FTI
FUNDS
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1996
FTI SMALL CAPITALIZATION
EQUITY FUND
FTI INTERNATIONAL EQUITY FUND
FTI INTERNATIONAL BOND FUND
FTI GLOBAL BOND FUND
EDGEWOOD SERVICES, INC.
Federated Investors Tower
Pittsburgh, PA 15222-3779
Edgewood Services, Inc. is the distributor of the funds
and is a subsidiary of Federated Investors.
Cusip 302927108
Cusip 302927207
Cusip 302927306
Cusip 302927405
G01710-01 (6/96) [RECYCLE LOGO]
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the first Semi-Annual Report to Shareholders for the FTI
Funds. This report combines information about each FTI Fund from the date of its
initial public investment through May 31, 1996.
The report begins with a commentary by each Fund's portfolio manager, which
covers economic and market conditions and their impact on Fund performance and
strategy. Following the commentary are a complete list of each Fund's
investments and the financial statements.
Of course, these Funds are designed to bring you and other shareholders
significant long-term opportunities from small company stocks, international
stocks, international bonds, and global bonds. Because these markets experience
periodic ups and downs, the true measure of performance in these markets is in
years rather than months. With that in mind, I'm pleased to present the
following summary.
FTI SMALL CAPITALIZATION EQUITY FUND
Managed to pursue a high level of growth through a diversified portfolio of
small-company stocks, the Fund achieved a total return of 21.50%* from January
10, 1996, the date of initial public investment, through May 31, 1996. The
Fund's net assets grew to reach $11.8 million at the end of the reporting
period.
FTI INTERNATIONAL EQUITY FUND
The Fund's diversified portfolio of international stocks produced a total return
of 6.90%* from January 16, 1996, the date of initial public investment, through
May 31, 1996. The Fund's share price reached $10.69 on the last day of the
reporting period, when net assets stood at $4.9 million.
FTI INTERNATIONAL BOND FUND
To pursue total return over the long term, the Fund invests in a diversified
portfolio of bonds issued by foreign governments and companies. The Fund's total
return was -1.50%* from January 16, 1996, the date of initial public investment,
through May 31, 1996. At the end of the reporting period, Fund net assets
reached $3.8 million.
FTI GLOBAL BOND FUND
This Fund offers a diversified approach to bonds. It invests in bonds issued by
U.S. and foreign governments and companies to pursue total return over the long
term. The Fund's total return was -1.60%* from February 8, 1996, the date of
initial public investment, through May 31, 1996. Fund net assets reached
$989,199 on May 31, 1996.
*Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
Thank you for your confidence in the FTI Funds. I urge you to review this report
to familiarize yourself with your Fund's strategy and portfolio. And, remember
to keep your eyes focused on the long term. We will continue to keep you
up-to-date on the details of your investment on a regular basis through the
highest level of service possible.
Sincerely,
[LOGO SIGNATURE OF EDWARD C. GONZALES]
Edward C. Gonzales
President
June 14, 1996
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
FTI SMALL CAPITALIZATION EQUITY FUND
<TABLE>
<CAPTION>
1/10/96-5/31/96
<S> <C>
FTI Small Capitalization Equity Fund* 21.50%
Russell 2000 Index 20.01%
</TABLE>
NAV* US$12.15 per share
The FTI Small Capitalization Equity Fund received an inflow of approximately
$5.7 million during May 1966, ending the reporting period with assets of $11.8
million. We continue to see strong performance in the small capitalization
growth area of the market. During the reporting period, the Russell 2000 Index**
was up 20.01% versus 12.79% for the S&P 500*** and 16.00% for the S&P
Midcap.**** The FTI Small Capitalization Equity Fund outperformed all of these
indices and gained 21.50% for the same time period.
Clearly we have a liquidity driven equity market. Outperformance in the small
capitalization category was fueled by unprecedented strong capital inflows to
this area as investors sought companies with strong, visible earnings growth.
The outperformance of the Fund in 1996 is also attributable to our strong
performing technology investments. Cheap, user-friendly technology is still
replacing expensive labor and capital spending intentions are strong. There is a
continuing demand for information access and enhancement of productivity.
Another area in which the Fund outperformed was the outsourcing segment.
Outsourcing of business segments has become one of the most efficient methods of
restructuring companies, a trend that continues to be a major theme for domestic
companies. Some of our investments that provide non-core activities to
businesses are: Paychex, a provider of payroll processing and related human
resources and On Assignment, a temporary help company that provides chemists and
other professionals for short and long term contracts.
We continue to be optimistic for the outlook for small-cap growth companies. The
stocks that we hold in this sector are still selling at a discount to their
growth rates which is not true of the major indices, S&P 500 and Dow Jones
Industrials, which are selling at a par with or at a premium to their growth
rates in this market environment. We continue to find high quality smaller
companies with excellent managements that have proprietary positions within
their sphere of operations that are selling at a discount to their growth rates.
*Past performance is not indicative of future results. Investment return and
principal value will fluctuate, so when shares are redeemed they may be
worth more or less than their original cost. Total return represents the
change in the value of an investment after reinvesting all income and
capital gains.
**Russell 2000t Index is a broadly diversified index consisting of
approximately 2,000 small capitalization common stocks that can be used to
compare to the total returns of funds whose portfolios are invested
primarily in small capitalization stocks.
***Standard & Poor's 500 Composite Stock Price Index covers 500 industrial,
utility, transportation, and financial companies in the United States market
(mostly New York Stock Exchange ("NYSE") issues). The index represents about
75% of NYSE market capitalization and 30% of all NYSE issues. It is a
capitalization-weighted index calculated on a total return basis with
dividends reinvested.
****Standard & Poor's MidCap 400 Index is a diversified index consisting of 400
domestic stocks chosen for market size (median market capitalization of
about $993 million, as of February 1995), liquidity, and industry group
representation. It is a market-weighted index with each stock affecting the
index in proportion to its market value.
Indices are unmanaged. Actual investments may not be made in an index.
- --------------------------------------------------------------------------------
FTI SMALL CAPITALIZATION EQUITY FUND--MAY 31, 1996
[GRAPH]
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
FTI INTERNATIONAL EQUITY FUND
The FTI International Equity Fund received an inflow of approximately $900,000
during May 1996, ending the reporting period with net assets of $4.9 million.
The investment returns for the FTI International Equity Fund versus the MSCI
EAFE Index are shown below. The NAV at the end of May 1996 was $10.69, resulting
in a 0.1% increase during the month versus a decline of 1.8% for EAFE. The Fund
has outperformed the benchmark index by 3.39% during the reporting period (6.9%
vs. 3.51%). The outperformance of the Fund versus EAFE in 1996 is attributable
to three factors: 1) stock selection in Sweden, Finland, the United Kingdom, and
Japan; 2) overweighted positions relative to EAFE in Sweden, Hong Kong, and
emerging markets; and 3) the hedging of approximately 80% of the Fund's Japanese
yen exposure, thereby benefiting as the dollar appreciated versus the yen during
the first five months of 1996. (Note: all returns herein refer to MSCI indices
and are in U.S. dollars, unless otherwise noted)
<TABLE>
<CAPTION>
MAY 1996 3 MONTHS 1996
<S> <C> <C> <C>
FTI International Equity Fund 0.1% 6.4% 6.9%
MSCI EAFE (1.8%) 3.2% 3.51%
</TABLE>
Past performance is not indicative of future results. Investment return and
principal value will fluctuate, so when shares are redeemed they may be worth
more or less than their original cost.
Total return represents the change in the value of an investment after
reinvesting all income and capital gains.
Morgan Stanley Capital International Europe, Australia, and Far East Index
(EAFE) is a market capitalization-weighted foreign securities index, which is
widely used to measure the performance of European, Australian and New Zealand,
and Far Eastern stock markets. Indexes are unmanaged and investments cannot be
in an index.
The weakening of the yen versus the U.S. dollar resulted in a gain of only 0.7%
for Japanese equities year-to-date (in yen, the market increased 5.5%). In the
first few months of the year, the market dealt with uncertainties related to the
resolution of the jusen crisis and selling pressure as the March 31 Japanese
corporate fiscal year-end approached. As the Japanese corporate fiscal year-end
date passed, the market rallied strongly, supported by confirmation of a
recovering economy and statements from Bank of Japan officials that they did not
see an immediate need to increase short term interest rates. The corollary was
further yen weakness which erased some of the market's gains during April.
Looking forward, further market gains will be dependent on an acceleration in
economic growth, corporate earnings growth, a stable to weaker yen, and only a
nominal interest rate increase by year-end.
The MSCI Europe Index increased 5.5% during the first five months of the year;
similar to Japan, dollar strength eroded a significant portion of the gains (in
local currency the Europe index increased 9.6%). The peripheral markets in
Sweden (+13.5%), Italy (+12.7%), and Spain (+9.7%) all performed well in
response to declining short and long term interest rates as inflation subsided,
and in reaction to favorable electoral outcomes. Growth stocks in Netherlands
supported an 11.6% market increase, while France (+9.4%) recovered from
oversold levels at the end of 1995 as investors reacted positively to the
government's progress in reducing the fiscal deficit and addressing labor
market reform. Three of the larger European markets, Germany (+2.7%), the
United Kingdom (+3.2%), and Switzerland (-0.7%) lagged as investors took
profits after strong performances in 1995 and, in the case of the U.K., reacted
cautiously to the next General Election and a likely Labour party victory.
Economic growth on the Continent remains weak, though some signs are emerging
for a year-end pick-up in economic growth which would support further equity
market gains.
Asia Pacific equities registered strong gains year-to-date, increasing 11.6%,
with Indonesia (+19.2%), Malaysia (+15.8%), and Hong Kong (+15.4%) all
performing well. The region's equity markets started the year strongly as
international investors (particularly U.S. institutions) increased their equity
exposure to the region. As U.S. bonds began to sell off in March 1996, many of
the Asia Pacific markets had a knee-jerk reaction to higher U.S. bond yields and
the threat of increased short term rates. After the initial reaction, investors
focused on corporate earnings and economic growth, supporting further rallies in
most of the region's markets. At current levels, investors remain somewhat
cautious towards the region, closely watching any developments at the U.S.
Federal Reserve Board.
Latin American equity markets performed quite strongly, increasing 14.6%
year-to-date, with Brazil (+22.4%), Mexico (+17.1%), and Argentina (+12.8%) all
registering impressive gains. Chile stood out as the weakest performing market,
declining 3.1% during the period as the government was forced to increase
interest rates in reaction to an acceleration of inflation due to strong
economic growth. The gains in the Brazilian, Mexican, and Argentine equity
markets were attributable to several factors: 1) increased funds flow to the
region by U.S. investors; 2) tangible signs of economic recovery; 3) and lower
inflation supporting interest rate declines. The markets are poised to move
higher, though as with Asia Pacific, caution should be used regarding future
U.S. monetary policy.
Further acceleration in Japanese economic growth and the Bank of Japan's
stimulative monetary policy will be the key determinants for Japanese equities
for the remainder of 1996. We maintain our relatively favorable outlook and
continue to focus on domestic cyclicals, consumer stocks, exporters, and
technology companies. In Europe, a pick-up in economic growth has been partially
priced into the markets, though we continue to find attractively valued
defensive/growth companies along with some cyclically oriented companies, which
are benefiting from corporate restructuring. In addition, the peripheral markets
of Spain, Italy, and Sweden still present attractive investment opportunities.
The U.K. market does not appear expensive, though the upcoming General Election
makes us cautious on the market, while attracted to stock specific investments.
The economic and corporate growth potential of many Asia Pacific and Latin
American markets makes us relatively positive towards investments in those
regions. Growth has been consistent in Asia Pacific, while the economic data
released in Argentina, Brazil, and Mexico, indicate a likely sustainable
economic recovery. In each of these regions we remain focused on infrastructure
and utility plays, while property companies remain attractively valued in many
Asia Pacific markets. As mentioned above, U.S. monetary policy is one of the
primary risks in both of these regions, and thus will be observed with a
cautious eye.
- --------------------------------------------------------------------------------
FTI INTERNATIONAL EQUITY FUND--MAY 31, 1996
[GRAPHS]
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
FTI GLOBAL BOND FUND
FTI INTERNATIONAL BOND FUND
The investment objective of each Fund is to provide total return. The FTI Global
Bond Fund invests primarily in bonds issued by both U.S. and foreign governments
and companies. The FTI International Bond Fund invests primarily in foreign
governments and companies. From February 8, 1996, through May 31, 1996, the FTI
Global Bond Fund provided a total return of -1.60%* and, since January 16, 1996,
the FTI International Bond Fund, a total return of -1.50%*.
Calendar year 1996 has been a turbulent one for global fixed income markets thus
far, rallying sharply in the early weeks of 1996, selling off dramatically in
the following three months, before stabilizing as the reporting period ended.
The year began with global bond markets rallying in response to a continuation
of the slow growth, low inflation environment which had driven yields lower from
the November 1994 peak. With surveys of business and consumer confidence still
at depressed levels and inflation remaining well-behaved, the Federal Reserve
Board (the "Fed") and Bundesbank cut short term rates, paving the way for lower
rates across Europe.
The global bond sell-off began in mid-February 1996 led by the U.S. market. Auto
and department store sales pointed to a revival of consumer demand, while
political developments began to weigh on the market, in particular the collapse
of budget negotiations. The February 1996 employment report proved much stronger
than expected and eliminated any chance of a near term easing by the Fed as had
been widely expected. The bond market plunged three points, the largest fall in
a decade as growth expectations were revised upward. Elsewhere in the dollar
block, Australian and Canadian markets outperformed the U.S. due to favorable
political developments.
In most of Europe, economic growth weakened further, most particularly in
Germany. Unemployment rates continued to rise while falling consumer confidence
depressed final demand. Despite weaker growth in Europe, however, bond markets
followed the U.S. market lower. In Italy, Spain and Sweden ("peripheral"),
markets reacted favorably to falling inflation and to a faster pace of monetary
easing than elsewhere in Europe. Early in the year, we increased our European
bond exposure against the dollar block, favouring the peripheral bond markets,
buying the short maturity instruments which would be expected to benefit most
from further monetary easing (reduction in short term interest rates).
The Japanese bond market traded sideways during the reporting period. Continued
low short term rates and buying by the Bank of Japan offset signs of stronger
economic activity, and asset allocation shifts out of bonds into stocks by
domestic institutions.
The dollar continued its climb against the German mark and yen, in response to
improving relative growth prospects in the U.S. and improved interest rate
differentials. The relative weakness of the German economy within Europe led to
the appreciation of other European currencies versus the deutschemark. We have
hedged a portion of the non-dollar currency exposure in both Funds during the
period to protect the value of some foreign bond holdings, whose worth declines
as the dollar appreciates.
* Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
FTI SMALL CAPITALIZATION EQUITY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--90.1%
- ---------------------------------------------------------------------------------------------------
BROADCASTING--2.6%
-------------------------------------------------------------------------------------
5,000 American Radio Systems Corp. $ 191,250
-------------------------------------------------------------------------------------
4,000 Infinity Broadcasting 109,000
------------------------------------------------------------------------------------- -------------
Total 300,250
------------------------------------------------------------------------------------- -------------
COMMERCIAL SERVICES--14.0%
-------------------------------------------------------------------------------------
4,000 Alternative Resources Corp. 154,000
-------------------------------------------------------------------------------------
2,000 Cambridge Technology Partners, Inc. 153,000
-------------------------------------------------------------------------------------
11,000 Core, Inc. 184,250
-------------------------------------------------------------------------------------
4,000 DeVRY, Inc. 159,000
-------------------------------------------------------------------------------------
5,000 Health Management Systems, Inc. 153,750
-------------------------------------------------------------------------------------
1,000 Learning Tree International, Inc. 29,750
-------------------------------------------------------------------------------------
5,000 META Group, Inc. 141,250
-------------------------------------------------------------------------------------
8,000 Metromedia International Group, Inc. 112,000
-------------------------------------------------------------------------------------
5,000 On Assignment, Inc. 201,250
-------------------------------------------------------------------------------------
5,000 Paychex, Inc. 220,000
-------------------------------------------------------------------------------------
1,800 Quintiles Transnational Corp. 136,800
------------------------------------------------------------------------------------- -------------
Total 1,645,050
------------------------------------------------------------------------------------- -------------
COMPUTERS--19.5%
-------------------------------------------------------------------------------------
4,000 Applix, Inc. 131,000
-------------------------------------------------------------------------------------
3,400 Business Objects SA, ADR 158,100
-------------------------------------------------------------------------------------
3,300 CBT Group PLC, ADR 155,100
-------------------------------------------------------------------------------------
5,000 DST Systems, Inc. 174,375
-------------------------------------------------------------------------------------
2,500 Electronics for Imaging, Inc. 200,000
-------------------------------------------------------------------------------------
4,000 FIserv, Inc. 125,500
-------------------------------------------------------------------------------------
2,000 Forte Software, Inc. 129,500
-------------------------------------------------------------------------------------
1,300 HBO & Co. 162,337
-------------------------------------------------------------------------------------
</TABLE>
FTI SMALL CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
COMPUTERS--CONTINUED
-------------------------------------------------------------------------------------
2,400 HCIA, Inc. $ 155,400
-------------------------------------------------------------------------------------
4,500 Henry Jack & Associates, Inc. 147,937
-------------------------------------------------------------------------------------
1,500 Medic Computer Systems, Inc. 139,500
-------------------------------------------------------------------------------------
2,500 Peoplesoft, Inc. 176,875
-------------------------------------------------------------------------------------
3,200 Transaction Systems Architects, Inc., Class A 180,000
-------------------------------------------------------------------------------------
3,000 Veritas Software Corp. 135,000
-------------------------------------------------------------------------------------
5,000 Xeikon N.V., ADR 123,750
------------------------------------------------------------------------------------- -------------
Total 2,294,374
------------------------------------------------------------------------------------- -------------
CONTAINER & PACKAGING--1.1%
-------------------------------------------------------------------------------------
3,000 Aptargroup, Inc. 127,125
------------------------------------------------------------------------------------- -------------
ELECTRONICS--3.2%
-------------------------------------------------------------------------------------
3,000 Input/Output, Inc. 121,125
-------------------------------------------------------------------------------------
3,000 Itron, Inc. 102,000
-------------------------------------------------------------------------------------
3,000 Verifone, Inc. 151,125
------------------------------------------------------------------------------------- -------------
Total 374,250
------------------------------------------------------------------------------------- -------------
ENVIRONMENTAL CONTROL--1.5%
-------------------------------------------------------------------------------------
5,000 U.S. Filter Corp. 174,375
------------------------------------------------------------------------------------- -------------
FINANCIAL SERVICES--5.4%
-------------------------------------------------------------------------------------
5,000 Charter One Financial, Inc. 181,875
-------------------------------------------------------------------------------------
500 Security First Network Bank 20,063
-------------------------------------------------------------------------------------
4,000 Sunamerica, Inc. 224,000
-------------------------------------------------------------------------------------
6,000 TCF Financial Corp. 205,500
------------------------------------------------------------------------------------- -------------
Total 631,438
------------------------------------------------------------------------------------- -------------
FOOD & BEVERAGE--1.1%
-------------------------------------------------------------------------------------
4,000 Richfood Holdings, Inc. 134,000
------------------------------------------------------------------------------------- -------------
FOREST PRODUCTS & PAPER--1.1%
-------------------------------------------------------------------------------------
6,000 Fort Howard Corp. 124,500
------------------------------------------------------------------------------------- -------------
</TABLE>
FTI SMALL CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HEALTHCARE--0.9%
-------------------------------------------------------------------------------------
3,500 NCS HealthCare, Inc., Class A $ 106,750
------------------------------------------------------------------------------------- -------------
INSURANCE--6.0%
-------------------------------------------------------------------------------------
4,400 Capital Re Corp. 160,600
-------------------------------------------------------------------------------------
6,000 Executive Risk, Inc. 211,500
-------------------------------------------------------------------------------------
2,000 Markel Corp. 182,000
-------------------------------------------------------------------------------------
2,400 Transatlantic Holdings, Inc. 154,200
------------------------------------------------------------------------------------- -------------
Total 708,300
------------------------------------------------------------------------------------- -------------
MEDICAL SUPPLIES--7.3%
-------------------------------------------------------------------------------------
3,500 American Oncology Resources, Inc. 164,500
-------------------------------------------------------------------------------------
4,000 Health Management Association 138,000
-------------------------------------------------------------------------------------
1,900 IDEXX Laboratories, Inc. 82,650
-------------------------------------------------------------------------------------
2,000 Omnicare, Inc. 111,500
-------------------------------------------------------------------------------------
5,000 Physician Sales & Service, Inc. 161,250
-------------------------------------------------------------------------------------
6,500 Sola International, Inc. 196,625
------------------------------------------------------------------------------------- -------------
Total 854,525
------------------------------------------------------------------------------------- -------------
METALS & MINING--1.1%
-------------------------------------------------------------------------------------
3,500 Kennametal, Inc. 129,938
------------------------------------------------------------------------------------- -------------
OFFICE PRODUCTS--1.6%
-------------------------------------------------------------------------------------
5,000 U.S. Office Products Co. 190,000
------------------------------------------------------------------------------------- -------------
OIL--4.7%
-------------------------------------------------------------------------------------
5,000 BJ Services Co. 168,750
-------------------------------------------------------------------------------------
2,000 Diamond Offshore Drilling, Inc. 95,750
-------------------------------------------------------------------------------------
6,000 Reading & Bates Corp. 132,000
-------------------------------------------------------------------------------------
3,000 Sonat Offshore Drilling Co. 159,000
------------------------------------------------------------------------------------- -------------
Total 555,500
------------------------------------------------------------------------------------- -------------
PHARMACEUTICALS--6.2%
-------------------------------------------------------------------------------------
4,000 Agouron Pharmaceuticals, Inc. 172,000
-------------------------------------------------------------------------------------
</TABLE>
FTI SMALL CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
PHARMACEUTICALS--CONTINUED
-------------------------------------------------------------------------------------
2,000 Cardinal Health, Inc. $ 127,750
-------------------------------------------------------------------------------------
4,500 Fuisz Technologies Ltd. 119,250
-------------------------------------------------------------------------------------
30,000 Interferon Sciences, Inc. 69,375
-------------------------------------------------------------------------------------
3,500 Interneuron Pharmaceuticals 135,625
-------------------------------------------------------------------------------------
10,000 Medarex, Inc. 102,500
------------------------------------------------------------------------------------- -------------
Total 726,500
------------------------------------------------------------------------------------- -------------
PRINTING & PUBLISHING--0.8%
-------------------------------------------------------------------------------------
10,000 IVI Publishing, Inc. 96,250
------------------------------------------------------------------------------------- -------------
RETAIL--2.8%
-------------------------------------------------------------------------------------
2,500 Regis Corp. Minnesota 112,500
-------------------------------------------------------------------------------------
2,000 Saks Holdings, Inc. 65,000
-------------------------------------------------------------------------------------
5,400 Viking Office Products, Inc. 154,575
------------------------------------------------------------------------------------- -------------
Total 332,075
------------------------------------------------------------------------------------- -------------
SECURITIES--1.1%
-------------------------------------------------------------------------------------
4,000 Jefferies Group, Inc. 131,000
------------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--6.3%
-------------------------------------------------------------------------------------
2,000 ADC Telecommunications, Inc. 92,000
-------------------------------------------------------------------------------------
3,000 Ascend Communications 200,625
-------------------------------------------------------------------------------------
6,000 Harmonic Lightwaves, Inc. 120,750
-------------------------------------------------------------------------------------
6,000 Paging Network, Inc. 135,000
-------------------------------------------------------------------------------------
5,000 PictureTel Corp. 196,250
------------------------------------------------------------------------------------- -------------
Total 744,625
------------------------------------------------------------------------------------- -------------
TRANSPORTATION--1.8%
-------------------------------------------------------------------------------------
3,000 Fritz Companies, Inc. 103,500
-------------------------------------------------------------------------------------
1,000 Wisconsin Central Transportation Corp. 106,000
------------------------------------------------------------------------------------- -------------
Total 209,500
------------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $9,760,387) 10,590,325
------------------------------------------------------------------------------------- -------------
</TABLE>
FTI SMALL CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
(A)REPURCHASE AGREEMENT--23.2%
- ---------------------------------------------------------------------------------------------------
$ 2,721,000 J.P. Morgan & Co., Inc., 4.60%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) $ 2,721,000
------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $12,481,387)(B) $ 13,311,325
------------------------------------------------------------------------------------- -------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $12,481,387. The
net unrealized appreciation of investments on a federal tax basis amounts to
$829,938 which is comprised of $981,557 appreciation and $151,619
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($11,752,769) at May 31, 1996.
The following acronyms are used throughout this portfolio:
ADR--American Depositary Receipt
LTD--Limited
PLC--Public Limited Company
SA--Support Agreement
(See Notes which are an integral part of the Financial Statements)
FTI SMALL CAPITALIZATION EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------
Investments in repurchase agreements $ 2,721,000
- -----------------------------------------------------------------------------------
Investments in securities 10,590,325
- ----------------------------------------------------------------------------------- -------------
Total investments in securities, at value
(identified and tax cost $12,481,387) $ 13,311,325
- --------------------------------------------------------------------------------------------------
Cash 2,133
- --------------------------------------------------------------------------------------------------
Income receivable 959
- --------------------------------------------------------------------------------------------------
Receivable for investments sold 75,300
- -------------------------------------------------------------------------------------------------- -------------
Total assets 13,389,717
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------
Payable for investments purchased 1,595,933
- -----------------------------------------------------------------------------------
Accrued expenses 41,015
- ----------------------------------------------------------------------------------- -------------
Total liabilities 1,636,948
- -------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 967,162 shares outstanding $ 11,752,769
- -------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------------------
Paid in capital $ 10,805,706
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 829,938
- --------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 134,676
- --------------------------------------------------------------------------------------------------
Accumulated net operating loss (17,551)
- -------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 11,752,769
- -------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- --------------------------------------------------------------------------------------------------
$11,752,769 / 967,162 shares outstanding $12.15
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI SMALL CAPITALIZATION EQUITY FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Dividends $ 3,962
- ------------------------------------------------------------------------------------------------------
Interest 7,997
- ------------------------------------------------------------------------------------------------------ ----------
Total income 11,959
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------
Investment advisory fee $ 19,674
- ------------------------------------------------------------------------------------------
Administrative personnel and services fee 30,943
- ------------------------------------------------------------------------------------------
Custodian fees 9,916
- ------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 7,032
- ------------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,381
- ------------------------------------------------------------------------------------------
Legal fees 2,975
- ------------------------------------------------------------------------------------------
Portfolio accounting fees 21,013
- ------------------------------------------------------------------------------------------
Share registration costs 3,043
- ------------------------------------------------------------------------------------------
Printing and postage 4,507
- ------------------------------------------------------------------------------------------
Insurance premiums 2,254
- ------------------------------------------------------------------------------------------
Miscellaneous 2,254
- ------------------------------------------------------------------------------------------ ----------
Total expenses 106,992
- ------------------------------------------------------------------------------------------
Reimbursement of other operating expenses (77,482)
- ------------------------------------------------------------------------------------------ ----------
Net expenses 29,510
- ------------------------------------------------------------------------------------------------------ ----------
Net operating loss (17,551)
- ------------------------------------------------------------------------------------------------------ ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ------------------------------------------------------------------------------------------------------
Net realized gain on investments 134,676
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 829,938
- ------------------------------------------------------------------------------------------------------ ----------
Net realized and unrealized gain on investments 964,614
- ------------------------------------------------------------------------------------------------------ ----------
Change in net assets resulting from operations $ 947,063
- ------------------------------------------------------------------------------------------------------ ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI SMALL CAPITALIZATION EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
(UNAUDITED)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------------
Net operating loss $ (17,551)
- ----------------------------------------------------------------------------------------------
Net realized gain on investments ($134,676 as computed for federal
tax purposes) 134,676
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 829,938
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from operations 947,063
- ---------------------------------------------------------------------------------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------------------------
Proceeds from sale of shares 11,896,284
- ----------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions declared --
- ----------------------------------------------------------------------------------------------
Cost of shares redeemed (1,090,578)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from share transactions 10,805,706
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets 11,752,769
- ----------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------
Beginning of period --
- ---------------------------------------------------------------------------------------------- ------------------
End of period $ 11,752,769
- ---------------------------------------------------------------------------------------------- ------------------
</TABLE>
(a) For the period from January 10, 1996 (date of initial public investment) to
May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FTI SMALL CAPITALIZATION EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------
Net operating loss (0.02)
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 2.17
- ---------------------------------------------------------------------------------------------- -------
Total from investment operations 2.15
- ---------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 12.15
- ---------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 21.50%
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------
Expenses 1.50%*
- ----------------------------------------------------------------------------------------------
Net operating loss (0.89%)*
- ----------------------------------------------------------------------------------------------
Expense reimbursement (c) 3.94%*
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 11,753
- ----------------------------------------------------------------------------------------------
Average commission rate paid $ 0.0273
- ----------------------------------------------------------------------------------------------
Portfolio turnover 31%
- ----------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from January 10, 1996 (date of initial
public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- ----------- -------------------------------------------------------------------------------------- ------------
COMMON STOCKS--93.9%
- ---------------------------------------------------------------------------------------------------
AUSTRALIA--1.3%
--------------------------------------------------------------------------------------
BANKING--1.3%
--------------------------------------------------------------------------------------
13,900 Westpac Banking Corp., Ltd. $ 64,901
-------------------------------------------------------------------------------------- ------------
BRAZIL--1.6%
--------------------------------------------------------------------------------------
TELECOMMUNICATIONS--1.6%
--------------------------------------------------------------------------------------
1,200 Telecomunicacoes Brasileras, ADR 77,250
-------------------------------------------------------------------------------------- ------------
CHILE--1.4%
--------------------------------------------------------------------------------------
UTILITIES-ELECTRIC--1.4%
--------------------------------------------------------------------------------------
2,800 Chilgener S.A., ADR 66,150
-------------------------------------------------------------------------------------- ------------
CHINA--0.9%
--------------------------------------------------------------------------------------
TRANSPORTATION--0.9%
--------------------------------------------------------------------------------------
2,100 (a)Guangshen Railway Co., Ltd., Class H, ADR 41,475
-------------------------------------------------------------------------------------- ------------
FINLAND--2.3%
--------------------------------------------------------------------------------------
MACHINERY & EQUIPMENT--1.4%
--------------------------------------------------------------------------------------
2,700 (a)]KCI Konecranes 65,905
-------------------------------------------------------------------------------------- ------------
TELECOMMUNICATIONS--0.9%
--------------------------------------------------------------------------------------
1,000 Nokia AB-A 43,512
-------------------------------------------------------------------------------------- ------------
TOTAL FINLAND 109,417
-------------------------------------------------------------------------------------- ------------
FRANCE--4.0%
--------------------------------------------------------------------------------------
FOREIGN BANK--0.7%
--------------------------------------------------------------------------------------
300 Societe Generale, Paris 31,918
-------------------------------------------------------------------------------------- ------------
OIL--1.8%
--------------------------------------------------------------------------------------
1,200 Total SA-B 86,747
-------------------------------------------------------------------------------------- ------------
</TABLE>
FTI INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- ----------- -------------------------------------------------------------------------------------- ------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FRANCE--CONTINUED
--------------------------------------------------------------------------------------
RETAIL--1.5%
--------------------------------------------------------------------------------------
400 Castorama Dubois Investisse $ 74,127
-------------------------------------------------------------------------------------- ------------
TOTAL FRANCE 192,792
-------------------------------------------------------------------------------------- ------------
GERMANY--5.2%
--------------------------------------------------------------------------------------
CHEMICALS--0.7%
--------------------------------------------------------------------------------------
100 Hoechst AG 33,277
-------------------------------------------------------------------------------------- ------------
ELECTRICAL EQUIPMENT--0.9%
--------------------------------------------------------------------------------------
800 Siemens AG 44,865
-------------------------------------------------------------------------------------- ------------
MACHINERY & EQUIPMENT--0.7%
--------------------------------------------------------------------------------------
100 Mannesmann AG 34,686
-------------------------------------------------------------------------------------- ------------
TRANSPORTATION--1.5%
--------------------------------------------------------------------------------------
480 Deutsche Lufthansa AG 74,391
-------------------------------------------------------------------------------------- ------------
UTILITIES-ELECTRIC--1.4%
--------------------------------------------------------------------------------------
1,350 Veba AG 70,641
-------------------------------------------------------------------------------------- ------------
TOTAL GERMANY 257,860
-------------------------------------------------------------------------------------- ------------
HONG KONG--4.5%
--------------------------------------------------------------------------------------
DIVERSIFIED--0.7%
--------------------------------------------------------------------------------------
4,000 Swire Pacific, Ltd. A 35,542
-------------------------------------------------------------------------------------- ------------
FINANCE-RETAIL--1.2%
--------------------------------------------------------------------------------------
4,000 HSBC Holdings PLC 60,486
-------------------------------------------------------------------------------------- ------------
REAL ESTATE--2.6%
--------------------------------------------------------------------------------------
9,000 Cheung Kong 66,593
--------------------------------------------------------------------------------------
6,000 Sun Hung Kai Properties 61,262
-------------------------------------------------------------------------------------- ------------
Total 127,855
-------------------------------------------------------------------------------------- ------------
TOTAL HONG KONG 223,883
-------------------------------------------------------------------------------------- ------------
</TABLE>
FTI INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- ----------- -------------------------------------------------------------------------------------- ------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
INDONESIA--1.3%
--------------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.8%
--------------------------------------------------------------------------------------
1,200 (a)PT Telecom, Class CS, ADR $ 36,600
-------------------------------------------------------------------------------------- ------------
TOBACCO--0.5%
--------------------------------------------------------------------------------------
2,000 PT Hanjaya Mandala Sampoerna, Foreign Shares 24,845
-------------------------------------------------------------------------------------- ------------
TOTAL INDONESIA 61,445
-------------------------------------------------------------------------------------- ------------
IRELAND--2.2%
--------------------------------------------------------------------------------------
FINANCIAL SERVICES--1.4%
--------------------------------------------------------------------------------------
9,400 Bank of Ireland 65,988
-------------------------------------------------------------------------------------- ------------
PHARMACEUTICALS--0.8%
--------------------------------------------------------------------------------------
600 (a)Elan Corp. PLC, ADR 37,650
-------------------------------------------------------------------------------------- ------------
TOTAL IRELAND 103,638
-------------------------------------------------------------------------------------- ------------
ITALY--2.4%
--------------------------------------------------------------------------------------
AUTOMOBILE--0.9%
--------------------------------------------------------------------------------------
12,000 Fiat SPA 42,364
-------------------------------------------------------------------------------------- ------------
FINANCIAL SERVICES--0.7%
--------------------------------------------------------------------------------------
6,800 Banca Popolare Milano 34,754
-------------------------------------------------------------------------------------- ------------
UTILITIES-TELEPHONE--0.8%
--------------------------------------------------------------------------------------
18,700 (a)Telecom Italia Mobile 39,974
-------------------------------------------------------------------------------------- ------------
TOTAL ITALY 117,092
-------------------------------------------------------------------------------------- ------------
JAPAN--35.5%
--------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.6%
--------------------------------------------------------------------------------------
15,000 Mitsubishi Heavy Industries, Ltd. 129,028
-------------------------------------------------------------------------------------- ------------
CHEMICALS--3.2%
--------------------------------------------------------------------------------------
18,000 Daicel Chemical Industries 108,833
--------------------------------------------------------------------------------------
4,000 Sekisui Chemical Co. 47,407
-------------------------------------------------------------------------------------- ------------
Total 156,240
-------------------------------------------------------------------------------------- ------------
</TABLE>
FTI INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- ----------- -------------------------------------------------------------------------------------- ------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
JAPAN--CONTINUED
--------------------------------------------------------------------------------------
CLOTHING & TEXTILES--3.1%
--------------------------------------------------------------------------------------
7,000 Nisshinbo Industries $ 69,352
--------------------------------------------------------------------------------------
5,000 Onward Kashiyama Co., Ltd. 81,482
-------------------------------------------------------------------------------------- ------------
Total 150,834
-------------------------------------------------------------------------------------- ------------
COMPUTER SOFTWARE--2.5%
--------------------------------------------------------------------------------------
4 NTT Data Communications Systems Co. 123,333
-------------------------------------------------------------------------------------- ------------
COMPUTERS--0.5%
--------------------------------------------------------------------------------------
300 Mars Engineering Corp. 23,250
-------------------------------------------------------------------------------------- ------------
DISTRIBUTOR--1.7%
--------------------------------------------------------------------------------------
3,000 Canon Sales Co., Inc. 81,667
-------------------------------------------------------------------------------------- ------------
ELECTRONICS--6.6%
--------------------------------------------------------------------------------------
300 Keyence Corp. 39,444
--------------------------------------------------------------------------------------
6,000 Matsushita Electric Industrial Co. 103,333
--------------------------------------------------------------------------------------
2,000 Rohm Co. 125,185
--------------------------------------------------------------------------------------
3,000 Yamatake-Honeywell 53,611
-------------------------------------------------------------------------------------- ------------
Total 321,573
-------------------------------------------------------------------------------------- ------------
FINANCIAL SERVICES--1.2%
--------------------------------------------------------------------------------------
3,000 Nomura Securities Co., Ltd. 56,667
-------------------------------------------------------------------------------------- ------------
INSURANCE--1.3%
--------------------------------------------------------------------------------------
7,000 Sumitomo Marine & Fire 63,389
-------------------------------------------------------------------------------------- ------------
MACHINERY, EQUIPMENT & AUTO--1.4%
--------------------------------------------------------------------------------------
7,000 Komatsu, Ltd. 66,759
-------------------------------------------------------------------------------------- ------------
MANUFACTURING--1.3%
--------------------------------------------------------------------------------------
7,000 Hitachi, Ltd. 64,815
-------------------------------------------------------------------------------------- ------------
OFFICE EQUIPMENT--1.6%
--------------------------------------------------------------------------------------
4,000 Canon, Inc. 78,519
-------------------------------------------------------------------------------------- ------------
</TABLE>
FTI INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- ----------- -------------------------------------------------------------------------------------- ------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
JAPAN--CONTINUED
--------------------------------------------------------------------------------------
RETAIL TRADE--3.9%
--------------------------------------------------------------------------------------
4,000 Credit Saison Co., Ltd. $ 95,556
--------------------------------------------------------------------------------------
7,000 Hankyu Department Stores, Inc. 94,630
-------------------------------------------------------------------------------------- ------------
Total 190,186
-------------------------------------------------------------------------------------- ------------
STEEL--1.4%
--------------------------------------------------------------------------------------
23,000 (a)NKK Corp. 67,296
-------------------------------------------------------------------------------------- ------------
TRANSPORTATION--1.4%
--------------------------------------------------------------------------------------
20,000 (a)Kawasaki Kisen Kaisha, Ltd. 66,481
-------------------------------------------------------------------------------------- ------------
UTILITIES-TELEPHONE--1.8%
--------------------------------------------------------------------------------------
10 DDI Corp. 86,667
-------------------------------------------------------------------------------------- ------------
TOTAL JAPAN 1,726,704
-------------------------------------------------------------------------------------- ------------
KOREA--0.8%
--------------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.8%
--------------------------------------------------------------------------------------
700 (a)Korea Mobile Telecomm Corp., GDR 40,250
-------------------------------------------------------------------------------------- ------------
MALAYSIA--1.7%
--------------------------------------------------------------------------------------
DIVERSIFIED--0.7%
--------------------------------------------------------------------------------------
5,000 United Engineers, Ltd. 34,849
-------------------------------------------------------------------------------------- ------------
FINANCE-COMMERCIAL--1.0%
--------------------------------------------------------------------------------------
14,000 DCB Holdings Berhad 46,545
-------------------------------------------------------------------------------------- ------------
TOTAL MALAYSIA 81,394
-------------------------------------------------------------------------------------- ------------
MEXICO--0.8%
--------------------------------------------------------------------------------------
FOOD & BEVERAGE--0.8%
--------------------------------------------------------------------------------------
900 Pan American Beverage, Class A 37,800
-------------------------------------------------------------------------------------- ------------
NETHERLANDS--3.4%
--------------------------------------------------------------------------------------
ELECTRONICS--1.1%
--------------------------------------------------------------------------------------
1,500 Philips Electronics N.V. 53,236
-------------------------------------------------------------------------------------- ------------
</TABLE>
FTI INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- ----------- -------------------------------------------------------------------------------------- ------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
NETHERLANDS--CONTINUED
--------------------------------------------------------------------------------------
FINANCIAL SERVICES--1.4%
--------------------------------------------------------------------------------------
814 International Nederlanden $ 67,027
-------------------------------------------------------------------------------------- ------------
RETAIL TRADE--0.9%
--------------------------------------------------------------------------------------
800 Koninklijke Ahold N.V. 42,917
-------------------------------------------------------------------------------------- ------------
TOTAL NETHERLANDS 163,180
-------------------------------------------------------------------------------------- ------------
PERU--1.3%
--------------------------------------------------------------------------------------
UTILITIES-TELEPHONE--1.3%
--------------------------------------------------------------------------------------
33,000 (a)Telefonica Del Peru CPT, Class B 65,290
-------------------------------------------------------------------------------------- ------------
PHILIPPINES--0.7%
--------------------------------------------------------------------------------------
HOMEBUILDERS--0.7%
--------------------------------------------------------------------------------------
42,100 (a)C & P Homes, Inc. 34,574
-------------------------------------------------------------------------------------- ------------
SINGAPORE--0.7%
--------------------------------------------------------------------------------------
REAL ESTATE--0.7%
--------------------------------------------------------------------------------------
5,000 Singapore Land, Ltd. 33,724
-------------------------------------------------------------------------------------- ------------
SPAIN--3.0%
--------------------------------------------------------------------------------------
REAL ESTATE--1.5%
--------------------------------------------------------------------------------------
4,100 Vallehermoso 72,176
-------------------------------------------------------------------------------------- ------------
UTILITIES-ELECTRIC--1.5%
--------------------------------------------------------------------------------------
8,800 Compania Sevillana de Electricidad 75,576
-------------------------------------------------------------------------------------- ------------
TOTAL SPAIN 147,752
-------------------------------------------------------------------------------------- ------------
SWEDEN--3.2%
--------------------------------------------------------------------------------------
AUTOMOBILE--0.9%
--------------------------------------------------------------------------------------
800 (a)Scania AB, Class A 22,625
--------------------------------------------------------------------------------------
800 (a)Scania AB, Class B 22,625
-------------------------------------------------------------------------------------- ------------
Total 45,250
-------------------------------------------------------------------------------------- ------------
</TABLE>
FTI INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- ----------- -------------------------------------------------------------------------------------- ------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
SWEDEN--CONTINUED
--------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--0.8%
--------------------------------------------------------------------------------------
2,000 Svedala Industri $ 38,403
-------------------------------------------------------------------------------------- ------------
PHARMACEUTICALS--1.5%
--------------------------------------------------------------------------------------
1,600 Astra AB, Class A 73,233
-------------------------------------------------------------------------------------- ------------
TOTAL SWEDEN 156,886
-------------------------------------------------------------------------------------- ------------
SWITZERLAND--3.1%
--------------------------------------------------------------------------------------
ELECTRONICS--1.5%
--------------------------------------------------------------------------------------
60 ABB AG 71,722
-------------------------------------------------------------------------------------- ------------
PHARMACEUTICALS--1.6%
--------------------------------------------------------------------------------------
10 Roche Holding AG 76,708
-------------------------------------------------------------------------------------- ------------
TOTAL SWITZERLAND 148,430
-------------------------------------------------------------------------------------- ------------
THAILAND--0.8%
--------------------------------------------------------------------------------------
FINANCE--COMMERCIAL--0.8%
--------------------------------------------------------------------------------------
7,600 Krung Thai Bank PLC, Foreign Shares 38,711
-------------------------------------------------------------------------------------- ------------
UNITED KINGDOM--11.8%
--------------------------------------------------------------------------------------
ELECTRONICS--0.9%
--------------------------------------------------------------------------------------
7,000 Electrocomponents PLC 42,197
-------------------------------------------------------------------------------------- ------------
ENTERTAINMENT--2.5%
--------------------------------------------------------------------------------------
3,800 Granada Group PLC 48,464
--------------------------------------------------------------------------------------
2,600 Thorn EMI 72,444
-------------------------------------------------------------------------------------- ------------
Total 120,908
-------------------------------------------------------------------------------------- ------------
FINANCIAL SERVICES--0.7%
--------------------------------------------------------------------------------------
6,861 Lloyds TSB Group PLC 33,175
-------------------------------------------------------------------------------------- ------------
FOOD & BEVERAGE--1.3%
--------------------------------------------------------------------------------------
8,500 Allied Domecq PLC 64,148
-------------------------------------------------------------------------------------- ------------
</TABLE>
FTI INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ----------- -------------------------------------------------------------------------------------- ------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
--------------------------------------------------------------------------------------
MACHINERY & EQUIPMENT--1.3%
--------------------------------------------------------------------------------------
4,800 Siebe PLC $ 64,342
-------------------------------------------------------------------------------------- ------------
OIL--1.7%
--------------------------------------------------------------------------------------
9,400 British Petroleum Co. PLC 80,846
-------------------------------------------------------------------------------------- ------------
PHARMACEUTICALS--1.2%
--------------------------------------------------------------------------------------
5,825 Smithkline Beecham PLC 59,306
-------------------------------------------------------------------------------------- ------------
PRINTING & PUBLISHING--0.7%
--------------------------------------------------------------------------------------
2,000 Reed International PLC 34,589
-------------------------------------------------------------------------------------- ------------
RESTAURANTS--1.5%
--------------------------------------------------------------------------------------
8,000 Compass Group 71,657
-------------------------------------------------------------------------------------- ------------
TOTAL UNITED KINGDOM 571,168
-------------------------------------------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $4,380,626) 4,561,766
-------------------------------------------------------------------------------------- ------------
CORPORATE BONDS--1.3%
- ---------------------------------------------------------------------------------------------------
UNITED KINGDOM--1.3%
--------------------------------------------------------------------------------------
TRANSPORTATION--1.3%
--------------------------------------------------------------------------------------
$ 17,000 British Airways Capital, Conv. Bond, 9.75%, 6/15/2005 (IDENTIFIED COST $57,692) 63,316
-------------------------------------------------------------------------------------- ------------
(B) REPURCHASE AGREEMENT--7.7%
- ---------------------------------------------------------------------------------------------------
378,000 J.P. Morgan Securities, Inc., 4.60%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) 378,000
-------------------------------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $4,816,318)(C) $ 5,003,082
-------------------------------------------------------------------------------------- ------------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(c) The cost of investments for federal tax purposes amounts to $4,816,318. The
net unrealized appreciation of investments on a federal tax basis amounts
to $186,764 which is comprised of $252,155 appreciation and $65,391
depreciation at May 31, 1996.
FTI INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Note: The categories of investments are shown as a percentage of net assets
($4,879,059) at
May 31, 1996.
The following acronym(s) are used throughout this portfolio:
ADR--American Depository Receipt
GDR--Global Depository Receipt
LTD--Limited
PLC--Public Limited Company
SA--Support Agreement
SPA--Standby Purchase Agreement
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $4,816,318) $ 5,003,082
- ----------------------------------------------------------------------------------------------------
Cash 61,017
- ----------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified and tax cost $9,037) 9,040
- ----------------------------------------------------------------------------------------------------
Income receivable 33,080
- ----------------------------------------------------------------------------------------------------
Receivable for foreign currency sold 1,754,389
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 6,860,608
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------
Payable for investments purchased $ 188,676
- --------------------------------------------------------------------------------------
Payable for taxes withheld 1,772
- --------------------------------------------------------------------------------------
Payable for foreign currency purchased 1,754,389
- --------------------------------------------------------------------------------------
Accrued expenses 36,712
- -------------------------------------------------------------------------------------- ------------
Total liabilities 1,981,549
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 456,507 shares outstanding $ 4,879,059
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 4,653,824
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets
and liabilities in foreign currency 204,038
- ----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (7,479)
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 28,676
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 4,879,059
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
$4,879,059 / 456,507 shares outstanding $10.69
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $3,695) $ 24,435
- ------------------------------------------------------------------------------------------------------
Interest 23,337
- ------------------------------------------------------------------------------------------------------ ----------
Total income 47,772
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------------
Investment advisory fee $ 11,935
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 30,328
- -----------------------------------------------------------------------------------------
Custodian fees 41,487
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 6,892
- -----------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,314
- -----------------------------------------------------------------------------------------
Legal fees 3,755
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 24,917
- -----------------------------------------------------------------------------------------
Share registration costs 2,983
- -----------------------------------------------------------------------------------------
Printing and postage 6,627
- -----------------------------------------------------------------------------------------
Insurance premiums 2,210
- -----------------------------------------------------------------------------------------
Miscellaneous 3,093
- ----------------------------------------------------------------------------------------- -----------
Total expenses 137,541
- -----------------------------------------------------------------------------------------
Reimbursement of other operating expenses (118,445)
- ----------------------------------------------------------------------------------------- -----------
Net expenses 19,096
- ------------------------------------------------------------------------------------------------------ ----------
Net investment income 28,676
- ------------------------------------------------------------------------------------------------------ ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
- ------------------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions (7,479)
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and translation of assets and liabilities in
foreign currency 204,038
- ------------------------------------------------------------------------------------------------------ ----------
Net realized and unrealized gain on investments and foreign currency 196,559
- ------------------------------------------------------------------------------------------------------ ----------
Change in net assets resulting from operations $ 225,235
- ------------------------------------------------------------------------------------------------------ ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
(UNAUDITED)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------------
Net investment income $ 28,676
- ----------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions
($7,479 net loss as computed for federal tax purposes) (7,479)
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments
and translation of assets and liabilities in foreign currency 204,038
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from operations 225,235
- ---------------------------------------------------------------------------------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------------------------
Proceeds from sale of shares 4,706,630
- ----------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared --
- ----------------------------------------------------------------------------------------------
Cost of shares redeemed (52,806)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from share transactions 4,653,824
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets 4,879,059
- ----------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------
Beginning of period --
- ---------------------------------------------------------------------------------------------- ------------------
End of period (including undistributed net investment income of $28,676) $ 4,879,059
- ---------------------------------------------------------------------------------------------- ------------------
</TABLE>
(a) For the period from January 16, 1996 (date of initial public investment) to
May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------
Net investment income 0.06
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign currency 0.63
- ---------------------------------------------------------------------------------------------- -------
Total from investment operations 0.69
- ---------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 10.69
- ---------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 6.90%
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------
Expenses 1.60%*
- ----------------------------------------------------------------------------------------------
Net investment income 2.40%*
- ----------------------------------------------------------------------------------------------
Expense reimbursement (c) 9.92%*
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 4,879
- ----------------------------------------------------------------------------------------------
Average commission rate paid $ 0.0512
- ----------------------------------------------------------------------------------------------
Portfolio turnover 11%
- ----------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from January 16, 1996 (date of initial
public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
- ---------------- ---------------------------------------------------------------------------------- ------------
<C> <S> <C>
GOVERNMENT AGENCIES--98.2%
- ----------------------------------------------------------------------------------------------------
AUSTRALIA--1.8%
----------------------------------------------------------------------------------
86,000 Australian Government, Foreign Government Guarantee, 9.00%,
9/15/2004 $ 69,461
---------------------------------------------------------------------------------- ------------
TOTAL AUSTRALIA 69,461
---------------------------------------------------------------------------------- ------------
CANADA--5.9%
----------------------------------------------------------------------------------
35,000 Canada Government, Deb., 6.50%, 6/1/2004 23,854
----------------------------------------------------------------------------------
70,000 Canada Government, Deb., 7.50%, 12/1/2003 50,996
----------------------------------------------------------------------------------
100,000 (d)Ontario Province, Sr. Unsub. Deb., 6.875%, 9/15/2000 149,930
---------------------------------------------------------------------------------- ------------
TOTAL CANADA 224,780
---------------------------------------------------------------------------------- ------------
DENMARK--2.8%
----------------------------------------------------------------------------------
610,000 Kingdom of Denmark, 8.00%, 3/15/2006 107,186
---------------------------------------------------------------------------------- ------------
TOTAL DENMARK 107,186
---------------------------------------------------------------------------------- ------------
FRANCE--11.5%
----------------------------------------------------------------------------------
750,000 Caisse Autonome de Refine, Sr. Unsub. Deb., 7.75%, 12/6/1999 156,688
----------------------------------------------------------------------------------
1,375,000 French Treasury Bill, 7.00%, 11/12/1999 281,916
---------------------------------------------------------------------------------- ------------
TOTAL FRANCE 438,604
---------------------------------------------------------------------------------- ------------
GERMANY--13.0%
----------------------------------------------------------------------------------
92,000 Bundesrepublik Deutschland, (German Government), 6.50%,
7/15/2003 61,723
----------------------------------------------------------------------------------
240,000 Deutsche Bundespost, (German Post Office), 7.50%, 12/2/2002 169,069
----------------------------------------------------------------------------------
130,000 Germany Unity Fund, 8.00%, 1/21/2002 94,714
----------------------------------------------------------------------------------
240,000 Treuhandanstalt, 7.125%, 1/29/2003 167,151
---------------------------------------------------------------------------------- ------------
TOTAL GERMANY 492,657
---------------------------------------------------------------------------------- ------------
ITALY--13.7%
----------------------------------------------------------------------------------
680,000,000 Buoni Poliennali Del Tes, (Italian Government), Deb., 10.50%,
4/15/1998 $ 454,493
----------------------------------------------------------------------------------
</TABLE>
FTI INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY PAR IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------------- ------------
GOVERNMENT AGENCIES--CONTINUED
- ----------------------------------------------------------------------------------------------------
ITALY--CONTINUED
----------------------------------------------------------------------------------
100,000,000 Buoni Poliennali Del Tes, (Italian Government), Deb., 10.50%,
4/1/2000 68,256
---------------------------------------------------------------------------------- ------------
TOTAL ITALY 522,749
---------------------------------------------------------------------------------- ------------
JAPAN--4.1%
----------------------------------------------------------------------------------
14,300,000 Japan Government National Bonds, Series 137, 6.50%, 3/20/2001 157,472
---------------------------------------------------------------------------------- ------------
TOTAL JAPAN 157,472
---------------------------------------------------------------------------------- ------------
SPAIN--11.0%
----------------------------------------------------------------------------------
28,700,000 Bonos Y Obligation Del Estado, (Spanish Government), Deb., 10.25%, 11/30/1998 234,369
----------------------------------------------------------------------------------
20,900,000 Bonos Y Obligation Del Estado, (Spanish Government), Deb., 12.25%, 3/25/2000 183,181
---------------------------------------------------------------------------------- ------------
TOTAL SPAIN 417,550
---------------------------------------------------------------------------------- ------------
SWEDEN--7.3%
----------------------------------------------------------------------------------
1,700,000 Swedish Government, 10.25%, 5/5/2000 277,560
---------------------------------------------------------------------------------- ------------
TOTAL SWEDEN 277,560
---------------------------------------------------------------------------------- ------------
UNITED KINGDOM--9.7%
----------------------------------------------------------------------------------
90,000 (e)European Investment Bank, Sr. Unsub. Deb., 8.00%, 6/10/2003 139,383
----------------------------------------------------------------------------------
60,000 United Kingdom Treasury, 7.00%, 11/6/2001 90,365
----------------------------------------------------------------------------------
87,000 United Kingdom Treasury, 8.50%, 7/16/2007 137,981
---------------------------------------------------------------------------------- ------------
TOTAL UNITED KINGDOM 367,729
---------------------------------------------------------------------------------- ------------
UNITED STATES--17.4%
----------------------------------------------------------------------------------
50,000,000 (c)Federal National Mortgage Association, 2.00%, 12/20/1999 464,352
----------------------------------------------------------------------------------
</TABLE>
FTI INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
OR IN U.S.
CONTRACTS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------------- ------------
GOVERNMENT AGENCIES--CONTINUED
- ----------------------------------------------------------------------------------------------------
UNITED STATES--CONTINUED
----------------------------------------------------------------------------------
$ 200,000 United States Treasury Bill, 9/5/1996 $ 197,389
---------------------------------------------------------------------------------- ------------
TOTAL UNITED STATES 661,741
---------------------------------------------------------------------------------- ------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $3,751,358) 3,737,489
---------------------------------------------------------------------------------- ------------
OPTIONS--0.1%
- ----------------------------------------------------------------------------------------------------
268,200 Eurostyle Put Option on German Marks, expires 7/2/1996, strike
@ 1.49 (IDENTIFIED COST $2,643) 4,007
---------------------------------------------------------------------------------- ------------
(A)REPURCHASE AGREEMENT--9.9%
- ----------------------------------------------------------------------------------------------------
$ 379,000 J.P. Morgan & Co., Inc., 4.60%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) 379,000
---------------------------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $4,133,001)(B) $ 4,120,496
---------------------------------------------------------------------------------- ------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $4,133,001. The
net unrealized depreciation of investments on a federal tax basis amounts to
$12,505 which is comprised of $30,111 appreciation and $42,616 depreciation
at May 31, 1996.
(c) Denominated in Japanese Yen.
(d) Denominated in U.S. Dollars.
(e) Supranational Issuer.
Note: The categories of investments are shown as a percentage of net assets
($3,807,447) at May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------
Investments in repurchase agreements $ 379,000
- --------------------------------------------------------------------------------------
Investments in securities 3,741,496
- -------------------------------------------------------------------------------------- ------------
Total investments in securities, at value (identified and tax cost $4,133,001) $ 4,120,496
- ----------------------------------------------------------------------------------------------------
Cash denominated in foreign currency (identified and tax cost $62,633) 62,361
- ----------------------------------------------------------------------------------------------------
Income receivable 77,000
- ----------------------------------------------------------------------------------------------------
Receivable for investments sold 692,593
- ----------------------------------------------------------------------------------------------------
Receivable for foreign currency sold 4,778,029
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 9,730,479
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------------------
Payable for investments purchased 1,099,456
- --------------------------------------------------------------------------------------
Payable for taxes withheld 1,178
- --------------------------------------------------------------------------------------
Payable for foreign currency purchased 4,778,029
- --------------------------------------------------------------------------------------
Accrued expenses 44,369
- -------------------------------------------------------------------------------------- ------------
Total liabilities 5,923,032
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 386,400 shares outstanding $ 3,807,447
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 3,841,885
- ----------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and translation of assets and liabilities in foreign
currency (22,532)
- ----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (66,018)
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 54,112
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 3,807,447
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
$3,807,447 / 386,400 shares outstanding $9.85
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL BOND FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $2,520) $ 69,771
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $ 9,135
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 28,894
- ----------------------------------------------------------------------------------------
Custodian fees 31,107
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 6,566
- ----------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,157
- ----------------------------------------------------------------------------------------
Legal fees 3,577
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 23,739
- ----------------------------------------------------------------------------------------
Share registration costs 2,841
- ----------------------------------------------------------------------------------------
Printing and postage 6,314
- ----------------------------------------------------------------------------------------
Insurance premiums 2,105
- ----------------------------------------------------------------------------------------
Miscellaneous 2,947
- ---------------------------------------------------------------------------------------- ------------
Total expenses 120,382
- ----------------------------------------------------------------------------------------
Reimbursement of other operating expenses (104,723)
- ---------------------------------------------------------------------------------------- ------------
Net expenses 15,659
- ------------------------------------------------------------------------------------------------------ ----------
Net investment income 54,112
- ------------------------------------------------------------------------------------------------------ ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
- ------------------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions (66,018)
- ------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation of investments and translation of assets and liabilities in
foreign currency (22,532)
- ------------------------------------------------------------------------------------------------------ ----------
Net realized and unrealized loss on investments and foreign currency (88,550)
- ------------------------------------------------------------------------------------------------------ ----------
Change in net assets resulting from operations $ (34,438)
- ------------------------------------------------------------------------------------------------------ ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
(UNAUDITED)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------------
Net investment income $ 54,112
- ----------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions
($66,018 net loss as computed for federal tax purposes) (66,018)
- ----------------------------------------------------------------------------------------------
Net change in unrealized depreciation of investments
and translation of assets and liabilities in foreign currency (22,532)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from operations (34,438)
- ---------------------------------------------------------------------------------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------------------------
Proceeds from sale of shares 4,025,150
- ----------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared --
- ----------------------------------------------------------------------------------------------
Cost of shares redeemed (183,265)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from share transactions 3,841,885
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets 3,807,447
- ----------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------
Beginning of period --
- ---------------------------------------------------------------------------------------------- ------------------
End of period (including undistributed net investment income of $54,112) $ 3,807,447
- ---------------------------------------------------------------------------------------------- ------------------
</TABLE>
(a) For the period from January 16, 1996 (date of initial public investment) to
May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------
Net investment income 0.14
- ----------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments and foreign currency (0.29)
- ---------------------------------------------------------------------------------------------- -------
Total from investment operations (0.15)
- ---------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 9.85
- ---------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) (1.50%)
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------
Expenses 1.20%*
- ----------------------------------------------------------------------------------------------
Net investment income 4.15%*
- ----------------------------------------------------------------------------------------------
Expense reimbursement (c) 8.03%*
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $3,807
- ----------------------------------------------------------------------------------------------
Portfolio turnover 108%
- ----------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from January 16, 1996 (date of initial
public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FTI GLOBAL BOND FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------------- ------------
CORPORATE BONDS--3.0%
- ----------------------------------------------------------------------------------------------------
GERMANY--3.0%
-----------------------------------------------------------------------------------
FINANCE--3.0%
-----------------------------------------------------------------------------------
29,000 (d)KFW International Finance, Company Guarantee, 7.50%, 4/21/2005 $ 29,534
----------------------------------------------------------------------------------- ------------
TOTAL GERMANY 29,534
----------------------------------------------------------------------------------- ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $29,418) 29,534
----------------------------------------------------------------------------------- ------------
GOVERNMENT AGENCIES--99.3%
- ----------------------------------------------------------------------------------------------------
AUSTRALIA--1.6%
-----------------------------------------------------------------------------------
20,000 Australian Government, Foreign Government Guarantee, 9.00%,
9/15/2004 16,154
----------------------------------------------------------------------------------- ------------
TOTAL AUSTRALIA 16,154
----------------------------------------------------------------------------------- ------------
DENMARK--4.3%
-----------------------------------------------------------------------------------
241,000 Kingdom of Denmark, 8.00%, 3/15/2006 42,347
----------------------------------------------------------------------------------- ------------
TOTAL DENMARK 42,347
----------------------------------------------------------------------------------- ------------
FRANCE--5.1%
-----------------------------------------------------------------------------------
204,000 French Treasury Bill, 5.75%, 3/12/1998 40,311
-----------------------------------------------------------------------------------
50,000 French Treasury Bill, 7.00%, 11/12/1999 10,251
----------------------------------------------------------------------------------- ------------
TOTAL FRANCE 50,562
----------------------------------------------------------------------------------- ------------
GERMANY--11.9%
-----------------------------------------------------------------------------------
20,000 Bundesrepublik Deutschland, (German Government), 6.00%, 1/5/2006 12,679
-----------------------------------------------------------------------------------
2,000 Bundesrepublik Deutschland, (German Government), 6.25%, 1/4/2024 1,156
-----------------------------------------------------------------------------------
110,000 Bundesrepublik Deutschland, (German Government), 6.50%, 7/15/2003 73,799
-----------------------------------------------------------------------------------
40,000 Bundesrepublik Deutschland, (German Government), 8.875%,
12/20/2000 30,003
----------------------------------------------------------------------------------- ------------
TOTAL GERMANY 117,637
----------------------------------------------------------------------------------- ------------
</TABLE>
FTI GLOBAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY
PAR AMOUNT
OR VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------------- ------------
GOVERNMENT AGENCIES--CONTINUED
- ----------------------------------------------------------------------------------------------------
ITALY--17.6%
-----------------------------------------------------------------------------------
250,000,000 Buoni Poliennali Del Tes, (Italian Government), Deb., 10.50%,
4/15/1998 $ 167,093
-----------------------------------------------------------------------------------
10,000,000 Buoni Poliennali Del Tes, (Italian Government), Deb., 10.50%, 4/1/2000 6,826
----------------------------------------------------------------------------------- ------------
TOTAL ITALY 173,919
----------------------------------------------------------------------------------- ------------
JAPAN--5.2%
-----------------------------------------------------------------------------------
4,600,000 Japan Government National Bonds, Series 182, 3.00%, 9/20/2005 42,099
-----------------------------------------------------------------------------------
850,000 Japan Government National Bonds, Series 137, 6.50%, 3/20/2001 9,360
----------------------------------------------------------------------------------- ------------
TOTAL JAPAN 51,459
----------------------------------------------------------------------------------- ------------
SPAIN--2.2%
-----------------------------------------------------------------------------------
2,500,000 Bonos Y Obligation Del Estado, (Spanish Government), Deb., 12.25%, 3/25/2000 21,912
----------------------------------------------------------------------------------- ------------
TOTAL SPAIN 21,912
----------------------------------------------------------------------------------- ------------
SWEDEN--4.9%
-----------------------------------------------------------------------------------
300,000 Swedish Government, 10.25%, 5/5/2000 48,981
----------------------------------------------------------------------------------- ------------
TOTAL SWEDEN 48,981
----------------------------------------------------------------------------------- ------------
UNITED KINGDOM--5.7%
-----------------------------------------------------------------------------------
10,000 United Kingdom Treasury, 7.00%, 11/6/2001 15,061
-----------------------------------------------------------------------------------
13,000 United Kingdom Treasury, 7.75%, 9/8/2006 19,548
-----------------------------------------------------------------------------------
10,000 United Kingdom Treasury, 8.00%, 9/27/2013 15,017
-----------------------------------------------------------------------------------
4,000 United Kingdom Treasury, 9.75%, 8/27/2002 6,772
----------------------------------------------------------------------------------- ------------
TOTAL UNITED KINGDOM 56,398
----------------------------------------------------------------------------------- ------------
UNITED STATES--40.8%
-----------------------------------------------------------------------------------
10,000,000 (c)Federal National Mortgage Association, 2.00%, 12/20/1999 92,870
-----------------------------------------------------------------------------------
$ 65,000 United States Treasury Bill, 6/6/1996 64,956
-----------------------------------------------------------------------------------
</TABLE>
FTI GLOBAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR CONTRACTS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------------- ------------
GOVERNMENT AGENCIES--CONTINUED
- ----------------------------------------------------------------------------------------------------
UNITED STATES--CONTINUED
-----------------------------------------------------------------------------------
$ 15,000 United States Treasury Bond, 6.25%, 8/15/2023 $ 13,411
-----------------------------------------------------------------------------------
50,000 United States Treasury Bond, 7.875%, 2/15/2021 54,000
-----------------------------------------------------------------------------------
85,000 United States Treasury Note, 5.875%, 7/31/1997 84,920
-----------------------------------------------------------------------------------
35,000 United States Treasury Note, 6.375%, 8/15/2002 34,420
-----------------------------------------------------------------------------------
47,000 United States Treasury Note, 7.25%, 8/15/2004 48,204
-----------------------------------------------------------------------------------
10,000 United States Treasury Note, 7.50%, 11/15/2001 10,369
----------------------------------------------------------------------------------- ------------
TOTAL UNITED STATES 403,150
----------------------------------------------------------------------------------- ------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $986,828) 982,519
----------------------------------------------------------------------------------- ------------
OPTIONS--0.04%
- ----------------------------------------------------------------------------------------------------
26,075 Eurostyle Put Option on German Marks, expires 7/2/1996, strike
@ 1.49 (IDENTIFIED COST $257) 390
----------------------------------------------------------------------------------- ------------
(A)REPURCHASE AGREEMENT--5.9%
- ----------------------------------------------------------------------------------------------------
$ 58,000 J.P. Morgan & Co., Inc., 4.60%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) 58,000
----------------------------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $1,074,503)(B) $ 1,070,443
----------------------------------------------------------------------------------- ------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $1,074,503. The
net unrealized depreciation of investments on a federal tax basis amounts to
$4,060 which is comprised of $4,631 appreciation and $8,691 depreciation at
May 31, 1996.
(c) Denominated in Japanese Yen.
(d) Denominated in U.S. Dollars.
Note: The categories of investments are shown as a percentage of net assets
($989,199) at May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FTI GLOBAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified and tax cost $1,074,503) $ 1,070,443
- ----------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified and tax cost $6,196) 6,140
- ----------------------------------------------------------------------------------------------------
Income receivable 15,470
- ----------------------------------------------------------------------------------------------------
Receivable for investments sold 75,745
- ----------------------------------------------------------------------------------------------------
Receivable for foreign currency sold 1,017,987
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 2,185,785
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------
Payable for investments purchased $ 149,064
- --------------------------------------------------------------------------------------
Payable for taxes withheld 217
- --------------------------------------------------------------------------------------
Payable for foreign currency purchased 1,017,987
- --------------------------------------------------------------------------------------
Accrued expenses 29,318
- -------------------------------------------------------------------------------------- ------------
Total liabilities 1,196,586
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 100,537 shares outstanding $ 989,199
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 990,150
- ----------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and translation of assets
and liabilities in foreign currency (5,326)
- ----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (3,914)
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 8,289
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 989,199
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
$989,199 / 100,537 shares outstanding $9.84
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI GLOBAL BOND FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $238) $ 10,036
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------
Investment advisory fee $ 1,019
- -------------------------------------------------------------------------------------------
Administrative personnel and services fee 23,361
- -------------------------------------------------------------------------------------------
Custodian fees 25,151
- -------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 5,309
- -------------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,552
- -------------------------------------------------------------------------------------------
Legal fees 2,892
- -------------------------------------------------------------------------------------------
Portfolio accounting fees 19,193
- -------------------------------------------------------------------------------------------
Share registration costs 2,297
- -------------------------------------------------------------------------------------------
Printing and postage 5,105
- -------------------------------------------------------------------------------------------
Insurance premiums 1,702
- -------------------------------------------------------------------------------------------
Miscellaneous 2,383
- ------------------------------------------------------------------------------------------- ---------
Total expenses 90,964
- -------------------------------------------------------------------------------------------
Reimbursement of other operating expenses (89,217)
- ------------------------------------------------------------------------------------------- ---------
Net expenses 1,747
- ------------------------------------------------------------------------------------------------------ ---------
Net investment income 8,289
- ------------------------------------------------------------------------------------------------------ ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
- ------------------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions (3,914)
- ------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation of investments and translation
of assets and liabilities in foreign currency (5,326)
- ------------------------------------------------------------------------------------------------------ ---------
Net realized and unrealized loss on investments and foreign currency (9,240)
- ------------------------------------------------------------------------------------------------------ ---------
Change in net assets resulting from operations $ (951)
- ------------------------------------------------------------------------------------------------------ ---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI GLOBAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
(UNAUDITED)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------------
Net investment income $ 8,289
- ----------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions
($3,914 net loss, as computed for federal tax purposes) (3,914)
- ----------------------------------------------------------------------------------------------
Net change in unrealized depreciation of investments and
translation of assets and liabilities in foreign currency (5,326)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from operations (951)
- ---------------------------------------------------------------------------------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------------------------
Proceeds from sale of shares 990,150
- ----------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared --
- ----------------------------------------------------------------------------------------------
Cost of shares redeemed --
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from share transactions 990,150
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets 989,199
- ----------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------
Beginning of period --
- ---------------------------------------------------------------------------------------------- ------------------
End of period (including undistributed net investment income of $8,289) $ 989,199
- ---------------------------------------------------------------------------------------------- ------------------
</TABLE>
(a) For the period from February 8, 1996 (date of initial public investment) to
May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FTI GLOBAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996(A)
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------
Net investment income 0.18
- ----------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments and foreign currency (0.34)
- ---------------------------------------------------------------------------------------------- -------
Total from investment operations (0.16)
- ---------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 9.84
- ---------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) (1.60%)
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------
Expenses 1.20%*
- ----------------------------------------------------------------------------------------------
Net investment income 5.69%*
- ----------------------------------------------------------------------------------------------
Expense reimbursement (c) 61.28%*
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $989
- ----------------------------------------------------------------------------------------------
Portfolio turnover 94%
- ----------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 8, 1996 (date of initial
public investment) to May 31, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FTI FUNDS
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
FTI Funds (the "Trust") is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company. The Trust
consists of four diversified portfolios (individually referred to as the "Fund",
or collectively as the "Funds") which are presented herein:
PORTFOLIO NAME
FTI Small Capitalization Equity Fund
FTI International Equity Fund
FTI International Bond Fund
FTI Global Bond Fund
The assets of each portfolio are segregated and a shareholder's interest is
limited to the portfolio in which shares are held.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--U.S. government securities, listed corporate bonds,
(other fixed income and asset-backed securities), and unlisted securities
and private placement securities are generally valued at the mean of the
latest bid and asked price as furnished by an independent pricing service.
Listed equity securities are valued at the last sale price reported on a
national securities exchange. Short-term securities are valued according to
the mean between the bid and asked prices as provided by an independent
pricing service. However, short-term securities with remaining maturities
of sixty days or less at the time of purchase may be valued at amortized
cost, which approximates fair market value. Investments in other open-end
regulated investment companies are valued at net asset value. With respect
to foreign securities, trading in foreign cities may be completed at times
which vary from the closing of the New York Stock Exchange. Therefore,
foreign securities are valued at the latest closing price on the exchange
on which they are traded prior to the closing of the New York Stock
Exchange. Foreign securities quoted in foreign currencies are translated
into U.S. Dollars at the foreign exchange rate in effect at noon, Eastern
time, on the day the value of the foreign security is determined.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have
FTI FUNDS
- --------------------------------------------------------------------------------
segregated within the custodian bank's vault, all securities held as
collateral under repurchase agreement transactions. Additionally,
procedures have been established by the Funds to monitor, on a daily basis,
the market value of each repurchase agreement's collateral to ensure that
the value of collateral at least equals the repurchase price to be paid
under the repurchase agreement transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
Withholding taxes on foreign interest has been provided for in accordance
with the Funds' understanding of the applicable country's tax rules and
rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
FOREIGN CURRENCY COMMITMENTS--The Funds may enter into forward foreign
exchange contracts in order to hedge against foreign currency risk in the
purchase or sale of securities denominated in foreign currency. The Funds
may also enter into such contracts to hedge against changes in foreign
currency exchange rates on portfolio positions. Risks may arise upon
entering these transactions from the potential inability of counter-parties
to meet the terms of their commitments and from unanticipated movements in
security prices or foreign exchange rates. The foreign currency
transactions are adjusted by the daily exchange rate of the underlying
currency and any gains or losses are recorded for financial statement
purposes as unrealized until the settlement date.
FTI FUNDS
- --------------------------------------------------------------------------------
At May 31, 1996, the Funds had outstanding foreign currency commitments as
set forth below:
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE APPRECIATION
PURCHASES DATE DELIVER/RECEIVE FOR (DEPRECIATION)
<S> <C> <C> <C> <C>
Spanish Peseta 6/3/96 5,013,976 $ 38,952 $ 17
- ------------------------------------
Pound Sterling 6/4/96 15,661 23,696 574
- ------------------------------------
Italian Lira 6/4/96 17,624,085 11,354 62
- ------------------------------------
Malaysian Ringgit 6/6/96 119,306 47,721 69
- ------------------------------------
SALES
Japanese Yen 7/9/96 173,532,511 1,632,666 17,025
- ------------------------------------ ------------------- --------------- -----------------
Total 196,305,539 $ 1,754,389 $ 17,747
- ------------------------------------ ------------------- --------------- -----------------
</TABLE>
INTERNATIONAL BOND FUND
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE APPRECIATION
PURCHASES DATE DELIVER/RECEIVE FOR (DEPRECIATION)
<S> <C> <C> <C> <C>
Japanese Yen 6/10/96 102,204,000 $ 982,825 $(35,151)
- ------------------------------------
Canadian Dollar 6/18/96 29,000 21,210 (31)
- ------------------------------------
Pound Sterling 7/9/96 60,000 90,699 2,221
- ------------------------------------
Spanish Peseta 7/11/96 44,431,704 348,134 (3,678)
- ------------------------------------
Danish Kroner 8/13/96 58,000 9,940 (66)
- ------------------------------------
Australian Dollar 8/16/96 95,000 75,525 (36)
- ------------------------------------
German Mark 8/20/96 1,296,000 849,183 4,108
- ------------------------------------
</TABLE>
FTI FUNDS
- --------------------------------------------------------------------------------
INTERNATIONAL BOND FUND--CONTINUED
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE APPRECIATION
SALES DATE DELIVER/RECEIVE FOR (DEPRECIATION)
<S> <C> <C> <C> <C>
Pound Sterling 6/4/96 3,359 $ 5,153 $ (53)
- ------------------------------------
Swedish Krona 6/11/96 1,934,000 286,517 (1,268)
- ------------------------------------
French Franc 6/17/96 2,321,000 456,890 7,579
- ------------------------------------
Canadian Dollar 6/18/96 134,000 97,996 138
- ------------------------------------
Japanese Yen 7/9/96 49,034,000 471,345 14,823
- ------------------------------------
Pound Sterling 7/9/96 227,000 344,454 (7,092)
- ------------------------------------
Spanish Peseta 7/11/96 49,716,000 399,534 14,111
- ------------------------------------
Italian Lira 7/19/96 322,550,000 203,284 (4,623)
- ------------------------------------
Australian Dollar 8/16/96 27,000 21,340 (114)
- ------------------------------------
German Mark 8/20/96 175,326 114,000 (1,435)
- ------------------------------------ ------------------- --------------- -----------------
Total 574,295,389 $ 4,778,029 $(10,567)
- ------------------------------------ ------------------- --------------- -----------------
</TABLE>
GLOBAL BOND FUND
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE APPRECIATION
PURCHASES DATE DELIVER/RECEIVE FOR (DEPRECIATION)
<S> <C> <C> <C> <C>
Japanese Yen 6/10/96 12,757,400 $ 122,457 $(4,166)
- ------------------------------------
French Franc 6/17/96 51,803 10,000 28
- ------------------------------------
Pound Sterling 7/9/96 29,059 43,609 1,393
- ------------------------------------
Spanish Peseta 7/11/96 9,183,580 71,467 (271)
- ------------------------------------
Italian Lira 7/19/96 84,571,200 53,541 971
- ------------------------------------
Australian Dollar 8/16/96 3,000 2,385 (1)
- ------------------------------------
German Mark 8/20/96 375,000 245,646 1,256
- ------------------------------------
</TABLE>
FTI FUNDS
- --------------------------------------------------------------------------------
GLOBAL BOND FUND--CONTINUED
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE APPRECIATION
SALES DATE DELIVER/RECEIVE FOR (DEPRECIATION)
<S> <C> <C> <C> <C>
Swedish Krona 6/11/96 339,000 $ 50,166 $ (278)
- ------------------------------------
French Franc 6/17/96 240,000 46,920 459
- ------------------------------------
Japanese Yen 7/9/96 9,898,000 93,912 1,758
- ------------------------------------
Pound Sterling 7/9/96 35,000 52,785 (1,418)
- ------------------------------------
Spanish Peseta 7/11/96 2,277,000 18,299 646
- ------------------------------------
Italian Lira 7/19/96 249,211,000 158,806 (1,828)
- ------------------------------------
German Mark 8/20/96 46,139 30,000 (378)
- ------------------------------------
Danish Kroner 8/13/96 105,000 17,994 120
- ------------------------------------ ------------------- --------------- --------
Total 369,122,181 $ 1,017,987 $ (1,709)
- ------------------------------------ ------------------- --------------- --------
</TABLE>
OPTIONS TRANSACTIONS--The Funds may purchase over-the-counter put options
to hedge against the effects of fluctuations in interest rates and other
market conditions. The risk associated with purchasing an option is that
the Funds pay a premium whether or not the option is exercised.
Additionally, the Funds bear the risk of loss of premium and change in
market value should the counterparty not perform under the contract. Put
options purchased are accounted for in the same manner as portfolio
securities.
FOREIGN CURRENCY TRANSLATION--The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective dates that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Funds do not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Funds'
books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign
FTI FUNDS
- --------------------------------------------------------------------------------
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end,
resulting from changes in the exchange rate.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At May
31, 1996, the capital paid-in was as follows:
<TABLE>
<CAPTION>
PORTFOLIO NAME CAPITAL PAID-IN
<S> <C>
Small Capitalization Equity Fund $ 10,805,706
- ----------------------------------------------------------------------------------------------
International Equity Fund 4,653,824
- ----------------------------------------------------------------------------------------------
International Bond Fund 3,841,885
- ----------------------------------------------------------------------------------------------
Global Bond Fund 990,150
- ----------------------------------------------------------------------------------------------
</TABLE>
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SMALL
CAPITALIZATION INTERNATIONAL INTERNATIONAL GLOBAL BOND
EQUITY FUND EQUITY FUND BOND FUND FUND
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
MAY 31, MAY 31, MAY 31, MAY 31,
1996(A) 1996(B) 1996(B) 1996(C)
<S> <C> <C> <C> <C>
- --------------------------------------- ----------------- ---------------- ---------------- ----------------
Shares sold 1,061,311 461,509 405,046 100,537
- ---------------------------------------
Shares issued to shareholders in
payment of distributions declared -- -- -- --
- ---------------------------------------
Shares redeemed (94,149) (5,002) (18,646) --
- --------------------------------------- ----------------- ---------------- ---------------- ----------------
Net change resulting from share
transactions 967,162 456,507 386,400 100,537
- --------------------------------------- ----------------- ---------------- ---------------- ----------------
</TABLE>
(a) For the period from January 10, 1996 (date of initial public investment) to
May 31, 1996.
(b) For the period from January 16, 1996 (date of initial public investment) to
May 31, 1996.
(c) For the period from February 8, 1996 (date of initial public investment) to
May 31, 1996.
FTI FUNDS
- --------------------------------------------------------------------------------
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Fiduciary International, Inc., the Funds' investment adviser (the "Adviser"),
receives for its services an annual investment advisory fee based on a
percentage of each Fund's average daily net assets as listed below. The Adviser
may voluntarily choose to waive any portion of its fee. The Adviser can modify
or terminate this voluntary waiver at any time at its sole discretion.
<TABLE>
<CAPTION>
PORTFOLIO NAME ANNUAL RATE
<S> <C>
Small Capitalization Equity Fund 1.00%
- -------------------------------------------------------------------------------------------------
International Equity Fund 1.00%
- -------------------------------------------------------------------------------------------------
International Bond Fund 0.70%
- -------------------------------------------------------------------------------------------------
Global Bond Fund 0.70%
- -------------------------------------------------------------------------------------------------
</TABLE>
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Funds for the period. FAS
may voluntarily choose to waive a portion of its fee.
DISTRIBUTION SERVICES FEE--The Funds have adopted Distribution Plans (the
"Plans") pursuant to Rule 12b-1 under the Act. Under the terms of the Plans, the
Funds will compensate Edgewood Services, Inc., the principal distributor, from
the net assets of each Fund to finance activities intended to result in the sale
of each Fund's shares. The Plans provide that each Fund may incur distribution
expenses as a percentage of the average daily net assets of the Funds' shares,
annually, to compensate Edgewood Services, Inc. as follows:
<TABLE>
<CAPTION>
PORTFOLIO NAME % OF AVG. DAILY NET ASSETS
<S> <C>
Small Capitalization Equity Fund 0.75%
- ----------------------------------------------------------------------------------
International Equity Fund 0.75%
- ----------------------------------------------------------------------------------
International Bond Fund 0.75%
- ----------------------------------------------------------------------------------
Global Bond Fund 0.75%
- ----------------------------------------------------------------------------------
</TABLE>
For the period ended May 31, 1996, the Funds did not incur a distribution
services fee.
FTI FUNDS
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Fiduciary International, Inc., the Funds will pay Fiduciary International,
Inc. a percentage of each Fund's average daily net assets as listed below:
<TABLE>
<CAPTION>
PORTFOLIO NAME % OF AVG. DAILY NET ASSETS
<S> <C>
Small Capitalization Equity Fund 0.25%
- ----------------------------------------------------------------------------------
International Equity Fund 0.25%
- ----------------------------------------------------------------------------------
International Bond Fund 0.25%
- ----------------------------------------------------------------------------------
Global Bond Fund 0.25%
- ----------------------------------------------------------------------------------
</TABLE>
The fee paid to Fiduciary International, Inc. is used to finance certain
services for shareholders and to maintain shareholder accounts. For the period
ended May 31, 1996, the Funds did not incur a shareholder services fee.
TRANSFER, DIVIDEND DISBURSING AGENT FEES--Federated Services Company ("FServ"),
through its subsidiary, Federated Shareholder Services Company, serves as
transfer and dividend disbursing agent for the Funds. The fee paid to FServ is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Fiduciary Trust Company International is the Funds' custodian.
The fee is based on the level of the Funds' average aggregate daily net assets
for the period, plus transaction charges. The Custodian is reimbursed for
out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were initially borne by FAS.
The Funds have agreed to reimburse FAS for the organizational expenses during
the five year period following each Fund's effective date. For the period ended
May 31, 1996, no payments have been made pursuant to this agreement. The total
organizational expenses borne by FAS through May 31, 1996 are as follows:
<TABLE>
<CAPTION>
PORTFOLIO NAME ORGANIZATIONAL EXPENSES
<S> <C>
Small Capitalization Equity Fund $ 34,076
- -----------------------------------------------------------------------------------
International Equity Fund 34,072
- -----------------------------------------------------------------------------------
International Bond Fund 34,077
- -----------------------------------------------------------------------------------
Global Bond Fund 38,216
- -----------------------------------------------------------------------------------
</TABLE>
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and/or
Directors or Trustees of the above companies.
FTI FUNDS
- --------------------------------------------------------------------------------
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1996, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO NAME PURCHASES SALES
<S> <C> <C>
Small Capitalization Equity Fund $ 10,969,714 $ 1,344,002
- -------------------------------------------------------------------------------------
International Equity Fund 4,750,682 304,899
- -------------------------------------------------------------------------------------
International Bond Fund 6,673,071 2,852,703
- -------------------------------------------------------------------------------------
Global Bond Fund 1,274,861 319,153
- -------------------------------------------------------------------------------------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Peter A. Aron Edward C. Gonzales
Nancy L. Close Chairman, President and Treasurer
James C. Goodfellow Joseph S. Machi
Edward C. Gonzales Vice President and Assistant Treasurer
Burton J. Greenwald Jay S. Neuman
Secretary
Max F. Miller
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or
any other government agency. Investment in mutual funds involves
investment risk, including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
