Markman
MULTIFUNDS
Annual
Report
December 31, 1998
Aggressive Allocation Portfolio
Moderate Allocation Portfolio
Conservative Allocation Portfolio
<PAGE>
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A look back:
Markets, Attitude, Performance
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After experiencing a year like 1998, which packed so much into a brief
twelve-month period, one struggles to distill some moral or investment lesson
from the chaos. In dizzying succession, we as investors were asked to react to
tragedy, farce, soap opera, euphoria, despair, greed, and fear.
What was so fascinating -- and instructive -- to me was the assumption that we
were supposed to react to these events. From the original Lewinsky revelations
last January, down through the Russian collapse, the hedge fund debacle, the
ongoing Asia deflation scare, and the impeachment mini-series (accompanied, of
course, by the wrenching sound of a 20% market decline in 90 days!), there were
certainly plenty of reasons to make precipitous and panicked short-term moves.
There was no shortage of pundits solemnly predicting that any or all of these
events could, would, should, possibly, and at some point, derail the U.S.
economy and plunge a red-hot market into nuclear winter.
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New and Better Comparative Indices
- ----------------------------------
This past year the Funds of Funds Association developed a new system of
categorizing multifunds. Three main categories were established: Conservative,
Moderate, and Growth. The purpose was twofold: first, to group funds of similar
risk objective together so that investors and the media would not err in
comparing apples to oranges, and second, to help investors make realistic
performance comparisons within legitimate peer groupings.
Markman Capital Management, the adviser to the Markman MultiFunds, is a founding
member of the Funds of Funds Association. The categories were established based
on the degree of daily price changes (volatility) compared to the S&P 500 in
1997. The funds in the Conservative group have maintained volatility less than
40% of that of the S&P 500 Index, although some may be higher from time to time.
The funds in the Moderate group have maintained volatility between 40% and 60%
of that of the S&P 500 Index, although some may be higher and some may be lower
from time to time. The funds in the Growth group have maintained volatility
between 60% and 100% of that of the S&P 500 Index, although some may be higher
and some may be lower from time to time. All funds of funds (as so categorized
by Morningstar, Inc.) with inception dates of February 1, 1995, or earlier are
included in these indices. These indices are not audited as part of the
financial statement audit.
Independent data from Lipper Analytical Services is used to calculate the
average returns within the three categories. We will be including these numbers
in our performance comparisons. We believe this will give a valuable perspective
on how we perform relative to our peers.
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<PAGE>
It seemed to us that, while some of these disaster scenarios were thoughtfully
constructed, they were still just "possibilities." Contrasted with these
possibilities were hard and indisputable facts: inflation was dead;
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The winds of change constantly blow through the financial markets, and
relationships and dynamics that had previously existed can never be taken for
granted.
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interest rates were declining significantly with several beneficial effects;
lower interest rates supported a higher P/E on growth stocks; lower rates also
acted as a de facto tax cut for the consumer, with massive mortgage refinancing
pumping billions of new spendable dollars into the economy. While some
companies, particularly in the obvious commodity area, were hurt by the Asian
crisis, we never saw the massive and broad collapse in earnings. In fact,
bellwether large caps like Dell, Microsoft, GE, and Ford posted record numbers.
Add to all this the huge increase in measured bearish sentiment (always a good
contrarian indicator) and the stage was set for something unexpected. As we
wrote to you on September 30, "...we believe that not only have we seen the lows
for the year, we are likely to finish 1998 a good deal higher than we are now.
The market may be pricing in a worst case scenario. Anything less and a big
rally could ensue." Facts over fear.
We took advantage of what we called the "media and professional panic" of last
summer and fall to aggressively redeploy much of our Portfolios. We recognized
that this was going to continue to be a difficult environment for small cap
funds, value funds, and international funds. At the same time, large U.S. stock
funds -- particularly the techs -- looked to us like fantastic opportunities. So
we jettisoned the laggards and questionables and loaded up the shopping cart
with pure U.S. large cap plays. And it couldn't have turned out better.
We are replacing the S&P 500 index as our broad-based index for the Aggressive
Allocation Portfolio and Moderate Allocation Portfolio, and the Lehman
Intermediate Government Bond Index for the Conservative Allocation Portfolio,
with the Wilshire 5000 Stock Index for all Portfolios. The Wilshire 5000 Stock
Index is the broadest of all stock indices, covering Nasdaq Stock Market stocks
and all stocks traded on the New York Stock Exchange and American Stock
Exchange. It is a market-value weighted index. Although it does not include
bonds, and therefore does not completely represent our holdings, it remains the
closest broad-based index available within the guidelines established by the
Securities and Exchange Commission. The Wilshire 5000 Stock Index gained 23.4%
in 1998.
For the year, the S&P 500 returned 28.6% and the Lehman Intermediate Government
Bond Index gained 8.6%. The fourth quarter was our best three-month period since
inception. The Conservative Allocation gained 12.25%, the Moderate Allocation
gained 20.14%, and the Aggressive Allocation gained 31.32%. This strong finish
to the year enabled all three Portfolios to beat the average Fund of Funds for
the year. The chart below shows how we did in 1998 against our managed portfolio
peers.
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1998 Returns
Markman Aggressive Allocation 26.17%
Average Growth Fund of Funds 17.32%
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Markman Moderate Allocation 18.32%
Average Moderate Fund of Funds 12.73%
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Markman Conservative Allocation 10.83%
Average Conservative Fund of Funds 9.83%
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Also helping returns in the later part of the year was our decision in the
Conservative and Moderate Portfolios to use the rally in U.S. Treasuries as an
opportunity to sell our zero coupon bond funds. Most of those dollars were
reallocated into temporarily depressed high-yield bond funds. Again, the timing
was fortuitous: after a difficult summer, high-yield bond funds far outperformed
Treasuries in the fourth quarter.
<PAGE>
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[GRAPHIC OMITTED]
Jan 31, Dec 31,
1995 1998
---- ----
Markman Conservative Allocation Portfolio $10,000 $16,948
Wilshire 5000 $10,000 $24,436
Lehman Intermediate Government Bond Index $10,000 $13,692
*Funds of Funds Conservative $10,000 $16,572
Past performance is not predicative of future performance.
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[GRAPHIC OMITTED]
Jan 31, Dec 31,
1995 1998
---- ----
Markman Moderate Allocation Portfolio $10,000 $19,541
Wilshire 5000 $10,000 $24,436
S&P 500 $10,000 $28,235
*Funds of Funds Moderate $10,000 $19,015
Past performance is not predicative of future performance.
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[GRAPHIC OMITTED]
Jan 31, Dec 31,
1998 1998
---- ----
Markman Aggressive Allocation Portfolio $10,000 $22,001
Wilshire 5000 $10,000 $24,436
S&P 500 $10,000 $28,235
*Funds of Funds Growth $10,000 $20,324
Past performance is not predicative of future performance.
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*See inside front cover "New and Better Comparative Indices" for an explanation
of these indices.
I also want to take this opportunity to discuss another important
performance-related point. One of our primary responsibilities is to make sure
we've done all we can to create
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We took advantage of what we called the "media and professional panic" of last
summer and fall to aggressively redeploy much of our Portfolios.
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Portfolios that reflect, in real life, the nature of the label we've given them:
Conservative, Moderate, Aggressive. While this might seem obvious and simple to
do, the real life execution sometimes becomes quite complex. For example, this
past year, theoretically "riskier" high P/E growth funds held up better in the
market decline than many of their more "cautious" value fund brethren. Real
estate funds, often touted as lower risk, defensive investments, ended the year
with double digit losses!
The winds of change constantly blow through the financial markets, and
relationships and dynamics that had previously existed can never be taken for
granted. One of the most important jobs we do for our shareholders is to keep on
top of these risk/reward dynamics, adjusting our holdings as soon as we identify
a shift in fortunes. Last year clearly demonstrated just how vital that kind of
research and attention can be. When you review the remarkably regular spread of
our returns (and the daily results that built up to them), we hope you agree
that we've succeeded in that task.
<PAGE>
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Our view as the year begins
It is hard to imagine a serious and extended setback for the market while the
macroeconomic picture remains so very positive. As the year begins, unemployment
is at its lowest level in over 25 years.
Not only are jobs plentiful, but they're paying better than ever: real,
inflation-adjusted wages are rising faster than they have for quite some time.
Historically low interest rates have, over the past year, created a boom in
housing along with all the other economic activity tied to the buying and
remodeling of homes. Those not moving or remodeling have taken advantage of
lower mortgage rates to refinance, freeing up sometimes hundreds of dollars per
month in new spendable cash flow. (For the middle class, this is like a
multibillion dollar tax cut.)
As I've said, the story the pundits missed last year was that the U.S. consumer
- -- the real engine of our economy -- was in a powerful position. Even more
amazing is that this still isn't fully appreciated. In fact, the biggest risk we
run this year is not recession (how can rational observers still say that?) but
an economy too strong for the Federal Reserve to tolerate.
Interest rates are likely to stay steady with perhaps a small upward bias to
reflect accelerating economic activity both here and abroad. The implications
for the bond market are substantial. We will probably see a reverse of last
year's bond dynamic. Treasuries will be in for some tough sledding while
high-yield corporates (junk) will again have the wind at their backs. As you'll
see, we've positioned the Portfolios accordingly.
Small cap stocks should do better this year. That doesn't mean, however, that
they will outperform large stocks. We continue to firmly believe that both the
domestic and global economic environments greatly favor large
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We continue to firmly believe that both the domestic and global economic
environments greatly favor large caps and see no investment benefit to be gained
from blind and unthinking small cap diversification.
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caps and see no investment benefit to be gained from blind and unthinking small
cap diversification.
Similarly, while I can see periods of exciting rebounds in selected overseas
markets, the risks continue to far outweigh the available gains. We are far
better off playing the potential for Asian and European growth by investing in
U.S. multinationals.
Technology, in its many shapes and variations, will continue to be a driving
force in the economy and in our Portfolios. We intend to maintain our
overweighting in tech stocks, particularly in the Aggressive Allocation.
Overall, I am extremely optimistic about 1999 and think that potentially
significant gains are possible. The road to those potential rewards, however,
will no doubt be strewn with potholes producing gut-wrenching declines.
Manias like those we are currently experiencing in Internet stocks have a way of
exploding and sliming all investors when they do. Just where the spark will come
from (and when), no one knows. After all, this time last year the pundits
thought Russia was on the road to healthy capitalist development; six months
later it suffered a fatal stroke that almost brought down the entire world
economy!
It is thus ever more important that I stress that I intend to keep the
Aggressive Allocation fully invested in a mix of potentially volatile funds.
Since I am confident in their long-term prospects, I am comfortable letting the
short-term chips fall where they may. On the other hand, my intention in the
Conservative Allocation is just the opposite. I will be taking all reasonable
efforts to achieve relative stability in that Portfolio. The Moderate
Allocation, as always, will split the difference.
The bottom line is that whatever your personal outlook and strategy are, we will
work hard to create and manage a portfolio that can meet your expectations.
[PHOTO OMITTED]
/s/ Bob Markman
<PAGE>
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Aggressive Allocation Portfolio
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OUR GOAL: To achieve high long-term growth. A fully invested portfolio, largely
stock oriented, will be maintained at all times, thus creating realively high
volatility.
We made no tactical moves of any significance here during the last quarter of
1998. As is obvious from our return over the past three months (up 31.32%), we
clearly had the Portfolio positioned right in the sweet spot of the market. By
the fourth quarter, we had completed our focusing of the Aggressive Portfolio on
large cap U.S. funds.
While many (if not most) fund observers continue to tout the relative "values"
in small cap and international funds, we remain convinced that large caps will
continue to lead the way for some time to come. (What I find fascinating is that
it's gotten to the point where our approach -- buying the Intels, GEs, and
Microsofts of the world -- is actually a contrarian position. Incredible.)
Technology -- particularly, again, large cap technology -- remains the dominant
theme in the Portfolio.
I cannot stress too strongly that this is an aggressive stance. The overwhelming
large cap U.S. stance, coupled with our tech overweighting, does create higher
short-term volatility. For those, however, who have patience and fortitude, it
also gives us the potential to maximize returns over time. One can also make the
case that long term, investing in large, dominant companies entails less risk of
disappointment than hopeful speculation in emerging markets, small caps, and the
like.
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Content Breakdown
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(Unaudited)
[GRAPHIC OMITTED]
U.S. Stocks ............. 96%
International Stocks .... 0%
Bonds ................... 0%
Cash .................... 4%
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PORTFOLIO COMAPRISON (Unaduited)
[GRAPHIC OMITTED]
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Markman Aggressive Funds of Funds Association
Allocation Portfolio Growth Index
-------------------- ------------
12 months ending 12/98 26.2% 17.3%
3 years annualized 18.8% 16.0%
Annualized since inception* 22.3% 19.7%
* from Februay 1, 1995
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<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
Markman Aggressive Allocation Portfolio -- December 31, 1998
- --------------------------------------------------------------------------------------------------
Fund Shares Market Value % of Total Status**
(Unaudited)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Twenty Fund 333,640 $ 17,782,997 19.4%
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The Rydex Series OTC Fund* 330,524 13,670,490 14.9% -
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Stein Roe Growth Stock Fund* 312,953 13,554,002 14.8% -
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The Rydex Series Nova Fund 359,995 11,962,639 13.1%
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White Oak Growth Stock Fund* 227,709 9,270,051 10.1% -
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PBHG Large Cap 20 Fund* 354,099 7,680,401 8.4% new
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ProFunds Ultra OTC 220,850 5,267,267 5.8% new
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Transamerica Premier Equity Fund* 205,490 5,092,036 5.6% -
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Marsico Focus Fund* 241,680 3,656,615 4.0%
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ProFunds UltraBull 201,542 2,960,655 3.2% new
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Miscellaneous-- Money Market Fund 312,077 312,077 0.3% -
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Total Investments (Cost $66,152,202) 91,209,230 99.6%
- --------------------------------------------------------------------------------------------------
Other Assets and Liabilities, Net 405,427 0.4%
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Net Assets $ 91,614,657 100.0%
============ ======
</TABLE>
See accompanying notes to financial statements.
* 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.
<PAGE>
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Moderate Allocation Portfolio
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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.
The fourth quarter adjustments in the Moderate Allocation Portfolio reflected
our continuing process of "blending" the strongest ideas from the Conservative
and Aggressive Portfolios. Our equity positions remained much the same and
appeared to be the right place to be, helping propel the Portfolio to a 20.14%
gain for the quarter.
We sold the last of our zero coupon bond fund position and added to our
high-yield bond fund holdings.
Allocating correctly within the stock/ bond matrix enabled us to achieve an
18.32% return for the year, well ahead of the 12.73% return of the average
moderate fund of funds. Given the generally balanced approach of most moderate
growth funds of funds, our margin of success last year is large and significant.
We think it confirms the validity of our approach of mixing large cap U.S. stock
funds with opportunistic allocations of strongly-trending bond sectors.
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Content Breakdown
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(Unaudited)
[GRAPHIC OMITTED]
U.S. Stocks ............. 74%
International Stocks .... 0%
Bonds ................... 19%
Cash .................... 7%
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PORTFOLIO COMAPRISON (Unaduited)
[GRAPHIC OMITTED]
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Markman Moderate Funds of Funds Association
Allocation Portfolio Moderate Index
-------------------- --------------
12 months ending 12/98 18.3% 12.7%
3 years annualized 16.2% 15.8%
Annualized since inception* 18.6% 17.8%
* from Februay 1, 1995
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<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
Markman Moderate Allocation Portfolio -- December 31, 1998
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Fund Shares Market Value % of Total Status**
(Unaudited)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Twenty Fund 362,963 $ 19,345,926 23.1% +
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Marsico Focus Fund* 1,010,951 15,295,686 18.3% +
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The Rydex Series Nova Fund 410,464 13,639,712 16.3% +
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Northeast Investors Trust 894,333 9,363,662 11.2% -
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Paap America-- Abroad Fund 280,901 9,025,354 10.8% +
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INVESCO High Yield Fund 1,203,374 7,749,731 9.2% new
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The Rydex Series OTC Fund 151,085 6,248,856 7.4% new
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The Oakmark Fund 87,479 3,133,489 3.7%
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Total Investments (Cost $69,963,946) 83,802,416 100.0%
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Other Assets and Liabilities, Net (3,341) 0.0%
- --------------------------------------------------------------------------------------------------
Net Assets $ 83,799,075 100.0%
============ ======
</TABLE>
See accompanying notes to financial statements.
* 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 appear in prior quarter.
<PAGE>
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Conservative Allocation Portfolio
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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.
Our research continues to show that many previously unquestioned dogmas about
cautious asset allocation no longer stand up under scrutiny. Commonly accepted
choices such as REITs, large and small value stocks, international
diversification, etc., have -- perversely -- created greater volatility and not
the stability hoped for.
Accordingly, we have refocused our stock/ bond/cash allocations by simplifying
our stock exposure. We believe that emphasizing large cap U.S. stock funds will
produce a consistency of dynamic not possible in a more broad-based, eclectic
mix. While simplifying our equity exposure entails a possibility of greater
short-term volatility, we believe we can offset that by a concurrent increase in
our bond and cash allocations.
Tactically, in the fourth quarter, we took advantage of the panic rally in
Treasuries to sell our zero coupon bond funds and "buy low" into the temporarily
depressed high-yield market. The results have been very satisfying. Our 12.25%
return for the quarter was the best three-month period ever for the Conservative
Allocation. Our stock funds have, in fact, moved so far, so fast that we
anticipate reducing our positions slightly in the first part of 1999.
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Content Breakdown
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(Unaudited)
[GRAPHIC OMITTED]
U.S. Stocks ............. 42%
International Stocks .... 0%
Bonds ................... 49%
Cash .................... 9%
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PORTFOLIO COMAPRISON (Unaduited)
[GRAPHIC OMITTED]
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Markman Conservative Funds of Funds Association
Allocation Portfolio Conservative Index
-------------------- ------------------
12 months ending 12/98 10.8% 9.8%
3 years annualized 12.8% 11.7%
Annualized since inception* 14.4% 13.7%
* from Februay 1, 1995
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<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
Markman Conservative Allocation Portfolio -- December 31, 1998
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Fund Shares Market Value % of Total Status**
(Unaudited)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Twenty Fund 139,173 $ 7,417,931 24.3% -
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Marsico Focus Fund* 431,431 6,527,544 21.4% new
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Northeast Investors Trust 460,450 4,820,909 15.8% +
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INVESCO High Yield Fund 704,161 4,534,795 14.9% +
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PIMCO Total Return Fund-- Institutional 366,456 3,862,441 12.7% new
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PIMCO High Yield Fund-- Institutional 268,311 3,034,594 10.0% new
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Miscellaneous-- Money Market Fund 473,315 473,315 1.6%
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Total Investments (Cost $27,591,540) 30,671,529 100.7%
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Other Assets and Liabilities, Net (204,781) (0.7)%
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Net Assets $ 30,466,748 100.0%
============ ======
</TABLE>
See accompanying notes to financial statements.
* 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.
<PAGE>
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FINANCIAL STATEMENTS
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Statements of Assets and Liabilities o December 31, 1998
<TABLE>
<CAPTION>
Markman Markman Markman
Conservative Moderate Aggressive
Allocation Allocation Allocation
Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
<S> <C> <C> <C>
At acquisition cost .......................... $ 27,591,540 $ 69,963,946 $ 66,152,202
============ ============ ============
At value (Note 1) ............................ $ 30,671,529 $ 83,802,416 $ 91,209,230
Cash ............................................ -- 11,953 --
Receivable for capital shares sold .............. 23,622 94,827 589,079
Dividends receivable ............................ 73,370 60,213 835
------------ ------------ ------------
Total Assets ................................. 30,768,521 83,969,409 91,799,144
------------ ------------ ------------
- --------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for capital shares redeemed ............. 35,262 57,506 104,162
Distributions payable to shareholders ........... 241,831 47,325 11,093
Payable to affiliates (Note 3) .................. 24,680 65,503 69,232
------------ ------------ ------------
Total Liabilities ............................ 301,773 170,334 184,487
------------ ------------ ------------
- --------------------------------------------------------------------------------------------------------
NET ASSETS ...................................... $ 30,466,748 $ 83,799,075 $ 91,614,657
============ ============ ============
Net assets consist of:
Paid-in capital ................................. $ 27,386,759 $ 70,038,040 $ 66,727,044
Distributions in excess of net realized
gains ........................................ -- (77,435) (169,415)
Net unrealized appreciation on
investments .................................. 3,079,989 13,838,470 25,057,028
------------ ------------ ------------
Net Assets ...................................... $ 30,466,748 $ 83,799,075 $ 91,614,657
============ ============ ============
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) (Note 4) ....................... 2,470,464 6,277,762 5,723,622
============ ============ ============
Net asset value, redemption price and offering
price per share (Note 1) ..................... $ 12.33 $ 13.35 $ 16.01
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
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FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Statements of Operations o For the Year Ended December 31, 1998
Markman Conservative Markman Moderate Markman Aggressive
Allocation Portfolio Allocation Portfolio Allocation Portfolio
INVESTMENT INCOME
<S> <C> <C> <C>
Dividend income ......................... $ 887,302 $ 1,477,067 $ 277,983
------------ ------------ ------------
EXPENSES
Investment advisory fees ................ 304,465 771,113 777,300
Independent trustees' fees .............. 14,250 14,250 14,250
------------ ------------ ------------
Total expenses (note 3) ................. 318,715 785,363 791,550
------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) ............... 568,587 691,704 (513,567)
------------ ------------ ------------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Net realized gains (losses) from
security transactions .................. 1,067,694 3,062,796 (231,303)
Capital gain distributions from
other investment companies ............. 515,255 1,388,199 1,291,832
Net change in unrealized appreciation/
depreciation on investments ............. 1,106,083 8,491,783 18,912,136
------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAINS ON INVESTMENTS ....................... 2,689,032 12,942,778 19,972,665
------------ ------------ ------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ............................ $ 3,257,619 $ 13,634,482 $ 19,459,098
============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets o For the Years Ended December 31, 1998 and 1997
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, 1998 Dec. 31, 1997 Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1998 Dec. 31, 1997
FROM OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) ............. $ 568,587 $ 923,212 $ 691,704 $ 1,645,556 $ (513,567) $ 45,400
Net realized gains (losses)
from security transactions ............ 1,067,694 1,417,864 3,062,796 6,181,757 (231,303) 7,715,287
Capital gain distributions
from other investment
companies ............................. 515,255 1,498,259 1,388,199 3,734,672 1,291,832 2,595,928
Net change in unrealized
appreciation/depreciation
on investments ........................ 1,106,083 1,268,051 8,491,783 3,184,691 18,912,136 3,812,227
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets
from operations ....................... 3,257,619 5,107,386 13,634,482 14,746,676 19,459,098 14,168,842
------------ ------------ ------------ ------------ ------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment
income ................................ (657,761) (835,373) (691,704) (1,645,585) (21,208) (24,224)
Distributions in excess of net
investment income (Note 1) .............. (45,764) (416,485) (260,772) (1,325,397) -- (1,125,463)
Distributions from net realized gains .... (1,102,192) (2,379,863) (3,393,190) (8,443,248) (340,273) (9,531,600)
------------ ------------ ------------ ------------ ------------ ------------
Decrease in net assets from
Distributions to shareholders ......... (1,805,717) (3,631,721) (4,345,666) (11,414,230) (361,481) (10,681,287)
------------ ------------ ------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (Note 4):
Proceeds from shares sold ................ 11,129,490 12,294,435 12,188,071 18,522,359 16,927,645 19,230,794
Net asset value of shares issued in
reinvestment of distributions
to shareholders ....................... 1,563,886 3,578,467 4,298,339 11,294,729 350,390 10,481,739
Payments for shares redeemed ............. (20,358,721) (23,247,508) (28,364,444) (25,388,050) (29,162,161) (33,127,820)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
from capital share transactions ...... (7,665,345) (7,374,606) (11,878,034) 4,429,038 (11,884,126) (3,415,287)
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS: ........................... (6,213,443) (5,898,941) (2,589,218) 7,761,484 7,213,491 72,268
NET ASSETS:
Beginning of year ........................ 36,680,191 42,579,132 86,388,293 78,626,809 84,401,166 84,328,898
------------ ------------ ------------ ------------ ------------ ------------
End of year .............................. $ 30,466,748 $ 36,680,191 $ 83,799,075 $ 86,388,293 $ 91,614,657 $ 84,401,166
============ ============ ============ ============ ============ ============
UNDISTRIBUTED NET
INVESTMENT INCOME ........................ $ -- $ 89,174 $ -- $ -- $ -- $ 21,208
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
December 31, December 31, December 31, December 31,
1998 1997 1996 1995(A)
- -----------------------------------------------------------------------------------------------------
MARKMAN CONSERVATIVE ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<S> <C> <C> <C> <C>
Net asset value at beginning
of period ...................... $ 11.82 $ 11.49 $ 10.97 $ 10.00
--------- --------- --------- ---------
Income from investment
operations:
Net investment income ........ 0.25 0.33 0.28 0.19
Net realized and unrealized
gains on investments ....... 1.03 1.31 1.19 1.61
--------- --------- --------- ---------
Total from investment
operations ...................... 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 .. $ 12.33 $ 11.82 $ 11.49 $ 10.97
========= ========= ========= =========
Total return ...................... 10.83% 14.27% 13.41% 18.00%
========= ========= ========= =========
Net assets at end of
period (000's) .................. $ 30,467 $ 36,680 $ 42,579 $ 9,852
========= ========= ========= =========
Ratio of expenses to average
net assets ...................... 0.95% 0.95% 0.95% 0.95%(B)
Ratio of net investment income
to average net assets ........... 1.70% 2.38% 3.21% 3.02%(B)
Portfolio turnover rate ........... 165% 48% 104% 176%
<CAPTION>
- -----------------------------------------------------------------------------------------------------
MARKMAN MODERATE ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<S> <C> <C> <C> <C>
Net asset value at beginning
of period .................... $ 11.90 $ 11.49 $ 11.31 $ 10.00
--------- --------- --------- ---------
Income from investment operations:
Net investment income ........ 0.12 0.26 0.18 0.06
Net realized and unrealized
gains on investments ....... 2.06 1.96 1.08 2.39
--------- --------- --------- ---------
Total from investment
operations ................... 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 .................... $ 13.35 $ 11.90 $ 11.49 $ 11.31
========= ========= ========= =========
Total return ...................... 18.32% 19.38% 11.11% 24.50%
========= ========= ========= =========
Net assets at end of
period (000's) ............... $ 83,799 $ 86,388 $ 78,627 $ 38,988
========= ========= ========= =========
Ratio of expenses to average
net assets ................... 0.95% 0.95% 0.95% 0.95%(B)
Ratio of net investment income
to average net assets ........ 0.84% 1.96% 1.34% 0.77%(B)
Portfolio turnover rate ........... 117% 82% 280% 141%
<CAPTION>
- -----------------------------------------------------------------------------------------------------
MARKMAN AGGRESSIVE ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<S> <C> <C> <C> <C>
Net asset value at beginning
of period .................... $ 12.74 $ 12.26 $ 11.79 $ 10.00
--------- --------- --------- ---------
Income from investment operations
Net investment income (loss) . (0.09) 0.01 0.05 0.01
Net realized and unrealized
gains on investments ....... 3.42 2.32 1.34 3.11
--------- --------- --------- ---------
Total from investment operations .. 3.33 2.33 1.39 3.12
--------- --------- --------- ---------
Less distributions:
Dividends from net investment
income ..................... (0.00) (0.01) (0.05) (0.01)
Distributions in excess of
net investment income ...... (0.00) (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 .. $ 16.01 $ 12.74 $ 12.26 $ 11.79
========= ========= ========= =========
Total return ...................... 26.17% 18.96% 11.72% 31.21%
========= ========= ========= =========
Net assets at end of period (000's) $ 91,615 $ 84,401 $ 84,329 $ 42,325
========= ========= ========= =========
Ratio of expenses to average
net assets ................... 0.95% 0.95% 0.95% 0.95%(B)
Ratio of net investment income
(loss) to average net assets . (0.62%) 0.05% 0.34% 0.15%(B)
Portfolio turnover rate ........... 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.
- --------------------------------------------------------------------------------
<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 shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
Each of the Funds files a tax return annually using tax accounting methods
required under provisions of the Code which may differ from GAAP, the basis on
which these financial statements are prepared. The differences arise primarily
from the treatment of short-term gain distributions made by mutual funds in
which the Funds invest and the deferral of certain losses under Federal income
tax regulations. Accordingly, the amount of net investment income and net
realized capital gain or loss reported in the financial statements may differ
from that reported in the Fund's tax return and, consequently, the character of
distributions to shareholders reported in the Statements of Changes in Net
Assets and the Financial Highlights may differ from that reported to
shareholders for Federal income tax purposes. As a result of such differences,
reclassifications were made to the components of net assets to conform to
generally accepted accounting principles.
The following information is based upon the federal income tax cost of portfolio
investments as of December 31, 1998:
- --------------------------------------------------------------------------------
Markman Markman Markman
Conservative Moderate Aggressive
Allocation Allocation Allocation
Portfolio Portfolio Portfolio
Gross unrealized appreciation $ 3,316,868 $ 14,099,548 $ 24,889,142
Gross unrealized depreciation (236,879) (338,517) (1,530)
------------ ------------ ------------
Net unrealized appreciation $ 3,079,989 $ 13,761,031 $ 24,887,612
============ ============ ============
Federal income tax cost of
portfolio investments $ 27,591,540 $ 70,041,385 $ 66,321,618
============ ============ ============
The difference between the acquisition cost and the federal income tax cost of
portfolio investments is due to certain timing differences in the recognition of
capital losses under GAAP and income tax regulations.
- --------------------------------------------------------------------------------
<PAGE>
2. Investment Transactions
During the year ended December 31, 1998, cost of purchases and proceeds from
sales of portfolio securities, other than short-term investments, amounted to
$54,074,703 and $61,869,045, respectively, for the Markman Conservative
Allocation Portfolio, $95,944,327 and $108,110,112, respectively, for the
Markman Moderate Allocation Portfolio, and $83,025,374 and $93,822,592,
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 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 ended December 31, 1998, the Trust had no borrowings on
this line of credit. No compensating balances are required.
5. Fund Share Transactions
Proceeds and payments from capital share transactions as shown in the Statements
of Changes in Net Assets are the result of the following capital share
transactions for the years ended December 31, 1998 and 1997.
<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, 1998 Dec. 31, 1997 Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1998 Dec. 31, 1997
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 934,987 1,007,092 970,847 1,475,542 1,234,363 1,394,595
Shares issued in reinvestment
of distributions to
shareholders 126,836 302,747 321,973 949,137 21,885 822,743
Shares redeemed (1,695,443) (1,912,551) (2,273,277) (2,009,044) (2,158,375) (2,470,930)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
shares outstanding (633,620) (602,712) (980,457) 415,635 (902,127) (253,592)
Shares outstanding,
beginning of year 3,104,084 3,706,796 7,258,219 6,842,584 6,625,749 6,879,341
---------- ---------- ---------- ---------- ---------- ----------
Shares outstanding,
end of year 2,470,464 3,104,084 6,277,762 7,258,219 5,723,622 6,625,749
========== ========== ========== ========== ========== ==========
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of the Markman MultiFund Trust:
We have audited the statements of assets and liabilities, including the
portfolios of investments, of the Markman MultiFund Trust (comprising,
respectively, the Markman Conservative Allocation Portfolio, the Markman
Moderate Allocation Portfolio and the Markman Aggressive Allocation Portfolio),
as of December 31, 1998, 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, 1998, 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 each
of the respective portfolios constituting the Markman MultiFund Trust as of
December 31, 1998, 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 13, 1999
<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
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> MARKMAN AGGRESSIVE ALLOCATION PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 66,152,202
<INVESTMENTS-AT-VALUE> 91,209,230
<RECEIVABLES> 589,914
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 91,799,144
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 184,487
<TOTAL-LIABILITIES> 184,487
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 66,727,044
<SHARES-COMMON-STOCK> 5,723,622
<SHARES-COMMON-PRIOR> 6,625,749
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 169,415
<ACCUM-APPREC-OR-DEPREC> 25,057,028
<NET-ASSETS> 91,614,657
<DIVIDEND-INCOME> 277,983
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 791,550
<NET-INVESTMENT-INCOME> (513,567)
<REALIZED-GAINS-CURRENT> 1,060,529
<APPREC-INCREASE-CURRENT> 18,912,136
<NET-CHANGE-FROM-OPS> 19,459,098
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 21,208
<DISTRIBUTIONS-OF-GAINS> 340,273
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,234,363
<NUMBER-OF-SHARES-REDEEMED> 2,158,375
<SHARES-REINVESTED> 21,885
<NET-CHANGE-IN-ASSETS> 7,213,491
<ACCUMULATED-NII-PRIOR> 21,208
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 350,951
<GROSS-ADVISORY-FEES> 777,300
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 791,550
<AVERAGE-NET-ASSETS> 83,340,611
<PER-SHARE-NAV-BEGIN> 12.74
<PER-SHARE-NII> (.09)
<PER-SHARE-GAIN-APPREC> 3.42
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .06
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.01
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> MARKMAN MODERATE ALLOCATION PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 69,963,946
<INVESTMENTS-AT-VALUE> 83,802,416
<RECEIVABLES> 155,040
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 11,953
<TOTAL-ASSETS> 83,969,409
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 170,334
<TOTAL-LIABILITIES> 170,334
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 70,038,040
<SHARES-COMMON-STOCK> 6,277,762
<SHARES-COMMON-PRIOR> 7,258,219
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 77,435
<ACCUM-APPREC-OR-DEPREC> 13,838,470
<NET-ASSETS> 83,799,075
<DIVIDEND-INCOME> 1,477,067
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 785,363
<NET-INVESTMENT-INCOME> 691,704
<REALIZED-GAINS-CURRENT> 4,450,995
<APPREC-INCREASE-CURRENT> 8,491,783
<NET-CHANGE-FROM-OPS> 13,634,482
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 691,704
<DISTRIBUTIONS-OF-GAINS> 3,393,190
<DISTRIBUTIONS-OTHER> 260,772
<NUMBER-OF-SHARES-SOLD> 970,847
<NUMBER-OF-SHARES-REDEEMED> 2,273,277
<SHARES-REINVESTED> 321,973
<NET-CHANGE-IN-ASSETS> (2,589,218)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 46,799
<GROSS-ADVISORY-FEES> 771,113
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 785,363
<AVERAGE-NET-ASSETS> 82,662,660
<PER-SHARE-NAV-BEGIN> 11.90
<PER-SHARE-NII> .12
<PER-SHARE-GAIN-APPREC> 2.06
<PER-SHARE-DIVIDEND> .12
<PER-SHARE-DISTRIBUTIONS> .57
<RETURNS-OF-CAPITAL> .04
<PER-SHARE-NAV-END> 13.35
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> MARKMAN CONSERVATIVE ALLOCATION PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 27,591,540
<INVESTMENTS-AT-VALUE> 30,671,529
<RECEIVABLES> 96,992
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,768,521
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
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</TABLE>
