to Redeem Shares ........................ 9
Dividends, Distributions and Taxes .......... 10
Other Information ........................... 11
Auditors .................................... 12
Legal Counsel ............................... 12
Appendix A .................................. A-1
Appendix B .................................. B-1
<PAGE>
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[LOGO] Investment Adviser Shareholder Services
Markman Capital Management, Inc. c/o Countrywide Fund Services, Inc.
6600 France Avenue South, Suite 565 312 Walnut Street, 21st Floor
Minneapolis, MN 55435 Cincinnati, OH 45202-3874
Toll-free: 1-800-395-4848 Toll-free: 1-800-707-2771
Telephone: (612) 920-4848
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Markman MultiFund Trust (the "Trust") is an open-end diversified management
investment company. It consists of three separate series portfolios. We refer to
each portfolio in this prospectus as a "Portfolio" and the three together as the
"Portfolios." "We" are Markman Capital Management, Inc. We manage each Portfolio
separately. Each Portfolio has its own investment objectives and strategies
designed to meet different investment goals. The Portfolios seek to achieve
their investment objectives by investing in shares of other open-end investment
companies. The Portfolios, as well as the other open-end investment companies in
which they invest, are commonly called "mutual funds." This strategy results in
greater expenses than you would incur if you invested directly in mutual funds.
See "Risks and Other Considerations."
The Markman Aggressive Allocation Portfolio seeks capital appreciation without
regard to current income.
The Markman Moderate Allocation Portfolio seeks growth of capital and a
reasonable level of current income.
The Markman Conservative Allocation Portfolio seeks to provide current income
and low to moderate growth of capital.
The Portfolios are no load funds. They sell and redeem their shares at net asset
value. There are no sales loads or commissions imposed upon the purchase of
Portfolio shares or any fees imposed upon redemption. The Portfolios do not
charge 12b-1 fees or deferred sales charges, however, they may invest in shares
of mutual funds that normally charge sales loads and/or pay their own 12b-1
distribution expenses. The Portfolios will not pay a sales load to buy these
underlying funds. Instead the Portfolios will use available quantity discounts
or waivers to avoid paying a sales load. The Trust will close to new investors
when net assets of the three Portfolios together reach $500 million. If you are
a shareholder of the Portfolios at the time the Portfolios close to new
investors, you can continue to make new investments in your previously
established Portfolio accounts.
Markman Capital Management, Inc. specializes in the construction and management
of no-load mutual fund portfolios for our clients. As of the date of this
Prospectus, we provide investment management services to over 400 client
accounts and have assets under management in excess of $400 million.
This Prospectus contains information about the Portfolios that you should
consider before investing. Please read the Prospectus carefully and retain it
for future reference. A Statement of Additional Information dated March 31, 1998
has been filed with the Securities and Exchange Commission (the "SEC"). The
Statement of Additional Information contains additional information about the
Portfolios and is hereby incorporated by reference into this Prospectus. The
Statement of Additional Information is available without charge and can be
obtained by writing or telephoning the Portfolios at the address and telephone
number shown above.
SHARES OF THE PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
1
<PAGE>
Expense Information
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Shareholder Transaction Expenses
Sales Load Imposed on Purchases None
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Sales Load Imposed on Reinvested Dividends None
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Deferred Sales Load None
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Exchange Fee None
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Redemption Fee None 1
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1. A wire transfer fee is charged in the case of redemptions made by wire. Such
fee is subject to change and is currently $8.00. See "How to Redeem Shares,"
page 9.
Annual Portfolio Operating Expenses (as a percentage of average net assets)
<TABLE>
<CAPTION>
Conservative Moderate Aggressive
Allocation Portfolio Allocation Portfolio Allocation Portfolio
<S> <C> <C> <C>
Management Fees* 0.95% 0.95% 0.95%
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12b-1 Fees** None None None
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Other Expenses*** 0.00% 0.00% 0.00%
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Total Portfolio 0.95% 0.95% 0.95%
Operating Expenses
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</TABLE>
Example: You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
Conservative Alloc. Portfolio $10 $30 $53 $117
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Moderate Alloc. Portfolio $10 $30 $53 $117
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Aggressive Alloc. Portfolio $10 $30 $53 $117
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The purpose of the above tables is to help you understand the various costs and
expenses that you will bear.
* We will voluntarily waive each Portfolio's fees and expenses to the extent
necessary to keep total Portfolio operating expenses no greater than 0.95%.
Unlike most other mutual funds, the management fees paid by the Portfolios
include transfer agency, pricing, custodial, auditing, legal services, and
general administrative and other operating expenses. Management fees paid
by the Portfolios do not include brokerage commissions, taxes, interest,
fees and expenses of non-interested Trustees or extraordinary expenses.
However, as long as the rivers flow, the grasses grow, and the winds blow,
forever and evermore, the Adviser will waive its advisory fees to the
extent necessary to limit each Portfolio's total expenses to .95% per annum
of its average daily net assets.
** Although the Portfolios do not directly impose 12b-1 fees, the underlying
funds in which the Portfolios invest may impose 12b-1 or service fees.
*** Does not include fees and expenses of the non-interested Trustees. Markman
Capital Management, Inc. is contractually required to reduce its management
fee in an amount equal to each Portfolio's allocable portion of such fees
and expenses which, during the fiscal year ended December 31, 1997,
amounted to .04%, .02%, and .02% of the average daily net assets of the
Conservative Allocation Portfolio, the Moderate Allocation Portfolio, and
the Aggressive Allocation Portfolio, respectively. See "Management of the
Trust -- the Adviser."
2
<PAGE>
FINANCIAL HIGHLIGHTS
The following information, which has been audited by Arthur Andersen LLP, is an
integral part of the audited financial statements and should be read in
conjunction with the financial statements. The financial statements as of
December 31, 1997 and related auditors' report appear in the Statement of
Additional Information of the Funds, which can be obtained by shareholders at no
charge by calling Countrywide Fund Services, Inc. (nationwide call toll-free
800-707-2771) or by writing to the Trust at the address on the front of this
Prospectus.
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PER SHARE DATA FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Conservative Moderate
Allocation Portfolio Allocation Portfolio
1/26/95- 1/1/96- 1/1/97- 1/26/95- 1/1/96- 1/1/97-
12/31/95(A) 12/31/96 12/31/97 12/31/95(A) 12/31/96 12/31/97(A)
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 10.00 $ 10.97 $ 11.49 $ 10.00 $ 11.31 $ 11.49
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.19 0.28 0.33 0.06 0.18 0.26
Net realized and unrealized
gains on investments 1.61 1.19 1.31 2.39 1.08 1.96
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Total from investment operations 1.80 1.47 1.64 2.45 1.26 2.22
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Less distributions:
Dividends from net investment income (0.19) (0.28) (0.30) (0.06) (0.18) (0.26)
Distributions in excess of
net investment income (0.04) (0.18) (0.15) (0.24) (0.14) (0.21)
Distributions from net realized gains (0.60) (0.49) (0.86) (0.84) (0.76) (1.34)
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Total distributions (0.83) (0.95) (1.31) (1.14) (1.08) (1.81)
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Net asset value at end of period $ 10.97 $ 11.49 $ 11.82 $ 11.31 $ 11.49 $ 11.90
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Total return 18.00% 13.41% 14.27% 24.50% 11.11% 19.38%
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Net assets at end of period (000's) $ 9,852 $42,579 $36,680 $38,988 $78,627 $86,388
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Ratio of expenses to average net assets 0.95%(B) 0.95% 0.95% 0.95%(B) 0.95% 0.95%
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Ratio of net investment income
to average net assets 3.02%(B) 3.21% 2.38% 0.77%(B) 1.34% 1.96%
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Portfolio turnover rate 176% 104% 48% 141% 280% 82%
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</TABLE>
Aggressive
Allocation Portfolio
1/26/95- 1/1/96- 1/1/97-
12/31/95 12/31/96 12/31/97
Net asset value at beginning of period $ 10.00 $ 11.79 $ 12.26
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Income from investment operations:
Net investment income 0.01 0.05 0.01
Net realized and unrealized
gains on investments 3.11 1.34 2.32
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Total from investment operations 3.12 1.39 2.33
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Less distributions:
Dividends from net investment income (0.01) (0.05) (0.01)
Distributions in excess of
net investment income (0.23) (0.11) (0.19)
Distributions from net realized gains (1.09) (0.76) (1.65)
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Total distributions (1.33) (0.92) (1.85)
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Net asset value at end of period $ 11.79 $ 12.26 $ 12.74
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Total return 31.21% 11.72% 18.96%
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Net assets at end of period (000's) $42,325 $84,329 $84,401
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Ratio of expenses to average net assets 0.95%(B) 0.95% 0.95%
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Ratio of net investment income
to average net assets 0.15%(B) 0.34% 0.05%
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Portfolio turnover rate 204% 340% 141%
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(A) Represents the period from the initial public offering of shares (January
26, 1995) through December 31, 1995.
(B) Annualized.
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3
<PAGE>
THE PORTFOLIOS
Each Portfolio is treated as a diversified investment company and many of the
underlying funds in which the Portfolios invest will be diversified investment
companies. The level of diversification the Portfolios obtain from being
invested in a number of underlying funds reduces the risk associated with an
investment in a single underlying fund. This risk is further reduced because
each underlying fund's investments are also spread over a range of issuers,
industries, and countries. Each Portfolio has its own investment objectives and
strategies designed to meet different investment goals. Investment in shares of
one or more of the Portfolios of the Trust involves risks. There can be no
assurance that a Portfolio's investment objective will be achieved.
INVESTMENT OBJECTIVES
Each Portfolio seeks to achieve its investment objective by investing in a
portfolio of other open-end mutual funds. (The mutual funds in which the
Portfolios may invest are referred to in this prospectus as the "underlying
funds.") A Portfolio may invest up to 25% of its total assets in any one
underlying fund. When we believe market conditions justify a defensive strategy,
a Portfolio may invest up to 100% of its assets in money market mutual funds. A
Portfolio will, under normal market conditions, maintain its assets invested in
a number of under-lying funds. Each Portfolio may invest in identical types of
mutual funds. While each Portfolio may invest in shares of the same mutual
funds, the percentage of each Portfolio's assets so invested will vary depending
upon the Portfolio's investment objective. Based on our asset allocation
analysis and selection of the funds we consider most suitable to effect our
asset allocation decisions, we determine a mix of asset classes and funds
appropriate for each Portfolio. To a certain extent, we manage the risk to which
the Portfolios are exposed by varying the concentration of asset classes in the
Portfolios. (See "How We Invest.") The Portfolios expect to be fully invested in
underlying mutual funds at all times. To provide liquidity as well as to assist
in achieving the Portfolios' investment objective, each Portfolio may invest in
money market mutual funds.
A Portfolio may not purchase shares of any closed-end investment company or of
any investment company that is not registered with the SEC. Each Portfolio's
investment objective is non-fundamental and may be changed by the Trustees of
the Trust without shareholder approval. You would be notified before a change in
the investment objective of a Portfolio.
MARKMAN AGGRESSIVE ALLOCATION PORTFOLIO
The investment objective of the Markman Aggressive Allocation Portfolio is
capital appreciation without regard to current income. Under normal market
conditions, at least 65% of the assets of the Aggressive Allocation Portfolio
will be invested in mutual funds that invest primarily in common stock or
securities convertible into or exchangeable for common stock (such as
convertible preferred stock, convertible debt securities with warrants attached
and debt securities entitling the fund to purchase common stock when the
principal amount of the debt securities can be used at face value to exercise
the warrants). The allocation of the assets of the Aggressive Allocation
Portfolio among the underlying funds is expected to result in the Portfolio
incurring more risk than the Markman Moderate Allocation Portfolio which, in
turn, can be expected to incur more risk than the Markman Conservative
Allocation Portfolio.
MARKMAN MODERATE ALLOCATION PORTFOLIO
The investment objective of the Markman Moderate Allocation Portfolio is to
provide growth of capital and a reasonable level of current income. The mutual
funds in the Moderate Allocation Portfolio will invest in common stocks,
preferred stocks, bonds and other fixed-income securities (including convertible
preferred stock, convertible debt securities with warrants attached and debt
securities entitling the fund to purchase common stock when the principal amount
of the debt securities can be used at face value to exercise the warrants).
MARKMAN CONSERVATIVE ALLOCATION PORTFOLIO
The investment objective of the Markman Conservative Allocation Portfolio is to
provide current income and low to moderate growth of capital. The mutual funds
in the Conservative Allocation Portfolio will invest in common stocks, preferred
stocks, bonds and other fixed- income securities (including convertible
preferred stock, convertible debt securities with warrants attached and debt
securities entitling the fund to purchase common stock when the principal amount
of the debt securities can be used at face value to exercise the warrants).
ALL PORTFOLIOS
Each Portfolio may also invest in mutual funds which invest primarily in long or
short-term bonds and various other types of fixed income securities (such as
securities issued or guaranteed or insured by the U.S. Government, its agencies
or instrumentalities, commercial paper, preferred stock and convertible
debentures) whenever we believe that such mutual funds offer a potential for
capital appreciation. These mutual funds may invest in investment grade bonds
(bonds rated in the four highest ratings categories by Standard & Poor's
Corporation ("S&P") (AAA, AA, A and BBB) or Moody's Investors Services, Inc.
("Moody's") (Aaa, Aa, A and Baa)) or in bonds that are not considered investment
grade (bonds rated Ba or below by Moody's or BB or below by S&P). In general,
the current value of bonds varies inversely with changes in prevailing interest
rates. If interest rates increase after a bond is purchased, the value of that
security will normally decline. If prevailing interest rates decrease after a
bond is purchased, however, its market price will normally rise. Non-investment
grade bonds are higher yielding, high risk securities commonly known as "junk
bonds." Underlying funds may have the ability to invest in debt securities rated
as low as D. For a description of ratings of debt securities, see the Appendix B
to this Prospectus.
The underlying funds may also invest in money market funds, money market or
short-term debt instruments as a temporary defensive strategy. The underlying
funds may actively trade their portfolios, resulting in higher brokerage
commissions and increased realization of taxable capital gains. They may invest
up to 100% of their assets in the securities of foreign issuers and engage in
foreign currency transactions with respect to such investments. They may invest
in companies whose securities are subject to more volatile investments. They may
invest up to 15% of their net assets in restricted or illiquid securities. They
may invest up to 5% of their assets in warrants. They may lend their portfolio
securities, sell securities short, borrow money, or write or purchase put or
call options on securities or stock indices. They may invest up to 25% of their
assets in one security. They may invest up to 100% of their assets in master
demand notes. They may invest in long or short-term corporate bonds and other
fixed income securities (such as U.S. Government securities, commercial paper,
preferred stock, convertible preferred stock and convertible debentures). They
may enter into futures contracts and options on futures contracts.
4
<PAGE>
RISKS AND OTHER CONSIDERATIONS
Each Portfolio will concentrate its investments in the shares of mutual funds.
Some mutual funds invest in particular types of securities (i.e. equity or
debt), some concentrate in certain industries, and others may invest in a
variety of securities to achieve a particular type of return or tax result. Any
investment involves risk. Even though the Portfolios may invest in a number of
mutual funds, this investment strategy cannot eliminate investment risk.
The 1940 Act provides that a mutual fund whose shares are purchased by a
Portfolio is obliged to redeem shares held by the Portfolio only in an amount up
to 1% of the underlying mutual fund's outstanding securities during any period
of less than 30 days. Accordingly, shares held by a Portfolio in excess of 1% of
an underlying mutual fund's outstanding securities will be considered not
readily marketable securities that, together with other such securities, may not
exceed 15% of that Fund's assets. However, since the Portfolio has elected to
reserve the right to pay redemption requests by a distribution in kind of
securities from its portfolio, instead of in cash, these positions may be
treated as liquid. See "Investment Policies and Restrictions." Under certain
circumstances an underlying fund may determine to make payment of a redemption
by a Portfolio (wholly or in part) by a distribution in kind of securities from
its portfolio, instead of in cash. As a result, a Portfolio may hold securities
distributed by an underlying fund until such time as we determine it appropriate
to dispose of such securities. Such disposition will impose additional costs on
the Portfolio.
In the case of an issuer that concentrates in a particular industry or industry
group, events may occur that impact that industry or industry group more
significantly than the stock market as a whole. An investment in a
non-diversified investment company can normally be expected to have greater
fluctuations in value than an investment in a fund that includes a broader range
of investments. To the extent a Portfolio invests in diversified investment
companies that do not have a policy of concentration, the impact of conditions
affecting an industry or industry group will be decreased.
Investment decisions by the investment advisers of the underlying funds are made
independently of the Portfolios and us. At any particular time, one underlying
fund may be purchasing shares of an issuer whose shares are being sold by
another underlying fund. As a result, a Portfolio would incur indirectly certain
transaction costs without accomplishing any investment purpose. Each Portfolio
limits its investments in underlying funds to mutual funds whose shares a
Portfolio may purchase without the imposition of a sales load. Each Portfolio
may purchase shares of underlying funds which charge a redemption fee. A
redemption fee is a fee imposed by an underlying fund upon shareholders (such as
a Portfolio) redeeming shares of such fund within a certain period of time (such
as one year). The fee is payable to the underlying fund. Accordingly, if a
Portfolio were to invest in an underlying fund and, as a result of redeeming
shares in such underlying fund, incur a redemption fee, the redeeming Portfolio
would bear such redemption fee. The underlying funds may incur distribution
expenses in the form of "Rule 12b-1 fees." The Portfolios will not, however,
invest in shares of a mutual fund that is sold with a contingent deferred sales
load. You could invest directly in the underlying funds. By investing in mutual
funds indirectly through the Portfolios, you bear not only your proportionate
share of the expenses of the Portfolios (including operating costs and
investment advisory and administrative fees) but also, indirectly, similar
expenses of the underlying funds. You may indirectly bear expenses paid by
underlying funds related to the distribution of such mutual funds' shares. As a
result of the Portfolios' policies of investing in other mutual funds, you may
receive taxable capital gains distributions to a greater extent than would be
the case if you invested directly in the underlying funds. See "Dividends,
Distributions and Taxes."
A general description of the types of securities that may be acquired by
underlying funds, the various investment techniques such mutual funds may
employ, and the risks associated with such investments are described in Appendix
A to this prospectus and in the statement of additional information.
HOW WE INVEST
GENERAL
We try to get the greatest return for the level of risk assumed by each
Portfolio. Our investment strategy stresses three factors: asset allocation,
fund selection and portfolio structure.
ASSET ALLOCATION
Different asset classes produce different results, both absolutely and relative
to each other, over various periods.
Diversification across asset classes is the appropriate protection against the
risk of being wrong about the prospects for an asset class. Diversification
takes advantage of the fact that asset classes do not perform the same way
relatively and absolutely at all times. Diversification allows investors to
counterbalance the more volatile swings in value typically experienced by
riskier asset classes with the greater stability of less risky asset classes.
Proper diversification allows for the tendency of certain asset classes to
behave contrary to the behavior of other asset classes during a given investment
period.
As part of the asset allocation process, we perform a forward-looking analysis
of economic and market trends which includes both broad macro-economic concerns
and more narrowly-focused sector concerns. We perform a "top down"
macro-economic analysis on a global basis, examining the strength of the economy
as a whole, as well as various sectors, inflation, currency, money flows, and
interest rate considerations and political concerns.
Additionally, we use various technical and fundamental analytical techniques to
determine at any given point the actual relative weighting of various asset
classes in the portfolio.
After performing the "top down" macro-economic analysis and market analysis
described above and the fund manager survey described below under "Fund
Selection" and "Portfolio Structure," we arrive at positive, neutral, or
negative outlooks for the short, intermediate, and long terms. Comparing the
outlooks at which we arrive to current condition period trends, we examine
whether the outlook indicates confirmation and continuation of a particular
trend or potential reversal of a trend.
5
<PAGE>
FUND SELECTION
Among mutual funds in a particular category, the performance of the best funds
often varies substantially from the average.
As part of our fund selection process, we analyze general historical performance
of funds over at least the past one, three, and five year periods. In this
regard, we use both absolute and risk-adjusted measures. We also identify the
"current condition period" (the time that the current investing conditions have
been in place) and research and analyze fund performance in other particular
time frames using various absolute and risk-adjusted measures. In doing so, we
look for what we call "idiosyncratic advantage," which means a unique edge
provided by a fund's management based on its knowledge, methods, skills, and
insights.
In evaluating a fund, we calculate the fund's volatility during the period under
consideration, both as a measure of risk inherent in the fund and as a basis for
comparison with other funds. We also conduct fundamental and technical analysis
of the fund's portfolio. We also evaluate the fund's management for background,
service capability, stability, technical and research support, and other
indications of quality of investment judgment including, to the extent feasible,
interviews with the fund's portfolio manager.
PORTFOLIO STRUCTURE
We believe that strategies of portfolio structure and management should also be
diversified. We believe there are three major strategies for structuring and
managing mutual fund portfolios: buy-and-hold, sector rotation, and market
timing.
In managing the Portfolios, we use a combination of the buy-and-hold, sector
rotation and market timing strategies. A buy-and-hold strategy involves
researching mutual funds primarily by doing fundamental analysis. This includes
analysis of performance records and capabilities and investment styles of fund
managers. The objective is to match a fund or combination of funds to the goals
and tolerance for risk of each Portfolio. Mutual funds so selected are
considered to be long-term investment vehicles and are not likely to be subject,
under normal market conditions, to frequent trading. A buy-and-hold strategy
focuses on results over one or more market cycles rather than short-term
performance. Risks of the buy-and-hold strategy include management turnover,
managers of funds losing their ability or their interest in managing the fund,
and a fund growing so large that its ability to invest is restricted.
A sector rotation strategy is based on a view of the market as a mix of many
sub-markets. It is intended to take advantage of the fact that certain
sub-markets are not closely correlated with many other sub-markets. Sector
rotation is an active strategy, relying on techniques for shifting asset
concentrations to and from various sectors to realize the benefits of sectors
anticipated to strengthen and to diminish the effects of sectors anticipated to
decline. A sector rotation strategy thus allows a portfolio to remain more fully
invested over time by frequently replacing assets in one sector with assets from
others. The primary risk associated with sector rotation is that anticipated
trends may not appear.
A market timing strategy assumes that the general trend of the market is very
important and has a greater impact on investment returns than the quality of a
particular fund or fund manager. Thus, market timing depends on macroeconomic
and market oriented analytic techniques to discern market direction. Moreover,
market timing typically involves continual portfolio adjustments. The primary
risk associated with a market timing strategy is that trends anticipated may not
appear. (In other words, we might guess wrong.)
The assumption is that there is limited correlation between certain sectors
(utility stocks vs. technology stocks, for example) and that at any given point
there are likely to be one or more sectors that are outperforming or have the
potential to outperform the overall market. A sector rotator will thus likely
stay fully invested over time, but may well frequently buy and sell in order to
move assets from one sector to another. On the other hand, a market timer will
stay fully invested only when he or she believes the market is going up and will
hold varying percentages of cash, up to 100% cash, depending on his or her level
of confidence that the market is going down.
Market timing and sector rotation strategies are complex, involve risk that
contemporary economic theory of financial markets suggests may not be fully
compensated measured by expected return, and are highly dependent on subjective
judgments. Further, any strategy designed to enhance returns also enhances risk
of loss and thus carries with it the potential instead for reducing gains or
causing losses. There can be no assurance that in carrying out market timing and
sector rotation strategies, we will successfully enhance the performance of the
Portfolios.
Based on our asset allocation analysis and selection of the funds we consider
most suitable to effect our asset allocation decisions, we determine a mix of
asset classes and funds appropriate for each Portfolio. To a certain extent, we
manage the risk to which the Portfolios are exposed by varying the concentration
of asset classes in Portfolio portfolios.
INVESTMENT POLICIES AND RESTRICTIONS
Each Portfolio has adopted certain fundamental investment policies. These
policies may not be changed without the vote of a majority of that Portfolio's
outstanding voting securities, as defined under "Other Information --Voting."
Each Portfolio has also adopted certain investment policies that are not
fundamental and therefore may be changed by the Board of Trustees of the Trust
without shareholder approval. Under each Portfolio's fundamental investment
policies, no Portfolio may (1) invest more than 25% of its total assets in the
securities of mutual funds that concentrate themselves (i.e., invest more than
25% of their assets) in any one industry. (Through its portfolio investments,
however, a Portfolio may indirectly invest more than 25% of its assets in one
industry), (2) borrow money, (except that as a temporary measure for
extraordinary or emergency purposes -- including meeting redemptions without
having to sell portfolio securities immediately -- a Portfolio may borrow from a
bank in an amount not in excess of 5% of the Portfolio's total assets), or (3)
pledge or hypothecate its assets, except that a Portfolio may pledge up to 5% of
its total assets to secure such borrowings for temporary or emergency purposes
or to effect redemptions. A Portfolio will not make additional investments at
any time during which it has outstanding borrowings. Under each Portfolio's
non-fundamental policies, no Portfolio may (1) invest more than 25% of its
assets in the shares of any one mutual fund, (2) purchase or otherwise acquire
the securities of any mutual fund (except in connection with a merger,
consolidation, acquisition of substantially all of the assets or reorganization
of another investment company) if, as a result, a Portfolio and its affiliates
(including the other Portfolios) would own more than 3% (25% if persuant to
exemptive relief granted by order of the Securities and Exchange Commission) of
the total outstanding stock of such mutual fund, or (3) purchase a security
which is not readily marketable if, as a result, more than 15% of that
Portfolio's assets would consist of such securities. See "Risks and Other
Considerations." Each
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Portfolio may invest in money market funds. These and other investment
strategies and restrictions are discussed in the section titled "Risks and Other
Considerations" to this Prospectus and in the Statement of Additional
Information.
The underlying funds may, but will not necessarily, have the same investment
objective and policies as the Portfolios. For example, although the Aggressive
Allocation Portfolio will not borrow money for investment purposes, it may
invest up to 25% of its total assets in a mutual fund that borrows money for
investment purposes (i.e., a mutual fund that engages in leveraging). A general
discussion of the investments that may be made by underlying funds and the risks
associated with such investments is found under "Investment Objectives" and
"Risks and Other Considerations" and in Appendix A to this Prospectus.
MANAGEMENT OF THE TRUST
THE TRUSTEES
The business and affairs of the Trust are managed under the direction of the
Board of Trustees. Additional information about the Trustees and the executive
officers of the Trust may be found in the Trust's Statement of Additional
Information under "Trustees and Officers."
THE ADVISER
We maintain our principal office at 6600 France Avenue South, Suite 565,
Minneapolis, Minnesota 55435. In addition to serving as investment adviser to
the Trust and its Portfolios, we provide investment supervisory services on a
continuous basis to individuals, pension and profit sharing plans, corporations,
partnerships, trusts and estates (including charitable organizations) and
consulting service to other financial professionals through our Professional
Fund Advisor service. We specialize in the construction and management of no
load mutual fund portfolios for our clients. Pursuant to an Investment
Management Agreement with the Trust, we are responsible for the investment
management of each Portfolio's assets, including the responsibility for making
investment decisions and placing orders for the purchase and sale of the
Portfolios' investments. See "Portfolio Transactions." We also furnish to the
Board of Trustees of the Trust periodic reports on the investment performance of
the Portfolios. Unlike most mutual funds, the management fees paid by the
Portfolios to us include transfer agency, pricing, custodial, auditing and legal
services, and general administrative and other operating expenses of each
Portfolio except brokerage commissions, taxes, interest, fees and expenses of
non-interested Trustees and extraordinary expenses.
For the services provided to the Portfolios, we receive from each Portfolio a
fee, payable monthly, at the annual rate of 0.95% of each Portfolio's average
daily net assets. We are contractually obligated to reduce our management fee in
an amount equal to each Portfolio's allocable portion of the fees and expenses
of the Trust's non-interested Trustees. Most investment companies pay lower
investment management fees. Most of such investment companies, however, also
pay, in addition to an investment management fee, certain of their own expenses,
while we pay almost all of the Portfolios' expenses, as described above, out of
investment management fees we receive from the Portfolios.
Robert J. Markman, Chairman of the Board of Trustees and President of the Trust,
serves as the Portfolio Manager of the Trust and is responsible for the day to
day management of the Portfolios. From 1981-1990, Mr. Markman was a registered
representative of Linsco Private Ledger Financial Services and a partner of Webb
Markman & Co. He has served as President of Markman Capital since its
organization in September 1990.
THE ADMINISTRATOR
The Trust has retained Countrywide Fund Services, Inc. ("the Transfer Agent"),
P.O. Box 5354, Cincinnati, Ohio, 45201-5354, to serve as the Portfolios'
transfer agent, dividend paying agent, and shareholder service agent. The
Transfer Agent is an indirect wholly-owned subsidiary of Countrywide Credit
Industries, Inc., a New York Stock Exchange listed company principally engaged
in the business of residential mortgage lending. Certain of the Trust's officers
are also officers of the Transfer Agent.
The Transfer Agent also provides accounting and pricing and administrative
services to the Portfolios. The Transfer Agent calculates daily net asset value
per share and maintains such books and records as are necessary to enable it to
perform its duties. The Transfer Agent supplies executive, administrative and
regulatory services, supervises the preparation of the Portfolios' tax returns,
and coordinates the preparation of reports to shareholders and reports to and
filings with the SEC and state securities authorities.
We pay the Transfer Agent monthly, out of the investment management fee we
receive from each Portfolio, a base fee of $15,000, an additional fee based upon
the number of shareholder accounts, and an additional fee at the annual rate of
.04% of aggregate average daily net assets of the Portfolios up to $200 million,
.03% of such assets between $200 million and $500 million, and .02% of such
assets in excess of $500 million.
THE CUSTODIAN
Pursuant to a Custodian Agreement between the Trust and State Street Bank and
Trust Company pursuant to which the Bank provides custodial services to the
Trust and each of the Portfolios. The principal business address of the Bank is
225 Franklin Street, Boston, Massachusetts, 02210.
PORTFOLIO TRANSACTIONS
Pursuant to the Investment Management Agreement, we place orders for the
purchase and sale of portfolio securities for a Portfolio's accounts with
brokers or dealers, selected by it in its discretion or directly with issuers or
in privately arranged transactions in which a premium may be paid by a
Portfolio.
Each Portfolio is actively managed and has no restrictions upon portfolio
turnover. Each Portfolio's rate of portfolio turnover may be greater than that
of many other mutual funds. A 100% annual portfolio turnover rate would be
achieved if each security in a Portfolio's portfolio (other than securities with
less than one year remaining to maturity) were replaced once during the year.
Trading also may result in realization of capital gains that would not otherwise
be realized, and shareholders are taxed on such gains when distributed from that
Portfolio. See "Dividends, Distributions and Taxes." There is no limit on the
portfolio turnover rates of the underlying funds.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Portfolio is calculated at 4:00 p.m. EST,
Monday through Friday, on each day that the New York Stock Exchange (the "NYSE")
is open for trading (which excludes the following national business holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day).
The net asset value per share of each Portfolio is calculated by dividing the
sum of the value of the securities held by the Portfolio plus cash or other
assets minus all liabilities (including estimated accrued expenses) by the total
number of outstanding shares of the Portfolio, rounded to the nearest cent.
Shares of the underlying funds are valued at their respective net asset values
under the 1940 Act. The underlying funds value securities in their portfolios
for which market quotations are readily available at their current market value
(generally the last reported sale price) and all other securities and assets at
fair value pursuant to methods established in good faith by the Board of
Trustees or Directors of the underlying mutual fund. Money market funds with
portfolio securities that mature in one year or less may use the amortized cost
or penny-rounding methods to value their securities. Securities having 60 days
or less remaining to maturity generally are valued at their amortized cost,
which approximates market value.
Other assets of each Portfolio are valued at their current market value if
market quotations are readily available and, if market quotations are not
available, they are valued at fair value pursuant to methods established in good
faith by the Board of Trustees.
HOW TO PURCHASE SHARES
Shares of the Portfolios are offered as an investment vehicle for individuals,
institutions, corporations and fiduciaries. Each Portfolio may invest in
underlying funds which are sold with a sales charge; however, the Portfolios
will use various quantity discount programs and/or applicable waivers to avoid
imposition of any sales loads. Prospectuses, sales material and applications can
be obtained from the Transfer Agent at the address and telephone number listed
on the back cover of this Prospectus.
Shares of each Portfolio are sold without a sales charge at the next price
calculated after receipt of an order in proper form by the Portfolios. The
minimum initial investment in a Portfolio is $25,000, except that the Trust
reserves the right, in its sole discretion, to waive the minimum initial
investment amount for certain investors, or to waive or reduce the minimum
initial investment for tax-deferred retirement plans. The minimum subsequent
investment is $500. The minimum initial investment is waived for purchases by
Trustees, officers and employees of the Trust, of the Transfer Agent, and of
Markman Capital and private clients of Markman Capital, including members of
such persons' immediate families. Each Portfolio also reserves the right to
waive the minimum initial investment for financial intermediaries. All purchase
payments are invested in full and fractional shares. The Trust is authorized to
reject any purchase order.
Shares of each Portfolio are sold on a continuous basis at the net asset value
next determined after receipt of a purchase order by the Trust. Investors should
note, however, that due to time constraints involved in the pricing of shares of
mutual funds such as the Portfolios, the net asset value of Portfolio shares
reported in newspapers will lag the Portfolios' actual net asset value by one
business day. Purchase orders received by dealers prior to 4:00 p.m. EST on any
business day, and transmitted to the Trust's transfer agent by 5:00 p.m. EST
that day are confirmed at the net asset value determined as of the close of the
regular session of trading on the NYSE on that day. It is the responsibility of
dealers to transmit properly completed orders so that they will be received by
the Transfer Agent by 5:00 p.m. EST. Broker-dealers or other agents may charge
you a fee for effecting transactions. Direct purchase orders received by the
Transfer Agent by 4:00 p.m. EST are confirmed at that day's net asset value.
Direct investments received by the Transfer Agent after 4:00 p.m. and orders
received from dealers after 5:00 p.m. are confirmed at the net asset value next
determined on the following business day.
You may open an account and make an initial investment in any Portfolio by
sending a check and a completed account application form to the Transfer Agent,
P.O. Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made payable to the
Markman MultiFund Trust. An account application is included with this
Prospectus.
The Trust mails to shareholders confirmations of all purchases or redemptions of
shares of the Portfolios. Certificates representing shares will not be issued.
The Trust reserves the rights to limit the amount of investments and to refuse
to sell to any person.
The Portfolios' account application contains certain provisions in favor of the
Trust, the Transfer Agent and certain of their affiliates, excluding such
entities from certain liabilities (including, among others, losses resulting
from unauthorized shareholder transactions) relating to the various services
(for example, telephone redemptions and exchanges) made available to investors.
If an order to purchase shares is cancelled because your check does not clear,
you will be responsible for any resulting losses or fees incurred by the Trust
or the Transfer Agent in the transaction.
You may also purchase shares of the Portfolios by wire. Please call the Transfer
Agent (Nationwide call toll-free 800-707-2771) for instructions. You should be
prepared to give the name in which the account is to be established, the
address, telephone number, and taxpayer identification number for the account,
and the name of the bank that will wire the money.
Investments in a Portfolio will be made at the Portfolio's net asset value next
determined after a wire is received together with the account information
outlined above. If the Trust does not receive timely and complete account
information, there may be a delay in the investment of money and any accrual of
dividends. To make an initial wire purchase, you must mail a completed account
application to the Transfer Agent. Banks may impose a charge for sending a wire.
There is presently no fee for receipt of wired funds, but the Transfer Agent
reserves the right to charge shareholders for this service upon thirty days'
prior notice to shareholders.
You may purchase and add shares to your account by mail or by bank wire. Checks
should be sent to the Transfer Agent, P.O. Box 5354, Cincinnati, Ohio
45201-5354. Checks should be made payable to the Markman MultiFund Trust. Bank
wires should be sent as outlined above. Each additional purchase request must
contain the account name and number to permit proper crediting.
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NO TRANSACTION FEE PROGRAM
If you purchase a minimum of $25,000 of shares of the Portfolios (either in a
Portfolio or spread across two or three Portfolios) through a discount broker
and we do not participate in that discount broker's no transaction fee program,
we will reimburse you for the amount of the transaction fee that you paid the
discount broker for that purchase within a week of us receiving a copy of your
trade confirmation.
SHAREHOLDER SERVICES
Contact the Transfer Agent (Nationwide call toll-free 1-800-707-2771) for
additional information about the shareholder services described below.
AUTOMATIC WITHDRAWAL PLAN
If the shares in your account have a value of at least $25,000, you may elect to
receive, or may designate another person to receive, monthly, quarterly, or
annual payments in a specified amount. There is no charge for this service.
ACCESS TO THE PORTFOLIO MANAGER
If the shares in your account have a value of at least $100,000, you may contact
Mr. Robert Markman directly by telephone. If you qualify, call the Transfer
Agent at the above telephone number to obtain your special access toll-free
telephone number direct to Mr. Markman.
TAX-DEFERRED RETIREMENT PLANS
Shares of the Portfolios are available for purchase in connection with the
following tax-deferred retirement plans:
- -- Keogh Plans for self-employed individuals
- -- Individual retirement account (IRA) plans for individuals and their
non-employed spouses, including Roth IRAs
- -- Qualified pension and profit-sharing plans for employees, including those
profit-sharing plans with a 401(k) provision
- -- 403(b)(7) custodial accounts for employees of public school systems,
hospitals, colleges and other non-profit organizations meeting certain
requirements of the Internal Revenue Code
AUTOMATIC INVESTMENT PLAN
You may make automatic monthly investments in the Portfolios from your bank,
savings and loan or other depository institution account. The minimum initial
and subsequent investments must be $25,000 and $500 under the plan. the Transfer
Agent pays the costs associated with these transfers, but reserves the right,
upon thirty days' written notice, to make reasonable charges for this service. A
depository institution may impose its own charge for debiting your account,
which would reduce the return from an investment in a Portfolio.
HOW TO REDEEM SHARES
Shares of the Portfolios may be redeemed on each day that the Trust is open for
business. You will receive the net asset value per share next determined after
receipt by the Transfer Agent of a redemption request in the form described
below. Payment is ordinarily sent by mail or by wire within three business days
after tender in such form, provided that payment in redemption of shares
purchased by check will be effected only after the check has been collected,
which may take up to fifteen days from the purchase date. To eliminate this
delay, you may purchase shares of the Portfolios by certified check or by wire.
BY TELEPHONE
Shares of the Portfolios may also be redeemed by telephone. The proceeds will be
sent by mail to the address designated on your account or wired directly to your
existing account in any commercial bank or brokerage firm in the United States
as designated on the application. To redeem by telephone, call the Transfer
Agent (Nationwide call toll-free 800-707-2771). The redemption proceeds will
usually be sent by mail or by wire within three business days after receipt of
telephone instructions. IRA accounts are not redeemable by telephone.
The telephone redemption privilege is automatically available to you. You may
change the bank or brokerage account designated under this procedure at any time
by writing to the Transfer Agent with the signature guaranteed by any eligible
guarantor institution (including banks, brokers and dealers, municipal
securities brokers and dealers, government securities brokers and dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations) or by completing a
supplemental telephone redemption authorization form. Contact the Transfer Agent
to obtain this form. Further documentation will be required to change the
designated account if shares are held by a corporation, fiduciary or other
organization.
Neither the Trust, the Transfer Agent, nor their respective affiliates will be
liable for complying with telephone instructions they reasonably believe to be
genuine or for any loss, damage, cost or expense in acting on such telephone
instructions. The investor will bear the risk of any such loss. The Trust or the
Transfer Agent or both will employ reasonable procedures to determine that
telephone instructions are genuine. If the Trust and/or the Transfer Agent do
not employ such procedures, they may be liable for losses due to unauthorized or
fraudulent instructions. Such procedures may include, among others, requiring
forms of personal identification prior to acting upon telephone instructions,
providing written confirmation of the transactions and/or tape recording
telephone instructions.
BY MAIL
Shares of the Portfolios may also be redeemed by written request to the Transfer
Agent The request must state the number of shares or the dollar amount to be
redeemed and the relevant account number. The request must be signed exactly as
your name appears on the Trust's account records. If the shares to be redeemed
have a value of $25,000 or more, your signature must be guaranteed by any of the
eligible guarantor institutions outlined above.
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Written redemption requests may also direct that the proceeds be deposited
directly in the bank account or brokerage account designated on an investor's
account application for telephone redemptions. Proceeds of redemptions requested
by mail are mailed within three business days following receipt of instructions
in proper form.
THROUGH BROKER-DEALERS
Shares may also be redeemed by placing a wire redemption request through a
securities broker or dealer. Broker-dealers or other agents may impose a fee for
this service. You will receive the net asset value per share next determined
after receipt by the Trust or its agent of your wire redemption request. It is
the responsibility of broker-dealers to promptly transmit wire redemption
orders.
ADDITIONAL REDEMPTION INFORMATION
For each wire redemption you will be charged an $8 processing fee. The Trust
reserves the right, upon thirty days' written notice, to change the processing
fee. All charges will be deducted from shareholder accounts by redemption of
shares in the account. Your bank or brokerage firm may also impose a charge for
processing the wire. In the event that wire transfer of funds is impossible or
impracticable, the redemption proceeds will be sent by mail to the designated
account.
Redemption requests may direct that the proceeds be deposited directly in a
shareholder's account with a commercial bank or other depository institution by
way of an Automated Clearing House (ACH) transaction. There is currently no
charge for ACH transactions. Contact the Transfer Agent for more information
about ACH transactions.
At the discretion of the Trust, corporate shareholders and other associations
may be required to furnish an appropriate certification authorizing redemptions
to ensure proper authorization. The Trust reserves the right to require you to
close your account if at any time the value of the shares is less than $25,000
(based on actual amounts invested, unaffected by market fluctuations) or such
other minimum amount as the Trust may from time to time determine. After
notification of the Trust's intention to close your account, you will be given
sixty days to increase the value of your account to the minimum amount.
The Trust reserves the right to suspend the right of redemption or to postpone
the date of payment for more than three business days under unusual
circumstances as determined by the SEC.
EXCHANGE PRIVILEGE
Shares of the Portfolios may be exchanged for each other at net asset value. You
may request an exchange by sending a written request to the Transfer Agent. The
request must be signed exactly as your name appears on the Trust's account
records. Exchanges may also be requested by telephone. If you are unable to
execute a transaction by telephone (for example during times of unusual market
activity) you should consider requesting that the exchange be made by mail. An
exchange will be effected at the next determined net asset value after receipt
of a request by the Transfer Agent.
Exchanges may only be made for shares of Portfolios then offered for sale in
your state of residence and are subject to the applicable minimum initial
investment requirements. The exchange privilege may be modified or terminated by
the Board of Trustees upon 60 days' prior notice to you. An exchange results in
a sale of Portfolio shares, which may cause you to recognize a capital gain or
loss.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Portfolio intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). In
any year in which a Portfolio qualifies as a regulated investment company and
distributes substantially all of its investment company taxable income (which
includes, among other items, the excess of net short-term capital gains over net
long-term capital losses) and its net capital gains (the excess of net long-term
capital gains over net short-term capital losses) the Portfolio will not be
subject to Federal income tax to the extent it distributes to you such income
and capital gains in the manner required under the Code. Amounts not distributed
on a timely basis in accordance with a calendar year distribution requirement
are subject to a nondeductible 4% excise tax. To avoid imposition of the excise
tax, each Portfolio must distribute for each calendar year an amount equal to
the sum of (1) at least 98% of its net ordinary income (excluding any capital
gains or losses) for the calendar year, (2) at least 98% of the excess of its
capital gains over capital losses (adjusted for certain ordinary losses)
realized during the one-year period ending October 31 of such year, and (3) all
ordinary income and capital gains for previous years that were not distributed
during such years. A distribution will be treated as paid on December 31 of the
calendar year if it is declared by a Portfolio in October, November or December
of that year with a record date in such a month and paid by the Portfolio during
January of the following calendar year. Such distributions will be taxable to
you in the calendar year in which the distributions are declared, rather than
the calendar year in which the distributions are received. Each Portfolio
intends to distribute its income in accordance with this requirement to prevent
application of the excise tax. Each year the Trust will notify you of the tax
status of dividends and distributions including the portion, if any, of capital
gains dividends which qualifies for the most favorable 20% maximum rate of
federal income tax.
Income received by a Portfolio from a mutual fund in that Portfolio's portfolio
(including dividends and distributions of short-term capital gains) will be
distributed by the Portfolio (after deductions for expenses) and will be taxable
to you as ordinary income. Because the Portfolios are actively managed and may
realize taxable net short-term capital gains by selling shares of a mutual fund
in its portfolio with unrealized portfolio appreciation, investing in a
Portfolio rather than directly in the underlying funds may result in increased
tax liability to you since the Portfolio must distribute its gains in accordance
with certain rules under the Code.
Distributions of net capital gains (the excess of net long-term capital gains
over net short-term capital losses) received by a Portfolio from the underlying
funds, as well as net long-term capital gains realized by a Portfolio from the
purchase and sale (or redemption) of mutual fund shares or other securities held
by a Portfolio for more than one year, will be distributed by the Portfolio and
will be taxable to you as long-term capital gains (even if you have held the
shares for less than one year). If a shareholder who has received a capital
gains distribution suffers a loss on the sale of his or her shares not more than
six months after purchase, the loss will be treated as a long-term capital loss
to the extent of the capital gains distribution received. Long-term capital
gains, including distributions of net capital gains are currently subject to
maximum federal tax rates of 28% (for assets held more than one year but not
more than 18 months) or 20% (for assets held more than 18 months) which rates
are less than the maximum rate imposed on other types of
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taxable income. Capital gains may be advantageous since, unlike ordinary income,
they may be offset by capital losses.
For purposes of determining the character of income received by a Portfolio when
an underlying fund distributes net capital gains to a Portfolio, the Portfolio
will treat the distribution as a long-term capital gain, even if the Portfolio
has held shares of the underlying fund for less than one year. Any loss incurred
by a Portfolio on the sale of such mutual fund's shares held for six months or
less, however, will be treated as a long-term capital loss to the extent of the
gain distribution.
The tax treatment of distributions from a Portfolio is the same whether the
distributions are received in additional shares or in cash. Sharehold-ers
receiving distributions in the form of additional shares will have a cost basis
for Federal income tax purposes in each share received equal to the net asset
value of a share of the Portfolio on the reinvestment date.
A Portfolio may invest in mutual funds with capital loss carryforwards. If such
a mutual fund realizes capital gains, it will be able to offset the gains to the
extent of its loss carryforwards in determining the amount of capital gains
which must be distributed to shareholders. To the extent that gains are offset
in this manner, distributions to a Portfolio and its shareholders will not be
characterized as capital gain dividends but may be ordinary income.
Depending upon your residence for tax purposes, distributions may also be
subject to state and local taxes, including withholding taxes. You should
consult your own tax adviser regarding the tax consequences of ownership of
shares of a Portfolio in your particular circumstances.
The Portfolios are generally required to withhold Federal income tax at a rate
of 31% ("backup withholding") from dividends paid to you if (1) you fail to
furnish the Trust with and to certify your correct taxpayer identification
number or social security number, (2) the Internal Revenue Service (the "IRS")
notifies the Trust that you have failed to report properly certain interest and
dividend income to the IRS and to respond to notices to that effect or (3) you
fail to certify that you are not subject to backup withholding.
Each Portfolio will distribute investment company taxable income and any net
realized capital gains at least annually. All dividends and distributions will
be reinvested automatically at net asset value in additional shares of the
Portfolio making the distribution, unless you notify the Portfolio in writing of
your election to receive distributions in cash.
OTHER INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust on September 7, 1994.
The Trust currently consists of three separately managed portfolios -- the
Markman Aggressive Allocation Portfolio, the Markman Moderate Allocation
Portfolio and the Markman Conservative Allocation Portfolio. The Board of
Trustees of the Trust has the power to establish additional series of the Trust
in the future. The capitalization of the Trust consists solely of an unlimited
number of shares of beneficial interest with no par value. When issued, shares
of the Portfolios are fully paid, non-assessable and freely transferable.
Under Massachusetts law, shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust. The
Declaration of Trust of the Trust, however, disclaims liability of the
shareholders, Trustees and officers of the Trust for acts or obligations of the
Trust that are binding only upon the assets and property of the Trust and
requires that notice of the disclaimer be given in each contract or obligation
entered into or executed by the Trust or the Trustees. The Declaration of Trust
provides for indemnification out of Trust property for all loss and expense of
any shareholder held personally liable for the obligations of the Trust. The
risk of a shareholder incurring financial loss because of shareholder liability
is limited to circumstances in which the Trust itself would be unable to meet
its obligations and is remote.
VOTING
Shareholders of each Portfolio have the right to vote for the election of
Trustees and on any matters which by law or the provisions of the Declaration of
Trust they may be entitled to vote upon. The Trust is not required to hold
annual meetings of its shareholders and does not intend to do so. See
"Description of the Trust" in the Statement of Additional Information.
The Declaration of Trust of the Trust provides that the holders of not less than
two-thirds of the outstanding shares of the Trust may remove a person serving as
Trustee either by declaration in writing or at a meeting called for such
purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of any person serving as Trustee if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Trust.
Shares of the Trust entitle their holders to one vote per share (with
proportionate voting for fractional shares). As used in this Prospectus, the
term "vote of a majority of the outstanding shares" of the Portfolio (or of the
Trust) means the vote of the lesser of: (1) 67% of the shares of the Portfolio
(or the Trust) present at a meeting of shareholders if the holders of more than
50% of the outstanding shares are present in person or by proxy or (2) more than
50% of the outstanding shares of the Portfolio (or the Trust). In compliance
with applicable provisions of the 1940 Act, shares of the mutual funds owned by
the Trust will be voted in the same proportion as the vote of all other holders
of the shares of such funds.
PERFORMANCE INFORMATION
From time to time a Portfolio may advertise its "average annual total return" in
advertisements or reports to shareholders or prospective shareholders.
Quotations of "average annual total return" will be expressed in terms of the
average annual compounded rate of return of a hypothetical investment in a
Portfolio over periods of 1, 5, and 10 years (up to the life of the Portfolio).
A Portfolio may also advertise total return (a "nonstandardized quotation")
which is calculated differently from "average annual total return." A
nonstandardized quotation of total return may be a cumulative return which
measures the percentage change in the value of an account between the beginning
and end of a period, assuming no activity in the account other than reinvestment
of dividends and capital gains distributions. A nonstandardized return may also
indicate average annual compounded rates of return over periods other than those
specified for "average annual total return." A nonstandardized quotation of
total return will always be accompanied by a Portfolio's "average annual total
return" as described above.
All total return figures will reflect the deduction of a proportional share of
Portfolio expenses on an annual basis, and will assume that all dividends and
distributions are reinvested when paid. Quotations of total return reflect only
the performance of a hypothetical investment in the Portfolios during the
particular time period on which the calculations are based. Total return for a
Portfolio will vary based upon changes in
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market conditions and the level of the Portfolio's expenses and should not be
considered an indication of future performance.
The Portfolios may also compare their performance with that of other mutual
funds as listed in the rankings prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc., or similar independent services that monitor mutual fund
performance, and with appropriate securities indices, which may assume
reinvestment of dividends but usually do not reflect deductions for
administrative and management costs and expenses. For more complete information
on the methods used to calculate each Portfolio's total return, see the
Statement of Additional Information. Additional information about the
Portfolios' performance will be contained in the Portfolios' Annual Report to
Shareholders, which may be obtained without charge from the Transfer Agent at
the address or telephone number listed on the back cover of this Prospectus.
SHAREHOLDER INQUIRIES
All shareholder inquiries should be directed to the Trust at the telephone
number and address shown on the back cover of this Prospectus for the Transfer
Agent
AUDITORS
Arthur Andersen LLP, 425 Walnut Street, Cincinnati, Ohio 45202, serves as
independentaccountant for the Trust and will audit the financial statements of
the Portfolios annually.
LEGAL COUNSEL
Sullivan & Worcester LLP, Washington, D. C. is legal counsel to the Trust.
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No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus or in the
Statement of Additional Information, and, if given or made, such other
information or representations must not be relied upon as having been authorized
by the Portfolios. This Prospectus does not constitute an offering by the Trust
in any jurisdiction in which such offering may not be lawfully made.
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APPENDIX A
FOREIGN SECURITIES
An underlying fund may invest up to 100% of its assets in securities of foreign
issuers. Investments in foreign securities involve risks and considerations that
are not present when a Portfolio invests in domestic securities.
EXCHANGE RATES
Since an underlying fund may purchase securities denominated in foreign
currencies, changes in foreign currency exchange rates will affect the value of
the underlying fund's (and accordingly a Portfolio's) assets from the
perspective of U.S. investors. Changes in foreign currency exchange rates may
also affect the value of dividends and interest earned, gains and losses
realized on the sale of securities and net investment income and gains, if any,
to be distributed to you by a mutual fund. The rate of exchange between the U.S.
dollar and other currencies is determined by the forces of supply and demand in
foreign exchange markets. These forces are affected by the international balance
of payments and other economic and financial conditions, government
intervention, speculation and other factors. The underlying fund may seek to
protect itself against the adverse effects of currency exchange rate
fluctuations by entering into currency-forward, futures or options contracts.
Hedging transactions will not, however, always be fully effective in protecting
against adverse exchange rate fluctuations. Furthermore, hedging transactions
involve transaction costs and the risk that the underlying fund will lose money,
either because exchange rates move in an unexpected direction, because another
party to a hedging contract defaults, or for other reasons.
EXCHANGE CONTROLS
The value of foreign investments and the investment income derived from them may
also be affected by exchange control regulations. Although it is expected that
underlying funds will invest only in securities denominated in foreign
currencies that are fully exchangeable into U.S. dollars without legal
restriction at the time of investment, there is no assurance that currency
controls will not be imposed after the time of investment. In addition, the
value of foreign fixed-income investments will fluctuate in response to changes
in U.S. and foreign interest rates.
LIMITATIONS OF FOREIGN MARKETS
There is often less information publicly available about a foreign issuer than
about a U.S. issuer. Foreign issuers are not generally subject to accounting,
auditing, and financial reporting standards and practices comparable to those in
the United States. The securities of some foreign issuers are less liquid and at
times more volatile than securities of comparable U.S. issuers. Foreign
brokerage commissions, custodial expenses, and other fees are also generally
higher than for securities traded in the United States. Foreign settlement
procedures and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of an underlying fund's
assets held abroad) and expenses not present in the settlement of domestic
investments. A delay in settlement could hinder the ability of an underlying
fund to take advantage of changing market conditions, with a possible adverse
effect on net asset value. There may also be difficulties in enforcing legal
rights outside the United States.
FOREIGN LAWS, REGULATIONS AND ECONOMIES
There may be a possibility of nationalization or expropriation of assets,
imposition of currency exchange controls, confiscatory taxation, political or
financial instability, and diplomatic developments that could affect the value
of an underlying fund's investments in certain foreign countries. Legal remedies
available to investors in certain foreign countries may be more limited than
those available with respect to investments in the United States or in other
foreign countries. The laws of some foreign countries may limit an underlying
fund's ability to invest in securities of certain issuers located in those
countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth or gross national
product, inflation rate, capital reinvestment, resource self-sufficiency and
balance of payment positions.
FOREIGN TAX CONSIDERATIONS
Income received by an underlying fund from sources within foreign countries may
be reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Any such taxes paid by an underlying fund will reduce the
net income of the underlying fund available for distribution to the Portfolios.
Special tax considerations apply to foreign securities.
EMERGING MARKETS
Risks may be intensified in the case of investments by an underlying fund in
emerging markets or countries with limited or developing capital markets.
Security prices in emerging markets can be significantly more volatile than in
more developed nations, reflecting the greater uncertainties of investing in
less established markets and economies. In particular, countries with emerging
markets may have relatively unstable governments, present the risk of
nationalization of businesses, restrictions on foreign ownership, or
prohibitions on repatriation of assets, and may have less protection of property
rights than more developed countries. The economies of countries with emerging
markets may be predominantly based on only a few industries, may be highly
vulnerable to changes in local or global trade conditions, and may suffer from
extreme and volatile debt or inflation rates. Local securities markets may trade
a small number of securities and may be unable to respond effectively to
increases in trading volume, potentially making prompt liquidation of
substantial holdings difficult or impossible at times. Securities of issuers
located in countries with emerging markets may have limited marketability and
may be subject to more abrupt or erratic price movements. Debt obligations of
developing countries may involve a high degree of risk, and may be in default or
present the risk of default. Governmental entities responsible for repayment of
the debt may be unwilling to repay principal and interest when due, and may
require renegotiation or rescheduling of debt payments. In addition, prospects
for repayment of principal and interest may depend on political as well as
economic factors.
CALCULATION OF NET ASSET VALUE
The underlying funds generally calculate their net asset values and complete
orders to purchase, exchange or redeem shares only on a Monday through Friday
basis (excluding holidays on which the NYSE is closed). Foreign securities in
which the underlying funds may invest may be listed primarily on foreign stock
exchanges that may trade on other days (i.e., Saturday). Accordingly, the net
asset value of an underlying fund's portfolio may be significantly affected by
such trading on days when Markman Capital does not have access to the underlying
funds and you do not have access to the Portfolios.
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FOREIGN CURRENCY TRANSACTIONS
An underlying fund may enter into forward contracts to purchase or sell an
agreed-upon amount of a specific currency at a future date that may be any fixed
number of days from the date of the contract agreed upon by the parties at a
price set at the time of the contract. Under such an arrangement, a fund would,
at the time it enters into a contract to acquire a foreign security for a
specified amount of currency, purchase with U.S. dollars the required amount of
foreign currency for delivery at the settlement date of the purchase; the
underlying fund would enter into similar forward currency transactions in
connection with the sale of foreign securities. The effect of such transactions
would be to fix a U.S. dollar price for the security to protect against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the particular foreign currency during the period between the
date the security is purchased or sold and the date on which payment is made or
received (usually 3 to 14 days). While forward contracts tend to minimize the
risk of loss due to a decline in the value of the currency involved, they also
tend to limit any potential gain that might result if the value of such currency
were to increase during the contract period.
REPURCHASE AGREEMENTS
An underlying fund may enter into repurchase agreements with banks and
broker-dealers under which it acquires securities, subject to an agreement with
the seller to repurchase the securities at an agreed-upon time and an
agreed-upon price. Repurchase agreements involve certain risks, such as default
by, or insolvency of, the other party to the repurchase agreement. An underlying
fund's right to liquidate its collateral in the event of a default could involve
certain costs, losses or delays. To the extent that proceeds from any sale upon
default of the obligation to repurchase are less than the repurchase price, the
underlying fund could suffer a loss.
ILLIQUID AND RESTRICTED SECURITIES
An underlying fund may invest up to 15% of its net assets in securities for
which there is no readily available market ("illiquid securities"). This figure
includes securities whose disposition would be subject to legal restrictions
("restricted securities") and repurchase agreements having more than seven days
to maturity. Illiquid and restricted securities are not readily marketable
without some time delay. This could result in the underlying fund being unable
to realize a favorable price upon disposition of such securities, and in some
cases might make disposition of such securities at the time desired by the
mutual fund impossible.
LOANS OF PORTFOLIO SECURITIES
An underlying fund may lend its portfolio securities as long as: (1) the loan is
continuously secured by collateral consisting of U.S. Government securities or
cash or cash equivalents maintained on a daily mark-to-market basis in an amount
at least equal to the current market value of the securities loaned; (2) the
underlying fund may at any time call the loan and obtain the securities loaned;
(3) the underlying fund will receive any interest or dividends paid on the
loaned securities; and (4) the aggregate market value of the securities loaned
will not at any time exceed one-third of the total assets of the underlying
fund. Lending portfolio securities involves risk of delay in the recovery of the
loaned securities and in some cases, the loss of rights in the collateral if the
borrower fails.
SHORT SALES
An underlying fund may sell securities short. In a short sale the underlying
fund sells stock it does not own and makes delivery with securities "borrowed"
from a broker. The underlying fund then becomes obligated to replace the
security borrowed by purchasing it at the market-price at the time of
replacement. This price may be more or less than the price at which the security
was sold by the underlying fund. Until the security is replaced, the underlying
fund is obligated to pay to the lender any dividends or interest accruing during
the period of the loan. In order to borrow the security, the underlying fund may
be required to pay a premium that would increase the cost of the security sold.
The proceeds of the short sale will be retained by the broker, to the extent
necessary to met bargain requirements, until the short position is closed out.
When it engages in short sales, an underlying fund must also deposit in a
segregated account an amount of cash or U.S. Government securities equal to the
difference between (1) the market value of the securities sold short at the time
they were sold short and (2) the value of the collateral deposited with the
broker in connection with the short sale (not including the proceeds from the
short sale). An underlying fund will incur a loss as a result of a short sale if
the price of the security increases between the date of the short sale and the
date on which the underlying fund replaces the borrowed security. The underlying
fund will realize a gain if the security declines in price between such dates.
The amount of any gain will be decreased and the amount of any loss increased by
the amount of any premium, dividends or interest the underlying fund may be
required to pay in connection with a short sale.
SHORT SALES "AGAINST THE BOX"
A short sale is "against the box" if at all times when the short position is
open the underlying fund owns an equal amount of the securities or securities
convertible into, or exchangeable without further consideration for, securities
of the same issue as the securities sold short. Such a transaction serves to
defer a gain or loss for Federal income tax purposes.
INDUSTRY CONCENTRATION
An underlying fund may concentrate its investments within one industry. The
value of the shares of such a fund may be subject to greater market fluctuation
than an investment in a fund that invests in a broader range of securities.
MASTER DEMAND NOTES
An underlying fund (particularly an underlying money market fund) may invest up
to 100% of its assets in master demand notes. These are unsecured obligations of
U.S. corporations redeemable upon notice that permit investment by a mutual fund
of fluctuating amounts at varying rates of interest pursuant to direct
arrangements between the mutual fund and the issuing corporation. Because master
demand notes are direct arrangements between the mutual fund and the issuing
corporation, there is no secondary market for the notes. The notes are, however,
redeemable at face value plus accrued interest at any time.
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OPTIONS
An underlying fund may write (sell) listed call options ("calls") if the calls
are covered through the life of the option. A call is covered if the underlying
fund owns the optioned securities. When an underlying fund writes a call, it
receives a premium and gives the purchaser the right to buy the underlying
security at any time during the call period (usually not more than nine months
in the case of common stock) at a fixed exercise price regardless of market
price changes during the call period. If the call is exercised, the underlying
fund will forgo any gain from an increase in the market price of the underlying
security over the exercise price.
An underlying fund may purchase a call on securities to effect a "closing
purchase transaction." This is the purchase of a call covering the same
underlying security and having the same exercise price and expiration date as a
call previously written by the fund on which it wishes to terminate its
obligation. If the fund is unable to effect a closing purchase transaction, it
will not be able to sell the underlying security until the call previously
written by the fund expires (or until the call is exercised and the fund
delivers the underlying security).
An underlying fund may write and purchase put options ("puts"). When a fund
writes a put, it receives a premium and gives the purchaser of the put the right
to sell the underlying security to the underlying fund at the exercise price at
any time during the option period. When an underlying fund purchases a put, it
pays a premium in return for the right to sell the underlying security at the
exercise price at any time during the option period. An underlying fund also may
purchase stock index puts, which differ from puts on individual securities in
that they are settled in cash based upon values of the securities in the
underlying index rather than by delivery of the underlying securities. Purchase
of a stock index put is designed to protect against a decline in the value of
the portfolio generally rather than an individual security in the portfolio. If
any put is not exercised or sold, it will become worthless on its expiration
date.
A mutual fund's option positions may be closed out only on an exchange which
provides a secondary market for options of the same series, but there can be no
assurance that a liquid secondary market will exist at any given time for any
particular option. In this regard, trading in options on certain securities
(such as U.S. Government securities) is relatively new so that it is impossible
to predict to what extent liquid markets will develop or continue.
A custodian, or a securities depository acting for it, generally acts as escrow
agent for the securities upon which the underlying fund has written puts or
calls, or as to other securities acceptable for such escrow so that no margin
deposit is required of the underlying fund. Until the underlying securities are
released from escrow, they cannot be sold by the fund.
In the event of a shortage of the underlying securities deliverable in the
exercise of an option, the Options Clearing Corporation has the authority to
permit other generally comparable securities to be delivered in fulfillment of
option exercise obligations. If the Options Clearing Corporation exercises its
discretionary authority to allow such other securities to be delivered, it may
also adjust the exercise prices of the affected options by setting different
prices at which otherwise ineligible securities may be delivered. As an
alternative to permitting such substitute deliveries, the Options Clearing
Corporation may impose special exercise settlement procedures.
OPTIONS TRADING MARKETS
Options in which the underlying funds will invest are generally listed on
Exchanges. Options on some securities may not, however, be listed on any
Exchange but traded in the over-the-counter market. Options traded in the
over-the-counter market involve the additional risk that securities dealers
participating in such transactions would fail to meet their obligations to the
fund. The use of options traded in the over-the-counter market may be subject to
limitations imposed by certain state securities authorities. In addition to the
limits on the use of options discussed herein, a mutual fund is subject to the
investment restrictions described in its prospectus and the statement of
additional information.
FUTURES CONTRACTS
An underlying fund may enter into futures contracts for the purchase or sale of
debt securities and stock indexes. A futures contract is an agreement between
two parties to buy and sell a security or an index for a set price on a future
date. Futures contracts are traded on designated "contract markets" which,
through their clearing corporations, guarantee performance of the contracts.
A financial futures contract sale creates an obligation by the seller to deliver
the type of financial instrument called for in the contract in a specified
delivery month for a stated price. A financial futures contract purchase creates
an obligation by the purchaser to take delivery of the type of financial
instrument called for in the contract in a specified delivery month at a stated
price. The specific instruments delivered or taken, respectively, at settlement
date are not determined until on or near such date. The determination is made in
accordance with the rules of the exchange on which the futures contract sale or
purchase was made. Futures contracts are traded in the United States only on
commodity exchanges or boards of trade (known as "contract markets") approved
for such trading by the Commodity Futures Trading Commission (the "CFTC"), and
must be executed through a futures commission merchant or brokerage firm that is
a member of the relevant contract market.
Closing out a futures contract sale is effected by purchasing a futures contract
for the same aggregate amount of the specific type of financial instrument or
commodity with the same delivery date. If the price of the initial sale of the
futures contract exceeds the price of the offsetting purchase, the seller is
paid the difference and realizes a gain. On the other hand, if the price of the
offsetting purchase exceeds the price of the initial sale, the seller realizes a
loss. The closing out of a futures contract purchase is effected by the
purchaser entering into a futures contract sale. If the offsetting sale price
exceeds the purchase price, the purchaser realizes a gain, and if the purchase
price exceeds the offsetting sale price, the purchaser realizes a loss.
An underlying fund may sell financial futures contracts in anticipation of an
increase in the general level of interest rates. Generally, as interest rates
rise, the market value of the securities held by an underlying fund will fall,
thus reducing its net asset value. This interest rate risk may be reduced
without the use of futures as a hedge by selling such securities and either
reinvesting the proceeds in securities with shorter maturities or by holding
assets in cash. This strategy, however, entails increased transaction costs in
the form of dealer spreads and brokerage commissions and would typically reduce
the fund's average yield as a result of the shortening of maturities.
The sale of financial futures contracts serves as a means of hedging against
rising interest rates. As interest rates increase, the value of an underlying
fund's short position in the futures contracts will also tend to increase, thus
offsetting all or a portion of the depreciation in the market value of the
fund's investments being hedged. While an underlying fund will incur commission
expenses in selling and closing out
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futures positions (by taking an opposite position in the futures contract),
commissions on futures transactions tend to be lower than transaction costs
incurred in the purchase and sale of portfolio securities.
An underlying fund may purchase interest rate futures contracts in anticipation
of a decline in interest rates when it is not fully invested. As such purchases
are made, an underlying fund would probably expect that an equivalent amount of
futures contracts will be closed out.
Unlike when an underlying fund purchases or sells a security, no price is paid
or received by the fund upon the purchase or sale of a futures contract. Upon
entering into a contract, the underlying fund is required to deposit with its
custodian in a segregated account in the name of the futures broker an amount of
cash and/ or U.S. Government securities. This is known as "initial margin."
Initial margin is similar to a performance bond or good faith deposit which is
returned to an underlying fund upon termination of the futures contract,
assuming all contractual obligations have been satisfied. Futures contracts also
involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance margin," to and
from the broker (or the custodian) are made on a daily basis as the price of the
underlying security or commodity fluctuates, making the long and short positions
in the futures contract more or less valuable. This is known as "marking to the
market."
An underlying fund may elect to close some or all of its futures positions at
any time prior to their expiration in order to reduce or eliminate a hedge
position then currently held by the fund. The underlying fund may close its
positions by taking opposite positions that will operate to terminate the fund's
position in the futures contracts. Final determinations of variation margin are
then made, additional cash is required to be paid by or released to the
underlying fund, and the fund realizes a loss or a gain. Such closing
transactions involve additional commission costs.
A stock index futures contract may be used to hedge an underlying fund's
portfolio with regard to market risk as distinguished from risk related to a
specific security. A stock index futures contract is a contract to buy or sell
units of an index at a specified future date at a price agreed upon when the
contract is made. A stock index futures contract does not require the physical
delivery of securities, but merely provides for profits and losses resulting
from changes in the market value of the contract to be credited or debited at
the close of each trading day to the respective accounts of the parties to the
contract. On the contract's expiration date, a final cash settlement occurs.
Changes in the market value of a particular stock index futures contract reflect
changes in the specified index of equity securities on which the future is
based.
In the event of an imperfect correlation between the futures contract and the
portfolio position that is intended to be protected, the desired protection may
not be obtained and the fund may be exposed to risk of loss. Further,
unanticipated changes in interest rates or stock price movements may result in a
poorer overall performance for the fund than if it had not entered into futures
contracts on debt securities or stock indexes.
The market prices of futures contracts may also be affected by certain factors.
First, all participants in the futures market are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, you may close futures contracts through offsetting transactions,
which could distort the normal relationship between the securities and futures
markets. Second, the deposit requirements in the futures market are less
stringent than margin requirements in the securities market. Accordingly,
increased participation by speculators in the futures market may also cause
temporary price distortions.
Positions in futures contracts may be closed out only on an exchange or board of
trade providing a secondary market for such futures. There is no assurance that
a liquid secondary market on an exchange or board of trade will exist for any
particular contract or at any particular time.
In order to assure that mutual funds have sufficient assets to satisfy their
obligations under their futures contracts, the underlying funds are required to
establish segregated accounts with their custodians. Such segregated accounts
are required to contain an amount of cash, U.S. Government securities and other
liquid, high-grade debt securities equal in value to the current value of the
underlying instrument less the margin deposit.
The risk to an underlying fund from investing in futures is potentially
unlimited. Gains and losses on investments in options and futures depend upon
the underlying fund's investment adviser's ability to predict correctly the
direction of stock prices, interest rates and other economic factors.
OPTIONS ON FUTURES CONTRACTS
An underlying fund may also purchase and sell listed put and call options on
futures contracts. An option on a futures contract gives the purchaser the right
in return for the premium paid, to assume a position in a futures contract (a
long position if the option is a call and a short position if the option is a
put), at a specified exercise price at any time during the option period. When
an option on a futures contract is exercised, delivery of the futures position
is accompanied by cash representing the difference between the current market
price of the futures contract and the exercise price of the option. The
underlying fund may also purchase put options on futures contracts in lieu of,
and for the same purpose as, a sale of a futures contract. An underlying fund
may also purchase such put options in order to hedge a long position in the
underlying futures contract in the same manner as it purchases "protective puts"
on securities.
The holder of an option may terminate the position by selling an option of the
same series. There is, however, no guarantee that such a closing transaction can
be effected. An underlying fund is required to deposit initial and maintenance
margin with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements similar to those applicable to futures
contracts described above and, in addition, net option premiums received will be
included as initial margin deposits.
In addition to the risks which apply to all options transactions, there are
several risks relating to options on futures contracts. The ability to establish
and close out positions on such options is subject to the development and
maintenance of a liquid secondary market. It is not certain that this market
will develop. In comparison with the use of futures contracts, the purchase of
options on futures contracts involves less potential risk to a fund because the
maximum amount of risk is the premium paid for the option (plus transaction
costs). There may, however, be circumstances when the use of an option on a
futures contract would result in a loss to an underlying fund when the use of a
futures contract would not, such as when there is no movement in the prices of
the underlying securities. Writing an option on a futures contract involves
risks similar to those arising in the sale of futures contracts, as described
above.
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HEDGING
An underlying fund may employ many of the investment techniques described above
for investment and hedging purposes. Although hedging techniques generally tend
to minimize the risk of loss that is hedged against, they also may limit the
potential gain that might have resulted had the hedging transaction not
occurred. Also, the desired protection generally resulting from hedging
transactions may not always be achieved.
WARRANTS
An underlying fund may invest in warrants. Warrants are options to purchase
equity securities at specific prices valid for a specified period of time. The
prices do not necessarily move in parallel to the prices of the underlying
securities. Warrants have no voting rights, receive no dividends and have no
rights with respect to the assets of the issuer. If a warrant is not exercised
within the specified time period, it becomes worthless and the mutual fund loses
the purchase price and the right to purchase the underlying security.
LEVERAGE
An underlying fund may borrow on an unsecured basis from banks to increase its
holdings of portfolio securities. Under the 1940 Act, such fund is required to
maintain continuous asset coverage of 300% with respect to such borrowings and
to sell (within three days) sufficient portfolio holdings in order to restore
such coverage if it should decline to less than 300% due to market fluctuation
or otherwise. Such sale must occur even if disadvantageous from an investment
point of view. Leveraging aggregates the effect of any increase or decrease in
the value of portfolio securities on the underlying fund's net asset value. In
addition, money borrowed is subject to interest costs (which may include
commitment fees and/or the cost of maintaining minimum average balances) which
may or may not exceed the interest and option premiums received from the
securities purchased with borrowed funds.
HIGH YIELD SECURITIES AND THEIR RISKS
An underlying fund may invest in high yield, high-risk, lower-rated securities,
commonly known as "junk bonds." Such fund's investment in such securities is
subject to the risk factors outlined below.
YOUTH AND GROWTH OF THE HIGH YIELD BOND MARKET
The high yield, high risk market has at times been subject to substantial
volatility. An economic downturn or increase in interest rates may have a more
significant effect on such securities in an underlying fund's portfolio and
their markets, as well as on the ability of securities' issuers to repay
principal and interest. Issuers of such securities may be of low credit
worthiness and the securities may be subordinated to the claims of senior
lenders. During periods of economic downturn or rising interest rates, the
issuers of high yield, high risk securities may have greater potential for
insolvency and a higher incidence of high yield, high risk bond defaults may be
experienced.
SENSITIVITY OF INTEREST RATE AND ECONOMIC CHANGES
The prices of high yield, high risk securities have been found to be less
sensitive to interest rate changes than higher-rated investments but are more
sensitive to adverse economic changes or individual corporate developments.
Periods of economic uncertainty and changes can be expected to result in
increased volatility of market prices of high yield, high risk securities and
the Portfolio's net asset value. Yields on high yield, high risk securities will
fluctuate over time. Further-more, in the case of high yield, high risk
securities structured as zero coupon or pay-in-kind securities, their market
prices are affected to a greater extent by interest rate changes and thereby
tend to be more volatile than market prices of securities which pay interest
periodically and in cash.
PAYMENT EXPECTATIONS
Certain securities held by an underlying fund, including high yield, high risk
securities, may contain redemption or call provisions. If an issuer exercises
these provisions in a declining interest rate market, such fund would have to
replace the security with a lower yielding security, resulting in a decreased
return for the investor. Conversely, a high yield, high risk security's value
will decrease in a rising interest rate market, as will the value of the
underlying fund's assets.
LIQUIDITY AND VALUATION
The secondary market may at times become less liquid or respond to adverse
publicity or investor perceptions, making it more difficult for an underlying
fund to accurately value high yield, high risk securities or dispose of them. To
the extent such fund owns or may acquire illiquid or restricted high yield, high
risk securities, these securities may involve special registration
responsibilities, liabilities and costs, and liquidity difficulties, and
judgment will play a greater role in valuation because there is less reliable
and objective data available.
TAXATION
Special tax considerations are associated with investing in high yield bonds
structured as zero coupon or pay-in-kind securities. An underlying fund will
report the interest on these securities as income even though it receives no
cash interest until the security's maturity or payment date.
CREDIT RATINGS
Credit ratings evaluate the safety of principal and interest payments, not the
market value risk of high yield, high risk securities. Since credit rating
agencies may fail to change the credit ratings in a timely manner to reflect
subsequent events, the investment adviser to an underlying fund should monitor
the issuers of high yield, high risk securities in the fund's portfolio to
determine if the issuers will have sufficient cash flow and profits to meet
required principal and interest payments, and to attempt to assure the
securities' liquidity so the fund can meet redemption requests. To the extent
that an underlying fund invests in high yield, high risk securities, the
achievement of the fund's investment objective may be more dependent on the
underlying fund's own credit analysis than is the case for higher quality bonds.
A-5
<PAGE>
ASSET-BACKED SECURITIES
An underlying fund may invest in mortgage pass-through securities, which are
securities representing interest in pools of mortgage loans secured by
residential or commercial real property in which payments of both interest and
principal on the securities are generally made monthly, in effect passing
through monthly payments made by individual borrowers on mortgage loans which
underlie the securities (net of fees paid to the issuer or guarantor of the
securities). Early repayment of principal on some mortgage-related securities
(arising from prepayments of principal due to sale of the underlying property,
refinancing, or foreclosure, net of fees and costs which may be incurred) may
expose an underlying fund to a lower rate of return upon reinvestment of
principal. Also, if a security subject to prepayment has been purchased at a
premium, in the event of prepayment the value of the premium would be lost.
Like other fixed income securities, when interest rates rise, the value of a
mortgage-related security generally will decline; however, when interest rates
are declining, the value of mortgage-related securities with prepayment features
may not increase as much as other fixed income securities.
An underlying fund may invest in collateralized mortgage obligations (CMOs),
which are hybrid mortgage-related instruments. Similar to a bond, interest and
pre-paid principal on a CMO are paid, in most cases, semiannually. CMOs are
collateralized by portfolios of mortgage pass-through securities and are
structured into multiple classes with different stated maturities. Monthly
payments of principal, including prepayments, are first returned to investors
holding the shortest maturity class; investors holding the longer maturity
classes receive principal only after the first class has been retired.
Other mortgage-related securities in which an underlying fund may invest include
other securities that directly or indirectly represent a participation in, or
are secured by and payable from, mortgage loans on real property, such as CMO
residuals or stripped mortgage-backed securities, and may be structured in
classes with rights to receive varying proportions of principal and interest. In
addition, the underlying funds may invest in other asset-backed securities that
have been offered to investors or will be offered to investors in the future.
Several types of asset-backed securities have already been offered to investors,
including certificates for automobile receivables, which represent undivided
fractional interests in a trust whose assets consist of a pool of motor vehicle
retail installment sales contracts and security interest in the vehicles
securing the contracts.
A-6
<PAGE>
APPENDIX B
RATINGS OF DEBT INSTRUMENTS
STANDARD & POOR'S CORPORATION ("S&P")
CORPORATE BOND RATINGS
An S&P corporate bond rating is a current assessment of the credit worthiness of
an obligor, with respect to a specific obligation. This assessment may take into
consideration obligors such as guarantors, insurers or lessees. The debt rating
is not a recommendation to purchase, sell or hold a security inasmuch as it does
not comment as to market price or suitability for a particular investor. The
ratings are based on current information furnished by the issuer or obtained by
S&P from other sources it considers reliable. S&P does not perform any audit in
connection with the ratings and may, on occasion, rely on unaudited financial
information.
The ratings are based, in varying degrees, on the following considerations: (a)
likelihood of default capacity and willingness of the obligor as to the timely
payment of interest and repayment of principal in accordance with the terms of
the obligation; (b) nature of and provisions of the obligation; and (c)
protection afforded by and relative position of the obligation in the event of
bankruptcy reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights. To provide more detailed indications of
credit quality, ratings from "AA" to "CCC" may be modified by the addition of a
plus or minus sign to show relative standing within the major rating categories.
A provisional rating is sometimes used by S&P. It assumes the successful
completion of the project being financed by the debt being rated and indicates
that payment of debt service requirements is largely or entirely dependent upon
the successful and timely completion of the project. This rating, however, while
addressing credit quality subsequent to completion of the project, makes no
comment on the likelihood of, or the risk of default upon failure of, such
completion.
Bond ratings are as follows:
AAA -- Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A -- Bonds rated A have strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC -- Bonds rated BB, B, CCC or CC are regarded on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
C -- The rating C is reserved for income bonds on which no interest is being
paid.
D -- Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
S&P NOTE RATINGS
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating. The following criteria are used in making that assessment: (a)
Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note), and (b) Source of
payment (the more dependent the issue is on the market for its refinancing, the
more likely it will be treated as a note).
Note ratings are as follows:
SP-1 -- Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2 -- Satisfactory capacity to pay principal and interest.
SP-3 -- Speculative capacity to pay principal and interest.
Demand Bonds. S&P assigns "Dual" ratings to all long-term debt issues that have
as part of their provisions a demand or double feature. The first rating
addresses the likelihood of repayment of principal and interest as due, and the
second rating addresses only the demand feature. The long-term debt rating
symbols are used for bonds to denote the long-term maturity and the commercial
paper rating symbols are used to denote the put options (for example,
"AAA/A-1+). For the newer "Demand Notes," S&P note rating symbols, combined with
the commercial paper symbols, are used (for example, "SP-1+/A-1+").
MOODY'S CORPORATE BOND RATINGS
Moody's ratings are as follows:
Aaa -- Bonds that are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of great amplitude or there may be other elements present that make the
long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds that are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
B-1
<PAGE>
payments and principal security appear adequate for the present, but certain
protective elements may be lacking or may be characteristically unreliable over
any great length of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
Moody's applies numerical modifiers, 1, 2 and 3, in each generic rating
classification from Aa through Baa in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Ba -- Bonds that are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B -- Bonds that are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments, or of maintenance of
other terms of the contract over any long period of time, may be small.
Caa -- Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca -- Bonds rated Ca represent obligations that are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- Bonds rated C are the lowest rated class of bonds and issues so rated can
be regarded as having extremely poor prospects of ever attaining any real
investment standing.
MOODY'S NOTE RATINGS. MOODY'S SHORT-TERM LOAN RATINGS -- Moody's ratings for
short-term obligations will be designated Moody's Investment Grade (MIG). This
distinction is in recognition of the differences between short-term credit risk
and long-term risk. Factors affecting the liquidity of the borrower are
uppermost in importance in short-term borrowing, while various factors of major
importance in bond risk are of lesser importance over the short run.
Rating symbols and their meanings follow:
MIG 1 -- This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support, or
demonstrated broad-based access to the market for refinancing.
MIG 2 -- This designation denotes high quality. Margins of protection are ample,
although not so large as in the preceding group.
MIG 3 -- This designation denotes favorable quality. All security elements are
accounted for, but this is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
MIG 4 -- This designation denotes adequate quality. Protection commonly regarded
as required of an investment security is present and, although not distinctly or
predominantly speculative, there is specific risk.
B-2
<PAGE>
Investment forms may be ordered by calling 1-800-707-2771.
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)
Waterhouse Securities (1-800-934-4443)
There is no transaction fee if you purchase from one of these discount brokers.
For additional forms or answers to any questions, call the Markman MultiFunds at
1-800-707-2771 between the hours of 8:30 AM and 7:30 PM EST. For a current
update on our views on the market and what funds are in each of the portfolios
call the Hotline at 1-800-975-5463.
For updated fund prices as of the close of the previous day and access to your
account balance, call 1-800-536-8679.
To order additional prospectuses call 1-800-395-4848.
Our Internet Home Page (for net asset values, current portfolios, and more) is
www.markman.com
Investment Adviser
Markman Capital Management, Inc.
6600 France Avenue South
Suite 565
Minneapolis, Minnesota 55435
Administrator and Transfer Agent
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02210
Independent Accountants
Arthur Andersen LLP
425 Walnut Street
Cincinnati, Ohio 45202
Legal Counsel
Sullivan & Worcester LLP
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036
<PAGE>
[LOGO]
Investment Adviser Shareholder Services
Markman Capital Management, Inc. c/o Countrywide Fund Services, Inc.
6600 France Avenue South, Suite 565 312 Walnut Street, 21st Floor
Minneapolis, MN 55435 Cincinnati, OH 45202-3874
Toll-free: 1-800-395-4848 Toll-free: 1-800-707-2771
Telephone: (612) 920-4848
<PAGE>
March 31, 1998
STATEMENT OF ADDITIONAL INFORMATION
MARKMAN MULTIFUND TRUST
312 Walnut Street
21st Floor
Cincinnati, Ohio 45202
(800) 707-2771
This Statement of Additional Information is not a prospectus, but expands upon
and supplements the information contained in the Prospectus of Markman MultiFund
Trust (the "Trust"), dated March 31, 1998, as supplemented from time to time.
The Statement of Additional Information should be read in conjunction with the
Prospectus. The Trust's Prospectus may be obtained by writing to the Trust at
the above address or by telephoning the Trust nationwide toll-free at
800-707-2771.
<PAGE>
TABLE OF CONTENTS
Page
----
I. INVESTMENT OBJECTIVES AND POLICIES..................... 3
II. INVESTMENT RESTRICTIONS................................ 3
III. TRUSTEES AND OFFICERS.................................. 5
IV. PRINCIPAL SECURITY HOLDERS............................. 7
V. INVESTMENT MANAGER..................................... 8
VI. TRANSFER AGENT AND ADMINISTRATOR....................... 9
VII. REDEMPTION OF SHARES................................... 10
VIII. SPECIAL REDEMPTIONS.................................... 10
IX. CUSTODIAN.............................................. 10
X. PORTFOLIO TRANSACTIONS................................. 10
XI. PERFORMANCE INFORMATION................................ 11
A. Total Return....................................... 11
B. Non-Standardized Total Return...................... 12
C. Other Information Concerning Fund Performance...... 12
XII. DESCRIPTION OF THE TRUST............................... 18
XIII. ADDITIONAL INFORMATION................................. 19
XIV. FINANCIAL STATEMENTS................................... 20
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<PAGE>
I. INVESTMENT OBJECTIVES AND POLICIES
Markman MultiFund Trust (the "Trust") is an open-end, diversified
management investment company, registered as such under the Investment Company
Act of 1940. The Trust currently consists of three separate portfolios (series),
each with different investment objectives (the "Portfolios"). The Portfolios
seek to achieve their investment objectives by investing in shares of other
open-end investment companies ("mutual funds"). As of the date of this Statement
of Additional Information, the Trust's series are:
MARKMAN AGGRESSIVE ALLOCATION PORTFOLIO (formerly Markman Aggressive Growth
Fund) seeks capital appreciation without regard to current income.
MARKMAN MODERATE ALLOCATION PORTFOLIO (formerly Markman Moderate Growth
Fund) seeks long-term growth of capital and a reasonable level of income.
MARKMAN CONSERVATIVE ALLOCATION PORTFOLIO (formerly Markman Conservative
Growth Fund) seeks to provide current income and low to moderate growth of
capital.
II. INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT POLICIES. Each Portfolio has adopted certain
fundamental investment policies. These fundamental investment policies cannot be
changed unless the change is approved by the lesser of (1) 67% of more of the
voting securities present at a meeting, if the holders of more than 50% of the
outstanding voting securities of the Portfolio are present or represented by
proxy, or (2) more than 50% of the outstanding voting securities of the
Portfolio. These fundamental policies provide that a Portfolio may not:
1. Purchase or otherwise acquire interests in real estate, real estate
mortgage loans or interests therein, except that a Portfolio may
purchase securities issued by issuers, including real estate investment
trusts, which invest in real estate or interests therein.
2. Make loans.
3. Purchase the securities of an issuer if one or more of the Trustees or
officers of the Trust individually owns more than one half of 1% of the
outstanding securities of such issuer and together beneficially own more
than 5% of such securities.
4. Make short sales of securities
5. Invest in puts, calls, straddles, spreads or combinations thereof.
-3-
<PAGE>
6. Purchase securities on margin, except that a Portfolio may obtain such
short-term credits as may be necessary for the clearance of purchases
and sales of securities.
7. Purchase or acquire commodities or commodity contracts.
8. Act as an underwriter of securities of other issuers except to the
extent that in selling portfolio securities, it may be deemed to be an
underwriter for purposes of the Securities Act of 1933.
9. Issue senior securities, except as appropriate to evidence indebtedness
that the Portfolio is permitted to incur.
10. Purchase or sell interests in oil, gas or other mineral leases,
exploration or development programs (although it may invest in companies
which own or invest in such interests).
11. Invest more than 25% of its total assets in the securities of investment
companies which themselves concentrate although each Portfolio will
itself concentrate its investments in investment companies.
As non-fundamental policies a Portfolio may not:
1. Invest in securities for the purpose of exercising control over or
management of the issuer.
2. Purchase securities of any closed-end investment company or any
investment company the shares of which are not registered in the United
States.
3. Invest in warrants, valued at the lower of cost or market value, in
excess of 5% of the value of its net assets. Included within that
amount, but not to exceed 2% of a Portfolio's net assets, may be
warrants which are not listed on the New York Stock Exchange or the
American Stock Exchange.
4. Invest in real estate limited partnerships.
The mutual funds in which the Portfolios may invest may, but need not, have
the same investment policies as a Portfolio. Although all of the Funds may from
time to time invest in shares of the same underlying mutual fund, the percentage
of each Portfolio's assets so invested may vary, and the Portfolios' investment
adviser will determine that such investments are consistent with the investment
objectives and policies of each Portfolio. The investments that may, in general,
be made by underlying funds in which the Portfolios may invest, as well as the
risks associated with such investments, are described in the Prospectus and in
Appendix A to the Prospectus.
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<PAGE>
III. TRUSTEES AND OFFICERS
The following is a list of the Trustees and executive officers of the Trust
and their aggregate compensation from the Trust for the fiscal year ended
December 31, 1997. As described below, certain of the executive officers of the
Trust are affiliates of organizations that provide services to the Trust. These
organizations are Markman Capital Management, Inc., the Portfolios' investment
adviser, and Countrywide Fund Services, Inc., the Portfolios' transfer agent and
administrator. Emilee Markman is married to Robert J. Markman.
<TABLE>
<CAPTION>
COMPENSATION
NAME AGE POSITION HELD FROM TRUST
- ---- --- ------------- ----------
<S> <C> <C> <C>
Richard Edwin Dana 51 Trustee $ 6,000
+Peter Dross 41 Trustee 5,250
*Judith E. Fansler 47 Trustee 0
+Susan Gale 45 Trustee 6,000
Susan M. Lindgren 33 Trustee 6,000
*Richard W. London 55 Trustee 0
Melinda S. Machones 43 Trustee 6,000
*Emilee Markman 44 Trustee 6,000
*Robert J. Markman 46 Chairman of the Board 0
of Trustees and President
+Michael J. Monahan 47 Trustee 6,000
Robert G. Dorsey 41 Vice President 0
John F. Splain 41 Secretary 0
Mark J. Seger 36 Treasurer 0
</TABLE>
* An "interested person" of the Trust as such term is defined in the
Investment Company Act of 1940.
+ Member of Audit Committee.
The principal occupations of the Trustees and executive officers of the
Trust during the past five years are set forth below:
SUSAN M. LINDGREN, 5560 Nathan Lane #1, Plymouth, Minnesota 55442 --
President/Sole Proprietor, Anything is Possible and kidvironments, Andover,
Minnesota (Anything is Possible is a consulting firm offering customized
experiential work shops for personal effectiveness, team building and
leadership; kidvironments creates custom interior and exterior environments for
children of any age) (August 1994-Present); Contract Employee, Lifespring, San
Rafael, California (Lifespring offers experiential personal effectiveness
courses internationally) (August 1994- Present); Executive Vice President,
Personal Empowerment Resource Center! ("PERC!"), Minneapolis, Minnesota (PERC!
offered experiential personal effectiveness courses) (April 1992-July 1994).
RICHARD EDWIN DANA, 748 Goodrich Avenue, Saint Paul, Minnesota 55105 --
Managing Member, JET Construction and Remodeling L.L.C.
-5-
<PAGE>
PETER DROSS, 717 East River Road, Minneapolis, Minnesota 55455 -- Director
of Development, The Center for Victims of Torture, Minneapolis, Minnesota
(provider of treatment and rehabilitation services to survivors of
politically-motivated torture).
JUDITH E. FANSLER, 6600 France Avenue South, Suite 565, Edina, Minnesota
55435 -- Chief Operating Officer, Markman Capital Management, Inc.
SUSAN GALE, 235 King Creek Road, Golden Valley, Minnesota 55416 --
Homemaker and a realtor with Edina Realty.
RICHARD W. LONDON, 6600 France Avenue South, Suite 565, Edina, Minnesota
55435 -- Chief Financial Officer, Markman Capital Management, Inc.
MELINDA S. MACHONES, 2138 Ponderosa Circle, Duluth, Minnesota 55811 --
Director of Information Technologies, The College of St. Scholastica (December
1994 to Present); Principal, INDUS Systems (computer consulting) (September
1993-Present); Manager, International Business Machines Corporation (1977-1993).
EMILEE MARKMAN, 5320 Kellogg Avenue South, Edina, Minnesota 55425 --
Student (January 1994 - Present); Registered Representative, American Asset
Management, Inc. (April 1990 - December 1993).
ROBERT J. MARKMAN, 6600 France Avenue South, Suite 565, Edina, Minnesota
55435 -- President, Treasurer and Secretary, Markman Capital Management, Inc.
MICHAEL J. MONAHAN, One Shelby Place, St. Paul, Minnesota 55116 -- Vice
President, External Relations, Ecolab, Inc. (June 1994 - Present) (provider of
premium institutional cleaning and sanitizing products and services worldwide);
Vice President, Investor Relations, Ecolab, Inc. (May 1992 - June 1994).
ROBERT G. DORSEY, 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202 --
President and Treasurer of Countrywide Fund Services, Inc. (a registered
transfer agent) and CW Fund Distributors, Inc. (a registered broker-dealer) and
Treasurer of Countrywide Investments, Inc. (a registered broker-dealer and
investment adviser) and Countrywide Financial Services, Inc., (a financial
services company and parent of Countrywide Fund Services, Inc., CW Fund
Distributors, Inc. and Countrywide Investments, Inc. and a wholly-owned
subsidiary of Countrywide Credit Industries, Inc.). He is also Vice President of
Brundage, Story and Rose Investment Trust, Dean Family of Funds, The New York
State Opportunity Funds, Lake Shore Family of Funds, Maplewood Investment Trust
and Wells Family of Real Estate Funds and Assistant Vice President of
Interactive Investments, Schwartz Investment Trust, The Tuscarora Investment
Trust, Williamsburg Investment Trust, The Gannett Welsh & Kotler Funds and The
Westport Funds (all of which are registered investment companies).
-6-
<PAGE>
JOHN F. SPLAIN, 312 Walnut Street, Cincinnati, Ohio 45202 -- Vice
President, Secretary and General Counsel of Countrywide Fund Services, Inc. and
CW Fund Distributors, Inc. and Secretary and General Counsel of Countrywide
Investments, Inc. and Countrywide Financial Services, Inc. He is also Secretary
of Countrywide Investment Trust, Countrywide Tax-Free Trust, Countrywide
Strategic Trust, Brundage, Story and Rose Investment Trust, The Tuscarora
Investment Trust, Williamsburg Investment Trust, Lake Shore Family of Funds,
Maplewood Investment Trust and Wells Family of Real Estate Funds and Assistant
Secretary of Interactive Investments, Schwartz Investment Trust, Dean Family of
Funds, The New York State Opportunity Funds, The Gannett Welsh & Kotler Funds
and The Westport Funds.
MARK J. SEGER, C.P.A.,312 Walnut Street, Cincinnati, Ohio 45202 -- Vice
President of Countrywide Financial Services, Inc., CW Fund Distributors, Inc.
and Countrywide Fund Services, Inc. He is also Treasurer of Countrywide
Investment Trust, Countrywide Tax-Free Trust, Countrywide Strategic Trust,
Brundage, Story and Rose Investment Trust, Williamsburg Investment Trust, Dean
Family of Funds, The New York State Opportunity Funds, Lake Shore Family of
Funds, Maplewood Investment Trust and Wells Family of Real Estate Funds and
Assistant Treasurer of Interactive Investments, Schwartz Investment Trust, The
Tuscarora Investment Trust, The Gannett Welsh & Kotler Funds and The Westport
Funds.
The Trustees who are not employed by the Adviser each receive a $3,000
annual retainer to be paid $750 per quarter, plus a $750 fee for each Board
meeting attended.
The Trust's Declaration of Trust provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved as a result of their positions
with the Trust, unless, as to liability to the Trust or its shareholders, it is
finally adjudicated that they engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in their offices, or
unless with respect to any other matter it is finally adjudicated that they did
not act in good faith in the reasonable belief that their actions were in the
best interests of the Trust and its Portfolios. In the case of settlement, such
indemnification will not be provided unless it has been determined by a court or
other body approving the settlement or other disposition, or by a reasonable
determination, based upon a review of readily available facts, by vote of a
majority of disinterested Trustees or in a written opinion of independent
counsel, that such officers or Trustees have not engaged in willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties.
IV. PRINCIPAL SECURITY HOLDERS
As of March 2, 1998, Charles Schwab & Co., Inc., 101 Montgomery Street, San
Francisco, California 94104, owned of record 14.5% of the outstanding shares of
the Markman Aggressive Allocation Portfolio, 19.2% of the outstanding shares of
the Markman Moderate Allocation Portfolio and 11.4% of the outstanding shares of
the Markman Conservative Allocation
-7-
<PAGE>
Portfolio. As of such date, Landscape Structures Inc. Profit Sharing Plan, 601
7th Street South, Delano, Minnesota 55369, owned of record 5.6% of the
outstanding shares of the Markman Aggressive Allocation Portfolio.
As of March 2, 1998, the Trustees and officers of the Trust as a group
owned of record and beneficially less than 1% of the outstanding shares of the
Trust and of each Portfolio.
V. INVESTMENT MANAGER
Markman Capital Management, Inc. ("Markman Capital") serves as investment
manager to the Trust and its Portfolios pursuant to a written investment
management agreement. Markman Capital is a Minnesota corporation organized in
1990, and is a registered investment adviser under the Investment Advisers Act
of 1940, as amended. Robert J. Markman, Chairman of the Board of Trustees and
President of the Trust, is President, Treasurer and Secretary of Markman
Capital. Richard W. London and Judith E. Fansler, employees of Markman Capital,
also serve as Trustees of the Trust.
Certain services provided by Markman Capital under the investment
management agreement are described in the Prospectus. In addition to those
services, Markman Capital may, from time to time, provide the Portfolios with
office space for managing their affairs, with the services of required executive
personnel, and with certain clerical services and facilities. These services are
provided without reimbursement by the Portfolios for any costs incurred. As
compensation for its services, each Portfolio pays Markman Capital a fee based
upon average daily net asset value. This fee is computed daily and paid monthly.
The rate at which the fee is paid is described in the Prospectus. For the fiscal
year ended December 31, 1997, the Markman Aggressive Allocation Portfolio, the
Markman Moderate Allocation Portfolio and the Markman Conservative Allocation
Portfolio paid advisory fees of $779,884, $784,937 and $354,506, respectively.
For the fiscal year ended December 31, 1996, the Markman Aggressive Allocation
Portfolio, the Markman Moderate Allocation Portfolio and the Markman
Conservative Allocation Portfolio paid advisory fees of $847,620, $772,803 and
$270,354, respectively. For the fiscal year ended December 31, 1995, the Markman
Aggressive Allocation Portfolio, the Markman Moderate Allocation Portfolio and
the Markman Conservative Allocation Portfolio paid advisory fees of $173,422,
$202,419 and $38,783, respectively.
Markman Capital pays out of the investment management fees it receives from
the Portfolios, all the expenses of the Portfolios except brokerage commissions,
taxes, interest, fees and expenses of the non-interested Trustees of the Trust
and extraordinary expenses. Markman Capital is contractually required to reduce
its management fee in an amount equal to each Portfolio's allocable portion of
the fees and expenses of the non-interested Trustees. The investment management
agreement with Markman Capital provides that if the total expenses of a
Portfolio in any fiscal year exceed the permissible limits applicable to the
Portfolio in any state in which shares of the Portfolio are then qualified for
sale, the compensation due Markman Capital for such fiscal year shall be reduced
by
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<PAGE>
the amount of such excess by a reduction or refund thereof at the time such
compensation is payable after the end of each calendar month during such fiscal
year of the Portfolio, subject to readjustment during the Portfolio's fiscal
year.
By its terms, the Trust's investment management agreement remains in effect
from year to year, subject to annual approval by (a) the Board of Trustees or
(b) a vote of the majority of a Portfolio's outstanding voting securities;
provided that in either event continuance is also approved by a majority of the
Trustees who are not interested persons of the Trust, by a vote cast in person
at a meeting called for the purpose of voting such approval. The Trust's
investment management agreement may be terminated at any time, on sixty days'
written notice, without the payment of any penalty, by the Board of Trustees, by
a vote of the majority of a Portfolio's outstanding voting securities, or by
Markman Capital. The investment management agreement automatically terminates in
the event of its assignment, as defined by the Investment Company Act of 1940
and the rules thereunder.
VI. TRANSFER AGENT AND ADMINISTRATOR
The Board of Trustees of the Trust has approved an Administration,
Accounting and Transfer Agency Agreement among the Trust, Countrywide Fund
Services, Inc. ("Countrywide") and Markman Capital. Pursuant to such Agreement,
Countrywide serves as the Trust's transfer and dividend paying agent and
performs shareholder service activities. Countrywide also calculates daily net
asset value per share and maintains such books and records as are necessary to
enable it to perform its duties. The administrative services necessary for the
operation of the Trust and its Portfolios provided by Countrywide include among
other things (i) preparation of shareholder reports and communications, (ii)
regulatory compliance, such as reports to and filings with the Securities and
Exchange Commission and state securities commissions and (iii) general
supervision of the operation of the Trust and its Portfolios, including
coordination of the services performed by Markman Capital, the custodian,
independent accountants, legal counsel and others. In addition, Countrywide
furnishes office space and facilities required for conducting the business of
the Trust and pays the compensation of the Trust's officers and employees
affiliated with Countrywide. For these services, Countrywide receives from
Markman Capital out of the investment advisory fee paid to Markman Capital by
each Portfolio a fee, as described under "The Administrator" in the Prospectus.
For the fiscal year ended December 31, 1997 and 1996, Markman Capital paid fees
of $283,156 and $283,773, respectively, to Countrywide. Countrywide also
receives reimbursement for certain out-of-pocket expenses incurred in rendering
such services.
Countrywide is a wholly-owned subsidiary of Countrywide Financial Services,
Inc., which in turn is a wholly-owned subsidiary of Countrywide Credit
Industries, Inc., a New York Stock Exchange listed company principally engaged
in the business of residential mortgage lending. Countrywide and its affiliates
currently provide administrative and
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distribution services for certain other registered investment companies. The
Portfolios will not invest in these funds or in any other fund which may in the
future be affiliated with Countrywide or any of its affiliates. The principal
business address of Countrywide is 312 Walnut Street, 21st Floor, Cincinnati,
Ohio 45202-5354.
VII. REDEMPTION OF SHARES
Detailed information on redemption of shares is included in the Prospectus.
The Trust may suspend the right to redeem its shares or postpone the date of
payment upon redemption for more than three business days (i) for any period
during which the New York Stock Exchange is closed (other than customary weekend
or holiday closings) or trading on the exchange is restricted; (ii) for any
period during which an emergency exists as a result of which disposal by a
Portfolio of securities owned by it is not reasonably practicable or it is not
reasonably practicable for a Portfolio fairly to determine the value of its net
assets; or (iii) for such other periods as the Securities and Exchange
Commission may permit for the protection of shareholders of the Trust.
VIII. SPECIAL REDEMPTIONS
If the Board of Trustees of the Trust determines that it would be
detrimental to the best interests of the remaining shareholders of a Portfolio
to make payment wholly or partly in cash, that Portfolio may pay the redemption
price in whole or in part by a distribution in kind of securities (mutual fund
shares) from the portfolio of that Portfolio, instead of in cash, in conformity
with applicable rules of the Securities and Exchange Commission. The Trust will,
however, redeem shares solely in cash up to the lesser of $250,000 or 1% of its
net assets during any 90-day period for any one shareholder. The proceeds of
redemption may be more or less than the amount invested and, therefore, a
redemption may result in a gain or loss for federal income tax purposes.
IX. CUSTODIAN
Pursuant to a Custodian Agreement between the Trust, State Street Bank and
Trust Company ("State Street") and Markman Capital, State Street provides
custodial services to the Trust and each of the Portfolios. The principal
business address of State Street is 225 Franklin Street, Boston, Massachusetts
02110.
X. PORTFOLIO TRANSACTIONS
Markman Capital is responsible for decisions to buy and sell securities for
the Portfolios and for the placement of the Portfolios' portfolio business and
negotiation of commissions, if any, paid on these transactions.
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The Portfolios will arrange to be included within a class of investors
entitled not to pay sales charges by purchasing load fund shares under letters
of intent, rights of accumulation, cumulative purchase privileges and other
quantity discount programs.
XI. PERFORMANCE INFORMATION
A. TOTAL RETURN
From time to time, quotations of a Portfolio's performance may be included
in advertisements, sales literature or reports to shareholders or prospective
investors. These performance figures may be calculated in the following manner:
Total return is computed by finding the average annual compounded rates of
return over the designated periods that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
n
P(1+T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the designated period assuming a
hypothetical $1,000 payment made at the beginning of the designated
period
The calculation set forth above is based on the further assumptions that:
(i) all dividends and distributions of a Portfolio during the period were
reinvested at the net asset value on the reinvestment dates; and (ii) all
recurring expenses that were charged to all shareholder accounts during the
applicable period were deducted.
Total returns quoted in advertising reflect all aspects of a Portfolio's
return, including the effect of reinvesting dividends and capital gain
distributions, and any change in the Portfolio's net asset value per share (NAV)
over the period. Average annual returns are calculated by determining the growth
or decline in value of a hypothetical historical investment in a Portfolio over
a stated period, and then calculating the annually compounded percentage rate
that would have produced the same result if the rate of growth or decline in
value had been constant over the period. For example, a cumulative return of
100% over ten years would produce an average annual return of 7.18%, which is
the steady annual return rate that would equal 100% growth on a compounded basis
in ten years. While average annual returns are a convenient means of comparing
investment alternatives, investors should realize that a Portfolio's performance
is not constant over time, but changes from year to year, and that average
annual returns represent averaged figures as opposed to the actual year-to-year
performance of the Portfolio.
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<PAGE>
The average annual total returns of the Portfolios for the one year period
ended December 31, 1997 and for the period since inception (January 26, 1995)
are as follows:
One Year Since Inception
-------- ---------------
Aggressive Allocation Portfolio 18.96% 20.89%
Moderate Allocation Portfolio 19.38% 18.67%
Conservative Allocation Portfolio 14.27% 15.60%
B. NONSTANDARDIZED TOTAL RETURN
In addition to the performance information described above, a Portfolio may
provide total return information for designated periods, such as for the most
recent rolling six months or most recent rolling twelve months. A Portfolio may
quote unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series of
redemptions over any time period. Total returns may be broken down into their
components of income and capital (including capital gains and changes in share
price) in order to illustrate the relationship of these factors and their
contributions to total return. Total returns and other performance information
may be quoted numerically or in a table, graph or similar illustration.
The total returns of the Portfolios for the period from the initial public
offering of shares on January 26, 1995 through December 31, 1997 were 74.38%,
65.16% and 52.92% for the Markman Aggressive Allocation Portfolio, the Markman
Moderate Allocation Portfolio and the Markman Conservative Allocation Portfolio,
respectively.
C. OTHER INFORMATION CONCERNING FUND PERFORMANCE
A Portfolio may quote its performance in various ways, using various types
of comparisons to market indices, other funds or investment alternatives, or to
general increases in the cost of living. All performance information supplied by
a Portfolio in advertising is historical and is not intended to indicate future
returns. A Portfolio's share prices and total returns fluctuate in response to
market conditions and other factors, and the value of a Portfolio's shares when
redeemed may be more or less than their original cost.
A Portfolio may compare its performance over various periods to various
indices or benchmarks, including the performance record of the Standard & Poor's
500 Composite Stock Price Index (S&P), the Dow Jones Industrial Average (DJIA),
the NASDAQ Industrial Index, the Ten Year Treasury Benchmark and the cost of
living (measured by the Consumer Price
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<PAGE>
Index, or CPI) over the same period. Comparisons may also be made to yields on
certificates of deposit, treasury instruments or money market instruments. The
comparisons to the S&P and DJIA show how such Portfolio's total return compared
to the record of a broad average of common stock prices (S&P) and a narrower set
of stocks of major industrial companies (DJIA). The Portfolio may have the
ability to invest in securities or underlying funds not included in either
index, and its investment portfolio may or may not be similar in composition to
the indices. Figures for the S&P and DJIA are based on the prices of unmanaged
groups of stocks, and unlike the Portfolio's returns, their returns do not
include the effect of paying brokerage commissions and other costs of investing.
Comparisons may be made on the basis of a hypothetical initial investment
in the Portfolio (such as $1,000), and reflect the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (that is, their
cash value at the time they were reinvested). Such comparisons may also reflect
the change in value of such an investment assuming distributions are not
reinvested. Tax consequences of different investments may not be factored into
the figures presented.
A Portfolio's performance may be compared in advertising to the performance
of other mutual funds in general or to the performance of particular types of
mutual funds, especially those with similar objectives.
Other groupings of funds prepared by Lipper Analytical Services, Inc.
("Lipper") and other organizations may also be used for comparison to the
Portfolio. Although Lipper and other organizations such as Investment Company
Data, Inc. ("ICD"), CDA Investment Technologies, Inc. ("CDA") and Morningstar
Investors, Inc. ("Morningstar"), include funds within various classifications
based upon similarities in their investment objectives and policies, investors
should be aware that these may differ significantly among funds within a
grouping.
From time to time a Portfolio may publish the ranking of the performance of
its shares by Morningstar, an independent mutual fund monitoring service that
ranks mutual funds, including the Portfolio, in broad investment categories
(equity, taxable bond, tax-exempt and other) monthly, based upon each
Portfolio's one, three, five and ten-year average annual total returns (when
available) and a risk adjustment factor that reflects Portfolio performance
relative to three-month U.S. treasury bill monthly returns. Such returns are
adjusted for fees and sales loads. There are five ranking categories with a
corresponding number of stars: highest (5), above average (4), neutral (3),
below average (2) and lowest (1). Ten percent of the funds, series or classes in
an investment category receive 5 stars, 22.5% receive 4 stars, 35% receive 3
stars, 22.5% receive 2 stars, and the bottom 10% receive one star.
From time to time, in reports and promotional literature, a Portfolio's
yield and total return will be compared to indices of mutual funds and bank
deposit vehicles such as Lipper's "Lipper - Fixed Income Fund Performance
Analysis," a monthly publication which tracks net assets, total return, and
yield on approximately 1,700 fixed income mutual funds in
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the United States. Ibbotson Associates, CDA Wiesenberger and F.C. Towers are
also used for comparison purposes as well as the Russell and Wilshire Indices.
Comparisons may also be made to Bank Certificates of Deposit, which differ from
mutual funds, such as the Portfolios, in several ways. The interest rate
established by the sponsoring bank is fixed for the term of a CD, there are
penalties for early withdrawal from CDs, and the principal on a CD is insured.
Comparisons may also be made to the 10 year Treasury Benchmark.
Performance rankings and ratings reported periodically in national
financial publications such as Money Magazine, Forbes, Business Week, The Wall
Street Journal, Micropal, Inc., Morningstar, Stanger's, Barron's, etc. will also
be used.
Ibbotson Associates of Chicago, Illinois (Ibbotson) and others provide
historical returns of the capital markets in the United States. A Portfolio may
compare its performance to the long-term performance of the U.S. capital markets
in order to demonstrate general long-term risk versus reward investment
scenarios. Performance comparisons could also include the value of a
hypothetical investment in common stocks, long-term bonds or treasuries. A
Portfolio may discuss the performance of financial markets and indices over
various time periods.
The capital markets tracked by Ibbotson are common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury Bills, and the U.S. rate of
inflation. These capital markets are based on the returns of several different
indices. For common stocks the S&P is used. For small capitalization stocks,
------------- -----------------------------
return is based on the return achieved by Dimensional Fund Advisors (DFA) Small
Company Fund. This fund is a market-value-weighted index of the ninth and tenth
decimals of the New York Stock Exchange (NYSE), plus stocks listed on the
American Stock Exchange (AMEX) and over-the-counter (OTC) with the same or less
capitalization as the upper bound of the NYSE ninth decile.
Long-term corporate bond returns are based on the performance of the
--------------------------
Salomon Brothers Long-Term-High-Grade Corporate Bond Index which includes nearly
all Aaa- and Aa-rated bonds. Returns on intermediate-term government bonds are
-----------------------------------
based on a one-bond portfolio constructed each year, containing a bond which is
the shortest noncallable bond available with a maturity not less than 5 years.
This bond is held for the calendar year and returns are recorded. Returns on
long-term government bonds are based on a one-bond portfolio constructed each
- ---------------------------
year, containing a bond that meets several criteria, including having a term of
approximately 20 years. The bond is held for the calendar year and returns are
recorded. Returns on U.S. Treasury Bills are based on a one-bill portfolio
---------------------
constructed each month, containing the shortest-term bill having not less than
one month to maturity. The total return on the bill is the month-end price
divided by the previous month-end price, minus one. Data up to 1976 is from the
U.S. Government Bond file at the University of Chicago's Center for Research in
Security Prices; the Wall Street Journal is the source thereafter. Inflation
---------
rates are based on the CPI.
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Other widely used indices that the Portfolios may use for comparison
purposes include the Lehman Bond Index, the Lehman Aggregate Bond Index, The
Lehman GNMA Single Family Index, the Lehman Government/Corporate Bond Index, the
Salomon Brothers Long-Term High Yield Index, the Salomon Brothers Non-Government
Bond Index, the Salomon Brothers Non-U.S. Government Bond Index, the Salomon
Brothers World Government Bond Index and the J.P. Morgan Government Bond Index.
The Salomon Brothers World Government Bond Index generally represents the
performance of government debt securities of various markets throughout the
world, including the United States. Lehman Government/Corporate Bond Index
generally represents the performance of intermediate and long-term government
and investment grade corporate debt securities. The Lehman Aggregate Bond Index
measures the performance of U.S. corporate bond issues, U.S. government
securities and mortgage-backed securities. The J.P. Morgan Government Bond Index
generally represents the performance of government bonds issued by various
countries including the United States. The foregoing bond indices are unmanaged
indices of securities that do not reflect reinvestment of capital gains or take
investment costs into consideration, as these items are not applicable to
indices.
The Portfolios may also discuss in advertising the relative performance of
various types of investment instruments, such as stocks, treasury securities and
bonds, over various time periods and covering various holding periods. Such
comparisons may compare these investment categories to each other or to changes
in the CPI.
A Portfolio may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program, the
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares had been purchased at those intervals. In evaluating
such a plan, investors should consider their ability to continue purchasing
shares through periods of low price levels.
The Portfolios may be available for purchase through retirement plans or
other programs offering deferral of or exemption from income taxes, which may
produce superior after-tax returns over time. For example, a $1,000 investment
earning a taxable return of 10% annually, compounded monthly, would have an
after-tax value of $2,009 after ten years, assuming tax was deducted from the
return each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,178 after ten years, assuming tax was deducted at a 31%
rate from the deferred earnings at the end of the ten year period.
Evaluations of Portfolio performance made by independent sources may also
be used in advertisements concerning the Portfolios, including reprints of, or
selections from, editorials or articles about the Portfolio. These editorials or
articles may include quotations of performance from other sources such as Lipper
or Morningstar. Sources for
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Portfolio performance information and articles about the Portfolios may include
the following:
BANXQUOTE, an on-line source of national averages for leading money market
and bank CD interest rates, published on a weekly basis by Masterfund, Inc. of
Wilmington, Delaware.
BARRON'S, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
BUSINESS WEEK, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.
CDA INVESTMENT TECHNOLOGIES, INC., an organization which provides
performance and ranking information through examining the dollar results of
hypothetical mutual fund investments and comparing these results against
appropriate market indices.
CHANGING TIMES. THE KIPLINGER MAGAZINE, a monthly investment advisory
publication that periodically features the performance of a variety of
securities.
CONSUMER DIGEST, a monthly business/financial magazine that includes a
"Money Watch" section featuring financial news.
FINANCIAL WORLD, a general business/financial magazine that includes a
"Market Watch" department reporting on activities in the mutual fund industry.
FORBES, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
FORTUNE, a national business publication that periodically rates the
performance of a variety of mutual funds.
IBC MONEY FUND REPORT, a weekly publication reporting on the performance of
the nation's money market funds, summarizing money market fund activity, and
including certain averages as performance benchmarks, specifically "IBC Money
Fund Average," and "IBC Government Money Fund Average."
IBBOTSON ASSOCIATES, INC., a company specializing in investment research
and data.
INVESTMENT COMPANY DATA, INC., an independent organization which provides
performance ranking information for broad classes of mutual funds.
INVESTOR'S DAILY, a daily newspaper that features financial, economic, and
business news.
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LIPPER ANALYTICAL SERVICES, INC.'S MUTUAL FUND PERFORMANCE ANALYSIS, a
weekly publication of industry-wide mutual fund averages by type of fund.
MONEY, a monthly magazine that from time to time features both specific
funds and the mutual fund industry as a whole.
MUTUAL FUND VALUES, a bi-weekly Morningstar, Inc. publication that provides
ratings of mutual funds based on fund performance, risk and portfolio
characteristics.
THE NEW YORK TIMES, a nationally distributed newspaper which regularly
covers financial news.
PERSONAL INVESTING NEWS, a monthly news publication that often reports on
investment opportunities and market conditions.
PERSONAL INVESTOR, a monthly investment advisory publication that includes
a "Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.
SUCCESS, a monthly magazine targeted to the world of entrepreneurs and
growing business, often featuring mutual fund performance data.
USA TODAY, a nationally distributed newspaper.
U.S. NEWS AND WORLD REPORT, a national business weekly that periodically
reports mutual fund performance data.
WALL STREET JOURNAL, a Dow Jones and Company, Inc. newspaper which
regularly covers financial news.
WIESENBERGER INVESTMENT COMPANIES SERVICES, an annual compendium of
information about mutual funds and other investment companies, including
comparative data on funds' background, management policies, salient features,
management results, income and dividend records, and price ranges.
WORKING WOMAN, a monthly publication that features a "Financial Workshop"
section reporting on the mutual fund/financial industry.
When comparing yield, total return and investment risk of shares of a
Portfolio with other investments, investors should understand that certain other
investments have different risk characteristics than an investment in shares of
the Portfolios. For example, certificates of deposit may have fixed rates of
return and may be insured as to principal and interest by the FDIC, while a
Portfolio's returns will fluctuate and its share values and returns are not
guaranteed. Money market accounts offered by banks also may be insured by the
FDIC and may offer stability of principal. U.S. Treasury securities are
guaranteed as to principal and interest by the full faith and credit of the U.S.
government. Money market mutual funds may seek to offer a fixed price per share.
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The performance of the Portfolios is not fixed or guaranteed. Performance
quotations should not be considered to be representative of performance of a
Portfolio for any period in the future. The performance of a Portfolio is a
function of many factors including its earnings, expenses and number of
outstanding shares. Fluctuating market conditions, purchases and sales of
underlying funds, sales and redemptions of shares of beneficial interest, and
changes in operating expenses are all examples of items that can increase or
decrease a Portfolio's performance.
XII. DESCRIPTION OF THE TRUST
The Trust is an open-end, diversified series management investment company
established as an unincorporated business trust under the laws of The
Commonwealth of Massachusetts pursuant to a Declaration of Trust dated September
7, 1994.
The Trustees of the Trust have authority to issue an unlimited number of
shares of beneficial interest in an unlimited number of series (each, a
"Series"), each share without par value. Currently, the Trust consists of three
Series. Each share in a particular Series represents an equal proportionate
interest in that Series with each other share of that Series and is entitled to
such dividends and distributions as are declared by the Trustees of the Trust.
Upon any liquidation of a Series, shareholders of that Series are entitled to
share pro rata in the net assets of that Series available for distribution.
Shareholders in one of the Series have no interest in, or rights upon
liquidation of, any of the other Series.
The Trust will normally not hold annual meetings of shareholders to elect
Trustees. If less than a majority of the Trustees of the Trust holding office
have been elected by shareholders, a meeting of shareholders of the Trust will
be called to elect Trustees. Under the Declaration of Trust of the Trust and the
Investment Company Act of 1940, the record holders of not less than two-thirds
of the outstanding shares of the Trust may remove a Trustee by votes cast in
person or by proxy at a meeting called for the purpose or by a written
declaration filed with the Trust's custodian bank. Except as described above,
the Trustees will continue to hold office and may appoint successor Trustees.
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Declaration of Trust of the Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of this disclaimer be given in
each agreement, obligation or instrument entered into or executed by the
Portfolios or the Trustees. The Declaration of Trust of the Trust provides for
indemnification out of the Trust's property for all loss and expense of any
shareholder held personally liable for obligations of the Trust and its
Portfolios. Accordingly, the risk of a shareholder of the Trust incurring a
financial loss on account of shareholder liability is limited to circumstances
in which the Trust itself would be unable to meet its obligations. The
likelihood of such circumstances is remote.
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XIII. ADDITIONAL INFORMATION
The Prospectus and this Statement of Additional Information do not contain
all of the information included in the Trust's Registration Statement filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, with respect to the securities offered hereby. Certain portions of the
Registration Statement have been omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. Such Registration Statement,
including the exhibits filed therewith, may be examined at the offices of the
Securities and Exchange Commission in Washington, D.C.
Statements contained in the Prospectus and this Statement of Additional
Information as to the contents of any agreement or other documents referred to
are not necessarily complete, and, in each instance, reference is made to the
copy of such agreement or other documents filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
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Annual
Report
December 31, 1997
Conservative Allocation Portfolio
Moderate Allocation Portfolio
Aggressive Allocation Portfolio
<PAGE>
1997: The Year of Surprises
- --------------------------------------------------------------------------------
Pick your topic: blue chip stocks, inflation, emerging markets, bonds -- nothing
seemed to turn out as forecast in the media last January. What does that tell us
about the possibilities in 1998?
The well-read investor a year ago was being told that there were a few
certainties that should be taken into account when investing in 1997. Here's a
brief list of past conventional wisdom and actual 1997 reality:
Conventional Wisdom: Large U.S. stocks are due for a pause. It is almost
impossible for the S&P 500 to gain more than 10% after the past few years'
incredible runup.
What Really Happened: S&P 500 gained 33.4%, breaking all existing records and
exceeding every other major index.
- --------------------------------------------------------------------------------
Conventional Wisdom: Wage pressures and continued strong growth in the economy
will push up inflation.
What Really Happened: Inflation fell to levels not seen since the 1960's, even
in the face of the lowest unemployment levels of a generation.
- --------------------------------------------------------------------------------
Conventional Wisdom: Rotate holdings from overvalued U.S. market into
international markets that are more reasonably priced. Get better upside
potential with less risk.
What Really Happened: Can you say "currency devaluation?" International markets
crash in fourth quarter in an apocalyptic frenzy. Ouch!
- --------------------------------------------------------------------------------
Conventional Wisdom: Junk (high yield) bonds are due for a pause after a long
run; treasuries will have rough sledding as inflation keeps rates up above 7%.
What Really Happened: Junk is king once again and returns 13.0%, according to
Lipper Analytical. Treasuries also soar as rates plummet to 5.9% at year end.
As Casey Stengel said while surveying his hapless Mets, "Can anybody here play
this game?"
Of course, it's easy to make fun and take cheap shots with the benefit of 20/20
hindsight. And we here at Markman have certainly made our share of wrong calls
(more on that later).
My point is simply to illustrate my answer to the question "What will the market
do?" The market will do whatever it takes in order to embarrass the maximum
number of pundits.
- --------------------------------------------------------------------------------
Markman
<PAGE>
A Look Back at Our Year
You may recall that as the year began I was one of those geniuses who were
confidently stating that there was no way the S&P 500 would "threepeat" after
its stunning '95 and '96 runup. We thus began the year with a reduced weighting
in large cap U.S. growth investments. In our last annual report I did, however,
point out two areas that I felt would produce superior risk-adjusted returns,
Real Estate and Small Cap Value. The results were happily as expected. We held
Cohen & Steers Realty in the Conservative and Moderate Portfolios and it
returned 21.2% for 1997. T. Rowe Price Small Cap Value in the Conservative
Portfolio gained 27.9% and Oakmark Small Cap soared 40.5%, helping the
Aggressive Portfolio.
Happier to be Home
Our international exposure was large as the year began, running some 30-35% of
the Moderate and Aggressive Portfolios. We can rattle on forever about asset
allocation and relative value, yada, yada, yada - but the fact is our
international exposure was largely dead weight for most of the year.
Fortunately, we didn't stay stuck in what "should be" and moved to reduce those
allocations as soon as our U.S. outlook brightened in early spring. By June 30,
we were down to 25 - 30% and by September 30 we were 13% and 21% international
in the Aggressive and Moderate Portfolios; and by year-end the allocations were
9% and 14% respectively. Additionally, 80% of that international allocation was
in more stable European value stocks. Thus we were able to side step some of the
fourth quarter carnage in the emerging markets. By year-end the bulk of our
international exposure was via the European holdings of the various Mutual
Series funds we own. We continue to believe this approach will give us a good
risk/return profile in 1998.
Glass Now Half Full
By early spring, continued good news on the inflation and earnings front
convinced me I was wrong in my earlier gloomy assessment of the U.S. market. We
moved quickly out of our defensive mode; in the Conservative Portfolio we
"What will the market do?"
The market will do whatever it takes in order to embarrass
the maximum number of pundits.
I've felt all year that inflation worries were much over
done, with the current Asian crisis being the final straw
that resoundingly crushes any near-term inflation concerns.
sold Robertson Stephens Contrarian and Lindner Dividend and reduced our
allocation of Merger Fund. We then bought Dodge and Cox Balanced, a cautious
balanced fund that we felt would increase our upside without significantly
increasing our risk.
In the Moderate and Aggressive Portfolios we reallocated some international
holdings toward Rydex Nova and Rydex OTC, two "high test" funds that quickly
gave us increased U.S. large cap and technology exposure.
No Inflation Bogey Man
Those of you who listen to our weekly hotline know that I've felt all year that
inflation worries were much over done, with the current Asian crisis being the
final straw that resoundingly crushes any near-term inflation concerns.
- --------------------------------------------------------------------------------
MARKMAN 1
<PAGE>
The following data replaces three graphs that represented comparisons between
the captioned Funds and Indices:
Growth of $10,000 invested on 1/31/95
<TABLE>
<CAPTION>
Graph 1 Graph 2 Graph 3
----------------------------------- ----------------------------------- ------------------------------------
Lehman Lipper
Markman Intermediate Lipper Markman Lipper Markman Global
Conservative Government Balanced Moderate Balanced Conservative Flexible
Allocation Bond Fund Allocation Fund Allocation Fund
Portfolio Index Index Portfolio S&P 500 Index Portfolio S&P 500 Index
--------- ----- ----- --------- ------- ----- --------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
JAN 1995 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
10,000 9,975 9,976 10,040 10,000 10,013 10,060 10,000 10,022
10,010 9,976 10,000 10,100 10,052 10,039 10,100 10,052 10,043
10,090 10,034 9,999 10,190 10,178 10,138 10,100 10,178 10,086
10,130 10,026 10,026 10,230 10,236 10,167 10,240 10,236 10,119
10,140 10,033 10,125 10,220 10,230 10,163 10,250 10,230 10,109
10,160 10,042 10,156 10,230 10,239 10,170 10,260 10,239 10,100
10,140 10,021 10,152 10,240 10,220 10,164 10,260 10,220 10,094
10,140 10,016 10,156 10,260 10,249 10,176 10,270 10,249 10,112
10,130 10,022 10,146 10,260 10,255 10,181 10,280 10,255 10,111
10,150 10,058 10,152 10,270 10,276 10,203 10,270 10,276 10,117
10,160 10,083 10,162 10,260 10,320 10,235 10,280 10,320 10,123
10,150 10,098 10,184 10,250 10,334 10,235 10,280 10,334 10,123
10,150 10,093 10,219 10,240 10,267 10,209 10,250 10,267 10,118
10,140 10,094 10,230 10,220 10,284 10,200 10,190 10,284 10,114
10,150 10,145 10,200 10,220 10,335 10,240 10,180 10,335 10,136
10,180 10,148 10,201 10,300 10,376 10,262 10,210 10,376 10,158
10,200 10,157 10,236 10,330 10,402 10,271 10,240 10,402 10,147
10,170 10,195 10,266 10,280 10,313 10,240 10,170 10,313 10,098
10,200 10,195 10,277 10,320 10,390 10,291 10,230 10,390 10,146
10,170 10,192 10,246 10,310 10,356 10,280 10,220 10,356 10,123
10,130 10,173 10,291 10,320 10,345 10,265 10,220 10,345 10,146
10,110 10,162 10,261 10,310 10,353 10,265 10,220 10,353 10,162
10,090 10,144 10,248 10,290 10,360 10,253 10,210 10,360 10,155
10,040 10,144 10,198 10,240 10,285 10,204 10,160 10,285 10,126
10,050 10,172 10,219 10,230 10,307 10,222 10,150 10,307 10,089
10,060 10,196 10,300 10,290 10,450 10,235 10,230 10,450 10,096
10,110 10,185 10,300 10,290 10,460 10,308 10,250 10,460 10,119
10,110 10,228 10,317 10,290 10,461 10,327 10,250 10,461 10,149
10,160 10,247 10,363 10,340 10,522 10,373 10,300 10,522 10,181
10,170 10,252 10,360 10,340 10,501 10,371 10,300 10,501 10,223
10,190 10,253 10,394 10,350 10,577 10,408 10,310 10,577 10,224
10,180 10,251 10,387 10,340 10,579 10,397 10,310 10,579 10,217
10,190 10,255 10,396 10,360 10,593 10,403 10,340 10,593 10,206
10,190 10,237 10,385 10,350 10,570 10,390 10,330 10,570 10,203
10,180 10,239 10,385 10,340 10,583 10,389 10,330 10,583 10,194
10,180 10,245 10,391 10,340 10,589 10,398 10,360 10,589 10,194
10,240 10,277 10,461 10,390 10,696 10,472 10,430 10,696 10,227
10,270 10,291 10,502 10,430 10,748 10,520 10,550 10,748 10,290
10,270 10,264 10,501 10,440 10,763 10,517 10,590 10,763 10,322
10,260 10,268 10,492 10,440 10,747 10,513 10,520 10,747 10,325
10,270 10,257 10,486 10,470 10,728 10,512 10,470 10,728 10,336
10,260 10,247 10,470 10,450 10,696 10,508 10,460 10,696 10,378
10,280 10,274 10,491 10,480 10,723 10,525 10,470 10,723 10,363
10,330 10,284 10,529 10,540 10,798 10,553 10,440 10,798 10,405
10,330 10,293 10,531 10,550 10,807 10,562 10,460 10,807 10,437
10,340 10,306 10,543 10,560 10,818 10,575 10,440 10,818 10,462
10,350 10,303 10,542 10,550 10,827 10,578 10,450 10,827 10,470
10,360 10,305 10,551 10,560 10,839 10,584 10,510 10,839 10,447
10,350 10,315 10,548 10,550 10,808 10,583 10,530 10,808 10,457
10,370 10,327 10,568 10,580 10,844 10,610 10,570 10,844 10,476
10,400 10,350 10,604 10,600 10,888 10,648 10,680 10,888 10,526
10,380 10,363 10,578 10,590 10,823 10,625 10,620 10,823 10,552
10,370 10,370 10,562 10,580 10,807 10,605 10,550 10,807 10,547
10,350 10,368 10,542 10,550 10,797 10,575 10,390 10,797 10,525
10,360 10,381 10,560 10,550 10,805 10,588 10,410 10,805 10,529
10,390 10,382 10,597 10,580 10,874 10,630 10,480 10,874 10,585
10,430 10,386 10,647 10,610 10,970 10,680 10,580 10,970 10,608
10,420 10,384 10,640 10,590 10,954 10,683 10,600 10,954 10,639
10,420 10,381 10,646 10,590 10,967 10,691 10,650 10,967 10,612
10,430 10,370 10,654 10,610 10,986 10,545 10,710 10,986 10,626
10,430 10,370 10,663 10,630 11,011 10,706 10,720 11,011 10,614
10,430 10,366 10,656 10,630 11,004 10,700 10,680 11,004 10,618
10,450 10,387 10,674 10,630 11,019 10,724 10,680 11,019 10,653
10,530 10,421 10,751 10,700 11,140 10,800 10,790 11,140 10,722
10,540 10,438 10,770 10,680 11,135 10,815 10,740 11,135 10,754
10,570 10,501 10,789 10,690 11,136 10,838 10,690 11,136 10,766
10,600 10,501 10,829 10,730 11,222 10,877 10,780 11,222 10,808
10,630 10,534 10,850 10,740 11,218 10,894 10,770 11,218 10,819
10,640 10,517 10,858 10,760 11,236 10,903 10,800 11,236 10,814
10,640 10,506 10,855 10,790 11,238 10,909 10,900 11,238 10,769
10,650 10,510 10,870 10,810 11,264 10,930 10,960 11,264 10,771
10,680 10,530 10,908 10,840 11,311 10,973 11,010 11,311 10,808
10,700 10,549 10,928 10,860 11,322 11,000 11,070 11,322 10,828
10,680 10,546 10,921 10,870 11,298 10,995 11,170 11,298 10,820
10,620 10,537 10,834 10,800 11,138 10,909 11,080 11,138 10,748
10,610 10,527 10,828 10,790 11,135 10,892 11,080 11,135 10,716
10,630 10,527 10,873 10,860 11,232 10,940 11,190 11,232 10,739
10,660 10,557 10,935 10,910 11,338 11,002 11,370 11,338 10,783
10,680 10,604 10,961 10,910 11,340 11,030 11,290 11,340 10,839
10,690 10,613 10,972 10,900 11,343 11,033 11,260 11,343 10,876
10,650 10,613 10,921 10,840 11,239 10,981 11,130 11,239 10,864
10,660 10,657 10,925 10,770 11,238 10,972 10,890 11,238 10,858
10,710 10,659 11,007 10,860 11,449 11,046 11,000 11,449 10,877
10,740 10,694 11,038 10,900 11,451 11,082 11,110 11,451 10,915
10,770 10,742 11,066 10,930 11,432 11,103 11,180 11,432 10,950
10,820 10,748 11,105 10,990 11,499 11,152 11,260 11,499 11,000
10,810 10,739 11,100 11,000 11,490 11,148 11,210 11,490 10,977
10,780 10,692 11,065 10,970 11,447 11,120 11,230 11,447 10,947
10,770 10,666 11,046 10,980 11,432 11,109 11,280 11,432 10,918
10,710 10,624 10,972 10,930 11,338 11,040 11,270 11,338 10,847
10,730 10,645 11,005 10,970 11,401 11,075 11,300 11,401 10,852
10,790 10,741 11,102 11,030 11,521 11,167 11,380 11,521 10,900
10,800 10,729 11,106 11,040 11,527 11,161 11,440 11,527 10,921
10,810 10,718 11,111 11,070 11,541 11,172 11,510 11,541 10,929
10,840 10,714 11,130 11,100 11,599 11,195 11,570 11,599 10,938
10,890 10,735 11,204 11,170 11,716 11,273 11,760 11,716 10,996
10,900 10,725 11,210 11,190 11,711 11,279 11,850 11,711 10,997
10,900 10,743 11,211 11,180 11,689 11,274 11,800 11,689 11,018
10,970 10,775 11,298 11,270 11,843 11,359 11,950 11,843 11,068
10,960 10,769 11,273 11,260 11,813 11,343 11,940 11,813 11,074
10,890 10,747 11,203 11,160 11,694 11,264 11,750 11,694 11,012
10,860 10,742 11,174 11,110 11,657 11,230 11,630 11,657 10,989
10,870 10,761 11,201 11,130 11,711 11,249 11,620 11,711 10,972
10,870 10,707 11,175 11,170 11,693 11,238 11,730 11,693 10,975
10,900 10,731 11,205 11,210 11,714 11,273 11,790 11,714 10,982
10,900 10,735 11,233 11,200 11,765 11,296 11,800 11,765 11,009
10,930 10,745 11,260 11,240 11,771 11,330 11,850 11,771 11,068
11,000 10,811 11,357 11,340 11,919 11,427 12,000 11,919 11,129
11,070 10,815 11,415 11,420 11,972 11,501 12,190 11,972 11,225
11,090 10,818 11,440 11,450 11,990 11,531 12,230 11,990 11,271
11,070 10,800 11,403 11,430 11,938 11,492 12,170 11,938 11,245
11,150 10,804 11,473 11,560 12,070 11,576 12,440 12,070 11,295
11,170 10,804 11,484 11,600 12,073 11,587 12,520 12,073 11,318
11,150 10,781 11,456 11,590 12,049 11,569 12,530 12,049 11,288
11,170 10,763 11,467 11,630 12,110 11,593 12,590 12,110 11,288
11,110 10,753 11,406 11,530 12,020 11,520 12,400 12,020 11,243
11,000 10,712 11,277 11,340 11,860 11,359 12,020 11,860 11,140
11,030 10,709 11,308 11,400 11,915 11,401 12,110 11,915 11,141
11,030 10,686 11,293 11,430 11,917 11,391 12,170 11,917 11,146
11,110 10,686 11,349 11,550 11,982 11,462 12,420 11,982 11,200
11,150 10,710 11,404 11,650 12,078 11,524 12,570 12,078 11,220
11,160 10,698 11,407 11,690 12,090 11,530 12,650 12,090 11,237
11,210 10,720 11,466 11,760 12,170 11,595 12,770 12,170 11,282
11,190 10,709 11,440 11,740 12,121 11,566 12,710 12,121 11,284
11,200 10,731 11,443 11,730 12,103 11,566 12,660 12,103 11,276
11,160 10,716 11,404 11,650 12,051 11,524 12,500 12,051 11,258
11,150 10,739 11,411 11,580 12,035 11,518 12,340 12,035 11,279
11,150 10,716 11,402 11,550 12,038 11,501 12,330 12,038 11,293
11,170 10,727 11,413 11,600 12,042 11,515 12,400 12,042 11,297
11,180 10,740 11,434 11,600 12,067 11,537 12,420 12,067 11,291
11,190 10,744 11,442 11,610 12,076 11,543 12,440 12,076 11,282
11,180 10,736 11,429 11,620 12,063 11,542 12,490 12,063 11,272
11,170 10,727 11,403 11,610 12,018 11,522 12,460 12,018 11,248
11,150 10,695 11,357 11,600 11,970 11,485 12,500 11,970 11,200
11,180 10,699 11,404 11,670 12,070 11,537 12,620 12,070 11,208
11,180 10,698 11,400 11,680 12,047 11,540 12,660 12,047 11,184
11,220 10,711 11,438 11,760 12,080 11,591 12,850 12,080 11,228
11,230 10,698 11,440 11,770 12,061 11,603 12,860 12,061 11,221
11,240 10,702 11,447 11,780 12,066 11,619 12,900 12,066 11,232
11,250 10,725 11,448 11,710 12,042 11,598 12,710 12,042 11,241
11,250 10,714 11,454 11,760 12,073 11,608 12,790 12,073 11,222
11,230 10,711 11,428 11,760 12,024 11,589 12,820 12,024 11,210
11,230 10,747 11,443 11,720 12,031 11,595 12,760 12,031 11,206
11,240 10,791 11,488 11,740 12,088 11,629 12,740 12,088 11,232
11,270 10,803 11,487 11,690 12,066 11,606 12,630 12,066 11,239
11,250 10,789 11,488 11,660 12,088 11,604 12,560 12,088 11,228
11,280 10,807 11,507 11,700 12,112 11,629 12,620 12,112 11,228
11,300 10,817 11,532 11,750 12,133 11,664 12,710 12,133 11,267
11,330 10,838 11,571 11,760 12,176 11,698 12,710 12,176 11,307
11,380 10,858 11,649 11,880 12,293 11,793 12,900 12,293 11,350
11,410 10,862 11,671 11,960 12,317 11,816 13,020 12,317 11,359
11,420 10,846 11,667 11,980 12,321 11,819 13,070 12,321 11,362
11,450 10,841 11,699 12,040 12,372 11,857 13,180 12,372 11,398
11,470 10,846 11,723 12,070 12,400 11,876 13,270 12,400 11,441
11,500 10,870 11,778 12,090 12,456 11,906 13,250 12,456 11,464
11,520 10,864 11,775 12,110 12,505 11,921 13,260 12,505 11,470
11,550 10,904 11,834 12,140 12,610 11,962 13,250 12,610 11,513
11,550 10,893 11,814 12,090 12,605 11,925 13,150 12,605 11,499
11,530 10,877 11,787 12,100 12,596 11,903 13,140 12,596 11,469
11,560 10,890 11,815 12,170 12,628 11,933 13,220 12,628 11,479
11,590 10,900 11,843 12,200 12,684 11,963 13,270 12,684 11,508
11,550 10,867 11,788 12,150 12,603 11,901 13,220 12,603 11,514
11,520 10,861 11,754 12,120 12,576 11,855 13,200 12,576 11,435
11,500 10,862 11,745 12,100 12,577 11,829 13,110 12,577 11,397
11,500 10,851 11,736 12,100 12,569 11,809 13,080 12,569 11,411
11,480 10,850 11,724 12,060 12,567 11,781 13,010 12,567 11,415
11,530 10,852 11,794 12,160 12,672 11,870 13,190 12,672 11,437
11,550 10,887 11,809 12,150 12,640 11,877 13,180 12,640 11,465
11,520 10,898 11,777 12,080 12,582 11,833 13,040 12,582 11,438
11,510 10,908 11,769 12,070 12,596 11,808 12,960 12,596 11,433
11,490 10,924 11,758 12,010 12,579 11,763 12,810 12,579 11,440
11,500 10,933 11,786 12,040 12,609 11,808 12,900 12,609 11,463
11,510 10,934 11,793 12,060 12,607 11,810 12,900 12,607 11,457
11,470 10,934 11,731 11,940 12,518 11,717 12,680 12,518 11,406
11,430 10,938 11,715 11,890 12,499 11,687 12,630 12,499 11,360
11,470 10,939 11,749 11,990 12,543 11,747 12,760 12,543 11,360
11,510 10,949 11,807 12,080 12,622 11,824 12,900 12,622 11,415
11,550 10,978 11,856 12,120 12,653 11,872 12,930 12,653 11,452
11,470 10,981 11,847 12,120 12,621 11,854 12,920 12,621 11,461
11,430 10,989 11,880 12,200 12,702 11,913 13,080 12,702 11,482
11,470 10,980 11,885 12,230 12,719 11,928 13,160 12,719 11,483
11,510 10,986 11,901 12,260 12,788 11,942 13,170 12,788 11,507
11,550 10,964 11,847 12,190 12,719 11,869 13,050 12,719 11,485
11,490 10,962 11,816 12,160 12,668 11,839 13,060 12,668 11,492
11,480 10,985 11,836 12,150 12,700 11,855 13,030 12,700 11,439
11,430 10,996 11,787 12,080 12,612 11,784 12,910 12,612 11,409
11,340 10,991 11,711 11,970 12,488 11,698 12,800 12,488 11,325
11,350 10,994 11,748 12,010 12,554 11,741 12,860 12,554 11,310
11,400 11,003 11,795 12,080 12,633 11,800 12,970 12,633 11,354
11,390 11,010 11,781 12,060 12,595 11,790 12,950 12,595 11,369
11,430 11,034 11,830 12,100 12,656 11,832 12,990 12,656 11,377
11,510 11,055 11,915 12,200 12,778 11,920 13,110 12,778 11,427
11,550 11,053 11,928 12,250 12,797 11,950 13,200 12,797 11,453
11,530 11,048 11,916 12,220 12,753 11,933 13,150 12,753 11,450
11,490 11,038 11,883 12,130 12,707 11,877 12,950 12,707 11,424
11,500 11,064 11,947 12,180 12,827 11,935 12,940 12,827 11,443
11,560 11,055 11,963 12,280 12,864 11,979 13,110 12,864 11,460
11,550 11,045 11,949 12,260 12,853 11,964 13,120 12,853 11,439
11,520 11,062 11,945 12,220 12,846 11,952 13,030 12,846 11,409
11,440 11,067 11,907 12,120 12,782 11,889 12,840 12,782 11,397
11,470 11,055 11,935 12,180 12,887 11,908 12,870 12,887 11,403
11,520 11,079 11,995 12,230 12,961 11,964 12,910 12,961 11,443
11,560 11,087 12,025 12,250 13,021 11,987 12,930 13,021 11,470
11,500 11,089 11,986 12,150 12,953 11,938 12,750 12,953 11,465
11,490 11,079 12,002 12,140 13,028 11,949 12,690 13,028 11,482
11,470 11,075 12,001 12,100 12,988 11,947 12,660 12,988 11,483
11,510 11,088 12,024 12,150 13,023 11,979 12,730 13,023 11,506
11,520 11,101 12,050 12,160 13,052 12,008 12,730 13,052 11,537
11,620 11,102 12,094 12,290 13,165 12,075 12,950 13,165 11,584
11,670 11,116 12,125 12,340 13,197 12,117 13,050 13,197 11,600
11,680 11,145 12,142 12,360 13,148 12,134 13,120 13,148 11,615
11,680 11,161 12,167 12,340 13,183 12,143 13,070 13,183 11,655
11,780 11,189 12,258 12,450 13,329 12,241 13,260 13,329 11,716
11,800 11,182 12,292 12,500 13,417 12,271 13,250 13,417 11,755
11,800 11,175 12,306 12,510 13,475 12,277 13,180 13,475 11,774
11,760 11,160 12,255 12,440 13,388 12,230 13,080 13,388 11,762
11,780 11,155 12,264 12,480 13,417 12,244 13,140 13,417 11,759
11,810 11,172 12,281 12,480 13,462 12,260 13,170 13,462 11,767
11,780 11,169 12,257 12,440 13,446 12,218 13,090 13,446 11,751
11,800 11,167 12,282 12,470 13,515 12,236 13,110 13,515 11,763
11,730 11,169 12,232 12,390 13,412 12,168 12,960 13,412 11,753
11,700 11,174 12,218 12,350 13,399 12,141 12,850 13,399 11,729
11,560 11,146 12,054 12,140 13,193 11,984 12,580 13,193 11,633
11,620 11,185 12,135 12,220 13,305 12,079 12,740 13,305 11,642
11,610 11,185 12,121 12,220 13,175 12,055 12,750 13,175 11,682
11,650 11,183 12,167 12,280 13,275 12,125 12,900 13,275 11,735
11,690 11,202 12,203 12,330 13,307 12,167 12,970 13,307 11,797
11,720 11,214 12,234 12,350 13,358 12,192 13,000 13,358 11,836
11,730 11,227 12,255 12,380 13,363 12,213 13,050 13,363 11,860
11,760 11,242 12,267 12,390 13,355 12,209 13,030 13,355 11,854
11,800 11,259 12,308 12,450 13,396 12,263 13,121 13,396 11,878
11,843 11,264 12,375 12,494 13,499 12,304 13,132 13,499 11,938
11,865 11,272 12,389 12,483 13,514 12,309 13,043 13,514 11,991
11,822 11,259 12,333 12,406 13,436 12,231 12,932 13,436 12,002
11,811 11,251 12,308 12,373 13,414 12,217 12,920 13,414 12,005
11,832 11,256 12,326 12,395 13,456 12,239 12,932 13,456 12,003
11,768 11,259 12,229 12,241 13,261 12,121 12,676 13,261 11,934
11,671 11,234 12,085 12,098 13,024 11,988 12,553 13,024 11,843
11,692 11,244 12,138 12,186 13,116 12,048 12,720 13,116 11,861
11,703 11,254 12,142 12,219 13,097 12,056 12,754 13,097 11,862
11,682 11,254 12,118 12,175 13,053 12,016 12,653 13,053 11,841
11,736 11,290 12,200 12,241 13,241 12,093 12,720 13,241 11,886
11,746 11,315 12,213 12,285 13,197 12,105 12,765 13,197 11,896
11,768 11,331 12,239 12,318 13,239 12,146 12,809 13,239 11,910
11,789 11,328 12,284 12,406 13,317 12,199 12,943 13,317 11,958
11,811 11,307 12,301 12,483 13,352 12,224 13,087 13,352 11,978
11,822 11,304 12,283 12,494 13,339 12,211 13,121 13,339 11,959
11,886 11,317 12,366 12,626 13,495 12,294 13,277 13,495 12,007
11,875 11,295 12,324 12,593 13,434 12,254 13,254 13,434 11,998
11,918 11,316 12,377 12,649 13,534 12,304 13,299 13,534 12,014
11,951 11,308 12,406 12,660 13,594 12,329 13,299 13,594 12,023
12,015 11,334 12,487 12,759 13,723 12,422 13,410 13,723 12,088
12,080 11,358 12,558 12,836 13,853 12,500 13,510 13,853 12,168
12,112 11,349 12,581 12,880 13,909 12,544 13,577 13,909 12,210
12,112 11,350 12,553 12,880 13,853 12,518 13,610 13,853 12,218
12,144 11,341 12,591 12,957 13,976 12,574 13,722 13,976 12,245
12,177 11,352 12,647 13,012 14,083 12,636 13,789 14,083 12,265
12,198 11,352 12,671 13,034 14,164 12,660 13,777 14,164 12,272
12,263 11,358 12,734 13,111 14,301 12,723 13,844 14,301 12,298
12,273 11,365 12,741 13,122 14,308 12,733 13,822 14,308 12,287
12,316 11,391 12,803 13,144 14,420 12,785 13,833 14,420 12,317
12,306 11,406 12,800 13,122 14,403 12,781 13,777 14,403 12,320
12,295 11,394 12,758 13,111 14,297 12,737 13,766 14,297 12,311
12,284 11,375 12,717 13,122 14,207 12,703 13,789 14,207 12,294
12,273 11,355 12,676 13,111 14,136 12,665 13,789 14,136 12,281
12,177 11,274 12,552 13,001 13,976 12,539 13,666 13,976 12,165
12,241 11,283 12,626 13,111 14,141 12,634 13,811 14,141 12,210
12,349 11,309 12,747 13,254 14,377 12,775 13,989 14,377 12,286
12,349 11,292 12,748 13,298 14,382 12,776 14,033 14,382 12,322
12,306 11,286 12,668 13,221 14,194 12,681 13,944 14,194 12,259
12,273 11,262 12,630 13,166 14,125 12,643 13,855 14,125 12,218
12,273 11,233 12,608 13,177 14,285 12,623 13,866 14,285 12,214
12,252 11,228 12,564 13,111 13,982 12,565 13,755 13,982 12,165
12,273 11,282 12,623 13,111 14,068 12,612 13,677 14,068 12,211
12,338 11,313 12,706 13,177 14,211 12,691 13,711 14,211 12,257
12,370 11,288 12,736 13,276 14,321 12,742 13,866 14,321 12,272
12,359 11,260 12,699 13,232 14,243 12,697 13,811 14,243 12,241
12,381 11,251 12,703 13,254 14,280 12,710 13,833 14,280 12,231
12,155 11,131 12,427 12,946 13,840 12,411 13,477 13,840 12,036
12,198 11,158 12,514 13,012 13,983 12,499 13,544 13,983 12,020
12,177 11,147 12,481 12,968 13,919 12,465 13,488 13,919 12,026
12,209 11,150 12,513 13,012 13,957 12,507 13,577 13,957 12,023
12,241 11,152 12,548 13,034 14,008 12,552 13,633 14,008 12,056
12,263 11,109 12,535 13,078 14,021 12,554 13,666 14,021 12,067
12,349 11,118 12,646 13,177 14,267 12,685 13,789 14,267 12,144
12,338 11,131 12,645 13,144 14,246 12,680 13,744 14,246 12,179
12,349 11,165 12,641 13,122 14,209 12,665 13,688 14,209 12,182
12,359 11,179 12,644 13,122 14,192 12,664 13,677 14,192 12,214
12,381 11,168 12,652 13,144 14,224 12,673 13,711 14,224 12,228
12,370 11,195 12,654 13,089 14,211 12,667 13,622 14,211 12,264
12,392 11,196 12,670 13,089 14,275 12,692 13,610 14,275 12,260
12,381 11,161 12,626 13,089 14,191 12,657 13,622 14,191 12,251
12,392 11,138 12,615 13,100 14,192 12,652 13,633 14,192 12,243
12,435 11,174 12,611 13,111 14,116 12,655 13,655 14,116 12,261
12,499 11,180 12,691 13,210 14,296 12,739 13,777 14,296 12,296
12,521 11,200 12,719 13,232 14,333 12,770 13,822 14,333 12,344
12,521 11,189 12,726 13,254 14,347 12,780 13,855 14,347 12,358
12,542 11,169 12,721 13,276 14,347 12,780 13,911 14,347 12,368
12,424 11,077 12,542 13,133 14,098 12,602 13,711 14,098 12,264
12,435 11,101 12,551 13,133 14,054 12,607 13,733 14,054 12,261
12,381 11,086 12,455 13,034 13,864 12,514 13,610 13,864 12,242
12,359 11,076 12,406 12,968 13,814 12,460 13,544 13,814 12,203
12,402 11,135 12,502 13,023 13,935 12,551 13,622 13,935 12,259
12,445 11,157 12,565 13,100 14,062 12,627 13,733 14,062 12,312
12,456 11,157 12,600 13,155 14,117 12,684 13,855 14,117 12,352
12,456 11,141 12,559 13,111 14,045 12,632 13,800 14,045 12,340
12,488 11,129 12,577 13,166 14,089 12,664 13,911 14,089 12,374
12,521 11,153 12,606 13,210 14,121 12,694 13,978 14,121 12,402
12,553 11,168 12,646 13,287 14,183 12,748 14,134 14,183 12,464
12,575 11,166 12,677 13,342 14,264 12,803 14,278 14,264 12,491
12,596 11,152 12,661 13,375 14,233 12,801 14,345 14,233 12,494
12,639 11,156 12,685 13,441 14,292 12,838 14,456 14,292 12,506
12,682 11,165 12,709 13,485 14,307 12,864 14,501 14,307 12,559
12,671 11,158 12,706 13,496 14,323 12,859 14,512 14,323 12,545
12,671 11,140 12,695 13,496 14,324 12,844 14,534 14,324 12,530
12,714 11,142 12,702 13,518 14,342 12,855 14,568 14,342 12,518
12,628 11,093 12,550 13,375 14,092 12,692 14,345 14,092 12,447
12,628 11,082 12,531 13,375 14,054 12,679 14,367 14,054 12,414
12,628 11,097 12,523 13,353 14,038 12,669 14,367 14,038 12,416
12,618 11,093 12,487 13,320 13,982 12,631 14,323 13,982 12,399
12,607 11,107 12,547 13,331 14,129 12,696 14,345 14,129 12,423
12,639 11,108 12,562 13,386 14,147 12,713 14,423 14,147 12,424
12,693 11,140 12,653 13,496 14,294 12,822 14,601 14,294 12,467
12,725 11,153 12,752 13,606 14,504 12,930 14,812 14,504 12,514
12,790 11,175 12,809 13,683 14,596 13,003 14,946 14,596 12,554
12,822 11,180 12,815 13,705 14,594 13,010 14,946 14,594 12,587
12,811 11,153 12,793 13,727 14,583 12,992 15,002 14,583 12,580
12,843 11,173 12,848 13,771 14,678 13,046 15,057 14,678 12,618
12,876 11,189 12,902 13,815 14,773 13,097 15,169 14,773 12,639
12,897 11,187 12,900 13,804 14,764 13,093 15,135 14,764 12,638
12,919 11,197 12,950 13,837 14,890 13,138 15,169 14,890 12,657
12,930 11,182 12,924 13,826 14,838 13,119 15,124 14,838 12,632
12,962 11,191 12,948 13,848 14,893 13,135 15,102 14,893 12,627
12,919 11,128 12,886 13,793 14,755 13,060 15,002 14,755 12,599
12,886 11,162 12,825 13,694 14,665 12,989 14,868 14,665 12,585
12,919 11,159 12,882 13,727 14,750 13,029 14,924 14,750 12,592
12,951 11,135 12,848 13,793 14,694 13,007 15,013 14,694 12,609
12,940 11,153 12,839 13,760 14,662 12,993 14,957 14,662 12,579
12,962 11,155 12,899 13,804 14,770 13,048 15,002 14,770 12,611
12,983 11,168 12,962 13,870 14,904 13,105 15,035 14,904 12,637
12,930 11,195 12,927 13,782 14,787 13,056 14,879 14,787 12,627
12,865 11,129 12,870 13,716 14,794 12,992 14,824 14,794 12,576
12,876 11,126 12,861 13,738 14,769 12,985 14,835 14,769 12,578
12,876 11,124 12,850 13,727 14,743 12,976 14,824 14,743 12,570
12,876 11,116 12,838 13,738 14,707 12,966 14,846 14,707 12,583
12,854 11,127 12,824 13,661 14,684 12,945 14,723 14,684 12,572
12,833 11,150 12,817 13,595 14,638 12,929 14,590 14,638 12,573
12,811 11,170 12,812 13,529 14,624 12,924 14,490 14,624 12,582
12,768 11,164 12,781 13,375 14,556 12,880 14,223 14,556 12,595
12,725 11,153 12,763 13,320 14,554 12,866 14,134 14,554 12,582
12,671 11,149 12,740 13,232 14,557 12,831 14,000 14,557 12,563
12,693 11,160 12,786 13,309 14,662 12,880 14,100 14,662 12,582
12,725 11,173 12,811 13,386 14,706 12,910 14,200 14,706 12,616
12,714 11,182 12,812 13,353 14,698 12,896 14,156 14,698 12,616
12,671 11,185 12,764 13,221 14,613 12,835 13,933 14,613 12,602
12,671 11,214 12,822 13,320 14,704 12,911 14,089 14,704 12,619
12,747 11,255 12,891 13,452 14,750 12,987 14,323 14,750 12,663
12,779 11,253 12,944 13,518 14,868 13,050 14,401 14,868 12,698
12,768 11,230 12,919 13,507 14,821 13,014 14,401 14,821 12,672
12,768 11,248 12,914 13,463 14,794 12,999 14,312 14,794 12,672
12,661 11,159 12,703 13,276 14,466 12,779 14,056 14,466 12,558
12,596 11,160 12,644 13,166 14,362 12,711 13,889 14,362 12,496
12,607 11,176 12,687 13,199 14,412 12,747 13,944 14,412 12,526
12,585 11,203 12,705 13,133 14,442 12,754 13,811 14,442 12,530
12,467 11,219 12,610 12,869 14,214 12,623 13,444 14,214 12,470
12,456 11,219 12,610 12,825 14,226 12,636 13,399 14,226 12,443
12,402 11,225 12,437 12,615 13,865 12,429 13,032 13,865 12,325
12,338 11,253 12,411 12,516 13,833 12,397 12,943 13,833 12,275
12,370 11,250 12,491 12,626 13,960 12,498 13,132 13,960 12,316
12,402 11,287 12,559 12,704 14,170 12,647 13,288 14,170 12,408
12,435 11,269 12,559 12,704 14,064 12,585 13,243 14,064 12,414
12,413 11,257 12,492 12,615 13,955 12,500 13,099 13,955 12,355
12,392 11,269 12,431 12,527 13,803 12,419 12,920 13,803 12,313
12,338 11,255 12,399 12,450 13,799 12,385 12,865 13,799 12,240
12,359 11,256 12,449 12,505 13,898 12,460 12,954 13,898 12,280
12,359 11,262 12,503 12,571 14,002 12,523 13,032 14,002 12,302
12,359 11,245 12,449 12,560 13,894 12,460 12,965 13,894 12,274
12,370 11,261 12,497 12,571 13,991 12,518 12,965 13,991 12,289
12,381 11,289 12,536 12,626 14,098 12,584 13,021 14,098 12,355
12,435 11,307 12,705 12,715 14,323 12,733 13,165 14,323 12,450
12,488 11,388 12,864 12,836 14,599 12,906 13,388 14,599 12,562
12,499 11,387 12,840 12,836 14,550 12,879 13,366 14,550 12,577
12,510 11,381 12,857 12,836 14,598 12,897 13,388 14,598 12,568
12,521 11,378 12,885 12,869 14,639 12,929 13,444 14,639 12,572
12,532 11,379 12,877 12,869 14,605 12,925 13,432 14,605 12,574
12,521 11,401 12,887 12,847 14,598 12,932 13,399 14,598 12,568
12,542 11,411 12,895 12,836 14,680 12,958 13,388 14,680 12,590
12,532 11,384 12,822 12,792 14,561 12,878 13,288 14,561 12,571
12,542 11,389 12,851 12,814 14,604 12,912 13,321 14,604 12,566
12,542 11,376 12,847 12,825 14,610 12,921 13,343 14,610 12,568
12,575 11,397 12,891 12,825 14,676 12,962 13,343 14,676 12,595
12,596 11,395 12,905 12,836 14,707 12,971 13,321 14,707 12,601
12,618 11,399 12,907 12,836 14,688 12,972 13,310 14,688 12,624
12,628 11,394 12,898 12,836 14,677 12,961 13,299 14,677 12,620
12,650 11,389 12,952 12,880 14,801 13,019 13,388 14,801 12,663
12,650 11,362 12,902 12,902 14,721 12,974 13,388 14,721 12,654
12,650 11,334 12,859 12,902 14,651 12,924 13,343 14,651 12,618
12,671 11,344 12,895 12,935 14,707 12,965 13,410 14,707 12,641
12,671 11,342 12,890 12,946 14,676 12,960 13,432 14,676 12,640
12,650 11,322 12,807 12,913 14,515 12,877 13,343 14,515 12,588
12,628 11,293 12,734 12,869 14,396 12,801 13,277 14,396 12,537
12,628 11,305 12,758 12,836 14,456 12,824 13,254 14,456 12,513
12,661 11,298 12,774 12,880 14,482 12,837 13,299 14,482 12,546
12,661 11,291 12,706 12,847 14,347 12,706 13,210 14,347 12,514
12,661 11,308 12,783 12,880 14,485 12,837 13,299 14,485 12,546
12,682 11,331 12,871 12,924 14,664 12,923 13,377 14,664 12,601
12,693 11,320 12,868 12,935 14,667 12,913 13,399 14,667 12,591
12,704 11,322 12,906 12,968 14,747 12,947 13,432 14,747 12,608
12,714 11,343 12,962 13,012 14,837 13,010 13,510 14,837 12,645
12,736 11,396 13,085 13,089 15,045 13,144 13,655 15,045 12,745
12,747 11,404 13,125 13,122 15,125 13,188 13,700 15,125 12,787
12,736 11,373 13,096 13,122 15,102 13,161 13,711 15,102 12,787
12,736 11,370 13,072 13,111 15,070 13,136 13,700 15,070 12,782
12,725 11,361 13,078 13,133 15,105 13,148 13,722 15,105 12,783
12,725 11,368 13,126 13,144 15,194 13,195 13,755 15,194 12,805
12,725 11,381 13,120 13,122 15,182 13,181 13,711 15,182 12,772
12,725 11,408 13,128 13,111 15,163 13,208 13,711 15,163 12,793
12,747 11,431 13,157 13,155 15,168 13,238 13,755 15,168 12,835
12,757 11,448 13,188 13,177 15,169 13,268 13,789 15,169 12,866
12,768 11,442 13,191 13,188 15,177 13,273 13,789 15,177 12,875
12,768 11,438 13,205 13,199 15,202 13,281 13,800 15,202 12,888
12,811 11,464 13,238 13,221 15,241 13,309 13,811 15,241 12,909
12,843 11,482 13,309 13,276 15,352 13,382 13,911 15,352 12,965
12,843 11,481 13,305 13,276 15,325 13,375 13,911 15,325 12,956
12,865 11,534 13,423 13,342 15,518 13,499 14,033 15,518 13,015
12,876 11,522 13,429 13,364 15,560 13,500 14,056 15,560 13,025
12,865 11,518 13,395 13,331 15,504 13,468 14,000 15,504 13,028
12,854 11,509 13,347 13,309 15,420 13,422 13,955 15,420 12,992
12,843 11,490 13,319 13,287 15,374 13,395 13,933 15,374 12,964
12,854 11,515 13,389 13,309 15,508 13,466 13,978 15,508 13,007
12,865 11,515 13,425 13,342 15,572 13,497 14,033 15,572 13,028
12,865 11,522 13,422 13,353 15,550 13,494 14,045 15,550 13,045
12,865 11,525 13,430 13,342 15,592 13,492 14,022 15,592 13,038
12,876 11,546 13,477 13,353 15,651 13,527 14,045 15,651 13,060
12,897 11,551 13,512 13,364 15,736 13,569 14,067 15,736 13,117
12,886 11,550 13,501 13,353 15,714 13,544 14,022 15,714 13,111
12,876 11,537 13,448 13,309 15,642 13,482 13,955 15,642 13,081
12,865 11,544 13,443 13,287 15,658 13,488 13,922 15,658 13,048
12,854 11,545 13,405 13,265 15,544 13,450 13,866 15,544 13,033
12,854 11,556 13,401 13,265 15,517 13,444 13,855 15,517 13,031
12,843 11,558 13,359 13,232 15,436 13,396 13,777 15,436 13,003
12,843 11,612 13,430 13,221 15,532 13,457 13,766 15,532 13,016
12,854 11,612 13,431 13,232 15,523 13,458 13,766 15,523 13,020
12,854 11,625 13,485 13,265 15,621 13,521 13,844 15,621 13,046
12,854 11,621 13,469 13,276 15,590 13,508 13,844 15,590 13,059
12,865 11,632 13,495 13,276 15,657 13,537 13,866 15,657 13,073
12,876 11,652 13,578 13,320 15,821 13,627 13,955 15,821 13,130
12,919 11,650 13,689 13,408 16,056 13,739 14,100 16,056 13,220
12,940 11,663 13,730 13,452 16,127 13,790 14,156 16,127 13,251
12,962 11,658 13,759 13,463 16,198 13,818 14,189 16,198 13,285
12,983 11,658 13,776 13,496 16,222 13,838 14,223 16,222 13,315
13,005 11,685 13,777 13,485 16,172 13,843 14,211 16,172 13,328
13,026 11,688 13,787 13,507 16,211 13,859 14,256 16,211 13,338
13,059 11,706 13,853 13,540 16,318 13,919 14,312 16,318 13,390
13,069 11,703 13,853 13,540 16,358 13,925 14,312 16,358 13,416
13,080 11,702 13,849 13,551 16,346 13,915 14,300 16,346 13,426
13,091 11,712 13,904 13,573 16,460 13,974 14,334 16,460 13,463
13,123 11,722 13,937 13,595 16,503 14,019 14,378 16,503 13,493
13,134 11,718 13,931 13,584 16,477 14,003 14,356 16,477 13,497
13,166 11,717 13,992 13,628 16,610 14,065 14,423 16,610 13,551
13,209 11,717 14,086 13,694 16,794 14,150 14,512 16,794 13,591
13,198 11,733 14,081 13,694 16,775 14,138 14,512 16,775 13,586
13,188 11,734 14,073 13,672 16,756 14,130 14,490 16,756 13,564
13,209 11,766 14,113 13,716 16,802 14,175 14,534 16,802 13,603
13,231 11,751 14,116 13,705 16,792 14,172 14,534 16,792 13,588
13,209 11,773 14,053 13,683 16,608 14,120 14,456 16,608 13,576
13,209 11,757 14,004 13,672 16,542 14,067 14,445 16,542 13,538
13,241 11,727 13,979 13,716 16,528 14,051 14,479 16,528 13,560
13,177 11,717 13,915 13,617 16,423 13,975 14,356 16,423 13,463
13,252 11,739 14,033 13,738 16,649 14,100 14,523 16,649 13,549
13,263 11,736 14,018 13,760 16,600 14,082 14,523 16,600 13,584
13,198 11,693 13,909 13,672 16,451 13,956 14,434 16,451 13,478
13,177 11,685 13,801 13,617 16,203 13,845 14,356 16,203 13,416
13,155 11,710 13,797 13,551 16,187 13,838 14,278 16,187 13,382
13,134 11,695 13,713 13,518 16,018 13,745 14,211 16,018 13,362
13,134 11,688 13,743 13,529 16,130 13,776 14,223 16,130 13,364
13,166 11,674 13,801 13,595 16,253 13,846 14,300 16,253 13,398
13,241 11,706 13,954 13,672 16,570 14,000 14,401 16,570 13,469
13,274 11,711 13,991 13,716 16,639 14,033 14,479 16,639 13,533
13,263 11,714 13,973 13,716 16,596 14,005 14,479 16,596 13,534
13,284 11,717 14,009 13,738 16,688 14,039 14,501 16,688 13,550
13,306 11,719 14,057 13,771 16,795 14,088 14,534 16,795 13,584
13,349 11,735 14,079 13,804 16,823 14,108 14,590 16,823 13,620
13,360 11,740 14,068 13,848 16,758 14,100 14,657 16,758 13,648
13,382 11,706 13,940 13,834 16,469 13,985 14,658 16,469 13,622
13,301 11,675 13,854 13,738 16,387 13,985 14,539 16,387 13,622
13,336 11,684 13,967 13,834 16,632 13,985 14,646 16,632 13,576
13,347 11,687 13,978 13,870 16,624 14,011 14,670 16,624 13,609
13,371 11,679 14,023 13,894 16,749 14,063 14,742 16,749 13,638
13,382 11,676 13,991 13,906 16,646 14,031 14,742 16,646 13,644
13,417 11,696 14,076 13,955 16,790 14,114 14,814 16,790 13,677
13,440 11,662 14,092 13,955 16,893 14,136 14,826 16,893 13,665
13,464 11,668 14,098 13,991 16,895 14,143 14,874 16,895 13,704
13,522 11,699 14,214 14,087 17,103 14,246 14,969 17,103 13,776
13,545 11,704 14,200 14,099 17,066 14,232 14,969 17,066 13,800
13,557 11,690 14,219 14,135 17,123 14,256 15,029 17,123 13,841
13,580 11,701 14,282 14,171 17,267 14,317 15,101 17,267 13,864
13,592 11,701 14,292 14,195 17,279 14,331 15,137 17,279 13,856
13,604 11,716 14,348 14,232 17,413 14,388 15,184 17,413 13,866
13,604 11,712 14,363 14,268 17,492 14,403 15,232 17,492 13,893
13,580 11,702 14,288 14,244 17,299 14,335 15,172 17,299 13,887
13,557 11,692 14,199 14,183 17,143 14,237 15,053 17,143 13,802
13,534 11,684 14,121 14,111 17,020 14,161 14,945 17,020 13,744
13,545 11,703 14,130 14,147 17,022 14,179 14,957 17,022 13,761
13,557 11,707 14,197 14,159 17,191 14,228 14,969 17,191 13,765
13,592 11,719 14,317 14,256 17,453 14,342 15,113 17,453 13,825
13,615 11,744 14,367 14,292 17,498 14,391 15,172 17,498 13,880
13,627 11,772 14,388 14,316 17,512 14,408 15,196 17,512 13,890
13,627 11,777 14,411 14,328 17,570 14,420 15,196 17,570 13,893
13,615 11,774 14,304 14,292 17,328 14,322 15,101 17,328 13,861
13,615 11,772 14,325 14,304 17,375 14,330 15,125 17,375 13,862
13,662 11,792 14,428 14,388 17,585 14,422 15,256 17,585 13,933
13,662 11,799 14,387 14,388 17,494 14,382 15,208 17,494 13,926
13,673 11,798 14,419 14,400 17,586 14,408 15,208 17,586 13,919
13,720 11,796 14,549 14,484 17,885 14,537 15,352 17,885 13,998
13,755 11,823 14,663 14,557 18,088 14,655 15,459 18,088 14,081
13,767 11,840 14,658 14,569 18,015 14,654 15,447 18,015 14,092
13,813 11,845 14,721 14,629 18,192 14,706 15,507 18,192 14,115
13,813 11,843 14,688 14,629 18,109 14,672 15,495 18,109 14,089
13,778 11,828 14,579 14,569 17,894 14,564 15,376 17,894 14,046
13,778 11,828 14,565 14,533 17,872 14,538 15,316 17,872 14,032
13,802 11,821 14,639 14,593 18,062 14,602 15,400 18,062 14,070
13,813 11,821 14,663 14,617 18,101 14,625 15,447 18,101 14,115
13,790 11,762 14,569 14,569 17,962 14,528 15,376 17,962 14,046
13,790 11,758 14,465 14,521 17,729 14,427 15,268 17,729 14,003
13,778 11,758 14,420 14,496 17,635 14,381 15,220 17,635 13,960
13,813 11,763 14,453 14,521 17,735 14,413 15,256 17,735 13,950
13,836 11,757 14,430 14,557 17,640 14,403 15,280 17,640 13,971
13,860 11,760 14,535 14,617 17,893 14,505 15,400 17,893 14,017
13,883 11,752 14,515 14,641 17,818 14,489 15,424 17,818 14,030
13,918 11,772 14,602 14,701 17,961 14,568 15,507 17,961 14,078
13,953 11,777 14,692 14,785 18,155 14,657 15,603 18,155 14,137
13,976 11,780 14,664 14,809 18,104 14,640 15,627 18,104 14,134
13,965 11,770 14,588 14,725 17,950 14,559 15,555 17,950 14,081
13,895 11,734 14,405 14,617 17,626 14,379 15,400 17,626 13,958
13,918 11,746 14,448 14,665 17,706 14,416 15,435 17,706 13,994
13,895 11,743 14,453 14,605 17,764 14,407 15,376 17,764 13,939
13,848 11,744 14,384 14,545 17,629 14,337 15,268 17,629 13,883
13,836 11,739 14,340 14,521 17,543 14,279 15,196 17,543 13,858
13,802 11,733 14,313 14,448 17,474 14,252 15,149 17,474 13,798
13,802 11,731 14,327 14,460 17,506 14,260 15,184 17,506 13,826
13,825 11,744 14,391 14,472 17,658 14,311 15,172 17,658 13,836
13,836 11,737 14,377 14,521 17,619 14,308 15,208 17,619 13,869
13,848 11,719 14,377 14,569 17,656 14,328 15,280 17,656 13,907
13,755 11,692 14,197 14,496 17,285 14,156 15,149 17,285 13,829
13,638 11,694 14,001 14,352 16,910 13,977 14,897 16,910 13,731
13,604 11,707 14,027 14,256 16,967 13,966 14,802 16,967 13,657
13,557 11,714 13,939 14,171 16,757 13,874 14,670 16,757 13,595
13,499 11,721 13,934 14,135 16,762 13,876 14,670 16,762 13,578
13,487 11,703 13,996 14,183 16,931 13,951 14,790 16,931 13,604
13,522 11,724 14,071 14,256 17,026 14,024 14,885 17,026 13,663
13,534 11,717 14,106 14,280 17,120 14,073 14,909 17,120 13,691
13,534 11,719 14,056 14,280 16,998 14,026 14,897 16,998 13,681
13,522 11,716 14,026 14,244 16,948 13,991 14,874 16,948 13,654
13,440 11,694 13,811 14,123 16,486 13,776 14,658 16,486 13,533
13,406 11,699 13,847 14,087 16,622 13,807 14,658 16,622 13,515
13,475 11,732 13,978 14,183 16,868 13,928 14,778 16,868 13,616
13,499 11,726 14,048 14,256 17,066 13,982 14,838 17,066 13,647
13,510 11,743 14,051 14,244 17,698 13,991 14,826 17,698 13,665
13,522 11,754 14,088 14,244 17,129 14,026 14,862 17,129 13,683
13,487 11,747 14,014 14,207 16,996 13,956 14,790 16,996 13,642
13,499 11,756 14,142 14,244 17,314 14,055 14,850 17,314 13,685
13,499 11,747 14,133 14,232 17,293 14,059 14,874 17,293 13,703
13,499 11,732 14,104 14,244 17,239 14,051 14,874 17,239 13,703
13,475 11,728 14,031 14,159 17,109 13,969 14,730 17,109 13,635
13,475 11,743 14,100 14,171 17,281 14,024 14,778 17,281 13,647
13,545 11,802 14,334 14,328 17,753 14,237 15,005 17,753 13,786
13,580 11,823 14,422 14,400 17,920 14,325 15,113 17,920 13,861
13,604 11,835 14,414 14,424 17,859 14,328 15,149 17,859 13,895
13,685 11,839 14,573 14,581 18,182 14,481 15,364 18,182 14,003
13,755 11,846 14,748 14,761 18,570 14,652 15,591 18,570 14,131
13,755 11,845 14,732 14,737 18,516 14,638 15,543 18,516 14,161
13,732 11,822 14,600 14,653 18,247 14,528 15,459 18,247 14,100
13,767 11,839 14,662 14,701 18,351 14,597 15,519 18,351 14,145
13,790 11,863 14,726 14,761 18,457 14,654 15,579 18,457 14,202
13,836 11,877 14,861 14,858 18,746 14,769 15,699 18,746 14,293
13,825 11,856 14,814 14,858 18,648 14,723 15,675 18,648 14,292
13,848 11,870 14,858 14,894 18,716 14,766 15,710 18,716 14,340
13,871 11,877 14,913 14,942 18,853 14,819 15,794 18,853 14,372
13,860 11,869 14,808 14,882 18,584 14,734 15,675 18,584 14,344
13,860 11,870 14,829 14,894 18,663 14,754 15,687 18,663 14,344
13,883 11,888 14,908 14,954 18,853 14,827 15,818 18,853 14,379
13,895 11,877 14,892 14,990 18,803 14,818 15,866 18,803 14,390
13,906 11,871 14,859 14,966 18,721 14,788 15,842 18,721 14,357
13,953 11,876 14,969 15,062 18,976 14,894 15,997 18,976 14,444
13,941 11,870 14,977 15,086 19,036 14,901 16,057 19,036 14,440
13,953 11,866 14,963 15,074 18,981 14,889 16,033 18,981 14,445
13,953 11,882 14,953 15,050 18,913 14,881 15,997 18,913 14,447
13,988 11,915 15,012 15,074 19,008 14,937 16,021 19,008 14,444
14,000 11,923 15,016 15,074 18,965 14,937 16,021 18,965 14,460
14,034 11,934 15,025 15,074 18,946 14,944 15,974 18,946 14,487
14,034 11,936 14,983 15,050 18,830 14,908 15,926 18,830 14,477
14,069 11,938 15,023 15,098 18,907 14,947 15,997 18,907 14,504
14,116 11,977 15,180 15,207 19,234 15,084 16,129 19,234 14,580
14,151 11,963 15,208 15,267 19,345 15,119 16,237 19,345 14,616
14,174 11,958 15,230 15,279 19,398 15,133 16,225 19,398 14,637
14,198 11,960 15,272 15,303 19,498 15,164 16,284 19,498 14,649
14,256 11,999 15,429 15,411 19,814 15,298 16,416 19,814 14,711
14,326 12,015 15,539 15,520 20,034 15,387 16,524 20,034 14,770
14,337 12,028 15,554 15,532 20,049 15,409 16,559 20,049 14,804
14,314 12,020 15,545 15,520 20,060 15,415 16,583 20,060 14,797
14,314 12,029 15,514 15,496 19,941 15,395 16,524 19,941 14,787
14,361 12,030 15,609 15,592 20,142 15,492 16,691 20,142 14,839
14,337 12,039 15,621 15,556 20,158 15,490 16,679 20,158 14,846
14,279 12,035 15,438 15,460 19,708 15,321 16,488 19,708 14,770
14,314 12,035 15,595 15,556 20,105 15,460 16,643 20,105 14,828
14,302 12,034 15,528 15,532 19,941 15,406 16,583 19,941 14,861
14,302 12,019 15,477 15,520 19,826 15,357 16,524 19,826 14,840
14,326 12,030 15,532 15,544 19,908 15,397 16,583 19,908 14,856
14,361 12,017 15,500 15,532 19,859 15,377 16,571 19,859 14,849
14,396 12,040 15,586 15,616 19,994 15,448 16,655 19,994 14,907
14,430 12,052 15,718 15,725 20,289 15,576 16,834 20,289 14,980
14,489 12,090 15,869 15,845 20,579 15,713 16,990 20,579 15,098
14,489 12,112 15,849 15,845 20,473 15,699 17,002 20,473 15,116
14,512 12,112 15,918 15,905 20,625 15,762 17,097 20,625 15,141
14,489 12,121 15,832 15,845 20,374 15,681 17,050 20,374 15,120
14,524 12,122 15,893 15,881 20,515 15,738 17,121 20,515 15,144
14,535 12,132 15,942 15,929 20,583 15,777 17,193 20,583 15,184
14,559 12,124 15,950 15,977 20,621 15,789 17,289 20,621 15,204
14,582 12,127 16,002 16,001 20,787 15,835 17,372 20,787 15,200
14,652 12,149 16,121 16,146 21,031 15,961 17,576 21,031 15,316
14,663 12,152 16,081 16,122 20,920 15,928 17,492 20,920 15,292
14,605 12,138 15,924 15,953 20,554 15,779 17,241 20,554 15,191
14,559 12,136 15,890 15,869 20,501 15,730 17,133 20,501 15,120
14,640 12,173 16,109 16,074 20,973 15,932 17,384 20,973 15,244
14,675 12,180 16,161 16,158 21,032 15,999 17,456 21,032 15,316
14,710 12,180 16,193 16,182 21,116 16,038 17,480 21,116 15,321
14,698 12,175 16,170 16,170 21,082 16,020 17,468 21,082 15,315
14,710 12,192 16,157 16,146 21,030 16,006 17,396 21,030 15,317
14,745 12,211 16,229 16,194 21,163 16,073 17,468 21,163 15,344
14,826 12,228 16,350 16,302 21,392 16,203 17,647 21,392 15,431
14,850 12,242 16,383 16,339 21,440 16,240 17,671 21,440 15,460
14,815 12,181 16,263 16,278 21,280 16,136 17,623 21,280 15,373
14,815 12,178 16,279 16,278 21,352 16,141 17,683 21,352 15,349
14,838 12,175 16,307 16,302 21,398 16,179 17,767 21,398 15,362
14,920 12,182 16,393 16,411 21,579 16,269 17,863 21,579 15,444
14,896 12,175 16,309 16,387 21,375 16,203 17,779 21,375 15,446
14,803 12,139 16,108 16,230 11,990 16,002 17,564 11,990 15,337
14,803 12,149 16,139 16,206 21,062 16,006 17,480 21,062 15,303
14,792 12,141 16,049 16,158 20,828 15,919 17,396 20,828 15,288
14,780 12,157 16,020 16,122 20,731 15,889 17,372 20,731 15,263
14,792 12,184 16,068 16,146 20,793 15,923 17,408 20,793 15,265
14,722 12,192 15,862 15,941 20,256 15,722 17,121 20,256 15,159
14,722 12,216 15,954 15,977 20,521 15,799 17,169 20,521 15,156
14,792 12,213 16,079 16,110 20,825 15,943 17,384 20,825 15,235
14,861 12,205 16,206 16,242 21,128 16,084 17,576 21,128 15,327
14,803 12,189 16,069 16,122 20,807 15,956 17,420 20,807 15,271
14,768 12,175 16,025 16,050 20,774 15,906 17,360 20,774 15,197
14,792 12,168 16,008 16,050 20,697 15,898 17,360 20,697 15,185
14,780 12,174 15,957 15,977 20,537 15,846 17,253 20,537 15,157
14,792 12,173 15,968 15,989 20,556 15,852 17,277 20,556 15,150
14,780 12,202 15,911 15,917 20,333 15,785 17,169 20,333 15,088
14,768 12,192 15,863 15,881 20,239 15,737 17,145 20,239 15,019
14,896 12,212 16,119 16,074 20,872 15,996 17,408 20,872 15,150
14,920 12,203 16,139 16,110 20,884 16,036 17,444 20,884 15,211
14,920 12,205 16,161 16,146 20,952 16,061 17,504 20,952 15,234
14,931 12,204 16,150 16,182 20,912 16,065 17,552 20,912 15,274
14,966 12,212 16,180 16,218 20,962 16,093 17,623 20,962 15,306
15,001 12,213 16,212 16,242 21,017 16,111 17,659 21,017 15,328
14,966 12,208 16,086 16,134 20,689 15,982 17,492 20,689 15,260
14,920 12,204 16,014 16,062 20,545 15,906 17,420 20,545 15,186
15,001 12,239 16,156 16,194 20,800 16,032 17,552 20,800 15,248
15,024 12,248 16,145 16,218 20,711 16,035 17,540 20,711 15,283
15,141 12,306 16,409 16,387 21,295 16,296 17,803 21,295 15,422
15,164 12,312 16,406 16,423 21,236 16,310 17,839 21,236 15,440
15,222 12,305 16,451 16,495 21,333 16,356 17,898 21,333 15,485
15,222 12,311 16,473 16,519 21,406 16,396 17,982 21,406 15,519
15,281 12,328 16,535 16,603 21,517 16,464 18,090 21,517 15,559
15,269 12,316 16,488 16,579 21,439 16,413 18,090 21,439 15,538
15,281 12,334 16,449 16,567 21,271 16,368 17,994 21,271 15,567
15,281 12,308 16,376 16,531 21,123 16,295 17,898 21,123 15,547
15,292 12,327 16,453 16,591 21,295 16,361 17,958 21,295 15,590
15,362 12,331 16,528 16,688 21,478 16,438 18,078 21,478 15,632
15,397 12,331 16,496 16,712 21,342 16,409 18,078 21,342 15,660
15,467 12,354 16,590 16,808 21,527 16,507 18,138 21,527 15,717
15,490 12,363 16,638 16,844 21,641 16,564 18,209 21,641 15,744
15,549 12,372 16,692 16,941 21,745 16,635 18,365 21,745 15,802
15,607 12,392 16,780 17,001 21,917 16,716 18,425 21,917 15,840
15,630 12,401 16,873 17,061 22,154 16,805 18,556 22,154 15,883
15,584 12,355 16,757 17,013 21,950 16,711 18,556 21,950 15,847
15,560 12,349 16,733 16,953 21,878 16,682 18,532 21,878 15,790
15,537 12,331 16,682 16,917 21,798 16,638 18,496 21,798 15,755
15,560 12,331 16,699 16,953 21,823 16,650 18,532 21,823 15,786
15,572 12,364 16,729 16,965 21,872 16,673 18,484 21,872 15,793
15,560 12,354 16,682 16,929 21,770 16,636 18,425 21,770 15,764
15,490 12,356 16,591 16,844 21,534 16,541 18,221 21,534 15,713
15,374 12,332 16,456 16,676 21,284 16,373 17,958 21,284 15,572
15,432 12,342 16,565 16,760 21,542 16,489 18,126 21,542 15,602
15,514 12,342 16,724 16,917 21,918 16,666 18,401 21,918 15,677
15,490 12,349 16,701 16,880 21,834 16,650 18,317 21,834 15,665
15,339 12,388 16,538 16,579 21,433 16,464 17,934 21,433 15,484
15,316 12,395 16,466 16,519 21,229 16,368 17,803 21,229 15,413
14,838 12,455 15,857 15,821 19,772 15,695 16,739 19,772 14,928
14,920 12,416 16,171 15,953 20,783 16,009 17,157 20,783 15,016
15,013 12,444 16,217 16,098 20,727 16,104 17,325 20,727 15,147
14,908 12,465 16,088 15,905 20,382 15,957 17,038 20,382 15,020
14,978 12,472 16,195 16,062 20,629 16,073 17,253 20,629 15,101
15,129 12,448 16,409 16,254 21,179 16,317 17,600 21,179 15,280
15,153 12,434 16,417 16,278 21,219 16,337 17,647 21,219 15,304
15,176 12,438 16,456 16,327 21,268 16,393 17,731 21,268 15,339
15,164 12,454 16,421 16,302 21,163 16,354 17,635 21,163 15,298
15,048 12,455 16,284 16,146 20,930 16,203 17,372 20,930 15,138
15,036 12,455 16,232 16,122 20,788 16,139 17,301 20,788 15,100
15,013 12,455 16,237 16,098 20,847 16,137 17,229 20,847 15,082
14,896 12,468 16,054 15,905 20,450 15,938 16,858 20,450 14,887
14,908 12,476 16,128 15,929 20,693 16,001 16,966 20,693 14,908
14,955 12,478 16,239 16,038 20,958 16,117 17,157 20,958 14,977
15,071 12,487 16,426 16,218 21,362 16,329 17,432 21,362 15,154
15,036 12,487 16,356 16,170 21,184 16,251 17,289 21,184 15,128
15,059 12,500 16,402 16,206 21,331 16,284 17,289 21,331 15,101
15,118 12,493 16,534 16,315 21,656 16,424 17,492 21,656 15,203
15,164 12,511 16,582 16,375 21,750 16,471 17,492 21,750 15,273
15,071 12,497 16,416 16,206 21,379 16,294 17,181 21,379 15,130
15,059 12,498 16,442 16,206 21,475 16,305 17,157 21,475 15,098
15,071 12,492 16,453 16,242 21,498 16,329 17,229 21,498 15,117
15,106 12,498 16,492 16,266 21,584 16,368 17,277 21,584 15,148
15,199 12,505 16,662 16,435 22,022 16,556 17,492 22,022 15,250
15,199 12,503 16,650 16,423 21,953 16,549 17,420 21,953 15,277
15,222 12,516 16,713 16,435 22,073 16,600 17,480 22,073 15,306
15,211 12,524 16,703 16,459 21,991 16,594 17,528 21,991 15,323
15,234 12,496 16,785 16,519 22,233 16,684 17,683 22,233 15,369
15,246 12,484 16,772 16,543 22,202 16,685 17,755 22,202 15,384
15,211 12,493 16,713 16,483 22,053 16,612 17,588 22,053 15,329
15,153 12,519 16,648 16,387 21,919 16,519 17,396 21,919 15,251
15,071 12,546 16,517 16,230 21,589 16,354 17,097 21,589 15,093
15,083 12,574 16,514 16,230 21,555 16,326 16,918 21,555 15,048
15,094 12,564 16,583 16,206 21,781 16,384 16,870 21,781 15,064
15,118 12,569 16,624 16,290 22,293 16,456 17,062 22,293 15,111
15,141 12,559 16,615 16,302 21,831 16,455 17,073 21,831 15,179
15,094 12,574 16,539 16,230 21,601 16,359 16,942 21,601 15,114
15,036 12,588 16,464 16,134 21,408 16,265 16,882 21,408 15,022
15,059 12,588 16,516 16,182 21,565 16,315 16,906 21,565 15,030
15,048 12,591 16,401 16,134 21,236 16,203 16,846 21,236 14,988
15,048 12,591 16,351 16,122 21,091 16,142 16,798 21,091 14,963
15,048 12,591 16,383 16,134 21,176 16,175 16,822 21,176 14,986
15,141 12,585 16,535 16,302 21,566 16,364 17,062 21,566 15,115
15,246 12,583 16,692 16,471 21,963 16,546 17,313 21,963 15,239
DEC 1997 15,292 12,603 16,734 16,515 21,954 16,610 17,438 21,954 15,278
</TABLE>
Past performance is not predictive of future performance.
Accordingly, our view is that interest rates are likely to decline sharply. We
acted on this last fall by buying zero coupon bond funds in all three
Portfolios. So far these positions have contributed greatly, producing gains
while reducing overall volatility. Of course, we continued to maintain all year
our large positions in Northeast Investors Trust, the best (in our opinion) junk
bond fund around. It returned 13.9% in 1997.
The Bottom Line
When the dust all settled, the results were good. As the graphs illustrate, the
MultiFunds did well against the indices that are most comparable to not only
what our funds own, but also how they are managed. The Aggressive Allocation
Portfolio returned 19.0% in 1997 versus 12.2% for the Lipper Global Flexible
Fund Index. The Moderate Allocation Portfolio gained 19.4% versus 18.8% for the
Lipper Flexible Fund Index. These two comparative indices are highlighted
because they provide a relevant picture of what our type of funds do. The
Flexible Fund Index covers funds that aim for high total return by allocating
their Portfolios among a wide range of asset classes. The Global Flexible Fund
Index is similar to the Flexible Fund Index, with at least 25% of assets in
securities traded outside the U.S. The S&P 500, an index of the largest U.S.
stocks gained 33.4%. We include this index in our comparisons to satisfy
regulatory requirements. We do not believe it to be an accurate or relevant
comparison to the content objective or risk levels of either the Moderate or
Aggressive Portfolio.
(The S&P is composed solely of the largest U.S. stocks. It is 100% "large cap
U.S." The Moderate and Aggressive Portfolios, on the other hand, are much more
widely diversified, holding funds that invest in small U.S. stocks, foreign
stocks, and bonds, in addition to large U.S. stocks. The actual large cap U.S.
stock exposure in our Portfolios has averaged well under 50%.)
The Conservative Allocation Portfolio returned 14.3% for the year, almost
exactly midway between the two indices we use as comparisons: Lipper Balanced
Fund Index (+20.1%) and the Lehman Intermediate Bond Index (+7.7%). These two
indices have little in common. The reason we use both is that the Markman
Conservative Allocation Portfolio, which in many respects looks like a balanced
fund, has an additional mission: reduction of short-term volatility. Our aim is
to be 25-50% less volatile than the average balanced fund, often achieving
degrees of volatility more often associated with an intermediate-term bond fund.
Naturally, attempts to reduce short-term volatility often result in the
reduction of upside potential as well. Note that in the bar graph comparison
made later in this report we use as a comparison a blended index of 75% Lipper
Balanced and 25% Lehman Intermediate Government Bond.
- --------------------------------------------------------------------------------
Markman 2
<PAGE>
What We Expect in 1998
Our view at Markman is that the markets have seriously misjudged the impact of
the Asian debacle. Western civilization is not teetering on the brink of
collapse. Indeed, in our view, quite the opposite is the case: we may be poised
for a truly explosive upside. Some talking points to bring to the office water
cooler debate:
The Stronger Economy
The U.S. economy is almost guaranteed to surprise everyone with its strength in
1998. Why? Consumer spending is over two-thirds of Gross National Product and
this year the consumer will truly be king. Prices will stay down and inflation
will probably be even lower than last year. At the same time, wages will
continue to creep up. Additionally, as interest rates fall, we'll see a flood of
home mortgage refinancing. This will put an additional $100-200 per month of
real money in millions of consumers' pockets. The net results will be a consumer
led continuation of the current economic expansion - without inflation.
Asia Not the Whole Story
Financial gloomsters continue to focus on the negative effects of Asian
meltdowns. Their glass is not only half empty, there's a hole in the bottom!
Without overly minimizing the seriousness of the crisis, let me suggest that in
all likelihood we'll somehow muddle through it all. Yes, there will be losers.
Cheap Asian imports will hurt commodity-based producers. But there will also be
winners. Companies that assemble products using Asian components will find their
cost of goods reduced, thus helping profit margins. Sales to Asia will slow, but
World trade is far more complex and self-correcting than TV
talking heads sometimes make it out to be.
business with Europe will almost certainly increase. In other words, world trade
is far more complex and self-correcting than TV talking heads sometimes make it
out to be.
Lower Rates: A Positive
One clear effect of the Asian crisis will be to keep prices down in 1998. Our
guess is that inflation will run under 1.5%. At that level, long-term interest
rates, currently just below 6%, are too high. Long rates could fall to 5% this
year. As interest rates fall, you'll hear many observers begin to note that
price earnings multiples could rise.
Multiple expansion, combined with better than expected earnings news, could
provide the positive surprises that fuel a major market rally. The best and
safest growth play will be the U.S. Yes, the rest of the world is not about to
close up shop, and there will be big opportunities in selected overseas markets.
But for there to be any sustainable move internationally, the U.S. must do well.
In other words, globally financially speaking, "if Wall Street ain't happy,
ain't nobody happy." We won't totally get out of foreign holdings (extreme moves
rarely pay off), but the real engines in the Portfolios are most likely made in
the USA.
So how much of this will be 100% correct one year from now? Certainly not all.
Surprises are inevitable. And by their very nature, are unforeseeable. (That's
why they're called surprises!) I will assure you that if the evidence points
elsewhere anytime in 1998, we'll be awake and ready to shift with the winds of
change.
As always, thanks for your confidence as shareholders. Call or write anytime.
/s/ Bob Markman
December 31, 1997
- --------------------------------------------------------------------------------
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.
Fourth quarter weakness in international markets, small caps, and technology
stocks acted as a drag on the Aggressive Portfolio over the past few months.
Even so, we finished 1997 well ahead of our targeted benchmark, the Lipper
Global Flexible Fund Index (18.96% vs. 12.16%).
There were three tactical moves made in this last quarter that you should be
aware of. First, we continued to reduce our international exposure, particularly
in areas outside Western Europe. We believe U. S. stocks will outperform foreign
holdings in 1998 and therefore will likely keep our international holdings below
average levels for the foreseeable future.
The most significant tactical move has been the inclusion of a zero coupon bond
fund position. This may seem unusual, given the Portfolio's fully invested
equity orientation, but does make sense when viewed simply as a dynamic growth
opportunity. Our outlook calls for long-term interest rates to decline to 5% or
lower this year. If that occurs, these bond positions will give us stock-like
returns of 20-30%.
Lastly, we continue to be long-term bulls on technology stocks and have used the
current short-term panic mentality as a good excuse to add to these positions.
- --------------------------------------------------------------------------------
Content Breakdown
- --------------------------------------------------------------------------------
Unaudited
U.S. Stocks
Bonds
Cash
Intl.
Stocks
U.S. Stocks ............. 68%
International Stocks .... 9%
Bonds ................... 13%
Cash .................... 10%
Portfolio Comparison
[Graphic Omitted]
Markman Aggressive Lipper Global Flexible
Allocation Portfolio Fund Index
-------------------- ----------
12 Mos. ending 12/97 19.0% 12.2%
2 years annualized 15.3% 13.4%
Since Inception annualized* 21.0% 15.7%
* from February 1, 1995
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
Markman Aggressive Allocation Portfolio - December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Shares Market Value % of Total Status**
(Unaudited)
<S> <C> <C> <C> <C>
Oakmark Small Cap Fund* ........................ 860,416 $ 16,709,270 19.8% --
PBHG Growth Fund* .............................. 550,474 13,976,533 16.6% +
Franklin Mutual European Fund - Class Z ........ 667,015 8,404,390 10.0%
Steinroe Growth Stock Fund* .................... 221,494 7,641,537 9.0%
American Century Benham Target Series 2025 Fund* 218,292 5,575,181 6.6% new
Franklin Mutual Financial Fund - Class Z ....... 416,847 5,118,875 6.1% +
American Century Benham Target Series 2020 Fund* 135,808 4,199,174 5.0% new
Franklin Mutual Shares Fund - Class Z .......... 190,573 4,057,304 4.8% --
The Rydex Series Nova Fund* .................... 153,697 3,831,661 4.5% --
Transamerica Premium Equity Fund* .............. 170,829 3,165,458 3.7% new
Yacktman Fund .................................. 217,586 3,057,090 3.6% --
The Rydex Series OTC Fund ...................... 131,660 2,943,917 3.5%
CGM Focus Fund* ................................ 266,947 2,503,964 3.0% +
T. Rowe Price Science & Technology Fund* ....... 67,101 1,829,183 2.2% --
Miscellaneous - Money Market Fund .............. 1,472,146 1,472,146 1.7% +
------------ -----
Total Investments (Cost $78,340,791) ........... 84,485,683 100.1%
Other Assets and Liabilities, Net .............. (84,517) (0.1)%
------------ -----
Net Assets ..................................... $ 84,401,166 100.0%
============ =====
</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 4
<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.
As in the Aggressive Portfolio, our
allocations to small caps and international funds (as scaled back as they were)
slowed our progress in the past quarter. We nevertheless finished the year ahead
of our targeted benchmark, the Lipper Flexible Fund Index (19.38% vs. 18.77%).
Nineteen ninety-seven proved to be a year when the strategy of "blending"
aggressive and conservative tactical allocations paid off. This will usually be
the case when we go through a period split between euphoria and despair in the
markets.
In the past few months, our major changes have been to decrease international
exposure (which helped), increase small cap exposure (which hurt), and increase
our bond positions (which helped). As we move into 1998, continued adjustments
will likely reflect our barbell blend of cautious ideas culled from the
Conservative Portfolio and high growth potential positions borrowed from the
Aggressive Portfolio. Look for more bonds, some tech holdings, more large cap
U.S., and less international.
- --------------------------------------------------------------------------------
Content Breakdown
- --------------------------------------------------------------------------------
Unaudited
Bonds
U.S. Stocks
Intl. Stocks
Cash
U.S. Stocks ............. 53%
International Stocks .... 14%
Bonds ................... 21%
Cash .................... 12%
PORTFOLIO COMPARISON
[Graphic Omitted]
Markman Moderate Lipper Flexible
Allocation Portfolio Fund Index
-------------------- ----------
12 mos. ending 12/97 19.4% 18.8%
2 years annualized 15.2% 16.4%
Since inception annualized* 18.8% 19.0%
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
Markman Moderate Allocation Portfolio - December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Shares Market Value % of Total Status**
(Unaudited)
<S> <C> <C> <C> <C>
Franklin Mutual Discovery Fund - Class Z ....... 623,257 $11,773,332 13.6%
Franklin Mutual Beacon Fund - Class Z .......... 811,651 11,460,517 13.3%
Yacktman Fund .................................. 796,773 11,194,659 13.0%
Northeast Investors Trust ...................... 911,828 10,622,794 12.3%
Oakmark Small Cap Fund* ........................ 491,110 9,537,357 11.0% +
Cohen & Steers Realty Shares ................... 186,538 9,360,473 10.8% +
American Century Benham Target Series 2020 Fund* 288,731 8,927,577 10.3% new
The Rydex Series Nova Fund* .................... 300,250 7,485,230 8.7% --
Janus Worldwide Fund ........................... 107,244 4,051,682 4.7% --
Miscellaneous - Money Market Fund .............. 1,623,210 1,623,211 1.9% +
------------ -----
Total Investments (Cost $80,690,145) ........... 86,036,832 99.6%
Other Assets and Liabilities, Net .............. 351,461 0.4%
------------ -----
Net Assets ..................................... $ 86,388,293 100.0%
============ =====
</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.
As cautiously positioned as we were going into the fourth quarter, the violent
international and small cap declines still affected the Conservative Portfolio
more than we liked to see short term. Overall, though, our results for the year
look good. Although we trailed our targeted benchmark, a blend consisting of 75%
Lipper Balanced Fund Index and 25% Lehman Intermediate Bond Index (14.27% vs.
17.00%), we think our approach remains more diversified and lower risk. This
will, we believe, become increasingly obvious in the volatile markets ahead.
The current tactical story for the Conservative Allocation Portfolio is much the
same as our other funds. International exposure has been ratcheted down to its
lowest level ever. Conversely, our bond exposure is at its highest level ever.
As the new year begins, we are continuing to shift assets to make this Portfolio
as stable as we can, given these troubled markets. It would not surprise us if
most of the assets by next quarter's report were in bonds and cash.
- --------------------------------------------------------------------------------
Content Breakdown
- --------------------------------------------------------------------------------
Unaudited
Bonds
U.S. Stocks
Cash
Intl.
Stocks
U.S. Stocks ............. 48%
International Stocks .... 7%
Bonds ................... 32%
Cash .................... 13%
PORTFOLIO
[Graphic Omitted]
Markman Conservative Blended**
Allocation Portfolio Index
-------------------- -----
12 mos.ending 12/97 14.3% 17.0%
2 years annualized 13.8% 13.8%
Since inception annualized* 15.7% 16.5%
* from February 1, 1995
** A blend consisting of 75% Lipper Balanced Fund and 25% Lehman Intermediate
Bond Index.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
Markman Conservative Allocation Portfolio - December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Shares Market Value % of Total Status**
(Unaudited)
<S> <C> <C> <C> <C>
Northeast Investors Trust ...................... 531,313 $ 6,189,801 16.9%
Dodge & Cox Balanced Fund ...................... 81,879 5,467,869 14.9%
Franklin Mutual Qualified Fund - Class Z ....... 251,873 4,579,058 12.5% --
T. Rowe Price Small-Cap Value Fund ............. 175,628 4,109,695 11.2% --
Cohen & Steers Realty Shares ................... 81,797 4,104,572 11.2% +
SoGen International Fund, Inc. ................. 152,779 3,888,226 10.6% --
American Century Benham Target Series 2010 Fund* 58,881 3,107,166 8.5% new
Yacktman Fund .................................. 173,116 2,432,283 6.6% --
American Century Benham Target Series 2020 Fund* 34,422 1,064,315 2.9% new
The Merger Fund ................................ 61,894 875,795 2.4% --
Miscellaneous - Money Market Fund .............. 595,445 595,444 1.6%
------------ -----
Total Investments (Cost $34,440,317) ........... 36,414,224 99.3%
Other Assets and Liabilities, Net .............. 265,967 0.7%
------------ -----
Net Assets ..................................... $ 36,680,191 100.0%
============ =====
</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 6
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Statements of Assets and Liabilities o December 31, 1997
Markman Markman Markman
Conservative Moderate Aggressive
Allocation Allocation Allocation
Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
<S> <C> <C> <C>
At acquisition cost ............................... $34,440,318 $ 80,690,145 $ 78,340,791
=========== ============ ============
At value (Note 1) ................................. $36,414,224 $ 86,036,832 $ 84,485,683
Receivable for capital shares sold ................... 356,864 588,476 216,722
Dividends receivable ................................. 1,824 2,903 4,604
----------- ------------ ------------
Total Assets ...................................... 36,772,912 86,628,211 84,707,009
----------- ------------ ------------
- ---------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for capital shares redeemed .................. 13,479 55,055 41,898
Distributions payable to shareholders ................ 53,253 119,501 199,549
Payable to affiliates (Note 3) ....................... 25,989 65,362 64,396
----------- ------------ ------------
Total Liabilities ................................. 92,721 239,918 305,843
----------- ------------ ------------
- ---------------------------------------------------------------------------------------------------------
NET ASSETS ........................................... $36,680,191 $ 86,388,293 $ 84,401,166
=========== ============ ============
Net assets consist of:
Paid-in capital ...................................... $34,617,111 $ 81,088,405 $ 78,586,017
Undistributed net investment income .................. 89,174 -- 21,208
Distributions in excess of net realized gains ........ -- (46,799) (350,951)
Net unrealized appreciation on investments ........... 1,973,906 5,346,687 6,144,892
----------- ------------ ------------
Net Assets ........................................ $36,680,191 $ 86,388,293 $ 84,401,166
=========== ============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) (Note 5) 3,104,084 7,258,219 6,625,749
=========== ============ ============
Net asset value, redemption price and offering
price per share (Note 1) .......................... $ 11.82 $ 11.90 $ 12.74
=========== ============ ============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
Markman 7
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Operations o For the Year Ended December 31, 1997
Markman Conservative Markman Moderate Markman Aggressive
Allocation Portfolio Allocation Portfolio Allocation Portfolio
INVESTMENT INCOME
<S> <C> <C> <C>
Dividend income ........................................................ $1,291,468 $ 2,444,243 $ 839,034
---------- ----------- -----------
EXPENSES
Investment advisory fees ................................................ 354,506 784,937 779,884
Independent trustees' fees .............................................. 13,750 13,750 13,750
---------- ----------- -----------
Total Expenses (Note 3) .............................................. 368,256 798,687 793,634
---------- ----------- -----------
NET INVESTMENT INCOME ................................................... 923,212 1,645,556 45,400
---------- ----------- -----------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions ........................ 1,417,864 6,181,757 7,715,287
Capital gain distributions from other investment companies ........... 1,498,259 3,734,672 2,595,928
Net change in unrealized appreciation/depreciation on investments .... 1,268,051 3,184,691 3,812,227
---------- ----------- -----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ........................ 4,184,174 13,101,120 14,123,442
---------- ----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS .............................. $5,107,386 $14,746,676 $14,168,842
========== =========== ===========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets o For the Years Ended December 31, 1997 and December 31, 1996
Markman Conservative Markman Moderate
Allocation Portfolio Allocation Portfolio
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1997 Dec. 31, 1996
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income .......................... $ 923,212 $ 964,793 $ 1,645,556 $ 1,110,324
Net realized gains from security transactions .. 1,417,864 612,693 6,181,757 1,942,355
Capital gain distributions from other
investment companies ........................ 1,498,259 1,573,569 3,734,672 3,505,633
Net change in unrealized appreciation/
depreciation on investments ................. 1,268,051 530,876 3,184,691 797,362
------------ ------------ ------------ ------------
Net increase in net assets from operations ..... 5,107,386 3,681,931 14,746,676 7,355,674
------------ ------------ ------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ........... (835,373) (963,458) (1,645,585) (1,110,295)
Distributions in excess of net investment
income (Note 1) ............................. (416,485) (627,137) (1,325,397) (860,538)
Distributions from net realized gains .......... (2,379,863) (1,678,900) (8,443,248) (4,782,033)
------------ ------------ ------------ ------------
Decrease in net assets from distributions
to shareholders ............................. (3,631,721) (3,269,495) (11,414,230) (6,752,866)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (Note 5):
Proceeds from shares sold ...................... 12,294,435 49,145,757 18,522,359 70,199,331
Net asset value of shares issued in
reinvestment of distributions to shareholders 3,578,467 3,199,781 11,294,729 6,679,202
Payments for shares redeemed ................... (23,247,508) (20,031,002) (25,388,050) (37,842,170)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from
capital share transactions .................. (7,374,606) 32,314,536 4,429,038 39,036,363
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ........ (5,898,941) 32,726,972 7,761,484 39,639,171
NET ASSETS:
Beginning of year .............................. 42,579,132 9,852,160 78,626,809 38,987,638
------------ ------------ ------------ ------------
End of year .................................... $ 36,680,191 $ 42,579,132 $ 86,388,293 $ 78,626,809
============ ============ ============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ............ $ 89,174 $ 1,335 $ -- $ 29
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Markman Aggressive
Allocation Portfolio
Year Ended Year Ended
Dec. 31, 1997 Dec. 31, 1996
FROM OPERATIONS:
<S> <C> <C>
Net investment income .......................... $ 45,400 $ 309,914
Net realized gains from security transactions .. 7,715,287 1,705,972
Capital gain distributions from other
investment companies ........................ 2,595,928 3,846,983
Net change in unrealized appreciation/
depreciation on investments ................. 3,812,227 2,238,283
------------ ------------
Net increase in net assets from operations ..... 14,168,842 8,101,152
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ........... (24,224) (309,882)
Distributions in excess of net investment
income (Note 1) ............................. (1,125,463) (689,085)
Distributions from net realized gains .......... (9,531,600) (4,868,973)
------------ ------------
Decrease in net assets from distributions
to shareholders ............................. (10,681,287) (5,867,940)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (Note 5):
Proceeds from shares sold ...................... 19,230,794 80,691,707
Net asset value of shares issued in
reinvestment of distributions to shareholders 10,481,739 5,792,545
Payments for shares redeemed ................... (33,127,820) (46,714,062)
------------ ------------
Net increase (decrease) in net assets from
capital share transactions .................. (3,415,287) 39,770,190
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ........ 72,268 42,003,402
NET ASSETS:
Beginning of year .............................. 84,328,898 42,325,496
------------ ------------
End of year .................................... $ 84,401,166 $ 84,328,898
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ............ $ 21,208 $ 32
============ ============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
Markman 8
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
MARKMAN CONSERVATIVE ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS December 31, December 31, December 31,
Per Share Data for a Share Outstanding Throughout Each Period 1997 1996 1995(A)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period .......................... $ 11.49 $ 10.97 $ 10.00
---------- ---------- ----------
Income from investment operations:
Net investment income ........................................ 0.33 0.28 0.19
Net realized and unrealized gains on investments ............. 1.31 1.19 1.61
---------- ---------- ----------
Total from investment operations ................................ 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 ................................ $ 11.82 $ 11.49 $ 10.97
========== ========== ==========
Total return .................................................... 14.27% 13.41% 18.00%
========== ========== ==========
Net assets at end of period (000's) ............................. $ 36,680 $ 42,579 $ 9,852
========== ========== ==========
Ratio of expenses to average net assets ......................... 0.95% 0.95% 0.95%(B)
Ratio of net investment income to average net assets ............ 2.38% 3.21% 3.02%(B)
Portfolio turnover rate ......................................... 48% 104% 176%
MARKMAN MODERATE ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
- -----------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period .......................... $ 11.49 $ 11.31 $ 10.00
---------- ---------- ----------
Income from investment operations:
Net investment income ........................................ 0.26 0.18 0.06
Net realized and unrealized gains on investments ............. 1.96 1.08 2.39
---------- ---------- ----------
Total from investment operations ................................ 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 ................................ $ 11.90 $ 11.49 $ 11.31
========== ========== ==========
Total return .................................................... 19.38% 11.11% 24.50%
========== ========== ==========
Net assets at end of period (000's) ............................. $ 86,388 $ 78,627 $ 38,988
========== ========== ==========
Ratio of expenses to average net assets ......................... 0.95% 0.95% 0.95%(B)
Ratio of net investment income to average net assets ............ 1.96% 1.34% 0.77%(B)
Portfolio turnover rate ......................................... 82% 280% 141%
MARKMAN AGGRESSIVE ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
- -----------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period .......................... $ 12.26 $ 11.79 $ 10.00
---------- ---------- ----------
Income from investment operations:
Net investment income ........................................ 0.01 0.05 0.01
Net realized and unrealized gains on investments ............. 2.32 1.34 3.11
---------- ---------- ----------
Total from investment operations ................................ 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 ................................ $ 12.74 $ 12.26 $ 11.79
========== ========== ==========
Total return .................................................... 18.96% 11.72% 31.21%
========== ========== ==========
Net assets at end of period (000's) ............................. $ 84,401 $ 84,329 $ 42,325
========== ========== ==========
Ratio of expenses to average net assets ......................... 0.95% 0.95% 0.95%(B)
Ratio of net investment income to average net assets ........... 0.05% 0.34% 0.15%(B)
Portfolio turnover rate ......................................... 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 -- 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 ("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 share- holders) 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 December 31, 1997:
- --------------------------------------------------------------------------------
Markman Markman Markman
Conservative Moderate Aggressive
Allocation Allocation Allocation
Portfolio Portfolio Portfolio
--------- --------- ---------
Gross unrealized appreciation $ 2,169,609 $ 5,461,259 $ 6,674,117
Gross unrealized depreciation (195,703) (161,374) (880,194)
------------ ------------ ------------
Net unrealized appreciation $ 1,973,906 $ 5,299,885 $ 5,793,923
============ ============ ============
Federal income tax cost of
portfolio investments $ 34,440,318 $ 80,736,947 $ 78,691,760
============ ============ ============
- --------------------------------------------------------------------------------
Markman 10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. Investment Transactions
During the year ended December 31, 1997, purchases and proceeds from sales of
portfolio securities, other than short-term investments, amounted to $18,384,163
and $27,753,976, respectively, for the Markman Conservative Allocation
Portfolio, $67,906,523 and $70,940,445, respectively, for the Markman Moderate
Allocation Portfolio, and $115,089,562 and $127,131,897, 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 year ending December 31, 1997, 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 for the years ended December 31, 1997 and December 31, 1996.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MARKMAN CONSERVATIVE MARKMAN MODERATE MARKMAN AGGRESSIVE
ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO
Year Ended, Year Ended, Year Ended, Year Ended, Year Ended, Year Ended,
Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1997 Dec. 31, 1996
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,007,092 4,224,322 1,475,542 5,984,900 1,394,595 6,577,451
Shares issued in reinvestment
of distributions to shareholders 302,747 278,484 949,137 581,306 822,743 472,475
Shares redeemed (1,912,551) (1,694,000) (2,009,044) (3,169,616) (2,470,930) (3,759,415)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
shares outstanding (602,712) 2,808,806 415,635 3,396,590 (253,592) 3,290,511
Shares outstanding, beginning of year 3,706,796 897,990 6,842,584 3,445,994 6,879,341 3,588,830
---------- ---------- ---------- ---------- ---------- ----------
Shares outstanding, end of year 3,104,084 3,706,796 7,258,219 6,842,584 6,625,749 6,879,341
---------- ---------- ---------- ---------- ---------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Markman 11
<PAGE>
To the Shareholders and Board of Trustees of the Markman MultiFund Trust:
We have audited the accompanying statements of assets and liabilities of the
Markman Conservative Allocation Portfolio, the Markman Moderate Allocation
Portfolio and the Markman Aggressive Allocation Portfolio of Markman MultiFund
Trust (a Massachusetts business trust), including the portfolios of investments,
as of December 31, 1997, and the related statements of operations, the
statements of changes in net assets, and the financial highlights for the
periods indicated thereon. 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 audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1997, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Markman Conservative Allocation Portfolio, the Markman Moderate Allocation
Portfolio and the Markman Aggressive Allocation Portfolio as of December 31,
1997, 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 8, 1998
- --------------------------------------------------------------------------------
Markman 12
<PAGE>
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
- --------------------------------------------------------------------------------
Investment Adviser Shareholder Services
Markman Capital Management, Inc. c/o Countrywide Fund Services, Inc.
6600 France Ave. So. 312 Walnut Street, 21st Floor
Minneapolis, Minnesota 55435 Cincinnati, Ohio 45202-3874
Telephone: 612-920-4848 Telephone: 513-629-2070
Toll-free: 1-800-395-4848 Toll-free: 1-800-707-2771
Authorized for distribution only if preceded or accompanied by a current
prospectus.
- --------------------------------------------------------------------------------
Markman 13
<PAGE>
FIRST CLASS
6600 France Avenue South
Minneapolis, Minnesota 55435
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Included in Part A:
- -------------------
Financial Highlights for the Periods Ended December 31, 1997, 1996 and 1995
Included in Part B:
- -------------------
Portfolios of Investments, December 31, 1997
Statements of Assets and Liabilities as of December 31, 1997
Statements of Operations for the Period Ended December 31, 1997
Statements of Changes in Net Assets for the Periods Ended December 31, 1997
and 1996
Financial Highlights for the Periods Ended December 31, 1997, 1996 and 1995
Notes to Financial Statements, December 31, 1997
Report of Independent Public Accountants
Included in Part C:
- -------------------
The required Schedules are omitted because the required information is included
in the financial statements included in Part A or Part B, or because the
conditions requiring their filing do not exist.
(B) EXHIBITS
Exhibit
Number Description of Exhibit
- ------ ----------------------
*(1) Declaration of Trust of the Registrant
*(2) Bylaws of the Registrant
(3) Inapplicable
*(4) Form of Share Certificate of Registrant
*(5) Investment Advisory Agreement
between Registrant and Markman Capital
Management, Inc. ("Markman Capital")
<PAGE>
(6) Inapplicable
(7) Inapplicable
(8) Custodian Agreement among Registrant,
Markman Capital and State Street Bank and
Trust Company
*(9)(i) Administration, Accounting and Transfer Agency Agreement
among Registrant, Markman Capital and Countrywide Fund
Services, Inc.
*(9)(ii) Consent to Use of Name
*(10) Opinion and Consent of Counsel
(11) Consent of Independent Public Accountants
(12) Inapplicable
*(13) Subscription Agreement between Registrant
and Markman Capital
(14) Prototype Individual Retirement Account Plan
(15) Inapplicable
(16) Inapplicable
(17)(i) Financial Data Schedule - Markman Aggressive
Allocation Portfolio
(17)(ii) Financial Data Schedule - Markman Moderate
Allocation Portfolio
(17)(iii) Financial Data Schedule - Markman Conservative
Allocation Portfolio
(18) Inapplicable
- --------------------
* Incorporated herein by reference to this Registration Statement as
originally filed with the Securities and Exchange Commission or as
subsequently amended.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The Registrant is not directly or indirectly controlled by or under common
control with any person other than the Trustees. The Registrant does not have
any subsidiaries.
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Set forth below are the number of record holders, as of March 1, 1998, of the
shares of beneficial interest of the Registrant:
Number of Record
Title of Class Holders
-------------- -------
Shares of Beneficial Interest 981
no par value, Aggressive Allocation Portfolio
Shares of Beneficial Interest 837
no par value, Moderate Allocation Portfolio
Shares of Beneficial Interest 358
no par value, Conservative Allocation Portfolio
ITEM 27. INDEMNIFICATION
Under the Registrant's Declaration of Trust and Bylaws, any past or present
Trustee or Officer of the Registrant is indemnified to the fullest extent
permitted by law against liability and all expenses reasonably incurred by him
or her in connection with any action, suit or proceeding to which he or she may
be a party or is otherwise involved by reason of his or her being or having been
a Trustee or Officer of the Registrant. The Declaration of Trust and Bylaws of
the Registrant do not authorize indemnification where it is determined, in the
manner specified in the Declaration of Trust and the Bylaws of the Registrant,
that such Trustee or Officer has not acted in good faith in the reasonable
belief that his or her actions were in the best interest of the Registrant.
Moreover, the Declaration of Trust and Bylaws of the Registrant do not authorize
indemnification where such Trustee or Officer is liable to the Registrant or its
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his duties.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, Officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, Officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, Officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the questions whether such indemnification is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
The Advisory Agreement with Markman Capital Management, Inc. (the "Adviser")
provides that the Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Registrant in connection with the
matters to which the Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence of the Adviser in the performance of
its duties or from the reckless disregard by the Adviser of its obligations
under the Agreement.
The Registrant, its Trustees and Officers, its investment adviser, and persons
affiliated with them are insured under a policy of insurance maintained by the
Registrant and its investment adviser, within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of actions, suits or proceedings, and certain liabilities that might be
imposed as a result of such actions, suits or proceedings, to which they are
parties by reason of being or having been such Trustees or officers. The policy
expressly excludes coverage for any Trustee or officer whose personal
dishonesty, fraudulent breach of trust, lack of good faith, or intention to
deceive or defraud has been adjudicated or may be established or who willfully
fails to act prudently.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Markman Capital Management, Inc. (the "Adviser"), is a registered investment
adviser providing investment advice to individuals, employee benefit plans,
charitable and other nonprofit organizations, and corporations.
Set forth below is a list of the Officers and Directors of the Adviser together
with information as to any other business, profession, vocation or employment of
a substantial nature engaged in by such officers and directors during the past
two years.
POSITION WITH
NAME THE ADVISER OTHER BUSINESSES, ETC.
Robert J. Markman Chairman of the None
Board, President,
Treasurer and
Secretary
Judith E. Fansler Chief Operations None
Officer
Jeffrey Caulfield Chief Compliance None
Officer
Richard W. London Chief Financial None
Officer
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Inapplicable
(b) Inapplicable
(c) Inapplicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The Registrant maintains the records required by Section 31(a) of the
Investment Company Act of 1940, as amended and Rules 31a-1 to 31a-3 inclusive
thereunder at its office located at 6600 France Avenue South, Suite 565, Edina,
Minnesota 55435 or at its office located at 312 Walnut Street, 21st Floor,
Cincinnati, Ohio 45202. Certain records, including records relating to the
Registrant's shareholders and the physical possession of its securities, may be
maintained pursuant to Rule 31a-3 at the main offices of the Registrant's
transfer agent, dividend disbursing agent and custodian located, as to the
custodian, at 225 Franklin Street, Boston, Massachusetts 02110, and, as to the
transfer and dividend disbursing agent functions, at 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202.
ITEM 31. MANAGEMENT SERVICES
Inapplicable.
ITEM 32. UNDERTAKINGS
(a) Inapplicable
(b) Inapplicable
(c) The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered a copy of the Registrant's annual report (when
available) to shareholders upon request and without charge.
(d) The Registrant hereby undertakes that, if requested to do so by
holders of at least 10% of the Trust's outstanding shares, it will
call a meeting of shareholders for the purpose of voting upon the
question of removal of a trustee or trustees and will assist in
communications between shareholders for such purpose as provided in
Section 16(c) of the Investment Company Act of 1940, as amended.
<PAGE>
NOTICE
The names "Markman MultiFund Trust," "Markman Aggressive Allocation Portfolio,"
"Markman Moderate Allocation Portfolio" and "Markman Conservative Allocation
Portfolio" are the designations of the Trustees under the Declaration of Trust
of the Trust dated September 7, 1994, as amended from time to time. The
Declaration of Trust has been filed with the Secretary of State of The
Commonwealth of Massachusetts and the Clerk of the City of Boston,
Massachusetts. The obligations of the Registrant are not personally binding
upon, nor shall resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Registrant, but only the
Registrant's property shall be bound.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this Registration Statement
pursuant to rule 485(b) under the Securities Act of 1933 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Edina and the State of Minnesota on
this 31st of March, 1998.
MARKMAN MULTIFUND TRUST
By: /s/ Robert J. Markman
------------------------------
Robert J. Markman,
Chairman of the Board and
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert J. Markman Chairman of the Board March 31, 1998
- ------------------------- of Trustees and President
Robert J. Markman (Principal executive officer)
/s/ Mark J. Seger Treasurer (Principal March 31, 1998
- ------------------------- financial and accounting officer)
Mark J. Seger
* Trustee
- -------------------------
Richard Edwin Dana
* Trustee
- -------------------------
Peter Dross
* Trustee
- -------------------------
Judith E. Fansler
* Trustee
- -------------------------
Susan Gale
* Trustee
- -------------------------
Susan M. Lindgren
* Trustee
- -------------------------
Richard W. London
* Trustee
- -------------------------
Melinda S. Machones /s/ David M. Leahy
-------------------------
* Trustee David M. Leahy
- ------------------------- Attorney-in-Fact*
Emilee Markman March 31, 1998
* Trustee
- -------------------------
Michael J. Monahan
<PAGE>
EXHIBIT INDEX
1. Custodian Agreement among Registrant, Markman Capital Management, Inc.
and State Street Bank and Trust Company
2. Consent of Independent Accountants
3. Prototype Individual Retirement Account
4. Financial Data Schedule - Markman Aggressive Allocation Portfolio
5. Financial Data Schedule - Markman Moderate Allocation Portfolio
6. Financial Data Schedule - Markman Conservative Allocation Portfolio
CUSTODIAN CONTRACT
Between
MARKMAN MULTIFUND TRUST
and
STATE STREET BANK AND TRUST COMPANY
Global/Series/Trust
21E593
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Employment of Custodian and Property to be Held By
It........................................................................1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States....................2
2.1 Holding Securities...............................................2
2.2 Delivery of Securities...........................................2
2.3 Registration of Securities.......................................4
2.4 Bank Accounts....................................................4
2.5 Availability of Federal Funds....................................5
2.6 Collection of Income.............................................5
2.7 Payment of Fund Monies...........................................5
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased.............................................6
2.9 Appointment of Agents............................................7
2.10 Deposit of Fund Assets in U.S. Securities System.................7
2.11 Fund Assets Held in the Custodian's Direct
Paper System.....................................................8
2.12 Segregated Account...............................................9
2.13 Ownership Certificates for Tax Purposes..........................9
2.14 Proxies.........................................................10
2.15 Communications Relating to Portfolio
Securities......................................................10
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States...............................10
3.1 Appointment of Foreign Sub-Custodians...........................10
3.2 Assets to be Held...............................................10
3.3 Foreign Securities Systems......................................11
3.4 Holding Securities..............................................11
3.5 Agreements with Foreign Banking Institutions....................11
3.6 Access of Independent Accountants of the Fund...................11
3.7 Reports by Custodian............................................11
3.8 Transactions in Foreign Custody Account.........................12
3.9 Liability of Foreign Sub-Custodians.............................12
3.10 Liability of Custodian..........................................12
3.11 Reimbursement for Advances......................................13
3.12 Monitoring Responsibilities.....................................13
3.13 Branches of U.S. Banks..........................................13
3.14 Tax Law.........................................................14
<PAGE>
4. Payments for Sales or Repurchases or Redemptions
of Shares of the Fund....................................................14
5. Proper Instructions......................................................14
6. Actions Permitted Without Express Authority..............................15
7. Evidence of Authority....................................................15
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income........................15
9. Records..................................................................16
10. Opinion of Fund's Independent Accountants................................16
11. Reports to Fund by Independent Public Accountants........................16
12. Compensation of Custodian................................................16
13. Responsibility of Custodian..............................................17
14. Effective Period, Termination and Amendment..............................18
15. Successor Custodian......................................................19
16. Interpretive and Additional Provisions...................................19
17. Additional Funds.........................................................20
18. Massachusetts Law to Apply...............................................20
19. Prior Contracts..........................................................20
20. Reproduction of Documents................................................20
21. Shareholder Communications Election......................................20
<PAGE>
CUSTODIAN CONTRACT
------------------
This Contract between Markman MultiFund Trust , a business trust organized
and existing under the laws of The Commonwealth of Massachusetts , having its
principal place of business at 6600 France Avenue South, Suite 565, Minneapolis,
Minnesota 55435 hereinafter called the "Fund", and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in three series, the
Markman Aggressive Growth Fund, Markman Moderate Growth Fund and Markman
Conservative Growth Fund (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with paragraph 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Declaration of
Trust. The Fund on behalf of the Portfolio(s) agrees to deliver to the Custodian
all securities and cash of the Portfolios, and all payments of income, payments
of principal or capital distributions received by it with respect to all
securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios, ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
<PAGE>
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
---------------------------------------------------------------------------
Custodian in the United States
------------------------------
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, to be held by it in
the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury
(each, a U.S. Securities System") and (b) commercial paper of an issuer for
which State Street Bank and Trust Company acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained in the Direct Paper
System of the Custodian (the "Direct Paper System") pursuant to Section
2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a U.S.
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the
Portfolio or into the name of any nominee or nominees of the Custodian
or into the name or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
2
<PAGE>
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of the
Portfolio, which may be in the form of cash or obligations issued by
the United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the Custodian will
not be held liable or responsible for the delivery of securities owned
by the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the Fund
on behalf of the Portfolio requiring a pledge of assets by the Fund on
behalf of the Portfolio, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio of the Fund;
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13) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board of
Trustees or of the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person
or persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized in
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed pursuant
to Section 2.9 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the Custodian
on behalf of the Portfolio under the terms of this Contract shall be in
"street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
the Fund, subject only to draft or order by the Custodian acting pursuant
to the terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for the
account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of
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1940. Funds held by the Custodian for a Portfolio may be deposited by it to
its credit as Custodian in the Banking Department of the Custodian or in
such other banks or trust companies as it may in its discretion deem
necessary or desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the Investment
Company Act of 1940 and that each such bank or trust company and the funds
to be deposited with each such bank or trust company shall on behalf of
each applicable Portfolio be approved by vote of a majority of the Board of
Trustees of the Fund. Such funds shall be deposited by the Custodian in its
capacity as Custodian and shall be withdrawable by the Custodian only in
that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian shall,
upon the receipt of Proper Instructions from the Fund on behalf of a
Portfolio, make federal funds available to such Portfolio as of specified
times agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of such Portfolio which are
deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to bearer domestic securities if, on the date
of payment by the issuer, such securities are held by the Custodian or its
agent thereof and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due
and shall collect interest when due on securities held hereunder. Income
due each Portfolio on securities loaned pursuant to the provisions of
Section 2.2 (10) shall be the responsibility of the Fund. The Custodian
will have no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian of
the income to which the Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing instructions
when deemed appropriate by the parties, the Custodian shall pay out monies
of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of title
to such options, futures contracts or options on futures contracts to
the Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a custodian and
has been designated by the Custodian as its agent for this purpose)
registered in the name of the Portfolio or in the name of a nominee of
the Custodian referred to in Section 2.3
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hereof or in proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.10 hereof; (c) in the case of a
purchase involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in the case of repurchase
agreements entered into between the Fund on behalf of the Portfolio
and the Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Portfolio of
securities owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from the
Portfolio or (e) for transfer to a time deposit account of the Fund in
any bank, whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the applicable
bank pursuant to Proper Instructions from the Fund as defined in
Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio as
set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the Portfolio,
including but not limited to the following payments for the account of
the Portfolio: interest, taxes, management, accounting, transfer agent
and legal fees, and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Trustees or of the
Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of domestic securities for the account of a
Portfolio is made by the Custodian in advance of
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receipt of the securities purchased in the absence of specific written
instructions from the Fund on behalf of such Portfolio to so pay in
advance, the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by the
Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, to act as a custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from time to time direct;
provided, however, that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S. Department
of the Treasury and certain federal agencies, collectively referred to
herein as "U.S. Securities System" in accordance with applicable Federal
Reserve Board and Securities and Exchange Commission rules and regulations,
if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in an
account ("Account") of the Custodian in the U.S. Securities System
which shall not include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the Portfolio. The
Custodian shall transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S. Securities System
that payment for such securities has been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Portfolio.
Copies of all advices from the U.S. Securities System of transfers of
securities for the account of the Portfolio shall identify the
Portfolio, be maintained for the Portfolio by the Custodian and be
provided to the Fund at its request. Upon request, the Custodian shall
furnish the Fund on behalf of the Portfolio confirmation of each
transfer to or from the account of the Portfolio in the form of a
written advice or
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notice and shall furnish to the Fund on behalf of the Portfolio copies
of daily transaction sheets reflecting each day's transactions in the
U.S. Securities System for the account of the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with any report
obtained by the Custodian on the U.S. Securities System's accounting
system, internal accounting control and procedures for safeguarding
securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the Portfolio
for any loss or damage to the Portfolio resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be entitled
to be subrogated to the rights of the Custodian with respect to any
claim against the U.S. Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage if and
to the extent that the Portfolio has not been made whole for any such
loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by a Portfolio in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from the Fund on
behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall transfer securities sold
for the account of the Portfolio upon the making of an entry
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on the records of the Custodian to reflect such transfer and receipt
of payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio,
in the form of a written advice or notice, of Direct Paper on the next
business day following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets reflecting
each day's transaction in the U.S. Securities System for the account
of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio with
any report on its system of internal accounting control as the Fund
may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper Instructions
from the Fund on behalf of each applicable Portfolio establish and maintain
a segregated account or accounts for and on behalf of each such Portfolio,
into which account or accounts may be transferred cash and/or securities,
including securities maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD
(or any futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market), or
of any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Portfolio, (ii) for
purposes of segregating cash or government securities in connection with
options purchased, sold or written by the Portfolio or commodity futures
contracts or options thereon purchased or sold by the Portfolio, (iii) for
the purposes of compliance by the Portfolio with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or
releases of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, but only, in the case of clause
(iv), upon receipt of, in addition to Proper Instructions from the Fund on
behalf of the applicable Portfolio, a certified copy of a resolution of the
Board of Trustees or of the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary, setting
forth the purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
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2.14 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without limitation, pendency
of calls and maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian
from issuers of the securities being held for the Portfolio. With respect
to tender or exchange offers, the Custodian shall transmit promptly to the
Portfolio all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Portfolio desires
to take action with respect to any tender offer, exchange offer or any
other similar transaction, the Portfolio shall notify the Custodian at
least three business days prior to the date on which the Custodian is to
take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held Outside
---------------------------------------------------------------------------
of the United States
--------------------
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated
on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together with a
certified resolution of the Fund's Board of Trustees, the Custodian and the
Fund may agree to amend Schedule A hereto from time to time to designate
additional foreign banking institutions and foreign securities depositories
to act as sub-custodian. Upon receipt of Proper Instructions, the Fund may
instruct the Custodian to cease the employment of any one or more such
sub-custodians for maintaining custody of the Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Portfolio's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund, the foreign
securities of the Fund held by each foreign sub-custodian.
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3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall be
maintained in a clearing agency which acts as a securities depository or in
a book-entry system for the central handling of securities located outside
the United States (each a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign Securities Systems and
U.S. Securities Systems are collectively referred to herein as the
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.5
hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash
property of the Fund which are maintained in such account shall identify by
book-entry those securities and other non-cash property belonging to the
Fund and (ii) the Custodian shall require that securities and other
non-cash property so held by the foreign sub-custodian be held separately
from any assets of the foreign sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign
banking institution shall provide that: (a) the assets of each Portfolio
will not be subject to any right, charge, security interest, lien or claim
of any kind in favor of the foreign banking institution or its creditors or
agent, except a claim of payment for their safe custody or administration;
(b) beneficial ownership for the assets of each Portfolio will be freely
transferable without the payment of money or value other than for custody
or administration; (c) adequate records will be maintained identifying the
assets as belonging to each applicable Portfolio; (d) officers of or
auditors employed by, or other representatives of the Custodian, including
to the extent permitted under applicable law the independent public
accountants for the Fund, will be given access to the books and records of
the foreign banking institution relating to its actions under its agreement
with the Custodian; and (e) assets of the Portfolios held by the foreign
sub-custodian will be subject only to the instructions of the Custodian or
its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of the Portfolio(s) held by foreign sub-custodians, including
but not limited to an identification of entities having possession of the
Portfolio(s) securities and other assets and advices or notifications of
any transfers of securities to or from each custodial account maintained by
a
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foreign banking institution for the Custodian on behalf of each applicable
Portfolio indicating, as to securities acquired for a Portfolio, the
identity of the entity having physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and 2.7
of this Contract shall apply, mutatis mutandis to the foreign securities of
the Fund held outside the United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of each
applicable Portfolio and delivery of securities maintained for the account
of each applicable Portfolio may be effected in accordance with the
customary established securities trading or securities processing practices
and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser
or dealer) against a receipt with the expectation of receiving later
payment for such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set
forth in Section 2.3 of this Contract, and the Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such
securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and the Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.13 hereof, the Custodian shall not be liable
for any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this paragraph
3.10, in delegating custody duties to State Street London Ltd., the
Custodian shall not be relieved of any responsibility to the Fund for any
loss due to such delegation,
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except such loss as may result from (a) political risk (including, but not
limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or (b)
other losses (excluding a bankruptcy or insolvency of State Street London
Ltd. not caused by political risk) due to Acts of God, nuclear incident or
other losses under circumstances where the Custodian and State Street
London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the Custodian to advance
cash or securities for any purpose for the benefit of a Portfolio including
the purchase or sale of foreign exchange or of contracts for foreign
exchange, or in the event that the Custodian or its nominee shall incur or
be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent action, negligent
failure to act or willful misconduct, any property at any time held for the
account of the applicable Portfolio shall be security therefor and should
the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's
assets to the extent necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be similar
in kind and scope to that furnished to the Fund in connection with the
initial approval of this Contract. In addition, the Custodian will promptly
inform the Fund in the event that the Custodian learns of a material
adverse change in the financial condition of a foreign sub-custodian or any
material loss of the assets of the Fund or in the case of any foreign
sub-custodian not the subject of an exemptive order from the Securities and
Exchange Commission is notified by such foreign sub-custodian that there
appears to be a substantial likelihood that its shareholders' equity will
decline below $200 million (U.S. dollars or the equivalent thereof) or that
its shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract,
the provisions hereof shall not apply where the custody of the Portfolios
assets are maintained in a foreign branch of a banking institution which is
a "bank" as defined by Section 2(a)(5) of the Investment Company Act of
1940 meeting the qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be governed by
paragraph 1 of this Contract.
(b) Cash held for each Portfolio of the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with the
Custodian's London branch, which account shall be subject to the direction
of the Custodian, State Street London Ltd. or both.
13
<PAGE>
3.14 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or any
state or political subdivision thereof. It shall be the responsibility of
the Fund to notify the Custodian of the obligations imposed on the Fund or
the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole responsibility of the
Custodian with regard to such tax law shall be to use reasonable efforts to
assist the Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
----------------------------------------------------------------------
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
5. Proper Instructions
-------------------
Proper Instructions as used throughout this Contract means a writing signed
or initialled by one or more person or persons as the Board of Trustees shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and the Custodian are satisfied that such procedures afford
14
<PAGE>
adequate safeguards for the Portfolios' assets. For purposes of this Section,
Proper Instructions shall include instructions received by the Custodian
pursuant to any three - party agreement which requires a segregated asset
account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
-------------------------------------------
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
otherwise directed by the Board of Trustees of the Fund.
7. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Trustees of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Trustees pursuant to the Declaration of Trust as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation of
---------------------------------------------------------------------------
Net Asset Value and Net Income
------------------------------
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund to keep the
books of account of each Portfolio and/or compute the net asset value per share
of the outstanding shares of each Portfolio or, if directed in writing to do so
by the Fund on behalf of the Portfolio, shall itself keep such books of account
and/or compute such net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of the Portfolio as described in the
Fund's currently effective prospectus related to such Portfolio and shall advise
the Fund and the Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Fund to do so,
15
<PAGE>
shall advise the Transfer Agent periodically of the division of such net income
among its various components. The calculations of the net asset value per share
and the daily income of each Portfolio shall be made at the time or times
described from time to time in the Fund's currently effective prospectus related
to such Portfolio.
9. Records
-------
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Portfolio and held by the Custodian and shall, when requested to
do so by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
----------------------------------------
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
-------------------------------------------------
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
12. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.
16
<PAGE>
13. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts; (ii) errors by the Fund or the Investment Advisor
in their instructions to the Custodian provided such instructions have been in
accordance with this Contract; (iii) the insolvency of or acts or omissions by a
Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to the Custodian's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of the Custodian, the Fund,
the Custodian's sub-custodians, nominees or agents or any consequential losses
arising out of such delay or failure to transfer such securities including
non-receipt of bonus, dividends and rights and other accretions or benefits;
(vi) delays or inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities System; and
(vii) any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in this Contract.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable
17
<PAGE>
for the payment of money or incurring liability of some other form, the Fund on
behalf of the Portfolio, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to a Portfolio act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees of the Fund has approved the
initial use of a particular Securities System by such Portfolio, as required by
Rule 17f-4 under the Investment Company Act of 1940, as amended and that the
Custodian shall not with respect to a Portfolio act under Section 2.11 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees has approved the initial use of
the Direct Paper System by such Portfolio ; provided further, however, that the
Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Declaration of
Trust, and further provided, that the Fund on behalf of one or more of the
Portfolios may at any time by action of its Board of Trustees (i) substitute
another bank or trust company for the Custodian by giving notice as described
above to the Custodian, or (ii) immediately terminate this Contract in the event
of the appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
15. Successor Custodian
-------------------
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of Trustees
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of Trust of the Fund. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
17. Additional Funds
----------------
In the event that the Fund establishes one or more series of Shares in
addition to the Markman Aggressive Growth Fund, Markman Moderate Growth Fund and
Markman Conservative Growth Fund with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.
18. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
20. Reproduction of Documents
-------------------------
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
21. Shareholder Communications Election
-----------------------------------
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any purpose
other than corporate communications. Please indicate below whether the Fund
consents or objects by checking one of the alternatives below.
20
<PAGE>
YES [ ] The Custodian is authorized to release the Fund's name, address, and
share positions.
NO [ ] The Custodian is not authorized to release the Fund's name, address,
and share positions.
21
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of July, 1997.
ATTEST MARKMAN MULTIFUND TRUST
/s/ illegible By /s/ Robert Markman
- ------------------------------ --------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Francine Hayes By /s/ illegible
- ------------------------------ --------------------------------
Executive Vice President
22
<PAGE>
SCHEDULE A
17F-5 APPROVAL
The Board of Trustees of Markman MultiFund Trust has approved certain
foreign banking institutions and foreign securities depositories within State
Street's Global Custody Network for use as subcustodians for the Fund's
securities, cash and cash equivalents held outside of the United States. Board
approval is as indicated by the Fund's Authorized Officer:
<TABLE>
<CAPTION>
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- -------- ------- ------------ ------------------
<S> <C> <C> <C>
______ Argentina Citibank, N.A. Caja de Valores S.A.
______ Australia Westpac Banking Corporation Austraclear Limited;
Reserve Bank Information and
Transfer System (RITS)
______ Austria GiroCredit Bank Aktiengesellschaft Oesterreichische Kontrollbank AG
der Sparkassen (Wertpapiersammelbank Division)
______ Bangladesh Standard Chartered Bank None
______ Belgium Generale Bank Caisse Interprofessionnelle de Depots
et de Virements de Titres S.A. (CIK);
Banque Nationale de Belgique
______ Botswana Barclays Bank of Botswana Limited None
______ Brazil Citibank, N.A. Bolsa de Valores de Sao Paulo (Bovespa);
Banco Central do Brasil,
Systema Especial de Liquidacao e
Custodia (SELIC)
______ Canada Canada Trustco Mortgage Company The Canadian Depository
for Securities Limited (CDS)
______ Chile Citibank, N.A. None
</TABLE>
<PAGE>
SCHEDULE A: 17F-5 APPROVAL
PAGE 2
<TABLE>
<CAPTION>
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- -------- ------- ------------ ------------------
<S> <C> <C> <C>
______ People's Republic The Hongkong and Shanghai Shanghai Securities Central Clearing and
of China Banking Corporation Limited, Registration Corporation (SSCCRC);
Shanghai and Shenzhen branches
Shenzhen Securities Central Clearing
Co., Ltd. (SSCC)
______ Colombia Cititrust Colombia S.A. None
Sociedad Fiduciaria
______ Cyprus Barclays Bank PLC None
Cyprus Offshore Banking Unit
______ Czech Republic Czeskoslovenska Obchodni Stredisko cennych papiru(SCP);
Banka A.S.
Czech National Bank (CNB)
______ Denmark Den Danske Bank Vaerdipapircentralen - The Danish
Securities Center (VP)
______ Ecuador Citibank, N.A. None
______ Egypt National Bank of Egypt None
______ Finland Merita Bank Limited The Central Share Register of
Finland
______ France Banque Paribas Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM);
Banque de France,
Saturne System
______ Germany Dresdner Bank AG The Deutscher Kassenverein AG
______ Ghana Barclays Bank of Ghana Limited None
______ Greece National Bank of Greece S.A The Central Securities Depository
(Apothetirion Titlon A.E.)
</TABLE>
<PAGE>
SCHEDULE A: 17F-5 APPROVAL
PAGE 3
<TABLE>
<CAPTION>
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- -------- ------- ------------ ------------------
<S> <C> <C> <C>
______ Hong Kong Standard Chartered Bank The Central Clearing and
Settlement System (CCASS)
______ Hungary Citibank Budapest Rt. The Central Depository and Clearing
House (Budapest) Ltd. (KELER Ltd.)
______ India Deutsche Bank AG None
______ The Hongkong and Shanghai None
Banking Corporation Limited
______ Indonesia Standard Chartered Bank None
______ Ireland Bank of Ireland None;
The Central Bank of Ireland,
The Gilt Settlement Office (GSO)
______ Israel Bank Hapoalim B.M. The Clearing House of the
Tel Aviv Stock Exchange
______ Italy Morgan Guaranty Trust Company Monte Titoli S.p.A.;
(Present Subcustodian)
Banca d'Italia
______ Banque Paribas Monte Titoli S.p.A.;
(Future Subcustodian)
Banca d'Italia
______ Ivory Coast Societe Generale de Banques None
en Cote d'Ivoire
______ Japan The Daiwa Bank, Limited Japan Securities Depository
Center (JASDEC);
Bank of Japan Net System
______ The Fuji Bank, Limited Japan Securities Depository
Center (JASDEC);
Bank of Japan Net System
______ The Sumitomo Trust Japan Securities Depository
& Banking Co., Ltd. Center (JASDEC);
Bank of Japan Net System
</TABLE>
<PAGE>
SCHEDULE A: 17F-5 APPROVAL
PAGE 4
<TABLE>
<CAPTION>
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- -------- ------- ------------ ------------------
<S> <C> <C> <C>
______ Jordan The British Bank of the Middle East None
______ Kenya Barclays Bank of Kenya Limited None
______ Republic of Korea SEOULBANK Korea Securities Depository (KSD)
______ Malaysia Standard Chartered Bank Malaysian Central Depository Sdn.
Malaysia Berhad Bhd. (MCD)
______ Mauritius The Hongkong and Shanghai None
Banking Corporation Limited
______ Mexico Citibank Mexico, S.A. S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de
Valores);
Banco de Mexico
______ Morocco Banque Commerciale du Maroc None
______ Netherlands MeesPierson N.V. Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V. (NECIGEF)
______ New Zealand ANZ Banking Group New Zealand Central Securities
(New Zealand) Limited Depository Limited (NZCSD)
______ Norway Christiania Bank og Verdipapirsentralen - The Norwegian
Kreditkasse Registry of Securities (VPS)
______ Pakistan Deutsche Bank AG None
______ Peru Citibank, N.A. Caja de Valores (CAVAL)
______ Philippines Standard Chartered Bank None
______ Poland Citibank Poland S.A. The National Depository of Securities
(Krajowy Depozyt Papierow
Wartosciowych);
National Bank of Poland
</TABLE>
<PAGE>
SCHEDULE A: 17F-5 APPROVAL
PAGE 5
<TABLE>
<CAPTION>
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- -------- ------- ------------ ------------------
<S> <C> <C> <C>
______ Portugal Banco Comercial Portugues Central de Valores Mobiliarios (Central)
______ Russia Credit Suisse, Zurich None
via Credit Suisse (Moscow) Limited
______ Singapore The Development Bank The Central Depository (Pte)
of Singapore Ltd. Limited (CDP)
______ Slovak Republic Czeskoslovenska Obchodna Stredisko Cennych Papierov (SCP);
Banka A.S.
National Bank of Slovakia
______ South Africa Standard Bank of South Africa Limited The Central Depository Limited
______ Spain Banco Santander, S.A. Servicio de Compensacion y
Liquidacion de Valores, S.A. (SCLV);
Banco de Espana,
Anotaciones en Cuenta
______ Sri Lanka The Hongkong and Shanghai Central Depository System
Banking Corporation Limited (Pvt) Limited
______ Swaziland Barclays Bank of Swaziland Limited None
______ Sweden Skandinaviska Enskilda Banken Vardepapperscentralen VPC AB -
The Swedish Central Securities Depository
______ Switzerland Union Bank of Switzerland Schweizerische Effekten - Giro AG
(SEGA)
______ Taiwan - R.O.C. Central Trust of China The Taiwan Securities Central
Depository Company, Ltd. (TSCD)
______ ________________________________
(Client Designated Subcustodian)
______ Thailand Standard Chartered Bank Thailand Securities Depository
Company Limited (TSD)
</TABLE>
<PAGE>
SCHEDULE A: 17F-5 APPROVAL
PAGE 6
<TABLE>
<CAPTION>
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- -------- ------- ------------ ------------------
<S> <C> <C> <C>
______ Turkey Citibank, N.A. Takas ve Saklama Bankasi A.S.
(TAKASBANK);
Central Bank of Turkey
______ United Kingdom State Street Bank and Trust Company None;
The Bank of England,
The Central Gilts Office (CGO);
The Central Moneymarkets Office (CMO)
______ Uruguay Citibank, N.A. None
______ Venezuela Citibank, N.A. None
______ Zambia Barclays Bank of Zambia Limited Lusaka Central Depository (LCD)
______ Zimbabwe Barclays Bank of Zimbabwe Limited None
______ Euroclear (The Euroclear System)/State Street London Limited
______ Cedel (Cedel Bank, societe anonyme)/State Street London Limited
</TABLE>
CERTIFIED BY:
- ------------------------------ -----------------------
FUND'S AUTHORIZED OFFICER DATE
<PAGE>
STATE STREET BANK AND TRUST COMPANY
CUSTODY AND ACCOUNTING FEE SCHEDULE
FOR
MARKMAN AGGRESSIVE GROWTH FUND
MARKMAN MODERATE GROWTH FUND
MARKMAN CONSERVATIVE GROWTH FUND
- --------------------------------------------------------------------------------
Effective July 1, 1997 thru June 30, 1998
I. CUSTODY
-------
Custody: Maintaining custody of fund assets. Settle portfolio and sales.
Report buy and sell fails. Determine and collect portfolio income. Make
cash disbursements and report cash transactions. Monitor corporate actions.
Report portfolio positions.
The fee shown below is an annual charge, billed and payable monthly, based
on average monthly net assets.
ANNUAL FEES
-----------
Annual Fee per Fund $10,000
II. PORTFOLIO TRANSACTIONS
----------------------
External Wires $ 7.00
Internal Wires $ 3.50
III. SPECIAL SERVICES
----------------
Fees for activities of non-recurring nature such as consolidations or
reorganizations, extraordinary security shipments and the preparation of
special reports will be subject to negotiation. fees for administration
activities, self-directed securities, lending transactions, SaFiRe
financial reporting, multiple class and core/feeder accounting, and other
special items will be negotiated separately.
<PAGE>
IV. OUT-OF-POCKET EXPENSES
----------------------
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of - pocket expenses include, but are
not limited to the following;
Telephone
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer ($8.00 each)
Items held in Street name over record date at the
request of the trustee ($50.00 each)
Transfer Fees
Sub-custodian Charges (Global Securities)
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check Items over $2,500 ($4.25 each)
GNMA Transfer ($15.00 each)
PTC Deposit/Withdrawal for same day turnaround ($50.00)
<PAGE>
[Logo] STATE STREET State Street Bank and Trust Company
Serving Institutional Legal Division
Investors Worldwide 1776 Heritage Drive
North Quincy, MA 02171-2197
April 30, 1997
Markman Capital Management, Inc.
6600 France Avenue South
Suite 565
Edina, Minnesota
RE: Markman MultiFund Trust
Dear Sir/Madam:
Reference is hereby made to the Custodian Agreement, dated as of April 30, 1997
between Markman MultiFund Trust (the "Trust") and State Street Bank and trust
Company (the "Custodian"). Pursuant to Section 12 of the Custodian Agreement,
the Trust, the Custodian and Markman Capital Management, Inc. (the "Investment
Manager") hereby acknowledge and agree that the Investment Manager shall be
primarily responsible for the payment of the Custodian's fees and expenses
described in Section 12 of the Custodian Agreement. The Custodian will send
monthly invoices for such fees and expenses to the Investment Manager (with a
copy to the Trust) and the Investment manager will pay to the Custodian the
amount of such invoices within thirty days of the date of the invoice.
Nothing in this Letter Agreement, alters or amends any provision of the
Custodian Agreement between the Trust and the Custodian.
Agreed and Acknowledged:
Markman Capital Management, Inc.
By: /s/ Robert Markman
------------------------------
Title:
---------------------------
Markman MutiFund Trust
By: /s/ Robert Markman
-------------------------------
Title:
---------------------------
State Street Bank and Trust Company
By: /s/ Illegible
------------------------------
Title: Executive Vice President
---------------------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use in this
Post-Effective Amendment No. 6 of our report dated January 8, 1998 and to all
references to our Firm included in or made a part of this Post-Effective
Amendment.
/s/ AUTHUR ANDERSEN LLP
IRA
Individual
Retirement
Account
* * * * * *
The Markman
MultiFunds
P.O. Box 5354 o Cincinnati, Ohio 45201-5354 o 800.707.2771
<PAGE>
The Markman
MultiFund Trust IRA
- --------------------------------------------------------------------------------
What is an IRA?
- --------------------------------------------------------------------------------
An Individual Retirement Account (IRA) is a special kind of personal savings
plan that will enable you to accumulate money for retirement. The key benefits
of an IRA are that, in many cases, contributions are tax-deductible and all
earnings (from dividends, interest and gains) accumulate tax-deferred. No taxes
are paid until you begin to withdraw funds from your IRA. Even if you already
participate in an employer-sponsored pension, profit sharing or other retirement
or savings plan, you are still eligible to establish an IRA.
- --------------------------------------------------------------------------------
Contributions
- --------------------------------------------------------------------------------
How much can I put into an IRA?
If you are employed and under age 70 1/2, you may contribute 100% of your
compensation to a maximum of $2,000 to an IRA. If you are married and have a
non-wage-earning spouse, you may contribute up to $4,000 to two IRAs, with a
maximum of $2,000 to any one account. Contributions may be made during the
calendar year, or no later than your tax filing due date excluding extensions.
Whether or not your contribution is fully deductible depends upon your income
and whether you or your spouse is covered by a qualified retirement plan at
work. Please refer to the MAGI Phaseout Ranges chart for limits on deductible
contributions for individuals covered by an employer-sponsored plan.
When should I contribute to my IRA?
To make the most of this tax break, you should consider making your yearly
contribution to your tax-deferred plan as soon after January 1 as possible. (You
are not just sheltering your contribution, you are also sheltering the earnings,
and the sooner you put money into the account, the sooner you protect the
earnings from taxes.) In order to qualify for a deduction on the current year's
tax return, your contribution must be made by your tax filing due date.
Must I contribute the same amount each year?
No - you may contribute any amount as long as you do not exceed the maximum
allowed.
- --------------------------------------------------------------------------------
Distributions
- --------------------------------------------------------------------------------
When can I take money out of my IRA?
You can start withdrawing funds from your IRA when you reach age 59 1/2. You
must start taking funds out by April 1 of the year following the year you reach
70 1/2. Withdrawals before age 59 1/2 can be made without any tax penalty in the
case of death or disability or for the payment of medical expenses which exceed
7 1/2% of your adjusted gross income or for qualified first-time home purchase
expenses (up to $10,000) or for qualified higher education expenses for you,
your spouse or any child or grandchild. Otherwise, you must pay a 10% tax
penalty on the amount withdrawn and declare the distribution as ordinary income
for federal income tax purposes.
- --------------------------------------------------------------------------------
Benefits of the Markman MultiFund Trust IRA
- --------------------------------------------------------------------------------
Investment Flexibility
The Markman MultiFund Trust IRA offers a variety of mutual funds, each with its
own investment objective.
- --------------------------------------------------------------------------------
Exchange Privilege
Your IRA investment can be exchanged among the Funds of the Markman MultiFund
Trust. See the fund prospectus for details and limitations.
- --------------------------------------------------------------------------------
Professional Management
Investments are actively managed by full-time investment professionals.
- --------------------------------------------------------------------------------
No Set-Up Fee
There is no fee for establishing an IRA.
- --------------------------------------------------------------------------------
Automatic Investment
To establish an ongoing investment program, simply determine the amount you want
to invest each month. It can be automatically withdrawn from your checking or
savings account for deposit into your IRA.
- --------------------------------------------------------------------------------
Rollovers/Transfers
IRAs provide a continuing tax-deferral for rollovers from qualified
employer-sponsored retirement plans and from other IRAs. An IRA can also be used
to receive a transfer directly from the Trustee of another IRA or a Direct
Rollover from a qualified employer-sponsored retirement plan.
IRAs may also be used to receive an employer's Simplified Employee Pension (SEP)
contributions.
- --------------------------------------------------------------------------------
Convenience
All safekeeping of securities, collection of interest and recordkeeping is
performed by the Custodian. You receive easy-to-read statements.
- --------------------------------------------------------------------------------
Benefits of an IRA
The following table demonstrates the substantial advantage of using an IRA to
accumulate a retirement fund.
- --------------------------------------------------------------------------------
HOW AN INDIVIDUAL RETIREMENT ACCOUNT GROWS
Compounded daily at assumed rates of interest
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------- ---------------------- ----------------------
8% 11% 14%
--------------------- ---------------------- ----------------------
Total Approx. Approx. Approx.
deposits monthly monthly monthly
at age 65 Value at payment Value at payment Value at payment
Age (at $2,000/yr.) age 65 at age 65 age 65 at age 65 age 65 at age 65
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
20 $90,000 $961,713 $7,753 $2,845,142 $28,656 $8,958,466 $109,642
- --------------------------------------------------------------------------------------------------
25 80,000 632,554 5,099 1,621,049 16,327 4,398,527 53,833
- --------------------------------------------------------------------------------------------------
30 70,000 413,125 3,330 920,124 9,267 2,155,727 26,383
- --------------------------------------------------------------------------------------------------
35 60,000 266,845 2,151 518,769 5,225 1,052,610 12,882
- --------------------------------------------------------------------------------------------------
40 50,000 169,330 1,365 288,950 2,910 510,043 6,242
- --------------------------------------------------------------------------------------------------
45 40,000 104,323 841 157,354 1,584 243,182 2,976
- --------------------------------------------------------------------------------------------------
50 30,000 60,986 491 82,001 825 111,927 1,369
- --------------------------------------------------------------------------------------------------
55 20,000 32,097 258 38,853 391 47,369 579
- --------------------------------------------------------------------------------------------------
60 10,000 12,838 103 14,147 142 15,617 191
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Markman MultiFund Trust IRA
Disclosure Statement
- --------------------------------------------------------------------------------
Right to Revoke the Account
You will have seven days from the date you complete the Adoption Agreement
and establish the Markman MultiFund Trust IRA to cancel the account for any
reason. If you cancel the IRA, Markman MultiFund Trust will refund all the money
you contributed, without increase or decrease for any reason.
You may cancel your IRA by sending a signed written notice delivered or
mailed within this seven-day period to:
Markman MultiFund Trust IRA
P.O. Box 5354
Cincinnati, OH 45201-5354
If mailed in a properly addressed, first class postage prepaid envelope,
the date of the postmark, or if certified or registered mail is used, the date
of certification or registration will be used to determine if you notified us
within the seven-day revocation period. If you have any questions about this
revocation procedure, please call us at 800-707-2771.
Definitions
In this Disclosure Statement the terms "you," "your," "Depositor," or "IRA
Owner" shall mean the person who established the IRA. The terms "Custodian,"
"our," "us," or "we" shall mean the financial organization acting as the
Custodian of your IRA. The term "IRS" shall refer to the Internal Revenue
Service. The term "IRA" shall mean Individual Retirement Account within the
meaning of section 408 of the Code and shall also refer to your Custodial
Account. The term "Roth IRA" shall mean a Roth Individual Retirement Account
within the meaning of section 408A of the Code. The term "SIMPLE IRA" shall mean
SIMPLE Retirement Account within the meaning of section 408(p) of the Code. The
term "Code" shall mean the Internal Revenue Code.
Account Growth
Your IRA is self-directed. Earnings and capital appreciation on investments
chosen by you will depend on overall economic conditions and the success of that
particular investment. Earnings on these investments are not guaranteed by the
Custodian and may or may not be reasonably projected. For example, if the
initial investment is a passbook, time deposit or money market account, the
account projection can be made based on the current rate of earnings paid. On
the other hand, if the initial investment is an investment security (stocks,
bonds, or mutual funds), the rate of growth of the earnings on these types of
investments cannot be reasonably projected.
Eligibility for IRAs
This part of the disclosure explains your eligibility to establish and
contribute to an IRA. This disclosure statement does not address your
eligibility for other types of IRAs (Roth IRA, Education IRA, or SIMPLE IRA).
A. Regular Contributions. You must be under the age 70 1/2 and have
"compensation" in order to contribute to an IRA. For tax years during or after
which you reach the age 70 1/2 you are not allowed to contribute to an IRA.
"Compensation" includes wages, tips, bonuses, taxable alimony, as well as other
compensation received for personal services. (If you are self-employed,
compensation is your net earnings from your trade or business reduced by your
deduction for contributions made on your behalf to retirement plans and the
deduction allowed for one-half of your self-employment taxes.) If you meet the
above eligibility requirements, you may contribute up to 100% of your
compensation or $2,000, whichever is less. (Caution: Contribution limit is
coordinated with Roth IRA limit-see below). Regular and spousal IRA
contributions must be made by your tax filing due date excluding extensions.
Please consult your tax adviser if you need additional assistance.
B. Spousal Contributions. You may make a contribution into your spouse's
IRA if you meet the special spousal IRA rules. You must be married, file a joint
federal income tax return, the receiving spouse must be under age 70 1/2, and
the receiving spouse must earn less in compensation than the spouse making the
contribution. The total combined contribution a couple can make each year to
both IRAs is the smaller of $4,000 or their combined compensation for the year.
You can divide your total IRA contribution in any manner you choose, provided
you do not contribute more than $2,000 to either IRA. Your combined compensation
equals the lesser compensated spouse's compensation plus the higher compensated
spouse's compensation (reduced by any IRA deduction). (Caution: Contribution
limit is coordinated with Roth IRA limit-see below).
C. Coordination with Roth IRA. The amount you are eligible to contribute to
your IRA is coordinated with the amount you may contribute to your Roth IRA. The
maximum you are allowed to contribute to both your IRA and your Roth IRA is
$2,000. Accordingly, if you make a Roth IRA contribution, that will reduce or
eliminate your eligibility to make an IRA contribution.
D. Rollover, Transfer, SEP, and SIMPLE Contributions. You may be eligible
to roll over, directly roll over, or transfer your existing IRA, SIMPLE IRA, or
qualified plan assets. The rules covering rollovers and transfers are discussed
later in this disclosure statement. Simplified Employee Pension (SEP) plan
contributions may also be made to this IRA. Your employer is responsible for
verifying the SEP eligibility requirements and determining the contribution
amount. SIMPLE contributions may not be made to this IRA, but instead must be
contributed into a SIMPLE IRA. The IRS or your employer can provide additional
information concerning SEP and SIMPLE eligibility.
Deductibility
You may or may not be allowed to deduct your IRA contribution on your
income tax return. Whether or not you may deduct your contribution depends upon
whether you or your spouse are active participants in an employer-maintained
retirement plan, your income level, your income tax filing status, and the tax
year for which you are making the contribution. Please see the charts that
follow:
A. Active Participant. You are an "active participant" for a year if you
are covered by a retirement plan. For example, if you are covered under a profit
sharing plan, a 401(k) plan, a tax-sheltered annuity plan (403(b)), certain
government plans, a SEP plan, a SIMPLE arrangement, or a plan which promises you
a retirement benefit which is based upon the number of years of service you have
with the employer, you are likely to be an active participant. The W-2, Wage and
Tax Statement, includes a box (the "Pension Plan" box) to indicate whether or
not you are covered for the plan year. If you are not certain whether or not you
are covered (an "active participant") you should ask your employer or tax
adviser. Caution: For the 1997 tax year, you are also considered an active
participant if your spouse is an active participant. If you are an active
participant, your ability to deduct your IRA contribution begins to be phased
out when your income exceeds certain levels.
B. MAGI. Your modified adjusted gross income (MAGI) is your adjusted gross
income from your federal income tax return figured without taking into account
any IRA deduction or any foreign earned income exclusion and foreign housing
exclusion (deduction), or any Series EE bond interest from IRS Form 8815.
C. Single Filers. If you are single and are not an active participant, you
may fully deduct your IRA contribution regardless of your income level. If you
are an active participant, then your ability to deduct your contribution begins
to be phased out at certain income levels. Please see the MAGI Phaseout Ranges
chart. If your income is the same as or less than the "Low End" number for the
applicable tax year, you may fully deduct your IRA contribution. If your income
is the same as or above the "High End" then you are not entitled to deduct any
amount of an IRA contribution. If your income falls within the ranges stated
then consult the Deduction Calculation chart to calculate the amount you may
deduct.
D. Married Filers. If you are married, your ability to make a deductible
contribution depends upon both you and your spouse's "active participation"
status as well as your income level, and income tax filing status.
(1) Neither You Nor Your Spouse Are Active Participants. If neither you
nor your spouse are active participants, you may fully deduct your IRA
contribution regardless of your income.
(2) You Are an Active Participant. If you are an active participant, your
ability to deduct your IRA contribution begins to be phased out at
certain income levels and also depends upon whether you file jointly
or separately. See the MAGI Phaseout Ranges chart below. This rule
applies regardless of whether or not your spouse is an active
participant. If your income is the same as or less than the "Low End"
number for the applicable tax year, you may fully deduct your IRA
contribution. If your income is the same as or above the "High End"
then you are not entitled to deduct any amount of an IRA contribution.
If your income falls within the ranges stated then see the Deduction
Calculation chart to calculate the amount you may deduct.
(3) You Are Not an Active Participant But Your Spouse Is. If you are not
an active participant, but your spouse is an active participant, then
your ability to deduct your IRA contribution begins to be phased out
at $150,000 if you file a joint return. See the chart below. Caution:
for the 1997 tax year, you are considered an active participant if
your spouse is an active participant. If you fall within this category
but file a separate return, consult with your tax adviser to determine
the amount you may deduct.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
MAGI Phaseout Ranges
Filing Status
----------------------------------------------------------------------------------------------
Married,**
Married, Married,* Filing Jointly,
Tax Single Filing Jointly, Filing Separately, Not an Active Participant,
Year Active Participant Active Participant Active Participant but Spouse is
Low End High End Low End High End Low End High End Low End High End
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $25,000 $35,000 $40,000 $50,000 $0 $10,000 $40,000 $50,000
- ------------------------------------------------------------------------------------------------------
1998 $30,000 $40,000 $50,000 $60,000 $0 $10,000 $150,000 $160,000
- ------------------------------------------------------------------------------------------------------
1999 $31,000 $41,000 $51,000 $61,000 $0 $10,000 $150,000 $160,000
- ------------------------------------------------------------------------------------------------------
2000 $32,000 $42,000 $52,000 $62,000 $0 $10,000 $150,000 $160,000
- ------------------------------------------------------------------------------------------------------
2001 $33,000 $43,000 $53,000 $63,000 $0 $10,000 $150,000 $160,000
- ------------------------------------------------------------------------------------------------------
2002 $34,000 $44,000 $54,000 $64,000 $0 $10,000 $150,000 $160,000
- ------------------------------------------------------------------------------------------------------
2003 $40,000 $50,000 $60,000 $70,000 $0 $10,000 $150,000 $160,000
- ------------------------------------------------------------------------------------------------------
2004 $45,000 $55,000 $65,000 $75,000 $0 $10,000 $150,000 $160,000
- ------------------------------------------------------------------------------------------------------
2005 $50,000 $60,000 $70,000 $80,000 $0 $10,000 $150,000 $160,000
- ------------------------------------------------------------------------------------------------------
2006 $50,000 $60,000 $75,000 $85,000 $0 $10,000 $150,000 $160,000
- ------------------------------------------------------------------------------------------------------
2007 $50,000 $60,000 $80,000 $100,000 $0 $10,000 $150,000 $160,000
- ------------------------------------------------------------------------------------------------------
</TABLE>
* The Taxpayer Relief Act of 1997 established a special rule for married
individuals filing separately which sets a fixed phaseout range for active
participants beginning with the first dollar of MAGI and completely phasing
out deductible IRA contributions at $10,000 of MAGI.
** The Taxpayer Relief Act of 1997 established a fixed schedule which says
that the maximum decuctible IRA contribution for an individual who is not
an active participant, but whose spouse is, is phased out for taxpayers
with MAGI between $150,000 and $160,000.
E. Phaseout Calculation. If your income falls within the phaseout limits
from the previous chart, you can determine your deductible amount according to
the deduction formula below. You are still allowed to contribute up to the
lesser of $2,000 or 100% of your earned income (coordinated with Roth IRA);
however, if your contribution exceeds your maximum deductible amount, the
remainder will be treated as a nondeductible contribution.
Deduction Calculation
A. Insert MAGI "High End" number from chart above
for the corresponding tax year and filing status $
--------------
B. Your MAGI (from IRS Form 1040 or 1040A) $
--------------
C. Subtract B from A $
--------------
(Line C multiplied by .2 equals the amount x .2**
you may deduct.*)
Deductible Amount*** $
--------------
Example
Jim wants to make a 1998 deductible IRA contribution. Jim is married, an active
participant, files jointly and has MAGI of $55,000.
A. $ 60,000
--------------
B. $ 55,000
--------------
C. $ 5,000
--------------
x .2
$ 1,000
--------------
* If the adjusted dollar deduction limit is not a multiple of ten, it is
rounded up to the next highest $10 increment. If your partial deduction is
less than $200 but greater that $0, you are allowed to claim an IRA
deduction of $200.
** For married couples filing jointly, replace the .2 with .1 starting in the
tax year 2007.
*** This assumes that you are eligible to contribute that amount (the amount
may need to be reduced if you made a Roth IRA contribution).
Note: Qualifying married couples, filing separately may use the "Single"
category.
Rollovers, Transfers, and Direct Rollovers
Distributions from IRAs, SIMPLE IRAs, qualified plans or tax-sheltered
annuity programs may be eligible for a tax-free rollover or transfer into an
IRA. Transfer and rollover contributions are not deductible and will not be
applied against the annual contribution limits mentioned above. See Rollover
Review Explanation for more information.
<PAGE>
A. Rollovers and Transfers from IRAs. Assets in IRAs may be directly
transferred or rolled over to another IRA. A rollover occurs when you take a
distribution of the assets and roll them into an IRA within 60 calendar days
from the date of receipt. If you retain the assets for any period of time beyond
the 60 days, the rollover is no longer allowed. An additional restriction on
rollovers is that you are only allowed one rollover for each 12-month period.
The 60 day period is extended to 120 days in the case of a first-time homebuyer
distribution where a delay or cancellation in purchase or construction occurs
and the one rollover per twelve month rule does not apply.
B. Rollovers or Transfers from SIMPLE IRAs. A SIMPLE IRA is an IRA that can
only accept contributions pursuant to a SIMPLE arrangement set up through your
employer. SIMPLE IRAs must remain separate from IRAs for a two-year period.
After the two years, you may roll over or transfer your SIMPLE IRA into an IRA.
C. Rollovers and Direct Rollovers from Qualified Plans. An eligible
rollover distribution from a qualified retirement plan or tax-sheltered annuity
program may be rolled over or directly rolled over to an IRA. Generally, an
eligible rollover distribution is any distribution except: (1) one of a series
of substantially equal periodic payments over the single or joint life
expectancy of the employee and beneficiary or for a specific period of ten years
or more, (2) a nontaxable distribution or (3) a required distribution for an
employee age 70 1/2 or older. To complete a direct rollover you would instruct
your employer to deliver the funds directly to the IRA Custodian. To complete a
rollover, you would take control of the assets and would have 60 calendar days
from the date of receipt to roll over the taxable portion of the distribution to
an IRA.
Conversion or Rollover Into a Roth IRA
Starting in 1998, you may be eligible to convert or roll over your IRA into
a Roth IRA. Your modified adjusted gross income must be less than $100,000 in
the year you convert or roll over in order to be eligible. The conversion or
rollover is a taxable event, however, you will not be subject to the IRS 10%
premature distribution penalty. If you complete the rollover or conversion in
1998, you pay your taxes ratably over a four-year period. After 1998, all
conversions or rollovers into Roth IRAs will be fully taxed in the year of the
conversion or rollover.
Required Distributions After Age 70 1/2
After you reach age 70 1/2, the rules require you to take minimum
distributions from your IRA each year. The distribution for your first year, the
year in which you reach age 70 1/2, must be made no later than April 1 of the
following year. Distributions for subsequent years must be taken by December 31
of each year.
You must elect a method to receive your distributions in a manner which
distributes the funds at least as rapidly as the minimum required distributions.
Unless you elect otherwise, the minimum required distribution for each year is
determined by dividing your ending account balance for the previous year
(adjusted by any outstanding rollovers) by your joint life expectancy with the
appropriate beneficiary. If no beneficiary exists or a beneficiary other than a
natural person is named (except certain trusts), your single life expectancy
must be used for this calculation.
For years after the first distribution year, you may elect to annually
recalculate your life expectancy and/or your spouse's life expectancy. If you do
not choose a method, it is presumed that recalculation is elected. If
recalculation is elected, a new life expectancy factor is determined each year
based upon the ages of you and/or your spouse as of your birthdays during the
year. If the person whose life is being recalculated dies, the life expectancy
for that individual becomes zero. If recalculation is not chosen, the life
expectancy is calculated by determining the life expectancy at the end of the
first distribution year and subtracting 1 for each year which has elapsed since.
If no recalculation is elected, the death of the IRA Owner or the beneficiary is
disregarded.
The joint life expectancy of you and a beneficiary other than your spouse
is limited by the Minimum Distribution Incidental Benefit (MDIB) tables which
can be obtained by contacting Countrywide Fund Services, Inc. The tables give
life expectancies for the IRA Owner and a beneficiary ten years younger. If this
factor is less than your joint life expectancy with the applicable beneficiary,
the factor from the MDIB table must be used to calculate the minimum
distribution.
If you have more than one IRA at the same or different financial
organization(s), the minimum distribution must be calculated separately for each
IRA. However, the minimum distribution from each IRA can be withdrawn from any
one or more of your IRAs.
Distributions After Death
A. Death After the Required Beginning Date. If you die after the date when
payments must have begun (April 1 of the year after you reach age 70 1/2), the
payments to your beneficiary or estate must continue so that the funds will be
distributed at least as rapidly as they would have been distributed if the death
had not occurred. A spouse beneficiary may elect to roll over a distribution
(other than a required minimum distribution) into his or her own IRA.
B. Death Before the Required Beginning Date. If you die before the required
beginning date, your beneficiary has the following options:
(1) Five Year Option. The beneficiary may withdraw the entire account
balance in any manner so that the IRA is depleted by December 31 of
the fifth year following the year of death.
(2) Life Expectancy Option. The beneficiary may withdraw the funds in a
series of payments over a period which does not exceed the
beneficiary's life expectancy. These payments must begin by December
31 of the year following the year of death if the beneficiary is not
your spouse, or December 31 of the year you would have been age 70 1/2
(if later), if the beneficiary is your spouse.
(3) Spouse Treat as Own Option. A spouse beneficiary may elect to roll
over a distribution into his/her own account or to treat the IRA as
his/her own.
If you die before your required beginning date, your spouse beneficiary
must make his/her election of payment by the earlier of December 31 of the fifth
year after the year of your death or December 31 of the year you would have
attained age 70 1/2. If you die before your required beginning date, your
nonspouse beneficiary must make his/her election of payment no later than
December 31 of the year following the year of your death.
Income Tax Status of Distributions
IRA distributions are generally fully taxable as ordinary income. IRAs are
not eligible for the special tax treatment (five and ten year tax averaging and
capital gains treatment) available to certain distributions from pension and
profit sharing plans.
A. Nondeductible Contributions. If you have made nondeductible
contributions to an IRA, a certain percentage of your distributions will be
nontaxable. The nontaxable portion of your distributions is calculated as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Total Nondeductible Contributions
Nontaxable Distributions = Less Previous Nontaxable Distributions X Distributions During the Year
--------------------------------------
Total Account Balance of All IRAs
at Year End Plus Total Distributions During the Year
</TABLE>
B. Estate Tax Status of Distributions. All funds held within your IRA will
be included in your gross estate for estate tax purposes, regardless of the
named beneficiary or manner of distribution. There is no specific estate tax
exclusion for funds held within an IRA.
C. Gift Tax Status of IRA Contributions and Distributions. For gift tax
purposes, irrevocable beneficiary designations will not be treated as gifts.
Federal Penalties
In addition to the taxes imposed on IRAs, distributions from IRAs are also
potentially subject to a wide variety of penalties (excise taxes).
A. Penalty for Premature Distribution. Generally, if you take a
distribution from your IRA before you reach the age 59 1/2 you will owe, in
addition to regular income taxes, a 10% excise tax on the taxable amount of the
distribution. Exceptions to the 10% excise tax exist in the case of disability,
death, qualified first home purchase expenses, qualified higher education
expenses, distributions for health care expenses exceeding 7.5% of your adjusted
gross income, distributions used to pay for health care insurance if you are
unemployed, or if you agree to take a series of substantially equal periodic
payments made over your life expectancy or the joint life expectancy of yourself
and your designated beneficiary.
B. Penalty for Excess Contributions. If you contribute more to your IRA
than allowed it is called an "excess contribution" and you may be penalized. The
government imposes a 6% penalty (excise tax) per year for any excess amount you
allow to remain in your IRA. You must pay the penalty by filing a special IRS
form along with your income tax return. You can avoid the 6% penalty by removing
your excess contribution plus any earnings on the excess amount prior to the due
date for filing your Federal income tax return for the year, plus extensions.
Due to the complications involved in excesses, we recommend you talk to your
legal or tax adviser when an excess occurs.
C. Penalty for Insufficient or Late Distribution. You will owe a penalty of
50% of the amount of any minimum distribution you fail to take. As discussed
above, minimum distributions are required when you reach age 70 1/2 and in some
cases for beneficiaries. You are responsible for paying this tax and reporting
it on your income tax return. This 50% penalty is in addition to any regular
income tax.
D. Penalty for Prohibited Transactions. If you engage in a prohibited
transaction as defined under Code Section 4975, the IRA loses its tax exemption
as of the first day of the year. You must include the Fair Market Value of the
IRA in your gross income for the year during which the prohibited transaction
occurred and pay all applicable taxes and penalties.
E. Penalty for Pledging the Account as Security. If you pledge your IRA as
security for a loan, the portion pledged is treated as a distribution to you in
that year. The portion pledged is fully taxable and subject to all penalties.
Miscellaneous Provisions
A. Your Custodian. Your Custodian must be a bank, savings and loan
association, credit union, or other entity that is permitted to accept IRA
contributions.
B. Cash Contributions. All contributions to your IRA must be in cash except
for rollover and transfer contributions.
C. Contribution Limit. You are not allowed to contribute more than $2,000
as a regular contribution and no more than $4,000 in the case when you are
making a contribution both to your IRA and to the IRA of your spouse under the
spousal IRA rules. Your contribution limit must also be coordinated with any
Roth IRA contributions you make.
D. Life Insurance. You may not invest your IRA in life insurance contracts.
E. Nonforfeitable. Your interest in your IRA balance is nonforfeitable.
F. No Commingling. The assets of the IRA will not be commingled with other
property except in a common trust or investment fund.
G. Collectibles. No part of the funds can be invested in collectibles,
including any work of art, rug or antique, metal or gem, stamp or coin,
alcoholic beverage, or any other tangible property specified by the IRS. The
acquisition of certain U.S. government-issued gold, silver, and platinum coins,
certain state-issued coins, and certain gold, silver, platinum, or palladium
bullion meeting specific requirements are permitted investments under the law.
IRS Approval of Forms
The Custodial Agreement used to establish this IRA is the IRS Model
Custodial Agreement (Form 5305-A). This agreement has been approved as to form
by the Internal Revenue Service. You are responsible to ensure you follow the
terms and conditions of this agreement. This approval is not an endorsement of
the investment instruments used by the Custodian.
Provisions Regarding Amendments to the Plan
The Custodian of this IRA may amend the IRA at any time. The Custodian
shall furnish copies of any such amendments to the IRA Owner within 30 days of
the date the amendments are to become effective.
Fees
There are no fees for maintaining your IRA. Of course, the shares of the
Fund in which your account is invested will be affected by management fees and
other expenses of that Fund. These matters are also discussed in the prospectus
for the Funds which you received prior to or along with this brochure. The fee
schedule may be changed upon 30 days' written notice to the IRA owner.
Annual Statements
Each year the Custodian will furnish you and the IRS with statements
reflecting the activity in your IRA. You and the IRS will receive a Form 5498
(or a substitute form), which will indicate your Fair Market Value of the
account as of the end of the previous calendar year. This form will give the
amount of your contribution to the IRA and will indicate any rollovers into the
account. Another statement, the IRS Form 1099-R, will reflect your distributions
for the year.
Other IRS Forms
You may be required to file other IRS forms. IRS Form 5329 is required when
you are assessed certain penalties. If you only owe the 10% premature
distribution penalty, you may be able to pay the penalty on your income tax
return alone. You must also file IRS Form 8606 for each taxable year you make
nondeductible contributions or receive nontaxable distributions.
<PAGE>
Individual Retirement
Custodial Account
Form 5305-A
(Rev. October 1992) Department of the Treasury Internal Revenue Service
The Depositor and the Custodian make the following agreement:
Article I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
Article II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3) which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
Article IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date, (April 1
following the calendar year end in which the Depositor reaches age 70 1/2). By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor
expectancy of the Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of
the beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the
life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the
year of the Depositor's death. If, however, the beneficiary is
the Depositor's surviving spouse, then this distribution is not
required to begin before December 31 of the year in which the
Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on
the Depositor's required beginning date, even though payments may
actually have been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse,
no additional cash contributions or rollover contributions may be
accepted in the account.
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the Custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of a distribution in accordance with paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
Article V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
Article VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles
Article VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
Article VIII Definitions
8.1 "Code." The term "Code" shall mean the Internal Revenue Code.
8.2 "Custodial Account." Your IRA shall be referred to as the "custodial
account" or "account"
8.3 "IRA." IRA shall mean Individual Retirement Account within the meaning
of Section 408 of the Code.
8.4 "IRS." The term "IRS" shall mean the Internal Revenue Service.
8.5 "We." The IRS selected the term "Custodian" to describe us, your
financial organization. In other parts of this agreement, the "Custodian" will
be referred to as "us," "we," "our," or the "Custodian."
8.6 "You." The IRS selected the term "Depositor" to describe "you," the
Roth IRA Owner. In other parts of this agreement, you will be referred to as
"you," "your," or "Roth IRA Owner."
8.7 "Fund(s)." The "Fund(s)" shall mean the mutual fund(s) identified in
the IRA Application used to establish this IRA.
Article IX Fees and Expenses
9.1 Fees. You agree to pay any fees we establish pursuant to the
Application or a separate fee schedule which we will publish from time to time.
Such fees may include, without limitation, establishment fees, annual
administration fees, termination fees, transfer fees, transaction fees, legal
fees, investment commissions, and such other fees as we determine applicable.
You agree to pay such fees either by a separate billing or direct deduction from
the custodial account; the method of payment is at our discretion. Some fees,
such as brokerage commissions, must be deducted from the custodial account. The
Custodian shall have the right to liquidate sufficient shares in the custodial
account to pay such fees. In the case of a third party receiving payments, such
as brokerage fees and commissions, we may receive a portion of these fees in
return for services provided in completing these transactions. We agree to give
you at least 30 days advance notice prior to changing a fee or imposing a new
fee.
9.2 Expenses. You agree to pay any income, transfer, and other taxes of any
kind that may be levied or assessed upon the custodial account, and all other
administrative expenses reasonably incurred by us in the performance of our
duties. These expenses may include legal, or other professionals hired by us in
connection with your custodial account. You agree to reimburse us for any
reasonable expenses incurred in the administration of the account. The Custodian
shall have the right to liquidate sufficient shares in the custodial account to
pay such expenses.
Article X Amendments
We may amend your custodial account at any time to comply with necessary
laws and regulations or for any other reason. Amendments may be made
retroactively when required to meet a law or regulatory change. You are deemed
to have automatically consented to any amendment 30 days after we mail you a
copy of the amendment. Your actual written or verbal consent is not required to
amend. We shall send you a copy of such amendment within 30 days of the
amendment's effective date.
Article XI Limited Liability
11.1 Hold Harmless. You agree to hold us harmless, to indemnify, and to
defend us against any and all claims arising from and liabilities incurred by
reason of any action taken by us, except to the extent such liability arises
from the willful misconduct or gross negligence of the Custodian.
11.2 No Investment Discretion. You agree that all contributions shall be
invested according to your sole discretion in whole or fractional shares of the
Fund(s) identified in the Roth IRA Application. All dividends and capital gain
distributions received on shares of the Fund(s) shall be reinvested in the
shares of the same Fund(s) which shall be credited to the custodial account. We
shall not be responsible or liable for any investment decisions or
recommendations with respect to the investment, reinvestment, or sale of assets
in the custodial account. We shall not be responsible for reviewing any assets
held in the custodial account and shall not be responsible for questioning any
of your investment decisions. We shall not be responsible for any loss resulting
from any failure to act because of the absence of directions from you. In the
event we determine your investment instructions are unclear, then we shall act
as soon as practical to obtain clarification of such instructions. Pending
clarification, we shall hold without investing all or any portion of the
contribution, without liability for loss of income or appreciation and without
liability for interest or dividends.
11.3 Transaction Responsibility. Unless required by law, we are not
responsible for inquiring into the nature or amount of any contribution made by
you, nor into the amount or timing of any distribution requested. You shall have
full responsibility for determining any tax or investment consequences of all
contributions to and distributions from the custodial account. We shall not be
bound to take any action on behalf of you, except upon receipt of written
instructions from you. We shall have no obligation to inquire into the
genuineness of any such written instruction without liability for any action
taken pursuant thereto, so long as we act in good faith.
11.4 No Assumed Responsibilities. We assume no responsibilities and agree
only to provide the administrative and custodial services required under IRC
section 408, 408A and applicable regulations.
Article XII Default Provisions (70 1/2 and Death)
12.1 70 1/2 Distributions. If you fail to make a written election of
payment by your required beginning date, the minimum required distribution will
be calculated using the joint life expectancy of you and your designated
beneficiary. If no beneficiary exists or a beneficiary other than a natural
person is named (except certain trusts), your single life expectancy will be
used for this calculation. See section 11.3 above. The recalculation method will
be used to the extent allowed.
12.2 Death Distributions. If you die before your required beginning date,
then your designated beneficiary must elect a method of distribution under
Article IV-4(b)(i) and (b)(ii) by the earlier of December 31 of the calendar
year in which the life expectancy distributions must begin under Article
IV-4(b)(ii) or December 31 of the calendar year which contains the fifth
anniversary of the date of your death. If you use the designation of beneficiary
form provided in the Application then the following rules apply (i) the
designation in the application revokes all previously made designations, (ii) if
any of the beneficiaries dies before you, the deceased beneficiary's share will
be reallocated to the surviving beneficiaries on a pro rata basis, and (iii) if
none of the beneficiaries survive you, or if the Custodian cannot locate your
beneficiary(ies) after a reasonable search, any balance in your IRA will be paid
to your estate. The Custodian may refuse to accept a designation not made on its
standard form. You agree to release the Custodian from and indemnify it for any
and all claims arising from the Custodian's actions under your designation of
beneficiary.
Article XIII Reports and Records
We shall keep accurate and detailed records of all contributions, receipts,
investments, distributions, disbursements, and other transactions relating to
the custodial account. We shall provide reports to the IRS and to you as
required by law and regulations. Unless you file a written statement with us
within 60 days after you receive a statement, we shall be relieved and
discharged from all liability to you (including any of your beneficiaries) with
respect to all matters set forth in such report.
Article XIV Powers
We shall have the right to hire attorneys or other professionals if we deem
it necessary for the proper administration of your custodial account. This
includes the right to have a party affiliated with the Fund(s) to perform
administrative duties. We shall also have the power to request a judicial
settlement of your account or to enter into a lawsuit for your account. We shall
also have the power to do whatever else we determine necessary for the proper
administration of your account.
Article XV Resignation or Removal of Us as Custodian
We may resign as Custodian without your consent and you may remove us as
Custodian without our consent. We must provide notice to you of any resignation
30 days prior to the effective date of the resignation. In the event of
resignation by us, you shall appoint a qualified successor Custodian. Upon our
receipt of a written acceptance of such appointment by the successor Custodian,
we shall transfer and pay over the assets of the custodial account to the
successor Custodian. If after 30 days from notice of resignation, you have not
appointed a successor Custodian or we have not received a written acceptance of
such appointment by the successor Custodian, we shall have the right to transfer
the assets remaining in the custodial account to a successor Custodian that we
choose in our sole discretion or we may liquidate the assets and distribute the
cash proceeds, or we may make an in-kind distribution, or we may otherwise
distribute to you the assets remaining in the custodial account. We are
authorized, however, to reserve such funds as we deem advisable for payment of
any liabilities constituting a charge against the assets of the custodial
account or against us, with any balance of such reserve remaining after payment
of all such items to be paid over the successor Custodian.
Article XVI Termination
In the event the balance of the custodial account is less than the minimum
value prescribed from time to time by the appropriate Fund(s), we may liquidate
the custodial account by making a distribution in cash or in-kind of the assets
in the account less any fees owing. If we terminate for any reason, we shall not
be liable for any loss or penalty incurred upon termination and liquidation of
the custodial account. Upon liquidation of the custodial account this Agreement
shall terminate and we shall be relieved of all further duties and any liability
relative to this Agreement, the custodial account, and the assets distributed
hereunder.
Article XVII Custodian's Responsibilities
We shall act as an agent for you, we shall receive funds and invest them at
your direction and in accordance with this Agreement. All shares of the Fund(s)
shall be held in our name as Custodian or our nominee's name. The parties do not
intend to confer any fiduciary responsibilities upon the Custodian and none
shall be implied. We shall deliver, or cause to be executed or delivered to you
all notices, prospectuses, financial statements, proxies and proxy solicitation
materials relative to shares of the appropriate Fund(s) held in the custodial
account. The Custodian shall vote such shares only in accordance with your
written instructions.
Article XVIII Contributions
The Custodian is under no duty to compel you to make any contributions and
shall have no duty to assure that such contributions are appropriate in amount.
You have sole responsibility for assuring the deductibility of any
contributions. We may request additional information in the case of rollovers
and direct rollovers. We may request a Transfer Form, or other forms prior to a
transfer.
Article XIX Miscellaneous
19.1 Notice. Any notice, payment, report, or other material mailed to you
shall be deemed delivered and effective three days after the date mailed by us
to you. We shall send such material to your last address you provided and we
shall assume no obligation to ascertain the actual address or whereabouts of
you. Any notice you send us shall be deemed delivered when actually received by
us. Except as otherwise permitted by us, all instructions to us must be in
writing.
19.2 Headings. The headings and articles of this agreement are for
convenience of reference only, and shall have no substantive effect on
provisions of this agreement.
19.3 Singular Form. Throughout this agreement, the singular form includes
the plural where applicable.
19.4 State Law. This agreement shall be construed and interpreted in
accordance with the laws of the state in which our principal office is located,
except to the extent superseded by federal law.
19.5 Disqualifying Provision. Any provision of this agreement which would
disqualify the custodial account as an IRA shall be disregarded to the extent
necessary to make the custodial account an IRA.
19.6 Interpretation. If any question arises as to the meaning of any
provision of this agreement, then we shall be authorized to interpret any such
provision, and our interpretation shall be binding upon all parties.
19.7 Additional Provisions. Additional provisions to this agreement may be
attached on a separate sheet.
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General Instructions
(Section references are to the Internal Revenue Code unless otherwise noted.)
Purpose of Form
Form 5305-A is a model custodial account agreement that meets the
requirements of section 408(a) and has been automatically approved by the IRS.
An individual retirement account (IRA) is established after the form is fully
executed by both the individual (Depositor) and the Custodian and must be
completed no later than the due date of the individual's income tax return for
the tax year (without regard to extensions). This account must be created in the
United States for the exclusive benefit of the Depositor or his or her
beneficiaries.
Individuals may rely on regulations for the Tax Reform Act of 1986 to the
extent specified in those regulations.
Do not file Form 5305-A with the IRS, instead, keep it for your records.
For more information on IRAs, including the required disclosure you can get
from your Custodian, get Pub. 590, Individual Retirement Arrangements (IRAs).
Definitions
Custodian. The Custodian must be a bank or savings and loan association, as
defined in section 408(n), or any person who has the approval of the IRS to act
as Custodian.
Depositor. The Depositor is the person who establishes the custodial
account.
Identifying Number
The Depositor's social security number will serve as the identification
number of his or her IRA. An employer identification number is required only for
an IRA for which a return is filed to report unrelated business taxable income.
An employer identification number is required for a common fund created for
IRAs.
IRA for Nonworking Spouse
Form 5305-A may be used to establish the IRA custodial account for a
nonworking spouse.
Contributions to an IRA custodial account for a nonworking spouse must be
made to a separate IRA custodial account established by the nonworking spouse.
Article IV
Distributions made under this article may be made in a single sum, periodic
payment, or a combination of both. The distribution option should be reviewed in
the year the Depositor reaches age 70 1/2 to ensure that the requirements of
section 408(a)(6) have been met.
Article VIII
Article VIII and any that follow it may incorporate additional provisions
that are agreed to by the Depositor and Custodian to complete the agreement.
They may include, for example, definitions, investment powers, voting rights,
exculpatory provisions, amendment and termination, removal of the Custodian,
Custodian's fees, state law requirements, beginning date of distributions,
accepting only cash, treatment of excess contributions, prohibited transactions
with the Depositor, etc. Use additional pages if necessary and attach them to
this form.
Note: Form 5305-A may be reproduced and reduced in size for adaption to
passbook purposes.
* * * * * *
The Markman
MultiFunds
P.O. Box 5354
Cincinnati, OH 45201-5354
800.707.2771
<PAGE>
ROTH IRA
Individual
Retirement
Account
* * * * * *
The Markman
MultiFunds
P.O. Box 5354 o Cincinnati, Ohio 45201-5354 o 800.707.2771
<PAGE>
The Markman
MultiFund Trust Roth IRA
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What is a Roth IRA?
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A Roth Individual Retirement Account (Roth IRA) is a nondeductible retirement
savings account which features tax free withdrawals for qualified distributions
after a five-year holding period. Even if you already participate in an
employer-sponsored pension, profit sharing or other retirement or savings plan,
you may still be eligible to establish a Roth IRA.
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Contributions
- --------------------------------------------------------------------------------
How much can I put into a Roth IRA?
If you are employed you may contribute 100% of your compensation to a maximum of
$2,000 into a Roth IRA. The annual Roth IRA contribution limit is combined with
the traditional IRA contribution limit. In other words, you may contribute a
maximum of $2,000 per year between the two types of IRAs. If you are married and
have a non-wage earning spouse, you may contribute up to $4,000 to two Roth
IRAs, with a maximum of $2,000 to any one account.
When should I contribute to my Roth IRA?
Contributions may be made during the calendar year, but no later than your tax
filing due date excluding extensions. To maximize the tax benefits, you should
consider making your yearly contribution to your Roth IRA as soon after January
1 as possible. (The sooner you put money into your account the sooner you
shelter the earnings from taxes.) In addition, you will begin the five year
holding period that qualifies distributions for tax-free treatment when you make
your initial contribution into your Roth IRA.
Must I contribute the same amount each year?
No - you may contribute any amount as long as you do not exceed the maximum
combined contribution allowed for all IRA products.
May I convert my existing IRA into a Roth IRA?
Yes - if you have an adjusted gross income of $100,000 or less in the year of
the conversion (applicable to both single filers and married couples filing a
joint return). The amount converted into a Roth IRA from your traditional IRA
will be subject to full taxation at your marginal income tax rate. The 10%
premature distribution penalty will not apply to conversions. The income limit
for conversion eligibility excludes the actual amount you would be converting.
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Distributions
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When can I take money out of my Roth IRA?
Because your contributions are made from income that has already been taxed,
your contributions may be distributed to you at any time without any taxes or
penalties. You can start withdrawing earnings from your Roth IRA tax-free when
you reach age 59 1/2 if your account has been open for five or more years.
Withdrawals of earnings before age 59 1/2 can be made without any taxes or
penalties in the case of death, disability or qualified first-time home purchase
expenses (up to $10,000) if the account has been open for five or more years.
Otherwise, you must pay a 10% penalty on the earnings withdrawn and declare the
earnings withdrawn as ordinary income for federal tax purposes. The 10% penalty
does not apply to earnings which are withdrawn for eligible medical expenses in
excess of 7 1/2% of your adjusted gross income, medical insurance premiums for
eligible unemployed individuals or qualified higher education expenses, but you
must declare the earnings withdrawn for these purposes as ordinary income for
federal tax purposes.
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Benefits of the Markman MultiFund Trust Roth IRA
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Investment Flexibility
The Markman MultiFund Trust Roth IRA offers a variety of mutual funds, each with
its own investment objective.
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Exchange Privilege
Your Roth IRA investment can be exchanged among the Funds of the Markman
MultiFund Trust. See the fund prospectus for details and limitations.
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Professional Management
Investments are actively managed by full-time investment professionals.
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No Set-Up Fee
There is no fee for establishing an IRA.
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Automatic Investment
To establish an ongoing investment program, simply determine the amount you want
to invest each month. It can be automatically withdrawn from your checking or
savings account for deposit into your Roth IRA.
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Rollovers/Conversions
You may be eligible to convert your traditional IRA into a Roth IRA.
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Convenience
All safekeeping of securities, collection of interest and recordkeeping is
performed by the Custodian. You receive easy-to-read statements.
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Benefits of an IRA
The following table demonstrates the substantial advantage of using an IRA to
accumulate a retirement fund.
HOW AN INDIVIDUAL RETIREMENT ACCOUNT GROWS
Compounded daily at assumed rates of interest
<TABLE>
<CAPTION>
---------------------- ------------------------ ------------------------
8% 11% 14%
---------------------- ------------------------ ------------------------
Total Approx. Approx. Approx.
deposits monthly monthly monthly
at age 65 Value at payment Value at payment Value at payment
Age (at $2,000/yr.) age 65 at age 65 age 65 at age 65 age 65 at age 65
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
20 $90,000 $961,713 $7,753 $2,845,142 $28,656 $8,958,466 $109,642
- ----------------------------------------------------------------------------------------------------
25 80,000 632,554 5,099 1,621,049 16,327 4,398,527 53,833
- ----------------------------------------------------------------------------------------------------
30 70,000 413,125 3,330 920,124 9,267 2,155,727 26,383
- ----------------------------------------------------------------------------------------------------
35 60,000 266,845 2,151 518,769 5,225 1,052,610 12,882
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40 50,000 169,330 1,365 288,950 2,910 510,043 6,242
- ----------------------------------------------------------------------------------------------------
45 40,000 104,323 841 157,354 1,584 243,182 2,976
- ----------------------------------------------------------------------------------------------------
50 30,000 60,986 491 82,001 825 111,927 1,369
- ----------------------------------------------------------------------------------------------------
55 20,000 32,097 258 38,853 391 47,369 579
- ----------------------------------------------------------------------------------------------------
60 10,000 12,838 103 14,147 142 15,617 191
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Markman MultiFund Trust Roth IRA
Disclosure Statement
- --------------------------------------------------------------------------------
Right to Revoke the Account
You will have seven days from the date you complete the Adoption Agreement
and establish the Markman MultiFund Trust Roth IRA to cancel the account for any
reason. If you cancel the Roth IRA, the Markman MultiFund Trust will refund all
the money you contributed, without increase or decrease for any reason.
You may cancel your Roth IRA by sending a signed written notice delivered
or mailed within this seven-day period to:
Markman MultiFund Trust Roth IRA
P.O. Box 5354
Cincinnati, OH 45201-5354
If mailed in a properly addressed, first class postage prepaid envelope,
the date of the postmark, or if certified or registered mail is used, the date
of certification or registration will be used to determine if you notified us
within the seven-day revocation period. If you have any questions about this
revocation procedure, please call us at 800-707-2771.
Definitions
In this Disclosure Statement the terms "you," "your," "Depositor," or "Roth
IRA Owner" shall mean the person who established the Roth IRA. The terms
"Custodian," "our," "us," or "we" shall mean the financial organization acting
as the Custodian of your Roth IRA. The term "IRS" shall refer to the Internal
Revenue Service. The term "Roth IRA" shall mean Roth Individual Retirement
Account within the meaning of section 408A of the Code and shall also refer to
your Custodial Account. The term "IRA" or "traditional IRA" shall mean
Individual Retirement Account or Individual Retirement Annuity within the
meaning of section 408 of the Code. The term "Code" shall mean the Internal
Revenue Code.
Overview
The Roth IRA is a nondeductible back-ended IRA. This means that the tax
benefits of a Roth IRA occur at the time of distribution, not at the time of
contribution. You are not allowed to deduct your Roth IRA contribution on your
income tax return. The tax benefits of the Roth IRA include tax-deferred growth
of the earnings and potentially, a tax-free distribution (if it meets the
requirements of a qualified distribution). Roth IRAs are authorized under
federal law and grant federal tax benefits. Your state may also grant tax
benefits for Roth IRAs. Please consult with your tax adviser concerning any
state law questions you may have.
Account Growth
Your Roth IRA is self-directed. Earnings and capital appreciation on
investments chosen by you will depend on overall economic conditions and the
success of that particular investment. Earnings on these investments are not
guaranteed by the Custodian and may or may not be reasonably projected. For
example, if the initial investment is a passbook, time deposit or money market
account, the account projection can be made based on the current rate of
earnings paid. On the other hand, if the initial investment is an investment
security (stocks, bonds, or mutual funds), the rate of growth of the earnings on
these types of investments cannot be reasonably projected.
Eligibility for Roth IRAs
A. Regular Roth IRA Contributions. You must have "earned income" and your
income cannot exceed certain income levels in order to contribute to a Roth IRA.
(1) Earned Income. Earned income includes compensation received as wages,
tips, bonuses, as well as other compensation received for personal
services. Compensation also includes taxable alimony. (If you are
self-employed, compensation is your net earnings from your trade or
business reduced by your deduction for contributions made on your
behalf to retirement plans and the deduction allowed for one-half of
your self-employment taxes.)
(2) Income Limits. Whether or not you are eligible to make a Roth IRA
contribution depends upon your income level and your tax filing
status. Your participation in another retirement plan, ("your active
participation status,") does not affect your ability to make a Roth
IRA contribution. Married joint filers with modified adjusted gross
incomes (MAGI) of $150,000 or less and single filers with MAGIs of
$95,000 or less are entitled to make up to a full $2,000 Roth IRA
contribution. Individuals earning more than the limits are slowly
phased out of the ability to make Roth IRA contributions. Married
joint filers lose the ability to make any contribution when their MAGI
reaches $160,000 and single filers when their MAGI reaches $110,000.
Married persons filing separately are subject to a phaseout range
starting with their first dollar of MAGI. The charts below are
designed to aid you in determining your eligibility to make a
contribution to a Roth IRA. You should consult with your tax or legal
adviser concerning questions.
B. MAGI. Your modified adjusted gross income (MAGI) is your adjusted gross
income from your federal income tax return figured without taking into account
any foreign earned income exclusion and housing exclusion (deduction) or any
Series EE bond interest from IRS Form 8815.
CONTRIBUTION CHART
This is a quick reference guide to determine whether or not you meet the
income thresholds for the Roth IRA. If your income places you in a phaseout
range, see the phaseout calculation chart.
Modified AGI Married, Filing Married, Filing
(MAGI) Single Jointly Separately**
- --------------------------------------------------------------------------------
Less than $10,000 Full Contribution Full Contribution Phaseout
- --------------------------------------------------------------------------------
$ 10,000 - $ 95,000 Full Contribution Full Contribution No Contribution
- --------------------------------------------------------------------------------
$ 95,001 - $109,999 Phaseout Full Contribution No Contribution
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$110,000 - $150,000 No Contribution Full Contribution No Contribution
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$150,001 - $159,999 No Contribution Phaseout No Contribution
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$160,000 or over No Contribution No Contribution No Contribution
- --------------------------------------------------------------------------------
FILING STATUS
PHASEOUT CALCULATION
If your income falls within the phaseout limits this chart helps determine
your maximum contribution amount.
Married, Filing Married, Filing
Single Jointly Separately**
------------- ------------- ------------
Modified Adjusted Gross
A. Income (MAGI) limit $ 110,000 $ 160,000 $ 10,000
------------- ------------- ------------
Your MAGI (From IRS
B. Form 1040 or 1040A) $ $ $
------------- ------------- ------------
Subtract B
C. from A $ $ $
------------- ------------- ------------
(Multiply line C x .1333** x .2** x .2**
by given factor)
Contribution Amount* $ $ $
------------- ------------- ------------
* CAUTION: The amount of your contribution must be coordinated with the
amount of your traditional IRA contribution. You are only allowed to
contribute $2,000 maximum to both your Roth IRA and your traditional IRA.
If the adjusted dollar contribution limit is not a multiple of ten, it is
rounded up to the next highest $10 increment. If your partial contribution
is less than $200 but greater than $0, you are allowed to claim a
contribution of $200.
** The IRS has not released guidance concerning how married persons filing
separately will determine their partial contribution amount. However, the
Tax Technical Corrections Act of 1997 provides for the numbers you see
printed in the phaseout calculation chart. At the time of this writing,
Congress was close to passing the Tax Technical Corrections Act of 1997. If
this bill does not pass, please substitute $15,000 in place of $10,000 and
also substitute .1333 in place of .2. Please check with your tax adviser
concerning the status of the Tax Technical Corrections Act of 1997.
C. Spousal Roth IRA Contributions. You may make a contribution into your
spouse's Roth IRA if you meet the special spousal rules. You must be married,
file a joint federal income tax return, and the receiving spouse must earn less
in compensation (or have no compensation) than the spouse making the
contribution. The total combined contribution a couple can make each year to
both of their Roth IRAs is the smaller of $4,000 or their combined compensation
for the year. You can divide your total Roth IRA contribution in any manner you
choose, provided you do not contribute more than $2,000 to either Roth IRA. Your
combined compensation equals the lesser compensated spouse's compensation plus
the higher compensated spouse's compensation (reduced by any Roth IRA
contribution and any traditional IRA contribution). Please consult your tax
adviser if you need additional assistance.
D. Contribution Amount. If you meet the above eligibility requirements, you
may contribute up to 100% of your compensation or $2,000, whichever is less.
Regular and spousal Roth IRA contributions must be made by your tax filing due
date, excluding extensions. The amount you are allowed to contribute to a Roth
IRA also depends upon the amount you contribute to a traditional IRA. The
maximum amount you are allowed to contribute to your Roth IRA is $2,000 reduced
by the amount you contribute to a traditional IRA.
E. Rollover from another Roth IRA. You are allowed to roll over the assets
from one Roth IRA into this Roth IRA. The rollover contribution does not affect
your ability to make a regular Roth IRA contribution in an amount of up to
$2,000 according to the rules outlined above. You must complete the rollover
within 60 days and you are only allowed one rollover per 12-month period. The
60-day period is extended to 120 days in the case of a first-time homebuyer
distribution where a delay or cancellation in purchase or construction occurs
and the one rollover per 12-month rule does not apply.
F. Rollover or Conversion from a traditional IRA into this Roth IRA. You
may be eligible to roll over or convert a traditional IRA into a Roth IRA.
(1) Qualified Rollover or Conversion Contribution. In order to be eligible
to roll over or convert your traditional IRA assets into a Roth IRA,
you must meet certain eligibility requirements.
a. Traditional IRA Assets. The assets you are intending to roll over
or convert to this Roth IRA must have been initially covered
under an Individual Retirement Account or Individual Retirement
Annuity.
b. 60 Days. In the case of rollovers, you must complete the rollover
within 60 days of receipt.
c. Income Restrictions. You are not allowed to roll over or convert
a traditional IRA into a Roth IRA if your modified adjusted gross
income exceeds $100,000.
d. May Not File Separate Return. If you are married and file a
separate income tax return, you are not allowed to roll over or
convert your traditional IRA into a Roth IRA.
e. Other Issues. If you are in your 70 1/2 year or beyond you may
not be allowed to roll the amount of your required minimum
distribution into a Roth IRA. The conservative Deductibility You
are not allowed to deduct your Roth IRA contribution. Qualified
Distributions Distributions from your Roth IRA are federal income
tax free and IRS penalty free in certain circumstances. To
qualify for a tax and IRS penalty-free distribution you must take
a "qualified distribution" which requires you to satisfy a
five-year holding period for your contributions and also requires
you to take the distribution for one of the qualified
distribution reasons listed below.
A. Five Years. You must keep your contribution in the Roth IRA account for
five years in order to avoid taxes on the earnings portion of your distribution.
(1) Regular Roth IRAs. For the purpose of calculating the five years for
regular Roth IRAs, the distribution must not be within the
five-taxable-year-period beginning with the first taxable year for
which the individual made a contribution to a Roth IRA (or such
individual's spouse made a contribution to a Roth IRA established for
such individual). We anticipate future guidance from the IRS on
exactly how the five years will be calculated.
(2) Rollover or Conversion Roth IRAs. In the case of a rollover or
conversion from a traditional IRA into a Roth IRA, the
five-taxable-year-period begins in the taxable year in which the
rollover or conversion occurred. At the time of this writing, Congress
was working on a technical corrections bill that would require the
five-year holding period to start with the most recent rollover or
conversion in the case where the assets from rollovers or conversions
occurring in different years were mixed together. Please check with
your tax adviser concerning the five-year holding period for rollovers
and conversions from traditional IRAs into Roth IRAs.
B. Qualified Distribution Reasons. In addition to meeting the five-year
holding period to meet the "qualified distribution" requirement, you are only
allowed to take a distribution for certain reasons. You will not be subject to
federal income taxation or to the 10% premature distribution penalty if you meet
the five-year holding period and take a distribution for one of the following
reasons: (1) if you are age 59 1/2 or older, (2) your beneficiary after your
death takes a distribution, (3) if you are disabled within the meaning of Code
Section 72(m), or (4) you meet the first-time homebuyer exception.
Premature Distribution Penalties
The IRS imposes a 10% premature distribution penalty on certain
distributions from Roth IRAs. There may also be an additional 10% penalty on
certain distributions from Roth IRAs containing amounts converted or rolled from
a traditional IRA in 1998. Review the categories below to determine your IRS
penalty situation.
A. Qualified Tax-Free Distributions. To meet the "qualified distribution"
requirements for tax-free distributions from a Roth IRA, you must meet both the
"five-year holding period" requirement and take the distribution for one of the
qualified reasons discussed above. (See Qualified Distributions.) This rule
applies to both regular Roth IRAs and conversion Roth IRAs. All nonqualified
distributions are subject to taxation of the earnings. (Note: Tax-free refers to
federal income taxes. State, local or other taxes may still apply.)
B. Regular Roth Contributions. If your Roth IRA contains only regular
contributions (i.e. annual contributions of up to $2,000), the following rules
apply.
(1) Return of Contributions. You will avoid the 10% premature distribution
penalty if you take a distribution containing only your contributions
and not any earnings. If you take a nonqualified distribution, the
distribution amount shall be treated as if made from contributions to
the extent that the distribution, when added to all previous
distributions, does not exceed the aggregate amount of contributions
to the Roth IRA. This is significant because only your earnings are
taxable and penalized when withdrawn for nonqualified reasons, not the
return of your contributions. In other words, you can withdraw your
original contribution amount tax-free and IRS penalty-free at any time
and for any reason. Only when you begin to take out your earnings do
you need to consider whether the distribution is taxable and
penalized.
(2) More Exceptions to the 10% Penalty. Regardless of whether or not you
meet the five-year holding period, you avoid the 10% IRS penalty on
distributions for the following reasons: a first-time homebuyer
distribution, qualified higher education expenses, death, disability,
attainment of the age 59 1/2, medical expenses exceeding 7 1/2% of
your adjusted gross income, health insurance premiums if you are
unemployed, and substantially equal periodic payments. The
distribution, however, will be subject to taxation of the earnings if
it is not a qualified distribution.
(3) Other Nonqualified Distributions. If you fail to meet the five-year
holding period, fail to meet any of the exceptions to the 10% IRS
penalty, and take a distribution containing earnings then you will be
subject to the taxation and the 10% penalty on the earnings withdrawn.
C. Roth IRAs Resulting from Traditional IRAs. If you converted or rolled
your traditional IRA into a Roth IRA special rules and penalties may apply to
you. At the time of this writing, Congress was close to passing the Tax
Technical Corrections Act of 1997 that would create new rules for you. This
section explains the proposed rules. Please check with your tax adviser
concerning the status and content of the bill. The five-year holding period
under the bill would start with the most recent rollover or conversion from a
traditional IRA. Accordingly, if you mix your rollover and conversion amounts
together from different years, you will be extending the five-year holding
period for the amount you rolled or converted first. Additionally, if you mix
amounts rolled or converted from traditional IRAs with regular Roth IRAs special
rules may apply. To avoid these issues, you may open a Roth Conversion IRA.
Other Federal Penalties
In addition to the taxes imposed on Roth IRAs and the 10% premature
distribution penalty, distributions from Roth IRAs are also potentially subject
to a wide variety of other penalties (excise taxes).
A. Penalty for Excess Contributions. Contributing more to your Roth IRA and
traditional IRA than allowed creates an "excess contribution" and you may be
penalized. An excess is determined by considering your contributions to both
your traditional IRA and your Roth IRA. The government imposes a six-percent
penalty (excise tax) per year for any excess amount you allow to remain in your
traditional IRA or Roth IRA. You must pay the penalty by filing a special IRS
form along with your income tax return. You can avoid the six-percent penalty by
removing your excess contribution plus any earnings on the excess amount prior
to the due date for filing your federal income tax return for the year, plus
extensions. Please consult with your tax adviser in cases involving excess
contributions.
B. Penalty for Prohibited Transactions. If you engage in a prohibited
transaction, the Roth IRA loses its tax exemption as of the first day of the
year in which the prohibited transaction occurred.
C. Penalty for Pledging the Account as Security. If you pledge your Roth
IRA as security for a loan, the portion pledged is treated as a distribution to
you in that year.
Distributions After Death
Your beneficiary's options include:
A. Five-Year Option. The beneficiary may withdraw the entire account
balance in any manner so that the Roth IRA is depleted by December 31 of the
fifth year following the year of death.
B. Life Expectancy Option. The beneficiary may withdraw the funds in a
series of payments over a period of years which does not exceed the
beneficiary's single life expectancy.
C. Spouse Treat as Own Option. A spouse beneficiary may elect to treat the
Roth IRA as his or her own.
Miscellaneous Provisions
A. Custodian. Your Custodian must be a bank, savings and loan association,
credit union, or other entity permitted to accept Roth IRA contributions.
B. Cash Contributions. All contributions to your Roth IRA must be in cash
except for rollover and conversion contributions.
C. Life Insurance. You may not invest your Roth IRA in life insurance
contracts.
D. Nonforfeitable. Your interest in your Roth IRA balance is
nonforfeitable.
E. No Commingling. The assets of the Roth IRA will not be commingled with
other property except in a common trust or investment fund.
F. Collectibles. No part of the funds can be invested in collectibles,
including any work of art, rug or antique, metal or gem, stamp, coin, alcoholic
beverage, or any other tangible property specified by the IRS. The acquisition
of certain U.S. government-issued gold, silver and platinum coins and certain
state-issued coins are permitted as investments in a Roth IRA under the law.
Additionally, any gold, silver, platinum, or palladium bullion meeting certain
fineness standards are permitted investments under the law.
G. No 70 1/2 Distribution. Roth IRA Owners will not be required to take a
minimum distribution each year after reaching age 70 1/2.
IRS Approval of Forms
The Custodial Agreement used to establish this Roth IRA is the IRS model
Roth Individual Retirement Custodial Account (Form 5305-RA). This agreement has
been approved as to form by the IRS. You are responsible to ensure you follow
the terms and conditions of this agreement. This approval is not an endorsement
of the investment instruments used by the Custodian.
Provisions Regarding Amendments to the Plan
The Custodian of this Roth IRA may amend (change or terminate) the Roth IRA
at any time. The Custodian shall furnish copies of any such amendments to the
Roth IRA Owner within 30 days of the date the amendments are to become
effective.
Fees
There are no fees for maintaining your IRA. Of course, the shares of the
Fund in which your account is invested will be affected by management fees and
other expenses of that Fund. These matters are also discussed in the prospectus
for the Funds which you received prior to or along with this brochure. The fee
schedule may be changed upon 30 days' written notice to the IRA owner.
Annual Statements
Each year the Custodian will furnish you and the IRS with statements
reflecting the activity in your Roth IRA. You will receive a statement, which
will indicate your Fair Market Value of the account as of the end of the
previous calendar year. This statement will give the amount of your contribution
to the Roth IRA and will indicate any rollovers into the account. Another
statement will reflect your distributions for the year. Your Custodian will also
send some of this information to the IRS, as required.
Other IRS Forms
You may be required to file other IRS Forms.
<PAGE>
Roth Individual Retirement
Custodial Account
Form 5305-RA
(Rev. January, 1998) Department of the Treasury Internal Revenue Service
The Depositor and the Custodian make the following agreement:
Article I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then,
except in the case of a rollover contribution described in section 408A(e), the
Custodian will accept only cash contributions and only up to a maximum amount of
$2,000 for any tax year of the Depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no
contributions other than IRA Conversion Contributions made during the same tax
year will be accepted.
Article II
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single Depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married Depositor who files jointly, between AGI of $150,000 and $160,000;
and for a married Depositor who files separately, between $0 and $10,000. In the
case of a conversion, the Custodian will not accept IRA Conversion Contributions
in a tax year if the Depositor's AGI for that tax year exceeds $100,000 or if
the Depositor is married and files a separate return. Adjusted gross income is
defined in section 408A(c)(3) and does not include IRA Conversion Contributions.
Article III
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article IV
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception of certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
Article V
1. If the Depositor dies before his or her entire interest is distributed
to him or her and the Depositor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the Depositor or, if the
Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(b) Be distributed over the life expectancy of the designated beneficiary
starting no later than December 31 of the year following the year of
the Depositor's death.
If distributions do not begin by the date described in (b), distribution
method (a) will apply.
2. In the case of distribution method 1.(b) above, to determine the minimum
annual payment for each year, divide the Depositor's entire interest in the
trust as of the close of business on December 31 of the preceding year by the
life expectancy of the designated beneficiary using the attained age of the
designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.
3. If the Depositor's spouse is the sole beneficiary on the Depositor's
date of death, such spouse will then be treated as the Depositor.
Article VI
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under sections 408(i) and
408A(d)(3)(E), Regulations sections 1.408-5 and 1.408-6, and under guidance
published by the Internal Revenue Service.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
Article VII
Not withstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
Article VIII
This agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the persons whose signatures appear
below.
Article IX Definitions
9.1 "Code." The term "Code" shall mean the Internal Revenue Code.
9.2 "Custodial Account." Your Roth IRA shall be referred to as the
"custodial account" or "account."
9.3 "IRA." IRA shall mean Individual Retirement Account within the meaning
of Section 408 of the Code.
9.4 "Roth IRA." Roth IRA shall mean Roth Individual Retirement Account
within the meaning of Section 408A of the Code.
9.5 "IRS." The term "IRS" shall mean the Internal Revenue Service.
9.6 "We." The IRS selected the term "Custodian" to describe us, your
financial organization. In other parts of this agreement, the "Custodian" will
be referred to as "us," "we," "our," or the "Custodian."
9.7 "You." The IRS selected the term "Depositor" to describe "you," the
Roth IRA Owner. In other parts of this agreement, you will be referred to as
"you," "your," or "Roth IRA Owner."
9.8 "Fund(s)." The "Fund(s)" shall mean the mutual fund(s) identified in
the Roth IRA Application used to establish this Roth IRA.
Article X Fees and Expenses
10.1 Fees. You agree to pay any fees we establish pursuant to the
Application or a separate fee schedule which we will publish from time to time.
Such fees may include, without limitation, establishment fees, annual
administration fees, termination fees, transfer fees, transaction fees, legal
fees, investment commissions, and such other fees as we determine applicable.
You agree to pay such fees either by a separate billing or direct deduction from
the custodial account; the method of payment is at our discretion. Some fees,
such as brokerage commissions, must be deducted from the custodial account. The
Custodian shall have the right to liquidate sufficient shares in the custodial
account to pay such fees. In the case of a third party receiving payments, such
as brokerage fees and commissions, we may receive a portion of these fees in
return for services provided in completing these transactions. We agree to give
you at least 30 days advance notice prior to changing a fee or imposing a new
fee.
10.2 Expenses. You agree to pay any income, transfer, and other taxes of
any kind that may be levied or assessed upon the custodial account, and all
other administrative expenses reasonably incurred by us in the performance of
our duties. These expenses may include legal, or other professionals hired by us
in connection with your custodial account. You agree to reimburse us for any
reasonable expenses incurred in the administration of the account. The Custodian
shall have the right to liquidate sufficient shares in the custodial account to
pay such expenses.
10.3 Small Accounts. We may establish a minimum account balance and
automatically close accounts when the assets in your Roth IRA drop below the
minimum balance established. We shall publish the minimum account balance on a
separate fee schedule which we will publish from time to time or otherwise make
available.
Article XI Amendments
We may amend your custodial account at any time to comply with necessary
laws and regulations or for any other reason. Amendments may be made
retroactively when required to meet a law or regulatory change. You are deemed
to have automatically consented to any amendment 30 days after we mail you a
copy of the amendment. Your actual written or verbal consent is not required to
amend. We shall send you a copy of such amendment within 30 days of the
amendment's effective date.
Article XII Limited Liability
12.1 Hold Harmless. You agree to hold us harmless, to indemnify, and to
defend us against any and all claims arising from and liabilities incurred by
reason of any action taken by us, except to the extent such liability arises
from the willful misconduct or gross negligence of the Custodian.
12.2 No Investment Discretion. You agree that all contributions shall be
invested according to your sole discretion in whole or fractional shares of the
Fund(s) identified in the Roth IRA Application. All dividends and capital gain
distributions received on shares of the Fund(s) shall be reinvested in the
shares of the same Fund(s) which shall be credited to the custodial account. We
shall not be responsible or liable for any investment decisions or
recommendations with respect to the investment, reinvestment, or sale of assets
in the custodial account. We shall not be responsible for reviewing any assets
held in the custodial account and shall not be responsible for questioning any
of your investment decisions. We shall not be responsible for any loss resulting
from any failure to act because of the absence of directions from you. In the
event we determine your investment instructions are unclear, then we shall act
as soon as practical to obtain clarification of such instructions. Pending
clarification, we shall hold without investing all or any portion of the
contribution, without liability for loss of income or appreciation and without
liability for interest or dividends.
12.3 Transaction Responsibility. Unless required by law, we are not
responsible for inquiring into the nature or amount of any contribution made by
you, nor into the amount or timing of any distribution requested. You shall have
full responsibility for determining any tax or investment consequences of all
contributions to and distributions from the custodial account. We shall not be
bound to take any action on behalf of you, except upon receipt of written
instructions from you. We shall have no obligation to inquire into the
genuineness of any such written instruction without liability for any action
taken pursuant thereto, so long as we act in good faith.
12.4 No Assumed Responsibilities. We assume no responsibilities and agree
only to provide the administrative and custodial services required under IRC
section 408, 408A and applicable regulations.
Article XIII Beneficiary Provisions
Notwithstanding Article V, a spouse beneficiary shall be permitted all the
beneficiary options allowed under law or applicable regulations. If you use the
designation of beneficiary form provided in the Application then the following
rules apply (i) the designation in the Application revokes all previously made
designations, (ii) if any of the beneficiaries dies before you, the deceased
beneficiary's share will be reallocated to the surviving beneficiaries on a pro
rata basis, and (iii) if none of the beneficiaries survive you, any balance in
your Roth IRA will be paid to your estate. The Custodian may refuse to accept a
designation not made on its standard form. You agree to release the Custodian
from and indemnify it for any and all claims arising from the Custodian's
actions under your designation of beneficiary.
Article XIV Reports and Records
We shall keep accurate and detailed records of all contributions, receipts,
investments, distributions, disbursements, and other transactions relating to
the custodial account. We shall provide reports to the IRS and to you as
required by law and regulations. Unless you file a written statement with us
within 60 days after you receive a statement, we shall be relieved and
discharged from all liability to you (including any of your beneficiaries) with
respect to all matters set forth in such report.
Article XV Powers
We shall have the right to hire attorneys or other professionals if we deem
it necessary for the proper administration of your custodial account. This
includes the right to have a party affiliated with the Fund(s) to perform
administrative duties. We shall also have the power to request a judicial
settlement of your account or to enter into a lawsuit for your account. We shall
also have the power to do whatever else we determine necessary for the proper
administration of your account.
Article XVI Resignation or Removal of Us as Custodian
We may resign as Custodian without your consent and you may remove us as
Custodian without our consent. We must provide notice to you of any resignation
30 days prior to the effective date of the resignation. In the event of
resignation by us, we may either assign a qualified Custodian to replace us or
we may request you to appoint a qualified successor Custodian. If we assign a
qualified Custodian to replace us we will transfer and pay over the assets of
the custodial account to the successor Custodian. If we ask you to appoint a
successor Custodian and after 30 days from notice of resignation, you have not
appointed a successor Custodian or we have not received a written acceptance of
such appointment by the successor Custodian, we shall have the right to transfer
the assets remaining in the custodial account to a successor Custodian that we
choose in our sole discretion or we may liquidate the assets and distribute the
cash proceeds, or we may make an in-kind distribution, or we may otherwise
distribute to you the assets remaining in the custodial account. We are
authorized, however, to reserve such funds as we deem advisable for payment of
any liabilities constituting a charge against the assets of the custodial
account or against us, with any balance of such reserve remaining after payment
of all such items to be paid over to the successor Custodian.
Article XVII Termination
In the event the balance of the custodial account is less than the minimum
value prescribed from time to time by the appropriate Fund(s), we may liquidate
the custodial account by making a distribution in cash or in-kind of the assets
in the account less any fees owing. If we terminate for any reason, we shall not
be liable for any loss or penalty incurred upon termination and liquidation of
the custodial account. Upon liquidation of the custodial account this Agreement
shall terminate and we shall be relieved of all further duties and any liability
relative to this Agreement, the custodial account, and the assets distributed
hereunder.
Article XVIII Custodian's Responsibilities
We shall act as an agent for you, we shall receive funds and invest them at
your direction and in accordance with this Agreement. All shares of the Fund(s)
shall be held in our name as Custodian or our nominee's name. The parties do not
intend to confer any fiduciary responsibilities upon the Custodian and none
shall be implied. We shall deliver, or cause to be executed or delivered to you
all notices, prospectuses, financial statements, proxies and proxy solicitation
materials relative to shares of the appropriate Fund(s) held in the custodial
account. The Custodian shall vote such shares only in accordance with your
written instructions.
Article XIX Contributions
The Custodian is under no duty to compel you to make any contributions and
shall have no duty to assure that such contributions are appropriate in amount.
We may request additional information in the case of rollovers and direct
rollovers. We may request a Transfer Form, or other forms prior to a transfer.
Article XX Miscellaneous
20.1 Notice. Any notice, payment, report, or other material mailed to you
shall be deemed delivered and effective three days after the date mailed by us
to you. We shall send such material to the last address you provided and we
shall assume no obligation to ascertain the actual address or whereabouts of
you. Any notice you send us shall be deemed delivered when actually received by
us. Except as otherwise permitted by us, all instructions to us must be in
writing.
20.2 Headings. The headings and articles of this agreement are for
convenience of reference only, and shall have no substantive effect on
provisions of this agreement.
20.3 Singular Form. Throughout this agreement, the singular form includes
the plural where applicable.
20.4 State Law. This agreement shall be construed and interpreted in
accordance with the laws of the state in which our principal office is located,
except to the extent superseded by federal law.
20.5 Disqualifying Provision. Any provision of this agreement which would
disqualify the custodial account as a Roth IRA shall be disregarded to the
extent necessary to make the custodial account a Roth IRA.
20.6 Interpretation. If any question arises as to the meaning of any
provision of this agreement, then we shall be authorized to interpret any such
provision, and our interpretation shall be binding upon all parties.
20.7 Additional Provisions. Additional provisions to this agreement may be
attached on a separate sheet.
- --------------------------------------------------------------------------------
General Instructions
(Section references are to the Internal Revenue Code unless otherwise noted.)
Purpose of Form
Form 5305-RA is a model custodial account agreement that meets the
requirements of section 408A and has been automatically approved by the IRS. A
Roth Individual Retirement Account (Roth IRA) is established after the form is
fully executed by both the individual (Depositor) and the Custodian. This
account must be created in the United States for the exclusive benefit of the
Depositor or his or her beneficiaries.
Do not file Form 5305-RA with the IRS. Instead, keep it for your records.
Unlike contributions to traditional individual retirement arrangements,
contributions to a Roth IRA are not deductible from the Depositor's gross
income; and distributions after 5 years that are made when the Depositor is 59
1/2 years of age or older or on account of death, disability, or the purchase of
a home by a first-time homebuyer (limited to $10,000), are not includible in
gross income. For more information on Roth IRAs, including the required
disclosure the Depositor can get from the Custodian, get Pub. 590, Individual
Retirement Arrangements (IRAs).
This Roth IRA can be used by a Depositor to hold: (1) IRA Conversion
Contributions, amounts rolled over or transferred from another Roth IRA, and
annual cash contributions of up to $2,000 from the Depositor; or (2) if
designated as a Roth Conversion IRA (by checking the appropriate box of the
Adoption Agreement), only IRA Conversion Contributions for the same tax year.
To simplify the identification of funds distributed from Roth IRAs,
Depositors are encouraged to maintain IRA Conversion Contributions for each tax
year in a separate Roth IRA.
Definitions
Roth Conversion IRA. A Roth Conversion IRA is a Roth IRA that accepts only
IRA Conversion Contributions made during the same tax year.
IRA Conversion Contributions. IRA Conversion Contributions are amounts
rolled over, transferred, or considered transferred from a nonRoth IRA to a Roth
IRA. A nonRoth IRA is an individual retirement account or annuity described in
section 408(a) or 408(b), other than a Roth IRA.
Custodian. The Custodian must be a bank or savings and loan association, as
defined in section 408(n), or any person who has the approval of the IRS to act
as Custodian.
Depositor. The Depositor is the person who establishes the custodial
account.
Specific Instructions
Article I
The Depositor may be subject to a six-percent tax on excess contributions
if (1) contributions to other individual retirement arrangements of the
Depositor have been made for the same tax year, (2) the Depositor's adjusted
gross income exceeds the applicable limits in Article II for the tax year, or
(3) the Depositor's and spouse's compensation does not exceed the amount
contributed for them for the tax year. The Depositor should see the disclosure
statement or Pub. 590 for more information.
Article IX
Article IX and any that follow it may incorporate additional provisions
that are agreed to by the Depositor and Custodian to complete the agreement.
They may include, for example, definitions, investment powers, voting rights,
exculpatory provisions, amendment and termination, removal of the Custodian,
Custodian's fees, state law requirements, beginning date of distributions,
accepting only cash, treatment of excess contributions, prohibited transactions
with the Depositor, etc. Use additional pages if necessary and attach them to
this form.
Note: Form 5305-RA may be reproduced and reduced in size for adaption to
passbook purposes.
<PAGE>
* * * * * *
The Markman
MultiFunds
P.O. Box 5354
Cincinnati, OH 45201-5354
800.707.2771
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