(Cover)
Markman
MULTIFUNDS
Semi-Annual
Report
June 30, 1999
Unaudited
Income Allocation Portfolio
Conservative Allocation Portfolio
Moderate Allocation Portfolio
Aggressive Allocation Portfolio
<PAGE>
THE BEAT GOES ON
- --------------------------------------------------------------------------------
Could it be? Could the market really manage to post an unheard of fifth
consecutive year of robust double-digit returns? Judging by the first six months
of the year, you certainly wouldn't want to bet against it. And what an
interesting first half it's been! In the first quarter, we saw the continuation
of the "Large Cap Growth Stocks `R' Us" market. It looked like, unbelievably,
small caps and value stocks were about to be declared illegal! Then in mid-April
it was as if someone simply turned a switch and immediately the large growth
leaders went on the chopping block, replaced in investors' hearts by value-based
cyclicals and small caps. For two months, those sectors (which had previously
performed miserably) shone like stars, allowing investors who had suffered
through years of underperformance to start practicing their bragging rights rap.
Unfortunately, the first robin, as they say, does not always herald the spring.
By mid-June, the small cap/value revival had slowed noticeably as investors once
again turned to what money manager and media presence Jim Cramer calls TSTEL
(The Stocks That Everyone Loves). As far as we're concerned, that's just as it
should be.
Much of the excitement regarding value/cyclicals earlier in the spring was due
to increased expectations of global economic revival. The world, it seemed, was
not coming to an end after all. Asian economies, given up for dead last fall,
were showing surprising signs of life. Those pundits who still insisted on
looking at the world as if the calendar said 1978 looked at this good news and
immediately flip-flopped from glum depression-induced despair to nervous
look-out-for-inflation anxiety. This proved, again, that if you're a neurotic
economic observer, you can be worried no matter what the data says. The
furrowed-brow brigade had its true moment of glory when the April CPI was
released, showing an alarming spike in inflation. Was this the long awaited end
of the low inflation good times? Would oil and other commodity prices again
skyrocket with increased global demand?
These fears sent the bond market reeling and led investors to load up on the
value and commodity-based stocks that would benefit from such an environment.
Copper and aluminum producers, oil companies, paper manufacturers, all were the
new Cinderellas at the ball. Why any sane investor
- --------------------------------------------------------------------------------
Pundits flip-flopped from glum depression-induced despair to nervous
look-out-for-inflation anxiety. This proved, again, that if you're a neurotic
economic observer, you can be worried no matter what the data says.
- --------------------------------------------------------------------------------
would want such a collection of nineteenth century companies in his portfolio is
something to think about, but for the moment they shone. Alas, the clock soon
struck midnight on the value plays. Two straight subsequent months of zippo
inflation made it clear that the April number was merely a statistical blip and
not the beginning of a new trend. By quarter's end, large-cap growth and
technology stocks were
- --------------------------------------------------------------------------------
Markman
<PAGE>
again firmly in the driver's seat as market leaders. Consequently, while many of
the second quarter media recaps of the market touted the value and small-cap
revivals, the reality was they were (literally and figuratively) reporting
yesterday's news. Their sixty days in the sun had ended.
As we plow ahead into the second half of 1999, we can say with a fairly high
degree of certainty that the world has not been transformed into something new
over the past few months. The United States economy is still, compared to the
pathetic showings of our competitors around the globe, a miracle machine of job
growth and productivity. Technology in all of its myriad forms continues to
imbed itself in our lives, thus becoming an increasingly more important part of
our economy. These trends are so big, so unstoppable, and so irrefutable, that
the term "macro trend" doesn't do them justice. The concept of U.S. large-cap
dominance fed by technology is a hyper-macro trend, one by which everything else
must be measured.
As we've discussed many times before, the equity allocation of our portfolios is
concentrated to take advantage of this hyper-macro trend. Although some industry
observers (those who act as if we still live in a Jimmy Carter world) feel we
are wrong to stay so long and heavy in large-cap U.S. funds, we believe we're
more likely to look back in a few years and say we were, if anything, too
cautious.
- --------------------------------------------------------------------------------
HALFTIME SCOREBOARD
It's been a good six months. The direction of both the stock and bond markets
generally favored our approach, and while there are the usual woulda, shoulda,
couldas that we love to flog ourselves with, I really have no cause for
complaint. The numbers speak for themselves. The Aggressive Allocation kept up
its 1998 pace with a return of 15.2% in the first half, besting both the S&P
500's 12.4% and the Wilshire 5000's 11.2%. We are well ahead of the average
growth fund of funds' return of 10.2%.*
The Moderate Allocation Portfolio's 10.1% return also compared favorably
with other stock/bond blends. Although slightly behind the all-stock indices of
the S&P 500 and Wilshire 5000, keep in mind that over a third of the Moderate
Allocation Portfolio is in bonds. When we factor in the poor performance of
bonds in the first half (the Merrill Lynch Master Domestic Bond Index actually
declined 1.6%!), our return looks quite good. A good indication of how a
stock/bond blend did can be seen in the average moderate fund of funds, which
gained only 6.9% in the first half.
Given the difficult bond environment, the performance of the Conservative
Allocation Portfolio is particularly impressive. Even with over half the
portfolio in bonds, the Conservative Allocation gained 7.2% year to date, almost
double that of the average conservative fund of funds, which made but 3.9%. Our
Conservative Allocation benefited, as did the Moderate Allocation, from our use
of high-yield bond funds as our primary choice for fixed income diversification.
The U.S. economy proved to be surprisingly strong in the first half, causing
interest rates to rise and bond prices to fall. We, however, were not surprised.
We anticipated this exact scenario (as we wrote in our Annual Report) and
positioned our bond allocation in the more economically sensitive high-yield
funds. We were thus able to benefit from the same events that harmed other bond
investors.
o Source: Funds of Funds Association, Lipper Analytical Services
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Markman
1
<PAGE>
WHY LONDON IS WARMER THAN MINNEAPOLIS--AND WHAT IT MEANS TO YOUR PORTFOLIO
London, England lies 6 degrees north of the Twin Cities. London should be colder
than Minneapolis, yet winters in London are remarkably mild. Snow is rare and
temperatures usually hover 10-20 degrees above those in Minnesota.
England's mild climate is caused by the moderating effect of the Gulf Stream, a
warm and powerful ocean current that originates in the Gulf of Mexico. The Gulf
Stream flows north along the eastern seaboard of the United States, veers east
at Virginia, and combines with several other smaller currents to form the North
Atlantic Drift. Moving eastward, it eventually reaches northern Europe where it
keeps temperatures from plunging as low as one might expect at those latitudes.
But what's the connection to investments? Consider two interesting angles:
First, what assumptions might you make about the weather in England if you knew
nothing about the effect of the Gulf Stream? One might look at a map and, seeing
the northern latitude, confidently predict cold snowy winters. After all,
winters at other similar locations experience such conditions. Without knowledge
of the Gulf Stream, you might conclude that any mild temperatures you
experienced were short-term aberrations. Sooner or later, temperature would
revert to the mean and decline. You would, of course, be wrong. The current
would always be there, continuing to create weather far different from that
predicted by your research.
Now suppose we are out at sea off the northeast coast of the United States.
The wind blows and the water churns in all directions. Waves rise and fall in
endlessly changing patterns. As we bob along the surface, it seems impossible to
sense a flow in a particular direction. In fact, simply staying afloat seems to
be the main imperative. Yet all along, just beneath the surface, the current
continues to flow inexorably in one direction. In fact, even though we can't
sense it as we are tossed on the surface, it is actually carrying us along in
its direction. Slowly, but surely, it will eventually pull us all the way to
Ireland!
Similar conditions may exist when investing. As we analyze investment
options, we are sometimes faced with data that seem to lead to a particular
conclusion. Perhaps a sector seems overvalued. But what if we are examining
these data not knowing that there is an ongoing and accompanying current
affecting how we should interpret the data? Perhaps this current (or trend) is
forcing us to re-evaluate our assumptions. Are large caps really overvalued?
What really is an appropriate multiple to pay for tech stocks? I have no
definitive answers here, but I would remind us all that perhaps we don't really
know all the trends and "currents" that may be affecting prices.
With all the data analysts have, could it be they're not factoring in the
single most important piece of information? We'll know in a decade. Until then,
I'd be wary of market tacticians who warn of overvaluations in certain sectors.
Our Gulf Stream metaphor also helps us keep long-term trends and short-term
events in perspective. In hindsight, we can now clearly see that since 1982
we've been carried along on the "Gulf Stream" of a bull market that has taken us
from 750 on the Dow to the 11,000 level. Absolutely amazing. Yet in those
seventeen years, a month never went by when some market strategist was not
warning of some impending problem. And there certainly did seem to be problems.
The 1987 "crash." The Mexican meltdown. The emerging markets crisis. The Gulf
War. Economy too slow. Economy too fast. Tech stocks are great! Tech stocks are
lousy! Buy, sell, rotate, tweak, adjust, hedge. Yet all along, the big, broad
current that flowed beneath the surface of all this confusion was carrying us
higher. Who do you think made the really big money over the past decade and a
half? Those who tried to finesse every short-term shift in the market, or those
who recognized and rode the current long term? The long-term trend is rarely
clearly identifiable. Like the Gulf Stream, it runs beneath the surface of the
short-term confusion. But it's there. And it's powerful. And it works.
We will stick with the broad themes and avoid short-term choppiness. We'll
let others play with the notions about whether cyclicals are a good play for the
next six months, or whether small caps might continue to catch up for a short
time before underperforming again. We believe we are most likely to reach our
long-term goals safely and efficiently by letting the long-term trends, the
"financial Gulf Streams," work for us.
- --------------------------------------------------------------------------------
Markman
2
<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.
After adding another 1.9% to our gains in the second quarter, the Aggressive
Allocation arrived at mid-year with a return of 15.2%, well ahead of the S&P 500
(+12.4%), the Wilshire 5000 (+11.2%) and the average growth fund of funds
(+10.2%).
Our long-term strategy remains unchanged: we continue to aggressively
concentrate in funds that invest in large U.S. growth companies. The sector
emphasis continues to be technology, with overweightings in financials and
health care.
After benefiting from the tremendous bounce-back after the October 1998
lows, we no longer wanted the added volatility of the ProFunds UltraOTC and
UltraBull funds. These funds use futures and options in an attempt to double the
movement of the Nasdaq 100 and S&P 500, respectively. During periods of strong
upward moves in the market, these funds provide tremendous returns. The reverse
is also true. We decided not to push our luck and moved out of the funds.
We also sold our PBHG Large Cap 20 position when Jim McCall was relieved of
his duties as portfolio manager. We did not think it prudent to stay under those
circumstances.
Later in the first half, we moved out of Rydex Nova. This fund uses options
and futures to get 150% of the S&P 500's movement. As the 1999 rally broadened
out to include more than just the top 20 stocks on the S&P, we felt we could do
better in a more broadly positioned fund. In June, we bought Selected American
Shares to participate more in the broad-based rally that we see continuing.
- ---------------------------------------
Content Breakdown
- ---------------------------------------
[GRAPHIC OMITTED]
U.S. Stocks ..................... 92%
International Stocks ............ 1%
Bonds ........................... 0%
Cash ............................ 7%
PORTFOLIO COMPARISON -- June 30, 1999
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Markman Aggressive Funds of Funds
Allocation Portfolio Association Growth Index
-------------------- ------------------------
Year-to-date 15.2% 10.2%
12 months ending 6/30/99 28.6% 15.0%
3 years annualized 21.0% 17.8%
Annualized since inception* 23.4% 19.8%
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Unaudited)
Markman Aggressive Allocation Portfolio -- June 30, 1999
- ---------------------------------------------------------------------------------------------------------
Fund Shares Market Value % of Total Status**
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Twenty Fund 310,735 $ 19,511,080 18.7% -
- ---------------------------------------------------------------------------------------------------------
Selected American Shares 510,143 18,298,846 17.5% new
- ---------------------------------------------------------------------------------------------------------
White Oak Growth Stock Fund* 357,583 17,603,799 16.9% +
- ---------------------------------------------------------------------------------------------------------
The Rydex Series OTC Fund* 330,524 17,111,249 16.4%
- ---------------------------------------------------------------------------------------------------------
Stein Roe Growth Stock Fund* 312,953 15,610,105 15.0%
- ---------------------------------------------------------------------------------------------------------
Transamerica Premier Equity Fund* 318,537 8,919,040 8.6%
- ---------------------------------------------------------------------------------------------------------
Marsico Focus Fund* 305,415 5,323,376 5.1%
- ---------------------------------------------------------------------------------------------------------
Miscellaneous - Money Market Fund 2,000,315 2,000,315 1.9% +
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $75,352,081) 104,377,810 100.1%
- ---------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (76,187) (0.1%)
- ---------------------------------------------------------------------------------------------------------
NET ASSETS $104,301,623 100.0%
============ ======
</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
3
<PAGE>
MODERATE ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
Our Goal: To blend our Conservative and Aggressive approaches in a
middle-of-the-road portfolio that aims for higher return than a Conservative
approach but lower volatility than an Aggressive stance. As you know, the
Moderate Allocation Portfolio is where we blend our best ideas or strategies
from the Aggressive and Conservative Portfolios to achieve a mid-point
risk/return in our offerings. The elements that constitute the Conservative and
Aggressive Allocations can quickly change in reaction to market conditions.
There is no hard and fast "science" to this; much is educated guesswork.
Fortunately, our knowledge of the stock and bond elements in the other
Portfolios has enabled us to mix the two in what has turned out to be a highly
predictable mid-point.
In 1999, the Moderate Allocation Portfolio has benefited from our
successful choices in both the stock and bond areas. The equity portion of the
allocation continues to be focused in large-cap U.S. growth funds. While many
industry observers feel these funds are long overdue for a pause, if not an
outright decline, we believe their long-term prospects remain excellent. In our
opinion, other fund "experts" who recommend moving away from these investments
are going to be left holding the bag because of their short-term thinking. We
say, "show us a list of companies that are likely to make more money and
dominate their growing markets more than Microsoft, Intel, Dell, Citigroup,
Merck, and Pfizer and we'll buy them."
The "mid-point" balance we've tried to hit seems to be on target. The
returns for the Moderate Allocation Portfolio are ahead of its peer group so far
this year with a gain of 10.1% versus a gain of 6.9% for the average moderate
fund of funds.
- ---------------------------------------
Content Breakdown
- ---------------------------------------
[GRAPHIC OMITTED]
U.S. Stocks ..................... 58%
International Stocks ............ 1%
Bonds ........................... 36%
Cash ............................ 5%
PORTFOLIO COMPARISON -- June 30, 1999
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Markman Moderate Funds of Funds
Allocation Portfolio Association Moderate Index
-------------------- --------------------------
Year-to-date 10.1% 6.9%
12 months ending 6/30/99 18.4% 11.1%
3 years annualized 17.0% 16.1%
Annualized since inception* 18.9% 18.0%
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Unaudited)
Markman Moderate Allocation Portfolio -- June 30, 1999
- ---------------------------------------------------------------------------------------------------------
Fund Shares Market Value % of Total Status**
<S> <C> <C> <C> <C>
Janus Twenty Fund 243,377 $ 15,281,673 17.5% -
- ---------------------------------------------------------------------------------------------------------
Marsico Focus Fund* 846,317 14,751,304 16.8%
- ---------------------------------------------------------------------------------------------------------
INVESCO High Yield Fund 1,725,516 11,250,363 12.9%
- ---------------------------------------------------------------------------------------------------------
Northeast Investors Trust 1,053,588 11,073,209 12.7%
- ---------------------------------------------------------------------------------------------------------
PIMCO Total Return Fund 1,040,866 10,543,977 12.0%
- ---------------------------------------------------------------------------------------------------------
Paap America Abroad Fund 280,901 9,398,953 10.7%
- ---------------------------------------------------------------------------------------------------------
Selected American Shares 212,687 7,629,078 8.7% new
- ---------------------------------------------------------------------------------------------------------
The Rydex Series OTC Fund* 140,706 7,284,349 8.3%
- ---------------------------------------------------------------------------------------------------------
Miscellaneous-- Money Market Fund 501,296 501,296 0.6%
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $73,605,734) 87,714,202 100.2%
- ---------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (135,042) (0.2%)
- ---------------------------------------------------------------------------------------------------------
NET ASSETS $ 87,579,160 100.0%
============ ======
</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>
CONSERVATIVE ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
Our Goal: To capture returns close to those 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.
The repositioning we performed through 1998 is creating exactly the results we
hoped for. We have reduced our stock fund exposure to below 40% of the
portfolio, thus minimizing the negative effects of a market decline. We continue
to believe that, particularly for conservative investors, a focus on U.S. large
caps (what folks used to call "blue chips") is the most prudent path.
Later in the first half, we took a small initial position in Selected
American Shares. The managers take a value-oriented approach to growth investing
with an emphasis on financial services stocks, thereby providing excellent
upside potential without exposure to some of the "pricier" sectors.
The most distinctive aspect of the Conservative Allocation is our large
position in high-yield bond funds. In a strong economy, these funds tend to
outperform their higher quality peers. In today's environment, there was little
doubt in our minds that high-yield bond funds give us the best bang for our bond
buck.
This view has paid off well so far in 1999. As noted earlier, 1999 has been
a difficult year in the bond market as stronger than expected economic activity
caused interest rates to increase. The Merrill Lynch Master Domestic Bond Index
actually lost 1.6% in this year's first six months while Invesco High Yield made
5.9%, Northeast Investors Trust made 4.8% and Pimco High Yield made 1.0%.
The Conservative Allocation Portfolio outdistanced its peers with a gain of
7.2% versus a return of 3.9% for the average conservative fund of funds.
- ---------------------------------------
Content Breakdown
- ---------------------------------------
[GRAPHIC OMITTED]
U.S. Stocks ..................... 40%
International Stocks ............ 1%
Bonds ........................... 55%
Cash ............................ 4%
PORTFOLIO COMPARISON -- June 30, 1999
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Markman Conservative Funds of Funds Association
Allocation Portfolio Conservative Index
-------------------- ------------------
Year-to-date 7.2% 3.9%
12 months ending 6/30/99 13.6% 6.8%
3 years annualized 12.5% 11.2%
Annualized since inception* 14.4% 13.0%
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Unaudited)
Markman Conservative Allocation Portfolio -- June 30, 1999
- --------------------------------------------------------------------------------------------------
Fund Shares Market Value % of Total Status**
<S> <C> <C> <C> <C>
Marsico Focus Fund* 340,802 $ 5,940,183 18.7%
- --------------------------------------------------------------------------------------------------
PIMCO Total Return Fund 553,855 5,610,547 17.6%
- --------------------------------------------------------------------------------------------------
INVESCO High Yield Fund 842,960 5,496,099 17.3% +
- --------------------------------------------------------------------------------------------------
Northeast Investors Trust 514,190 5,404,135 17.0% +
- --------------------------------------------------------------------------------------------------
Janus Twenty Fund 79,178 4,971,594 15.6% -
- --------------------------------------------------------------------------------------------------
PIMCO High Yield Fund 313,159 3,435,350 10.8% +
- --------------------------------------------------------------------------------------------------
Selected American Shares 22,727 815,227 2.5% new
- --------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $28,376,009) 31,673,135 99.5%
- --------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET 151,224 0.5%
- --------------------------------------------------------------------------------------------------
NET ASSETS $ 31,824,359 100.0%
============ ======
</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>
INCOME ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
Our Goal: To provide high current income and low share price fluctuation.
The Income Allocation Portfolio is a new MultiFund Portfolio. Since its newness
(only two months old) prevents me from discussing comparative performance, I
want to take this opportunity to share our tactics and strategy for this
Portfolio.
This Portfolio will consist primarily of a mix of bond mutual funds. We
can, for the sake of long-term stability of capital and total return potential,
invest a small portion of the portfolio (up to 15%) in stock mutual funds. Given
our currently positive view of the markets, we have done so, as you can see from
the allocation.
The bulk of the Portfolio will be invested in what we feel is the best mix
of bond funds to achieve a balance between high current income and stability of
capital. We started this Portfolio for investors who prefer to have minimal
exposure to the stock market and who would normally have most of their money in
bond funds. Our goal with this Portfolio is to implement this goal in an
imaginative way to maximize the return potential without undue risk. Execution
will involve the overweighting or underweighting of different bond sectors based
on our view of where the best returns may be.
Currently, we have most of the bond allocation in the high-yield sector. We
have also avoided any allocation in international or emerging market bonds.
These allocations are different from those of most of our peers.
- ---------------------------------------
Content Breakdown
- ---------------------------------------
[GRAPHIC OMITTED]
U.S. Stocks ..................... 19%
International Stocks ............ 0%
Bonds ........................... 69%
Cash ............................ 12%
PORTFOLIO COMPARISON -- June 30, 1999
- --------------------------------------------------------------------------------
We look forward to reporting performance of the Income Allocation Portfolio in
the December 31, 1999, Annual Report.
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Markman Income Funds of Funds Association
Allocation Portfolio Income Index
-------------------- ------------
Year-to-date
12 months ending 6/30/99
3 years annualized
Annualized since inception*
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Unaudited)
Markman Income Allocation Portfolio -- June 30, 1999
- ------------------------------------------------------------------------------------------------
Fund Shares Market Value % of Total Status**
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PIMCO Total Return Fund 4,942 $ 50,066 23.0% new
- ------------------------------------------------------------------------------------------------
Northeast Investors Trust 4,245 44,614 20.5% new
- ------------------------------------------------------------------------------------------------
INVESCO High Yield Fund 6,808 44,387 20.4% new
- ------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 2,206 22,015 10.1% new
- ------------------------------------------------------------------------------------------------
Marsico Growth & Income Fund* 961 15,994 7.3% new
- ------------------------------------------------------------------------------------------------
Selected American Shares 426 15,286 7.0% new
- ------------------------------------------------------------------------------------------------
Miscellaneous-- Money Market Fund 25,682 25,682 11.7% new
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $219,021) 218,044 100.0%
- ------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET 21 0.0%
- ------------------------------------------------------------------------------------------------
NET ASSETS $ 218,065 100.0%
========= ======
</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>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES o June 30, 1999 (Unaudited)
Markman Markman Markman Markman
Income Conservative Moderate Aggressive
Allocation Allocation Allocation Allocation
Portfolio Portfolio Portfolio Portfolio
===============================================================================================================
ASSETS
Investments in securities:
<S> <C> <C> <C> <C>
At acquisition cost ................... $ 219,021 $ 28,376,009 $ 73,605,734 $ 75,352,081
============= ============= ============= =============
At value (Note 1) ..................... $ 218,044 $ 31,673,135 $ 87,714,202 $ 104,377,810
Cash ..................................... -- 200,735 -- --
Receivable for capital shares sold ....... -- 6,296 5,936 26,580
Dividends receivable ..................... 192 -- 1,247 28,026
------------- ------------- ------------- -------------
TOTAL ASSETS .......................... 218,236 31,880,166 87,721,385 104,432,416
------------- ------------- ------------- -------------
===============================================================================================================
LIABILITIES
Payable for capital shares redeemed ...... -- 30,698 75,404 54,171
Payable to Adviser (Note 3) .............. 171 25,109 66,821 76,622
------------- ------------- ------------- -------------
TOTAL LIABILITIES ..................... 171 55,807 142,225 130,793
------------- ------------- ------------- -------------
===============================================================================================================
NET ASSETS ............................... $ 218,065 $ 31,824,359 $ 87,579,160 $ 104,301,623
============= ============= ============= =============
Net assets consist of:
Paid-in capital .......................... $ 217,627 $ 26,508,494 $ 65,635,061 $ 65,578,722
Undistributed net investment ............. 1,426 640,698 830,162 (409,412)
income (loss)
Accumulated net realized gains (losses)
from security transactions ............ (11) 1,378,041 7,005,469 10,106,584
Net unrealized appreciation (depreciation)
on investments ........................ (977) 3,297,126 14,108,468 29,025,729
------------- ------------- ------------- -------------
NET ASSETS ............................ $ 218,065 $ 31,824,359 $ 87,579,160 $ 104,301,623
============= ============= ============= =============
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) (Note 5) ................ 22,009 2,407,976 5,956,711 5,651,970
============= ============= ============= =============
Net asset value, redemption price and
offering price per share (Note 1) ..... $ 9.91 $ 13.22 $ 14.70 $ 18.45
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
Markman
7
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
================================================================================
STATEMENTS OF OPERATIONS o For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Markman Markman Markman
Markman Income Conservative Moderate Aggressive
Allocation Allocation Allocation Allocation
Portfolio(A) Portfolio Portfolio Portfolio
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Dividend income ..................................... $ 1,597 $ 794,985 $ 1,233,899 $ 54,140
------------ ------------ ------------ ------------
EXPENSES
Investment advisory fees ............................ 171 147,287 396,737 456,552
Independent Trustees' fees .......................... -- 7,000 7,000 7,000
------------ ------------ ------------ ------------
Total Expenses (Note 3) ............................. 171 154,287 403,737 463,552
------------ ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) ........................ 1,426 640,698 830,162 (409,412)
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gains (losses) from security transactions (11) 1,378,041 7,082,904 10,275,999
Net change in unrealized appreciation/
depreciation on investments ...................... (977) 217,137 269,998 3,968,701
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAINS (Losses)
ON INVESTMENTS ................................... (988) 1,595,178 7,352,902 14,244,700
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS .................................. $ 438 $ 2,235,876 $ 8,183,064 $ 13,835,288
============ ============ ============ ============
</TABLE>
================================================================================
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS o For the periods ended June 30, 1999 and December 31, 1998
Markman Income Markman Conservative Markman Moderate
Allocation Portfolio Allocation Portfolio Allocation Portfolio
Period ended Six months ended Year ended Six months ended Year ended
June 30, 1999(A) June 30, 1999 Dec. 31, 1998 June 30, 1999 Dec. 31, 1998
(Unaudited) (Unaudited) (Unaudited)
FROM OPERATIONS:
<S> <C> <C> <C> <C> <C>
Net investment income (loss) ..................... $ 1,426 $ 640,698 $ 568,587 $ 830,162 $ 691,704
Net realized gains (losses) from security
transactions .................................. (11) 1,378,041 1,067,694 7,082,904 3,062,796
Capital gain distributions from other
investment companies .......................... -- -- 515,255 -- 1,388,199
Net change in unrealized appreciation/depreciation
on investments ................................ (977) 217,137 1,106,083 269,998 8,491,783
------------- ------------- ------------- ------------- -------------
Net increase in net assets from operations ....... 438 2,235,876 3,257,619 8,183,064 13,634,482
------------- ------------- ------------- ------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ............. -- -- (657,761) -- (691,704)
Distributions in excess of net investment
income (Note 1) ............................... -- -- (45,764) -- (260,772)
Distributions from net realized gains ............ -- -- (1,102,192) -- (3,393,190)
------------- ------------- ------------- ------------- -------------
Decrease in net assets from distributions
to shareholders ............................... -- -- (1,805,717) -- (4,345,666)
------------- ------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS (Note 5):
Proceeds from shares sold ........................ 468,408 5,703,502 11,129,490 7,939,542 12,188,071
Net asset value of shares issued in
reinvestment of distributions to shareholders . -- -- 1,563,886 -- 4,298,339
Payments for shares redeemed ..................... (250,781) (6,581,767) (20,358,721) (12,342,521) (28,364,444)
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in net assets from
capital share transactions .................... 217,627 (878,265) (7,665,345) (4,402,979) (11,878,034)
------------- ------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .......... 218,065 1,357,611 (6,213,443) 3,780,085 (2,589,218)
NET ASSETS:
Beginning of period .............................. -- 30,466,748 36,680,191 83,799,075 86,388,293
------------- ------------- ------------- ------------- -------------
End of period .................................... $ 218,065 $ 31,824,359 $ 30,466,748 $ 87,579,160 $ 83,799,075
============= ============= ============= ============= =============
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ....... $ 1,426 $ 640,698 $ -- $ 830,162 $ --
============= ============= ============= ============= =============
</TABLE>
Markman Aggressive
Allocation Portfolio
Six months ended Year ended
June 30, 1999 Dec. 31, 1998
(Unaudited)
------------- -------------
FROM OPERATIONS:
Net investment income (loss) ..................... $ (409,412) $ (513,567)
Net realized gains (losses) from security
transactions .................................. 10,275,999 (231,303)
Capital gain distributions from other
investment companies .......................... -- 1,291,832
Net change in unrealized appreciation/depreciation
on investments ................................ 3,968,701 18,912,136
------------- ------------
Net increase in net assets from operations ....... 13,835,288 19,459,098
------------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ............. -- (21,208)
Distributions in excess of net investment
income (Note 1) ............................... -- --
Distributions from net realized gains ............ -- (340,273)
------------- ------------
Decrease in net assets from distributions
to shareholders ............................... -- (361,481)
------------- ------------
FROM CAPITAL SHARE TRANSACTIONS (Note 5):
Proceeds from shares sold ........................ 12,262,253 16,927,645
Net asset value of shares issued in
reinvestment of distributions to shareholders . -- 350,390
Payments for shares redeemed ..................... (13,410,575) (29,162,161)
------------- ------------
Net increase (decrease) in net assets from
capital share transactions .................... (1,148,322) (11,884,126)
------------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .......... 12,686,966 7,213,491
NET ASSETS:
Beginning of period .............................. 91,614,657 84,401,166
------------- ------------
End of period .................................... $ 104,301,623 $ 91,614,657
============= ============
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ....... $ (409,412) $ --
============= ============
(A) Represents the period from the initial public offering of shares (May 1,
1999) through June 30, 1999.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
Markman
8
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
================================================================================
MARKMAN INCOME ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout The Period
Period ended
June 30, 1999 (A)
(Unaudited)
Net asset value at beginning of period ......................... $ 10.00
-------
Income from investment operations:
Net investment income ....................................... 0.06
Net realized and unrealized losses on investments ........... (0.15)
-------
Total from investment operations ............................... (0.09)
-------
Less distributions:
Dividends from net investment income ........................ --
Distributions in excess of net investment income ............ --
Distributions from net realized gains ....................... --
-------
Total distributions ............................................ --
-------
NET ASSET VALUE AT END OF PERIOD ............................... $ 9.91
=======
TOTAL RETURN ................................................... (0.90%)
=======
NET ASSETS AT END OF PERIOD (000'S) ............................ $ 218
=======
Ratio of expenses to average net assets ........................ 0.63%(C)
Ratio of net investment income to average net assets ........... 5.23%(C)
Portfolio turnover rate ........................................ 13%
================================================================================
MARKMAN CONSERVATIVE ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Year ended Year ended Year ended Period ended
Six months ended December 31, December 31, December 31, December 31,
June 30, 1999 1998 1997 1996 1995(B)
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period ...... $ 12.33 $ 11.82 $ 11.49 $ 10.97 $ 10.00
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income ................... 0.27 0.25 0.33 0.28 0.19
Net realized and unrealized gains
on investments .......................... 0.62 1.03 1.31 1.19 1.61
---------- ---------- ---------- ---------- ----------
Total from investment operations ............ 0.89 1.28 1.64 1.47 1.80
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income .... -- (0.28) (0.30) (0.28) (0.19)
Distributions in excess of net investment
income .................................. -- (0.02) (0.15) (0.18) (0.04)
Distributions from net realized gains ... -- (0.47) (0.86) (0.49) (0.60)
---------- ---------- ---------- ---------- ----------
Total distributions ......................... -- (0.77) (1.31) (0.95) (0.83)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE AT END OF PERIOD ............ $ 13.22 $ 12.33 $ 11.82 $ 11.49 $ 10.97
========== ========== ========== ========== ==========
TOTAL RETURN ................................ 7.22% 10.83% 14.27% 13.41% 18.00%
========== ========== ========== ========== ==========
NET ASSETS AT END OF PERIOD (000'S) ......... $ 31,824 $ 30,467 $ 36,680 $ 42,579 $ 9,852
========== ========== ========== ========== ==========
Ratio of expenses to average net
assets ................................... 0.65%(C) 0.95% 0.95% 0.95% 0.95%(C)
Ratio of net investment income to
average net assets ...................... 3.94%(C) 1.70% 2.38% 3.21% 3.02%(C)
Portfolio turnover rate ..................... 20% 165% 48% 104% 176%
</TABLE>
(A) Represents the period from the initial public offering of shares (May 1,
1999) through June 30, 1999.
(B) Represents the period from the initial public offering of shares (January
26, 1995) through December 31, 1995.
(C) Annualized.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
Markman
9
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
MARKMAN MODERATE ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Six months ended Year ended Year ended Year ended Period ended
June 30, 1999 December 31, December 31, December 31, December 31,
(Unaudited) 1998 1997 1996 1995(A)
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period ............. $ 13.35 $ 11.90 $ 11.49 $ 11.31 $ 10.00
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income .......................... 0.14 0.12 0.26 0.18 0.06
Net realized and unrealized gains on investments 1.21 2.06 1.96 1.08 2.39
--------- --------- --------- --------- ---------
Total from investment operations ................... 1.35 2.18 2.22 1.26 2.45
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ........... -- (0.12) (0.26) (0.18) (0.06)
Distributions in excess of net investment income -- 0.04) (0.21) (0.14) (0.24)
Distributions from net realized gains .......... -- (0.57) (1.34) (0.76) (0.84)
--------- --------- --------- --------- ---------
Total distributions ................................ -- (0.73) (1.81) (1.08) (1.14)
--------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD ................... $ 14.70 $ 13.35 $ 11.90 $ 11.49 $ 11.31
========= ========= ========= ========= =========
TOTAL RETURN ....................................... 10.11% 18.32% 19.38% 11.11% 24.50%
========= ========= ========= ========= =========
NET ASSETS AT END OF PERIOD (000'S) ................ $ 87,579 $ 83,799 $ 86,388 $ 78,627 $ 38,988
========= ========= ========= ========= =========
Ratio of expenses to average net assets ............ 0.95%(B) 0.95% 0.95% 0.95% 0.95%(B)
Ratio of net investment income to average
net assets ...................................... 1.95%(B) 0.84% 1.96% 1.34% 0.77%(B)
Portfolio turnover rate ............................ 30% 117% 82% 280% 141%
<CAPTION>
===============================================================================================================================
MARKMAN AGGRESSIVE ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
Six months ended Year ended Year ended Year ended Period ended
June 30, 1999 December 31, December 31, December 31, December 31,
(Unaudited) 1998 1997 1996 1995(A)
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period .................. $ 16.01 $ 12.74 $ 12.26 $ 11.79 $ 10.00
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income (loss) ........................ (0.07) (0.09) 0.01 0.05 0.01
Net realized and unrealized gains on investments 2.51 3.42 2.32 1.34 3.11
--------- --------- --------- --------- ---------
Total from investment operations ........................ 2.44 3.33 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 ............... -- (0.06) (1.65) (0.76) (1.09)
--------- --------- --------- --------- ---------
Total distributions ..................................... -- (0.06) (1.85) (0.92) (1.33)
--------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD ........................ $ 18.45 $ 16.01 $ 12.74 $ 12.26 $ 11.79
========= ========= ========= ========= =========
TOTAL RETURN ............................................ 15.24% 26.17% 18.96% 11.72% 31.21%
========= ========= ========= ========= =========
NET ASSETS AT END OF PERIOD (000'S) ..................... $ 104,302 $ 91,615 $ 84,401 $ 84,329 $ 42,325
========= ========= ========= ========= =========
Ratio of expenses to average net assets ................. 0.95%(B) 0.95% 0.95% 0.95% 0.95%(B)
Ratio of net investment income (loss) to
average net assets ................................... (0.84%)(B) (0.62)% 0.05% 0.34% 0.15%(B)
Portfolio turnover rate ................................. 31% 101% 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
10
<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 four series of shares to investors: the
Markman Income Allocation Portfolio, 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
(except for the Markman Income Allocation Portfolio) at $10.00 per share. The
public offering of shares of such 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 public offering of shares of the Markman
Income Allocation Portfolio commenced on May 1, 1999.
The Markman Income Allocation Portfolio seeks to provide high current income and
low share price fluctuation. 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 (normally 4:00 p.m., Eastern time). Shares of open-end, management
investment companies (mutual funds) in which the Funds invest are valued at
their respective net asset values as determined under the 1940 Act. Such mutual
funds value securities in their portfolios for which market quotations are
readily available at their current market value (generally the last reported
sale price) and all other securities and assets at fair value pursuant to
methods established in good faith by the Board of Trustees or Directors of the
underlying mutual fund. Money market funds in which the Funds also invest
generally value securities in their portfolios on an amortized cost basis, which
approximates market.
Share valuation -- The net asset value per share of each Fund is calculated
daily by dividing the total value of that Fund's assets, less liabilities, by
the number of shares outstanding, rounded to the nearest cent. The offering and
redemption price per share of each Fund are equal to the net asset value per
share.
Investment income -- Dividend income is recorded on the ex-dividend date. For
financial reporting purposes, the Funds record distributions of short-term and
long-term capital gains made by mutual funds in which the Funds invest as
realized gains. For tax purposes, the short-term portion of such distributions
is treated as dividend income by the Funds.
Distributions to shareholders -- Distri-butions to shareholders arising from
each Fund's net investment income and net realized capital gains, if any, are
distributed at least once each year. Income distributions and capital gain
distributions are determined in accordance with income tax regulations.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are determined on a specific identification basis.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Federal income tax -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code (the Code) available to regulated
investment companies. As provided therein, in any fiscal year in which a Fund so
qualifies and distributes at least 90% of its taxable net income, the Fund (but
not the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
Each of the Funds files a tax return annually using tax accounting methods
required under provisions of the Code which may differ from GAAP, the basis on
which these financial statements are prepared. The differences arise primarily
from the treatment of short-term gain distributions made by mutual funds in
which the Funds invest and the deferral of certain losses under Federal income
tax regulations. Accordingly, the amount of net investment income and net
realized capital gain or loss reported in the financial statements may differ
from that reported in the Fund's tax return and, consequently, the character of
distributions to shareholders reported in the Statements of Changes in Net
Assets and the Financial Highlights may differ from that reported to
shareholders for federal income tax purposes. As a result of such differences,
reclassifications are made to the components of net assets to conform to GAAP.
The following information is based upon the federal income tax cost of portfolio
investments as of June 30, 1999:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Markman Markman Markman Markman
Income Conservative Moderate Aggressive
Allocation Allocation Allocation Allocation
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Gross unrealized appreciation $ 1,489 $ 3,773,587 $ 14,779,367 $ 28,797,282
Gross unrealized depreciation (2,466) (482,767) (722,479) (48,228)
------------ ------------ ------------ ------------
Net unrealized appreciation
(depreciation) $ (977) $ 3,290,820 $ 14,056,888 $ 28,749,054
============ ============ ============ ============
Federal income tax cost of
portfolio investments $ 219,021 $ 28,382,315 $ 73,657,314 $ 75,628,756
============ ============ ============ ============
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Markman
11
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. INVESTMENT TRANSACTIONS
During the periods ended June 30, 1999, cost of purchases and proceeds from
sales of portfolio securities, other than short-term investments, amounted to
$208,340 and $14,989, respectively, for the Markman Income Allocation Portfolio;
$6,079,743 and $6,200,000, respectively, for the Markman Conservative Allocation
Portfolio; $25,115,583 and $29,057,995, respectively, for the Markman Moderate
Allocation Portfolio; and $30,000,000 and $32,764,357, 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 0.95% of average daily net assets of the Markman Conservative Allocation
Portfolio, the Markman Moderate Allocation Portfolio and the Markman Aggressive
Allocation Portfolio and 0.65% of the average daily net assets of the Markman
Income Allocation Portfolio. The Adviser pays all operating expenses of the
Funds except brokerage commissions, taxes, interest, fees and expenses of
independent Trustees and any extraordinary expenses. In addition, the Adviser is
contractually obligated to reduce its investment management fee in an amount
equal to each Fund's allocable portion of the fees and expenses of the Trust's
independent Trustees.
ADMINISTRATION, ACCOUNTING AND TRANSFER AGENCY AGREEMENT
Under the terms of the Administration, Accounting, and Transfer Agency Agreement
between the Trust, the Adviser and CFS, CFS supplies non-investment related
statistical and research data, internal regulatory compliance services and
executive and administrative services for each of the Funds. CFS supervises the
preparation of tax returns for the Funds, reports to shareholders of the Funds,
reports to and filings with the Securities and Exchange Commission and state
securities commissions and materials for meetings of the Board of Trustees. In
addition, CFS maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of each Fund's shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. CFS also calculates the
daily net asset value per share and maintains the financial books and records of
each Fund. For the performance of these services, the Adviser, out of its
investment management fee, pays CFS a monthly base fee, an asset based fee, and
a fee based on the number of shareholder accounts. In addition, the Adviser pays
out-of-pocket expenses including, but not limited to, postage and supplies.
4. BANK LOANS
The Trust has an unsecured $10,000,000 bank line of credit; borrowings under
this arrangement bear interest at a rate determined by the bank at the time of
borrowing. For the six months ended June 30, 1999, 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 periods ended June 30, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
MARKMAN INCOME MARKMAN CONSERVATIVE MARKMAN MODERATE MARKMAN AGGRESSIVE
ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO
Period Six months Year Six months Year Six months Year
ended, ended ended ended ended ended ended
June 30, June 30, Dec. 31, June 30, Dec. 31, June 30, Dec. 31,
1999(A) 1999 1998 1999 1998 1999 1998
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Shares sold ..................... 47,482 441,703 934,987 558,383 970,847 699,304 1,234,363
Shares issued in reinvestment of
distributions to shareholders -- -- 126,836 -- 321,973 -- 21,885
Shares redeemed ................. (25,473) (504,191) (1,695,443) (879,434) (2,273,277) (770,956) (2,158,375)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
shares outstanding ......... 22,009 (62,488) (633,620) (321,051) (980,457) (71,652) (902,127)
Shares outstanding, beginning
of period ................... -- 2,470,464 3,104,084 6,277,762 7,258,219 5,723,622 6,625,749
---------- ---------- ---------- ---------- ---------- ---------- ----------
Shares outstanding,
end of period ............... 22,009 2,407,976 2,470,464 5,956,711 6,277,762 5,651,970 5,723,622
========== ========== ========== ========== ========== ========== ==========
</TABLE>
(A) Represents the period from the initial public offering of shares (May 1,
1999) through June 30, 1999.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Markman
12
<PAGE>
- --------------------------------------------------------------------------------
STAY INFORMED
- --------------------------------------------------------------------------------
1-800-975-5463
PORTFOLIO/STRATEGY UPDATE
To hear Bob Markman's weekly market
overview and MultiFund activity report.
www.markman.com/funds.htm
ONLINE
Check for net asset values and more.
1-800-536-8679
PRICELINE
For up-to-the-minute net asset values
and account values.
1-800-707-2771
HELPLINE
For a prospectus, an application form,
for assistance in completing an application,
or for general administrative questions.
- --------------------------------------------------------------------------------
New, Improved Web Site
If you haven't checked out the MultiFunds web site (www.markman.com/funds.htm),
you may want to take a look. We have expanded performance information, portfolio
allocations updated biweekly, on-line access to the Prospectus, and more with a
lot more coming. Plus, we're interested in your comments and suggestions.
These forms are available:
o Account Application
o IRA Application
o Roth 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 5:30 PM EST)
Toll-free: 1-800-707-2771
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MARKMAN INVESTMENT ADVISER SHAREHOLDER SERVICES
- ---------------- MULTIFUNDS Markman Capital Management, Inc. c/o Countrywide Fund Services, Inc.
NO-LOAD ---------- 6600 France Ave. So. 312 Walnut Street, 21st Floor
100% MUTUAL FUND For investors too smart Minneapolis, Minnesota 55435 Cincinnati, Ohio 45202-3874
COUNCIL to do it themselves Telephone: 612-920-4848 Telephone: 513-629-2070
- ---------------- Toll-free: 1-800-395-4848 Toll-free: 1-800-707-2771
</TABLE>
Authorized for distribution only if preceded or accompanied by a current
prospectus.
- --------------------------------------------------------------------------------
<PAGE>
Markman
MULTIFUNDS
- ---------- FIRST CLASS
For investors too smart
to do it themselves
6600 France Avenue South
Minneapolis, Minnesota 55435
