FTI
FUNDS
ANNUAL REPORT
TO SHAREHOLDERS
NOVEMBER 30, 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 SCEF
Cusip 302927207 IEF
Cusip 302927306 IBF
Cusip 302927405 GBF
G01980-01 (1/97) [LOGO]
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
This first Annual Report to Shareholders for the FTI Funds covers each Fund's
operation since it became effective on December 22, 1995, through November 30,
1996.
This report is your opportunity to familiarize yourself with your Fund's
operation. It 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 is a set of graphs showing each Fund's total
return since inception, followed by a complete listing of each Fund's holdings
and financial statements.
I'm pleased to present the following summary. As you review it, keep in mind
that the Funds have been in operation for less than a year. Performance is best
measured over the long term, in years, rather than months.
FTI SMALL CAPITALIZATION EQUITY FUND
Managed to pursue a high level of growth through a diversified portfolio of
small-company stocks, the Fund performed extremely well in a highly favorable
stock market environment.* It achieved a total return of 20.80%** from December
22, 1995 through November 30, 1996 as the share price increased from $10.00 to
$12.08. The Fund's total net assets grew to $19.3 million at the end of the
reporting period.
FTI INTERNATIONAL EQUITY FUND
The Fund's portfolio of international stocks*** which at the end of the
reporting period was diversified across 23 countries, produced a total return of
10.04%** from December 22, 1995 through November 30, 1996. The Fund paid
dividends totaling $0.01 per share, while the share price increased from $10.00
to $10.99 over the reporting period. Net assets reached $12 million at the end
of the reporting period.
FTI INTERNATIONAL BOND FUND
At the end of the reporting period, the Fund's bond portfolio was diversified
among government and corporate bonds across 14 countries.*** The Fund's total
return was 3.75%** from December 22, 1995 through November 30, 1996. During the
reporting period, dividends totaled $0.17 per share, while the net asset value
increased from $10.00 to $10.20. At the end of the reporting period, the Fund's
total net assets reached $5.2 million.
* Small cap stocks have historically experienced greater volatility than
average.
** Performance quoted represents past performance. 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.
*** Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in accounting and other
financial standards.
FTI GLOBAL BOND FUND
At the end of the reporting period, this Fund's bond portfolio was diversified
among government and corporate bonds across 14 countries*, including the U.S.,
to pursue total return over the long term. The Fund achieved a total return of
5.02%** from December 22, 1995 through November 30, 1996. The Fund paid
dividends totaling $0.08, while the share price increased from $10.00 to $10.42.
Fund net assets reached $1.1 million on the last day of the reporting period.
Thank you for pursuing your financial goals through the FTI Funds. As we enter a
new year, we look forward to keeping you up to date on the details of your
investment through the highest level of service possible.
Sincerely,
LOGO
President
January 15, 1997
* Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in accounting and other
financial standards.
** Performance quoted represents past performance. 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.
INVESTMENT REVIEW
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FTI SMALL CAPITALIZATION EQUITY FUND
PERFORMANCE
The FTI Small Capitalization Equity Fund ended the fiscal year with a net asset
value ("NAV") per share of $12.08 and net assets of $19.3 million. The
investment return for the Fund versus the benchmark Russell 2000 Index* is shown
below. For the period ended November 30, 1996, the Fund outperformed the
benchmark index by 5.80%. The relative outperformance was due to stock
selection, the Fund having been invested broadly across all industry groups
using minor over-weightings to take advantage of undervalued stocks. The Fund
thus avoided the extreme volatility which affected some mutual funds more
concentrated in particular sectors. The last quarter of the fiscal year was the
weakest for the high growth sector of the small capitalization market in which
the Fund has specialized. During the last quarter, many investors took profits
in this sector and reinvested in the larger capitalization portions of the
market. Both the S&P 500* and the S&P Midcap* outperformed the Russell 2000, and
the high growth section of the Russell 2000 underperformed the index as a whole.
<TABLE>
<S> <C>
1996 YTD
----------
FTI SMALL CAPITALIZATION EQUITY FUND 20.80%**
RUSSELL 2000 INDEX 15.00%
</TABLE>
NOTE: 1996 YTD performance since December 22, 1995 (effective date).
* The Russell 2000 Small Stock Index is an index consisting of approximately
2000 small capitalization common stocks that can be used to compare to the
total returns of funds whose portfolios are invested primarily in small
capitalization common stocks. The S&P 500 is an index consisting of common
stocks of industrial, utility, transportation, and financial companies in the
United States market. The S&P Midcap 400 Index is an index consisting of 400
domestic stocks chosen for market size (median market capitalization of about
$1.383 million as of November 1996), liquidity and industry group
representation. Indices are unmanaged and investments cannot be made in an
index.
** 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.
- --------------------------------------------------------------------------------
NOVEMBER 1996 FISCAL YEAR-END MARKET REVIEW
The Fund's favorable performance since its effective date of December 22, 1995
was aided by the very strong market for high growth small capitalization stocks
in the first fiscal quarter of 1996. The Fund had a slight over-weighting in the
technology and healthcare industry groups which substantially outperformed other
sectors in this time period. During the second fiscal quarter this market rose
dramatically in April and May and the industry groups that fared the best were
service related, particularly temporary help companies which recognized the
opportunities created by outsourcing and down-sizing of many corporations. After
a strong performance that ended mid-way through June, the small capitalization
market had an equally strong setback in July with the technology and healthcare
sectors impacted most heavily, and the smaller capitalization stocks within
those sectors impacted most severely. During the balance of the fiscal year,
smaller capitalization stocks significantly underperformed larger capitalization
investments. The best performing sector was the financial sector which was
mildly over-weighted in the Fund. The relatively stronger performance of larger
capitalization stocks drove these investments to higher price/earnings ratios
and premiums to their growth rates making the high growth sector of the small
capitalization market very appealing as an investment with its price/earnings
ratios selling at a discount to its projected growth rate.
AS OF NOVEMBER 30, 1996:
GRAPHIC PRESENTATION `A1'' OMITTED. SEE APPENDIX.
SOURCE: Vesteck
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INVESTMENT OUTLOOK AND STRATEGY
We continue to have a positive long-term outlook for the small capitalization
asset class. The stocks held by the Fund are selling at a reasonable discount to
their growth rates. We expect to continue to find plenty of companies that offer
excellent long term growth potential. We believe that the current demographics
will favorably impact the growth of new money invested in this sector through
substantial increases in retirement savings, and greater investment diversity in
these savings.
Our strategy is to focus primarily on stock selection as the key to performance.
We search for under-researched companies with excellent balance sheets,
recurring revenues, franchise value, and strong committed managements that are
likely to be paid for their performance in the stock of their company. The Fund
is invested broadly across all sectors to diversify risk. We believe that the
Fund is advantageously positioned to benefit from the positive forces in the
U.S. economy in 1997.
FTI SMALL CAPITALIZATION EQUITY FUND--NOVEMBER 30, 1996
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
COMPANY SECTOR % OF PORTFOLIO
<S> <C> <C>
Registry, Inc. Consumer Services 1.95%
Paychex, Inc. Consumer Services 1.87
Devry, Inc. Consumer Services 1.78
Barrett Resources Energy 1.77
Genesee & Wyoming, Inc. Transportation 1.76
Snyder Communications Inc. Consumer Services 1.70
Sykes Enterprises, Inc. Science & Technology 1.63
Prepaid Legal Services, Inc. Consumer Services 1.60
Jack Henry & Assoc., Inc. Science & Technology 1.52
On Assignment, Inc. Consumer Services 1.50
</TABLE>
GRAPHIC PRESENTATION `A2'' OMITTED. SEE APPENDIX.
FTI SMALL CAPITALIZATION EQUITY FUND
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GROWTH OF $10,000 INVESTED IN
FTI SMALL CAPITALIZATION EQUITY FUND
The graph below illustrates the hypothetical investment of $10,000 in FTI Small
Capitalization Equity Fund (the "Fund") from December 22, 1995 (start of
performance) to November 30, 1996, compared to the Russell 2000 Index.+
GRAPHIC PRESENTATION `A3'' OMITTED. SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The Russell 2000 Index has been adjusted to reflect
reinvestment of dividends on securities in the index.
+ The Russell 2000 Index is not adjusted to reflect sales charges, expenses, or
other fees that the Securities and Exchange Commission requires to be
reflected in the Fund's performance. This index is unmanaged.
INVESTMENT REVIEW
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FTI INTERNATIONAL EQUITY FUND
PERFORMANCE
The FTI International Equity Fund ended the fiscal year with a NAV per share of
$10.99 and net assets of $12.1 million. The investment returns for the Fund
versus the MSCI EAFE Index* are shown below. For the period from December 22,
1995 through November 30, 1996, the Fund outperformed the benchmark index by
2.64%. The relative outperformance was due to three primary factors: 1) stock
selection in the U.K. and Europe, 2) overweight positions relative to the
benchmark index in Hong Kong and Latin America, and an underweight position in
Japan and 3) the hedging of the portfolio's Japanese Yen exposure, which given
the weakness in the Yen, produced gains for the Fund.
<TABLE>
<CAPTION>
1996 YTD
----------
<S> <C>
FTI INTERNATIONAL EQUITY FUND 10.04%**
MSCI EAFE INDEX (INCL. NET DIVIDENDS) 7.40%
</TABLE>
NOTE: 1996 YTD performance since December 22, 1995 (effective date)
* MSCI EAFE (Morgan Stanley Capital International Europe, Australia, and Far
East Index) is a market capitalization-weighted foreign securities index,
which is widely used to measure the performance of European, Australian, New
Zealand, and Far Eastern stock markets. All listed market returns referring
to MSCI indices are for the period January 1, 1996 to November 30, 1996 and
are measured in U.S. dollars, unless otherwise noted. Indices are unmanaged
and investments cannot be made in an index.
** 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.
- --------------------------------------------------------------------------------
NOVEMBER 1996 FISCAL YEAR-END MARKET REVIEW
International equity markets increased 7.7% through November (7.40% since the
Fund's effective date of December 22, 1995, though performance varied
dramatically by region. In developed markets, European equities turned in very
strong performances, as investors focused on the benefits to Continental
interest rates from the more likely implementation of European Monetary Union
("EMU"). Although the U.K. will likely opt out of EMU, the strength of the U.K.
economy and the subsequent strengthening of Sterling contributed to high
investment returns to dollar based investors. Japan started the year with high
expectations for economic growth and a continuation of the bull market from
1995. As the year progressed, hopes for an acceleration in growth subsided,
leaving equities flat for the year (though because of further yen weakness, down
9% in dollars). Asia Pacific and Latin American markets registered gains of 20%
on average, though performance within these regions was quite different on a
country and stock-specific basis.
As mentioned above, EUROPEAN MARKETS performed quite well during the year
(+19.2%). Economic growth was weak in most Continental European countries,
however, several factors combined to support the strong rallies seen in European
shares. Led by the weak economic outlook, the Bundesbank and neighboring central
banks lowered short term interest rates, supporting rallies in European bond
markets. Additionally, in response to declining inflation, central banks in
peripheral European countries (Sweden, Spain, and Italy) significantly lowered
base rates, while their governments addressed their fiscal deficits in order to
qualify for EMU. This resulted in a sharp convergence of bond yields throughout
European markets, much to the benefit of the peripheral markets. In such an
environment, it is no surprise that Sweden (+36.8%) and Spain (+28.2%) out paced
their European counterparts, which on average, also produced strong returns. The
U.K. (+23.2%) and Ireland (+30.4%), also turned in strong performances, though
most of their growth was a result of strong domestic economies and export led
growth. The Fund's exposure to highly sought after growth stocks (E.G., SGS
THOMSON, COMPASS GROUP) and corporate restructuring stories (E.G., HOECHST,
BRITISH PETROLEUM) contributed to the strong performance versus the EAFE Index.
Although economic growth in JAPAN will probably end the March 1997 fiscal year
at 2.5%, expectations by the investment community for higher economic growth
were not met, thereby disappointing market observers. The weaker than
anticipated recovery and the limited commitment of Japanese companies to
restructure their operations, resulted in only modest earnings growth when
compared to the declines suffered during the recession of the 1990's. The impact
of slower growth in the current year is compounded when considering the changes
that will occur in fiscal policy for 1997. Much of the pick-up that was seen in
consumer spending in 1996 was in anticipation of an increase in the consumption
tax from 3% to 5% in April 1997. Thus even though economic growth in 1996 fell
short of expectations, some of the 1997 consumer spending has already been
brought forward to the current year. This "borrowed" spending, combined with a
reduction in government infrastructure expenditures for 1997, led analysts to
downgrade their growth expectations in Japan for next year as well. The Japanese
equity market was flat for the year through November (in yen), with autos (on
the strength of new models and consumer spending growth) and non-commodity
technology companies outperforming the stagnant market.
There was a marked difference in performance year-to-date among the various ASIA
PACIFIC markets. Hong Kong (+33.8%) was clearly the best performer, as the
market benefited from a bond rally in the U.S. after the
- --------------------------------------------------------------------------------
March sell-off, a recovery in the Hong Kong residential property market, a
stronger Chinese economy, and reduced tension over the issue of the changeover
to China that will occur on July 1, 1997. The Fund's overweight position in Hong
Kong property and financial stocks (E.G., CHEUNG KONG, HSBC) was beneficial as
those sectors performed well given the economic backdrop. The Malaysian market
(+24.6%) also benefited from a well managed cooling of the previously overheated
economy, and a marked turnaround in its balance of trade. Conversely, Singapore
(-8.5%), Korea (-29.1%), and Thailand (-28.3%) dealt with weaker export growth
in response to the poor DRAM semi-conductor market, high interest rates to rein
in previously high economic growth, and political unrest (in the latter two
countries).
LATIN AMERICAN EQUITIES produced excellent gains for the region as a whole,
increasing 18.7% through November. The performance among the four major markets
differed with Brazil (+35.7%), Mexico (+14.9%), and Argentina (+13.4%) doing
well, while Chile (-9.0%) lagged its regional neighbors as economic growth in
the perennially strong economy decelerated slightly. The economies in the former
three markets all showed strong signs of recovering from the 1995 recessions
that resulted from the devaluation in Mexico in December 1994. Of note, however
most of the Brazilian stock market gains were generated by recently or soon to
be privatized companies in the utility sector, while private sector Brazilian
companies sharply underperformed the local index. The Fund's emphasis on public
sector companies and, in particular, TELEBRAS (telecom) and CEMIG (electricity)
contributed significantly to the Fund's overall returns. Strength in Mexican and
Argentine shares were more company specific, though the Argentine market rallied
significantly after the dismissal of the Former Finance Minister Cavallo and the
subsequent replacement by Mr. Fernandez, as it became apparent that government
reforms would continue.
INVESTMENT OUTLOOK AND STRATEGY:
Looking to 1997 we see a favorable environment for international equities.
Inflation does not appear to be a concern, while growth in the U.K., Europe,
Latin America, and Asia Pacific should accelerate in 1997, with the
corresponding favorable impact on corporate earnings growth in those regions.
With inflationary concerns relatively low, the interest rate backdrop is likely
to remain favorable for equities (pre-emptive interest rate hikes in the U.K.
are unlikely to dampen investor interest in U.K. equities). The portfolio is
positioned to capitalize on the growth potential in those regions, with
particular emphasis on companies that can benefit from secular investment themes
such as aging demographics, technological change, corporate restructuring,
industry consolidation, and emerging markets growth. The counter to our positive
stance on the above regions is our underweight position in Japan, where economic
growth will likely decelerate in 1997, as planned fiscal tightening further
restricts consumer spending.
FTI INTERNATIONAL EQUITY FUND--NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
REGIONAL ALLOCATION
GRAPHIC PRESENTATION `A4'' OMITTED. SEE APPENDIX.
SECTOR ALLOCATION
GRAPHIC PRESENTATION `A4'' OMITTED. SEE APPENDIX.
TOP REGIONAL HOLDINGS
<TABLE>
<CAPTION>
REGION COMPANY SECTOR % OF PORTFOLIO
- ---------------- ---------------------------- --------------------- --------------
<S> <C> <C> <C>
Intermediate &
U.K./IRELAND Siebe PLC Capital Goods 1.9%
British Aerospace Science & Technology 1.8%
EUROPE Veba AG Utilities 2.1%
ING Groep, N.V. Financial 2.1%
JAPAN Canon Inc. Science & Technology 2.6%
Matsushita Electric
Industrial Co. Science & Technology 2.3%
ASIA PACIFIC HSBC Holdings PLC Financial 1.5%
Mandarin Oriental Consumer 1.1%
LATIN AMERICA Telecomunicacoes Brasileras Utilities 1.4%
Companhia Energetica de
Minos Gerais Utilities 1.2%
</TABLE>
FTI INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN
FTI INTERNATIONAL EQUITY FUND
The graph below illustrates the hypothetical investment of $10,000 in FTI
International Equity Fund (the "Fund") from December 22, 1995 (start of
performance) to November 30, 1996, compared to the Morgan Stanley Capital
International Europe, Australia, and Far East Index (MSCI EAFE Index).+
GRAPHIC PRESENTATION `A5'' OMITTED. SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI EAFE Index has been adjusted to reflect reinvestment
of dividends on securities in the index.
+ The MSCI EAFE Index is not adjusted to reflect sales charges, expenses, or
other fees that the Securities and Exchange Commission requires to be
reflected in the Fund's performance. This index is unmanaged.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
FTI INTERNATIONAL BOND FUND
FTI GLOBAL BOND FUND
PERFORMANCE
The FTI International Bond Fund ended the fiscal year with a NAV per share of
$10.20 and total net assets of $5.2 million. The FTI Global Bond Fund ended the
fiscal year with a NAV per share of $10.42 and total net assets of $1.1 million.
The investment returns for the FTI International Bond Fund and the FTI Global
Bond Fund versus the Salomon Brothers Non-U.S. Dollar World Government Bond
Index* and the Salomon Brothers World Government Bond Index*, respectively, are
shown below. Both Funds moderately underperformed their benchmark after
expenses. This underperformance was due to Fund expenses, as well as transaction
costs incurred when investing cash flows.
<TABLE>
<S> <C>
1996 YTD
----------
FTI INTERNATIONAL BOND FUND 3.75%**
SALOMON BROTHERS NON-U.S. DOLLAR WORLD
GOVERNMENT BOND INDEX 5.13%
NOTE: 1996 YTD performance since December 22, 1995
(effective date)
1996 YTD
----------
FTI GLOBAL BOND FUND 5.02%**
SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX 5.04%
NOTE: 1996 YTD performance since December 22, 1995
(effective date)
</TABLE>
* Salomon Brothers Non-U.S. Dollar World Government Bond Index. The indices of
nonbase currency sectors exclude respective base currency bond markets from
the calculation and, in turn, are stated in terms of the base currency. The
index includes the following countries: Australia, Austria, Belgium, Canada,
Denmark, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden, the
United Kingdom and the United States (collectively, the "WGBI Countries").
Therefore, the Non-U.S. Dollar World Government Bond Index includes all WGBI
Countries, except the United States, and is stated in U.S. dollar terms.
Salomon Brothers World Government Bond Index is a market
capitalization-weighted index consisting of government bond markets of the
WGBI Countries. Indices are unmanaged and investments cannot be made in an
index.
** 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.
- --------------------------------------------------------------------------------
NOVEMBER 1996 FISCAL YEAR-END MARKET REVIEW
1996 was a bittersweet year for global/international fixed income investors. In
local currency terms, every major bond market outpaced the U.S. market, however,
an appreciating U.S. dollar erased much of this outperformance. It was also an
unusual year for global/international bond markets. The three major bond
markets, the U.S., Japan and Germany, produced the lowest returns while the
highest returns were earned in the riskiest markets, led by emerging markets and
the peripheral European bond markets.
The U.S. market was the most volatile of the major markets this year, as
perceptions of the strength of the economy shifted back and forth throughout the
year. At the beginning of the year, the Federal Reserve Board (the "Fed") cut
short-term interest rates in response to seemingly weak economic activity. A
series of strong employment reports and rising consumer spending quickly dashed
hopes of further interest rate cuts, prompting some of the largest one day falls
in bond prices in a decade. By early July, bond yields had risen above 7.00%
from 6.00% at the beginning of the year, as analysts feared that stronger growth
would prompt the Fed to raise interest rates. For the balance of the year,
yields fell back to 6.60% as growth remained steady and the likelihood of any
move by the Fed receded. The dollar benefitted from the relative strength of the
U.S. economy and falling interest rates overseas, leading the dollar to its
highest levels against the Yen since early 1993. Throughout the year we hedged a
portion of the Fund's currency exposure back to U.S. dollars, protecting that
part of the portfolio from the negative impact of the rising dollar.
The Canadian and Australian markets have typically tracked the U.S. market
closely, tending to outperform the U.S. in a rallying environment, and
underperforming in a selloff, but this pattern was shattered this year.
Political developments in both countries (the election of a conservative
government in Australia, and the lessening of the Quebec sovereignty threat in
Canada), boosted those markets, while continued progress to reduce fiscal
deficits and favorable inflation outcomes permitted central banks to cut
interest rates. In Canada, the subdued pace of domestic demand led the Canadian
central bank to bring short-term rates below U.S. rates and down to the lowest
levels in a generation. Bond yields in both countries fell even as U.S. yields
rose.
European bond markets have been dominated by two related influences: the
European Monetary Union ("EMU") project, and the weakness of economic activity.
Politicians across Europe continually affirmed their commitment to making EMU
happen on schedule in 1999. Accordingly, financial markets moved to reflect the
increasing probability of EMU, bringing yields in core European markets (most
notably France) down to the same levels as Germany. Meanwhile, the Italian and
Spanish governments continued to press for membership of EMU from the beginning,
despite budget deficits that seemed likely to miss the reference levels
specified in the Maastricht Treaty EMU blueprint (the "criteria") by a wide
margin. The building momentum towards EMU nevertheless benefitted these markets,
as investors began to price in the possibility of EMU membership in 2000 or
2001. When governments announced very ambitious budget plans aimed at achieving
the reference criteria, a renewed round of yields convergence followed, bringing
ten year Italian yields to 1.75% over German government bonds from 4.75% at the
beginning of the year. Sluggish growth and falling interest rates and inflation
provided further reasons for investors to increase weightings in these
"peripheral markets." The Fund remained heavily invested in these markets for
much of the year (approximately one quarter of portfolio assets was invested in
these "peripheral" markets).
- --------------------------------------------------------------------------------
The German economy's sluggish growth performance continued throughout the year,
the only bright spot being the export sector, which benefitted from the
depreciation of the German Mark against the dollar and other European
currencies. The Bundesbank led short-term rates down to 3.00% bringing down
long-term yields. In France, the government's commitment to EMU was sorely
tested by double digit unemployment, industrial action and plummeting popular
support.
The U.K. bond market was the desert in the middle of the oasis in Europe. While
convergence Europhoria reigned elsewhere, the Major led government took an
increasingly hardline and isolated position on EMU. A vanishing parliamentary
majority forced the government to take heed of the increasingly vocal right wing
of their Party, who remain staunchly opposed to the further integration of the
U.K. within Europe, leading the government to all but rule out membership of EMU
in 1999. Relations with other members of the European Union were further soured
by the government's handling of the "mad-cow disease" crisis. The economic
situation was also very different, with growth resurgent, prompting the Bank of
England to raise interest rates even as rates were falling elsewhere in Europe.
This growth environment sent the pound soaring but battered bond prices. By the
end of the reporting period, with U.K. yields now the highest in Europe, we
increased our allocations to the "gilt" market.
In Japan, the economy disappointed after an astonishingly strong first quarter.
Despite holding short-term interest rates at 0.5% for the whole year, demand
remained anemic. The financial sector utilized the increased liquidity in the
domestic and international bond markets to repair balance sheets that had been
destroyed by five years of falling equity and real estate values. Bond yields
fell to record low levels (below 2.50% for ten year bonds). The Ministry of
Finance encouraged foreign investment both to push down the value of the Yen
(and to boost exports) and to boost returns above the dismal returns offered by
Japanese assets. These capital outflows also contributed to the strong
performance of some overseas markets this year (notably Australia).
INVESTMENT OUTLOOK AND STRATEGY:
Looking out to 1997, we believe that European bonds should continue to provide
good returns in the early part of the year as central banks could continue to be
forced to offset tight fiscal policy with low interest rates. Additionally, all
markets should benefit from the continuation of Japanese outflows which will
further push down the value of the Yen. Within the dollar block, Australian
bonds should continue to provide superior performance relative to the U.S.
Japanese bonds offer little value at such low yield levels, however, if short-
term rates remain unchanged, little movement is expected. A change of government
to a much more "euro-friendly" administration should boost U.K. bond prices by
the middle of the year.
FTI INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN
FTI INTERNATIONAL BOND FUND
The graph below illustrates the hypothetical investment of $10,000 in FTI
International Bond Fund (the "Fund") from December 22, 1995 (start of
performance) to November 30, 1996, compared to the Salomon Brothers Non-U.S.
Dollar World Government Bond Index ("SBNUSDWGBI").+
GRAPHIC PRESENTATION `A6'' OMITTED. SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The SBNUSDWGBI has been adjusted to reflect reinvestment of
dividends on securities in the index.
+ The SBNUSDWGBI is not adjusted to reflect sales charges, expenses, or other
fees that the Securities and Exchange Commission requires to be reflected in
the Fund's performance. This index is unmanaged.
FTI GLOBAL BOND FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN
FTI GLOBAL BOND FUND
The graph below illustrates the hypothetical investment of $10,000 in FTI Global
Bond Fund (the "Fund") from December 22, 1995 (start of performance) to November
30, 1996, compared to the Salomon Brothers World Government Bond Index
("SBWGBI").+
GRAPHIC PRESENTATION `A7'' OMITTED. SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The SBWGBI has been adjusted to reflect reinvestment of
dividends on securities in the index.
+ The SBWGBI is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
FTI SMALL CAPITALIZATION EQUITY FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--98.9%
ADVERTISING--2.4%
6,500 HA-LO Industries, Inc. $ 250,250
7,950 (a)Outdoor Systems, Inc. 201,731
------------
Total 451,981
------------
AUCTION HOUSE--1.1%
12,000 Sothebys Holdings, Inc., Class A 211,500
------------
AUTOMOBILE--1.1%
12,000 (a)Ugly Duckling Corp. 208,500
------------
BANKING--1.9%
18,000 Security Bank Holding Co. 155,250
6,500 Texas Regional Bancshares, Inc.,
Class A 219,375
------------
374,625
------------
BUILDING PRODUCTS--1.1%
30,000 (a)Morgan Products, Ltd. 210,000
------------
CLOTHING & TEXTILES--0.7%
8,500 (a)Donna Karan International,
Inc. 139,188
------------
COMMERCIAL SERVICES--14.9%
10,000 (a)Abacus Direct Corp. 242,500
6,500 (a)Caribiner International, Inc. 286,812
4,800 (a)Cohr, Inc. 100,800
20,600 (a)Core, Inc. 203,425
3,000 (a)Corestaff, Inc. 179,375
8,000 (a)DeVRY, Inc. 357,000
6,000 (a)Health Management Systems,
Inc. 89,625
10,000 (a)Lason Holdings, Inc. 195,000
10,000 (a)On Assignment, Inc. 300,000
7,000 Paychex, Inc. 374,500
23,000 (a)Prepaid Legal Services, Inc. 319,125
14,800 (a)Professional Staff PLC, ADR 139,675
1,600 (a)Quintiles Transnational Corp. 96,800
------------
Total 2,884,637
------------
COMPUTER SERVICES--7.0%
2,700 (a)Bisys Group, Inc. 100,575
10,000 (a)CCC Information Service
Group, Inc. 155,000
8,000 (a)DST Systems, Inc. 259,000
8,000 Jack Henry & Associates, Inc. 304,000
16,000 (a)Object Design, Inc. 206,000
7,500 (a)Sykes Enterprises, Inc. 326,250
------------
Total 1,350,825
------------
<CAPTION>
SHARES VALUE
- ----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
COMPUTER SOFTWARE--7.1%
5,000 (a)CBT Group PLC, ADR $ 287,500
1,800 HBO & Co. 102,375
15,000 (a)Interlink Computer Sciences,
Inc. 198,750
11,000 (a)MetaTools, Inc. 203,500
10,000 (a)OrCAD, Inc. 100,000
3,000 (a)Peoplesoft, Inc. 274,500
4,500 (a)Veritas Software Corp. 208,688
------------
Total 1,375,313
------------
COMPUTERS--2.2%
2,500 (a)Electronics for Imaging, Inc. 212,500
6,000 (a)Transaction Systems
Architects, Inc., Class A 217,500
------------
Total 430,000
------------
CONSULTING SERVICES--5.6%
5,000 (a)Cambridge Technology
Partners, Inc. 152,500
9,000 (a)META Group, Inc. 253,125
10,700 (a)Metzler Group, Inc. 283,550
8,000 (a)Registry, Inc. 391,000
------------
Total 1,080,175
------------
ENTERTAINMENT--1.3%
7,500 (a)Regal Cinemas, Inc. 244,688
------------
ENVIRONMENTAL CONTROL--1.0%
5,500 (a)U.S. Filter Corp. 188,375
------------
FINANCIAL SERVICES--5.4%
6,300 (a)Charter One Financial, Inc. 274,050
21,000 (a)Dime Community Bancorp, Inc. 295,312
6,000 Penncorp Financial Group, Inc. 206,250
6,000 TCF Financial Corp. 270,000
------------
Total 1,045,612
------------
FOOD & BEVERAGE--0.7%
20,000 (a)Coffee People, Inc. 136,250
------------
FUNERAL SERVICES--1.3%
12,000 (a)Equity Corporation
International 258,000
------------
HEALTHCARE--0.8%
12,000 (a)Orthodontic Centers of
America, Inc. 151,500
------------
INSURANCE--7.7%
4,400 Berkley, W. R. Corp. 231,000
6,000 Capital Re Corp. 230,250
</TABLE>
FTI SMALL CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
INSURANCE (continued)
6,000 Executive Risk, Inc. $ 240,000
700 MMI Companies, Inc. 21,612
2,500 (a)Markel Corp. 212,500
7,000 SunAmerica, Inc. 293,125
2,400 Transatlantic Holdings, Inc. 191,100
2,500 UICI 70,000
------------
Total 1,489,587
------------
MANUFACTURING--1.9%
3,000 Chicago Miniature Lamp, Inc. 100,500
20,000 (a)Gradall Industries, Inc. 267,500
------------
Total 368,000
------------
MEDICAL SUPPLIES--4.7%
5,000 (a)IDEXX Laboratories, Inc. 175,000
10,000 (a)Kensey Nash Corp. 162,500
6,900 (a)Lincare Holdings, Inc. 274,275
8,400 (a)Sola International, Inc. 295,050
------------
Total 906,825
------------
METALS & MINING--1.1%
12,000 Oregon Steel Mills 205,500
------------
NETWORKING PRODUCTS--3.0%
4,500 (a)Citrix Systems Inc. 205,312
13,300 (a)Digex, Inc. 137,987
500 (a)International Network
Services 16,000
6,000 (a)Legato Systems, Inc. 210,000
------------
Total 569,299
------------
OFFICE EQUIPMENT--1.2%
7,600 (a)U.S. Office Products Co. 235,600
------------
OIL--8.2%
5,000 (a)BJ Services Co. 238,750
8,700 (a)Barrett Resources 354,525
12,500 (a)Oceaneering International,
Inc. 207,813
8,000 Parker & Parsley Petroleum Co. 264,000
4,000 (a)Reading & Bates Corp. 116,000
2,800 (a)Transocean Offshore, Inc. 168,700
10,700 (a)Veritas DGC, Inc. 228,713
------------
Total 1,578,501
------------
PERSONAL CARE PRODUCTS--0.3%
12,000 Enamelon, Inc. 65,250
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
PHARMACEUTICALS--2.2%
100,000 (a)Boston Life Sciences, Inc. $ 75,000
15,000 (a)Fuisz Technologies Ltd. 121,875
7,000 (a)Interneuron Pharmaceuticals 136,500
3,000 (a)Vivus, Inc. 103,125
------------
Total 436,500
------------
REAL ESTATE--1.4%
11,000 (a)Arden Realty Group, Inc. 265,375
------------
RECREATION--1.0%
6,000 (a)Family Golf Centers, Inc. 187,500
------------
RETAIL--1.6%
5,000 Regis Corp. Minnesota 125,000
5,000 Tiffany & Co. 184,375
------------
Total 309,375
------------
SECURITIES--1.1%
6,000 Jefferies Group, Inc. 215,250
------------
TELECOMMUNICATIONS--3.6%
2,000 (a)ADC Telecommunications, Inc. 72,500
14,500 (a)Metro One Telecommunications 119,625
6,000 (a)PictureTel Corp. 166,500
14,000 (a)Snyder Communications, Inc. 341,250
------------
Total 699,875
------------
TRANSPORTATION--4.3%
10,000 (a)Genesee & Wyoming, Inc.,
Class A 351,250
10,000 (a)Heartland Express, Inc. 236,250
6,000 (a)Wisconsin Central
Transportation Corp. 244,500
------------
Total 832,000
------------
TOTAL COMMON STOCKS (identified
cost $17,770,789) 19,105,606
------------
(B)REPURCHASE AGREEMENT--4.7%
$ 901,000 J.P. Morgan & Co., Inc., 4.50%,
dated 11/27/1996, due
12/2/1996 (at amortized cost) 901,000
------------
TOTAL INVESTMENTS (identified
cost $18,671,789)(c) $ 20,006,606
============
</TABLE>
FTI SMALL CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
(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 $18,699,573. The
net unrealized appreciation of investments on a federal tax basis amounts to
$1,307,033 which is comprised of $2,316,267 appreciation and $1,009,234
depreciation at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($19,317,565) at November 30, 1996.
The following acronyms are used throughout this portfolio:
ADR -- American Depositary Receipt
PLC -- Public Limited Company
(See Notes which are an integral part of the Financial Statements)
FTI SMALL CAPITALIZATION EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $18,671,789 and tax cost $18,699,573) $20,006,606
- -----------------------------------------------------------------------------------------------------
Income receivable 4,541
- ----------------------------------------------------------------------------------------------------- -----------
Total assets 20,011,147
- -----------------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------------------
Payable for investments purchased $631,933
- ------------------------------------------------------------------------------------------
Payable to bank 21,270
- ------------------------------------------------------------------------------------------
Accrued expenses 40,379
- ------------------------------------------------------------------------------------------ -------
Total liabilities 693,582
- ----------------------------------------------------------------------------------------------------- -----------
Net Assets for 1,598,693 shares outstanding $19,317,565
- ----------------------------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------
Paid in capital $18,208,200
- -----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,334,817
- -----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (225,452)
- ----------------------------------------------------------------------------------------------------- -----------
Total Net Assets $19,317,565
- ----------------------------------------------------------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -----------------------------------------------------------------------------------------------------
$19,317,565 / 1,598,693 shares outstanding $12.08
- ----------------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI SMALL CAPITALIZATION EQUITY FUND
STATEMENT OF OPERATIONS
PERIOD ENDED NOVEMBER 30, 1996(A)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------------------
Dividends $ 19,049
- -------------------------------------------------------------------------------------------------------
Interest 61,271
- ------------------------------------------------------------------------------------------------------- ----------
Total income 80,320
- -------------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------------------
Investment advisory fee $ 98,496
- ------------------------------------------------------------------------------------------
Administrative personnel and services fee 68,443
- ------------------------------------------------------------------------------------------
Custodian fees 9,006
- ------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 14,959
- ------------------------------------------------------------------------------------------
Directors'/Trustees' fees 10,983
- ------------------------------------------------------------------------------------------
Legal fees 11,775
- ------------------------------------------------------------------------------------------
Portfolio accounting fees 47,597
- ------------------------------------------------------------------------------------------
Share registration costs 16,408
- ------------------------------------------------------------------------------------------
Printing and postage 9,337
- ------------------------------------------------------------------------------------------
Insurance premiums 2,662
- ------------------------------------------------------------------------------------------
Miscellaneous 6,878
- ------------------------------------------------------------------------------------------ --------
Total expenses 296,544
- ------------------------------------------------------------------------------------------
Reimbursement of operating expenses (148,800)
- ------------------------------------------------------------------------------------------ --------
Net expenses 147,744
- ------------------------------------------------------------------------------------------------------- ----------
Net operating loss (67,424)
- ------------------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------------------------------------
Net realized loss on investments (225,452)
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 1,334,817
- ------------------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 1,109,365
- ------------------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $1,041,941
- ------------------------------------------------------------------------------------------------------- ----------
</TABLE>
(a) For the period from December 22, 1995 (start of performance) to
November 30, 1996.
(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
NOVEMBER 30, 1996(A)
--------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------------------
Net operating loss $ (67,424)
- -------------------------------------------------------------------------------------------
Net realized loss on investments ($197,668 loss as computed for federal tax purposes) (225,452)
- -------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 1,334,817
- ------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations 1,041,941
- ------------------------------------------------------------------------------------------- ------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------------------------------------
Proceeds from sale of shares 20,583,257
- -------------------------------------------------------------------------------------------
Cost of shares redeemed (2,307,633)
- ------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from share transactions 18,275,624
- ------------------------------------------------------------------------------------------- ------------
Change in net assets 19,317,565
- -------------------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------------------
Beginning of period --
- ------------------------------------------------------------------------------------------- ------------
End of period $ 19,317,565
- ------------------------------------------------------------------------------------------- ------------
</TABLE>
(a) For the period from December 22, 1995 (start of performance) to November 30,
1996.
(See Notes which are an integral part of the Financial Statements)
FTI SMALL CAPITALIZATION EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30, 1996(A)
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------
Net operating loss (0.04)
- ------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 2.12
- ------------------------------------------------------------------------------------------ -------
Total from investment operations 2.08
- ------------------------------------------------------------------------------------------ -------
NET ASSET VALUE, END OF PERIOD $ 12.08
- ------------------------------------------------------------------------------------------ -------
TOTAL RETURN (B) 20.80%
- ------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------------
Expenses 1.50% *
- ------------------------------------------------------------------------------------------
Net operating loss (0.68%)*
- ------------------------------------------------------------------------------------------
Expense reimbursement (c) 1.51% *
- ------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $19,318
- ------------------------------------------------------------------------------------------
Average commission rate paid $0.0334
- ------------------------------------------------------------------------------------------
Portfolio turnover 94%
- ------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from December 22, 1995 (start of
performance) to November 30, 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
operating loss ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--95.1%
ARGENTINA--2.2%
26,000 Banco de Galicia y Buenos Aires
S.A. de C.V., Class B $ 143,838
3,200 Telecom Argentina S.A., ADR 126,000
------------
TOTAL ARGENTINA 269,838
------------
AUSTRALIA--0.7%
13,900 Westpac Banking, Corp., Sydney 83,156
------------
BRAZIL--2.7%
4,900 (a)Companhia Energetica de Minas
Gerais, ADR 152,513
2,200 Telecomunicacoes Brasileras, ADR 166,650
------------
TOTAL BRAZIL 319,163
------------
FINLAND--0.7%
2,700 (a)KCI Konecranes 83,346
------------
FRANCE--7.6%
250 (a)Carrefour Supermarche 154,390
400 Castorama Dubois Investisse 70,447
3,400 Lagardere S.C.A. 102,837
3,300 (a)SGS-Thomson Microelectronics
N.V. 218,261
4,900 Scor S.A. 173,064
2,427 Total S.A.-B 194,065
------------
TOTAL FRANCE 913,064
------------
GERMANY--6.7%
1,900 Adidas AG 164,911
8,400 (a)Deutsche Lufthansa AG 108,133
3,600 Hoechst AG 157,519
2,400 Siemens AG 115,623
4,450 Veba AG 260,242
------------
TOTAL GERMANY 806,428
------------
HONG KONG--6.8%
4,400 (a)Asia Satellite
Telecommunications Holdings
Ltd., ADR 111,650
13,000 (a)Cheung Kong 114,330
9,078 HSBC Holdings PLC 189,027
89,000 Mandarin Oriental 136,170
35,000 (a)New World Infrastructure 104,113
6,000 Sun Hung Kai Properties 74,496
10,000 Swire Pacific Ltd.-Class A 94,736
------------
TOTAL HONG-KONG 824,522
------------
INDONESIA--0.3%
1,200 PT TeleKom, Class CS, ADR 39,450
------------
<CAPTION>
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
IRELAND--2.6%
20,217 Bank of Ireland $ 176,070
4,400 (a)Elan Corp. PLC, ADR 130,900
------------
TOTAL IRELAND 306,970
------------
ITALY--3.0%
23,100 Banca Pop Di Milano 118,094
30,500 Fiat SPA 89,129
64,700 (a)Telecom Italia Mobile 152,152
------------
TOTAL ITALY 359,375
------------
JAPAN--25.9%
9,000 Canon Sales Co., Inc. 225,988
15,000 (a)Canon, Inc. 316,067
2,000 Circle K Japan Co. Ltd. 87,796
6,000 Credit Saison Co. Ltd. 137,489
18 DDI Corp. 128,797
26,000 (a)Daicel Chemical Industries 123,494
10,000 Hankyu Department Stores, Inc. 118,525
15,000 (a)Hitachi, Ltd. 139,596
1,100 Keyence Corp. 133,275
3,300 Laox 50,702
16,000 (a)Matsushita Electric Industrial
Co. 276,734
17,000 Minebea Co. 145,075
30,000 Mitsubishi Heavy Industries Ltd. 244,952
51,000 (a)NKK Corp. 125,373
5 NTT Data Communications Systems
Co. 148,376
13,000 Nisshinbo Industries 114,135
8,000 Nomura Securities Co. Ltd. 134,855
12,000 Onward Kashiyama Co. Ltd. 167,515
3,000 Rohm Co 184,372
8,000 Yamatake-Honeywell 129,939
------------
TOTAL JAPAN 3,133,055
------------
KOREA--0.7%
6,100 (a)Korea Mobile Telecomm Corp.,
ADR 79,300
------------
MALAYSIA--1.5%
28,000 DCB Holdings Berhad 95,845
10,000 United Engineers Ltd. 90,621
------------
TOTAL MALAYSIA 186,466
------------
MEXICO--1.8%
21,000 Apasco S.A. de CV 141,118
1,600 Pan American Beverage, Class A 74,800
------------
TOTAL MEXICO 215,918
------------
</TABLE>
FTI INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
NETHERLANDS--4.5%
2,835 Ahold N.V. $ 177,403
7,397 (a)ING Groep, N.V. 259,107
2,300 PolyGram N.V. 110,845
------------
TOTAL NETHERLANDS 547,355
------------
NEW ZEALAND--0.8%
5,600 (a)Tranz Rail Holdings Ltd., ADR 100,100
------------
PERU--0.8%
51,100 Telefonica Del Peru CPT, Class B 100,243
------------
PHILIPPINES--0.8%
205,000 (a)Fortune Cement Corp. 99,435
------------
PORTUGAL--0.3%
1,300 Portugal Telecom S.A., ADR 34,450
------------
SPAIN--2.2%
12,000 Iberdrola S.A. 138,490
6,100 Vallehermosa S.A. 126,907
------------
TOTAL SPAIN 265,397
------------
SWEDEN--2.4%
3,500 Astra AB, Class A 167,818
4,800 Scania AB, Class A 120,436
------------
TOTAL SWEDEN 288,254
------------
SWITZERLAND--5.2%
180 ABB AG 225,224
100 Ciba-Giegy AG 123,744
17 Roche Holding AG 130,679
10,100 (a)TAG Heuer International S.A.,
ADR 141,400
------------
TOTAL SWITZERLAND 621,047
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
UNITED KINGDOM--14.9%
11,372 British Aerospace $ 221,207
14,525 (a)British Petroleum Co. PLC 167,948
17,000 Compass Group 173,344
27,084 Electrocomponents PLC 201,035
19,000 Hays PLC 170,419
31,732 Lloyds TSB Group PLC 219,798
5,500 Reed International PLC 106,569
14,170 Siebe PLC 226,201
38,000 Smith & Nephew 118,510
13,847 Smithkline Beecham Corp. 190,897
------------
TOTAL UNITED KINGDOM 1,795,928
------------
TOTAL COMMON STOCKS (identified
cost $10,965,737) 11,472,260
------------
CORPORATE BONDS--1.4%
UNITED KINGDOM--1.4%
41,000 British Airways Capital, Conv.
Bond, 9.75%, 6/15/2005
(identified cost $155,321) 174,650
------------
(B)REPURCHASE AGREEMENTS--5.1%
$618,000 J.P. Morgan & Co., Inc., 4.50%,
dated 11/27/1996, due 12/2/1996
(at amortized cost) 618,000
------------
TOTAL INVESTMENTS (identified
cost $11,739,058)(c) $ 12,264,910
============
</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 $11,741,285. The
net unrealized appreciation of investments on a federal tax basis amounts to
$523,625 which is comprised of $946,371 appreciation and $422,746
depreciation at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($12,065,451) at November 30, 1996.
The following acronyms are used throughout this portfolio:
<TABLE>
<C> <S>
ADR -- American Depository Receipt
PLC -- Public Limited Company
SPA -- Standby Purchase Agreement
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $11,739,058 and tax cost $11,741,285) $12,264,910
- -----------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified and tax cost $4,505) 4,614
- -----------------------------------------------------------------------------------------------------
Income receivable 12,612
- -----------------------------------------------------------------------------------------------------
Receivable for investments sold 85,803
- -----------------------------------------------------------------------------------------------------
Net receivable for forward foreign currency exchange contracts 9,188
- ----------------------------------------------------------------------------------------------------- -----------
Total assets 12,377,127
- -----------------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------------------
Payable for investments purchased $254,820
- ------------------------------------------------------------------------------------------
Payable to bank 9,401
- ------------------------------------------------------------------------------------------
Payable for taxes withheld 2,785
- ------------------------------------------------------------------------------------------
Accrued expenses 44,670
- ------------------------------------------------------------------------------------------ -------
Total liabilities 311,676
- ----------------------------------------------------------------------------------------------------- -----------
Net Assets for 1,097,739 shares outstanding $12,065,451
- ----------------------------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------
Paid in capital $11,490,219
- -----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets and liabilities in foreign
currency 526,306
- -----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (119,531)
- -----------------------------------------------------------------------------------------------------
Undistributed net investment income 168,457
- ----------------------------------------------------------------------------------------------------- -----------
Total Net Assets $12,065,451
- ----------------------------------------------------------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -----------------------------------------------------------------------------------------------------
$12,065,451 / 1,097,739 shares outstanding $10.99
- ----------------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
PERIOD ENDED NOVEMBER 30, 1996(A)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $9,826) $ 68,787
- --------------------------------------------------------------------------------------------------------
Interest 26,551
- -------------------------------------------------------------------------------------------------------- --------
Total income 95,338
- --------------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------------
Investment advisory fee $ 55,029
- --------------------------------------------------------------------------------------------
Administrative personnel and services fee 67,829
- --------------------------------------------------------------------------------------------
Custodian fees 19,661
- --------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 14,910
- --------------------------------------------------------------------------------------------
Directors'/Trustees' fees 9,844
- --------------------------------------------------------------------------------------------
Legal fees 11,941
- --------------------------------------------------------------------------------------------
Portfolio accounting fees 45,574
- --------------------------------------------------------------------------------------------
Share registration costs 17,100
- --------------------------------------------------------------------------------------------
Printing and postage 9,975
- --------------------------------------------------------------------------------------------
Insurance premiums 2,607
- --------------------------------------------------------------------------------------------
Miscellaneous 6,076
- -------------------------------------------------------------------------------------------- --------
Total expenses 260,546
- --------------------------------------------------------------------------------------------
Reimbursement of operating expenses (168,000)
- -------------------------------------------------------------------------------------------- --------
Net expenses 92,546
- -------------------------------------------------------------------------------------------------------- --------
Net investment income 2,792
- -------------------------------------------------------------------------------------------------------- --------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY:
- --------------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign currency transactions 52,073
- --------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and translation of assets and liabilities in
foreign currency 526,306
- -------------------------------------------------------------------------------------------------------- --------
Net realized and unrealized gain on investments and foreign currency 578,379
- ------------------------------------------------------------------------------------------------------- --------
Change in net assets resulting from operations $581,171
- ------------------------------------------------------------------------------------------------------- --------
</TABLE>
(a) For the period from December 22, 1995 (start of performance) to November 30,
1996.
(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
NOVEMBER 30, 1996(A)
--------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------------------
Net investment income $ 2,792
- -------------------------------------------------------------------------------------------
Net realized gain on investments and foreign currency transactions ($119,531 net loss, as
computed for federal tax purposes) 52,073
- -------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and translation of assets and
liabilities in foreign currency 526,306
- ------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations 581,171
- ------------------------------------------------------------------------------------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------------------
Distributions from net investment income (8,166)
- ------------------------------------------------------------------------------------------- ------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------------------------------------
Proceeds from sale of shares 11,857,000
- -------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions declared 363
- -------------------------------------------------------------------------------------------
Cost of shares redeemed (364,917)
- ------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from share transactions 11,492,446
- ------------------------------------------------------------------------------------------- ------------
Change in net assets 12,065,451
- -------------------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------------------
Beginning of period --
- ------------------------------------------------------------------------------------------- ------------
End of period (including undistributed net investment income of $168,457) $ 12,065,451
- ------------------------------------------------------------------------------------------- ------------
</TABLE>
(a) For the period from December 22, 1995 (start of performance) to November 30,
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
NOVEMBER 30, 1996(A)
--------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- -------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------
Net investment income 0.01(b)
- -------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency 0.99
- ------------------------------------------------------------------------------------------- --------
Total from investment operations 1.00
- ------------------------------------------------------------------------------------------- --------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------------
Distributions from net investment income (0.01)
- ------------------------------------------------------------------------------------------- --------
NET ASSET VALUE, END OF PERIOD $ 10.99
- ------------------------------------------------------------------------------------------- --------
TOTAL RETURN (C) 10.04%
- -------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------
Expenses 1.68%*
- -------------------------------------------------------------------------------------------
Net investment income 0.05%*
- -------------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 3.05%*
- -------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 12,065
- -------------------------------------------------------------------------------------------
Average commission rate paid $ 0.0365
- -------------------------------------------------------------------------------------------
Portfolio turnover 29%
- -------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from December 22, 1995 (start of
performance) to November 30, 1996.
(b) Per share information is based on average shares outstanding.
(c) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d) 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
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY
PAR AMOUNT
OR
PRINCIPAL VALUE IN
AMOUNT U.S. DOLLARS
- -----------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS--10.5%
GERMANY--5.5%
FINANCE--5.5%
180,000,000 (a)Bayerische Landesbank
Girozentrale, Unsub.,
7.50%, 2/11/1999 $ 121,261
20,600,000 (b)Deutsche Siedlungs LB,
Deb., 8.75%, 10/14/1998 165,982
----------
TOTAL GERMANY 287,243
----------
JAPAN--1.7%
FINANCE--1.7%
10,000,000 Export-Import Bank Japan,
Foreign Gov't. Guarantee,
2.875%, 7/28/2005 90,430
----------
SWEDEN--3.3%
FINANCE--3.3%
1,000,000 Statens Bostads, 10.25%,
5/5/2000 168,741
----------
TOTAL CORPORATE BONDS
(identified cost $528,431) 546,414
----------
GOVERNMENT AGENCIES--84.0%
ARGENTINA--1.8%
186,000 (c)Republic of Argentina,
5.5%, 4/1/2000 91,140
----------
AUSTRALIA--6.3%
74,000 Australian Government,
10.00%, 2/15/2006 71,523
145,000 Treasury Corp. of Victoria,
Local Gov't. Guarantee,
8.75%, 7/9/2003 257,187
----------
TOTAL AUSTRALIA 328,710
----------
CANADA--7.1%
185,000 Canada Government, Deb.,
6.50%, 6/1/2004 143,413
70,000 Canada Government, Deb.,
7.50%, 12/1/2003 57,481
100,000 (d)Ontario Province, Sr.
Unsub. Deb., 6.87%,
9/15/2000 165,906
----------
TOTAL CANADA 366,800
----------
<CAPTION>
FOREIGN
CURRENCY VALUE IN
PAR AMOUNT U.S. DOLLARS
- -----------------------------------------------------------
<C> <S> <C>
GOVERNMENT AGENCIES (continued)
DENMARK--4.1%
1,140,000 Kingdom of Denmark, 8.00%,
3/15/2006 $211,140
---------
FRANCE--6.5%
750,000 Caisse Autonome de Refine,
Sr. Unsub. Deb., 7.75%,
12/6/1999 157,866
890,000 France Telecom, Sr. Unsub.,
6.50%, 7/19/1999 180,064
---------
TOTAL FRANCE 337,930
---------
GERMANY--14.4%
240,000 Deutsche Bundespost, (German
Post Office), 7.50%,
12/2/2002 173,778
130,000 Germany Unity Fund, 8.00%,
1/21/2002 96,539
92,000 Germany (Fed Republic),
6.50%, 7/15/2003 63,786
40,000 Germany (Fed Republic),
5.875%, 5/15/2000 27,369
330,000 Germany (Fed Republic),
6.00%, 1/5/2006 219,099
240,000 Treuhandanstalt, 7.125%,
1/29/2003 171,828
----------
TOTAL GERMANY 752,399
----------
IRELAND--6.9%
70,000 Republic of Ireland, 6.50%,
10/18/2001 120,805
140,000 Treasury, Deb., 6.25%,
4/1/1999 237,962
----------
TOTAL IRELAND 358,767
----------
ITALY--17.4%
1,300,000,000 Buoni Poliennali Del Tes,
(Italian Government), Deb.,
10.50%, 7/15/1998 907,457
----------
JAPAN--2.3%
12,900,000 Japan-186, 3.20%, 3/20/2006 119,138
----------
</TABLE>
FTI INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE IN
PAR AMOUNT U.S. DOLLARS
- -----------------------------------------------------------
<C> <S> <C>
GOVERNMENT AGENCIES (continued)
NETHERLANDS--1.0%
90,000 Netherlands Government,
Foreign Gov't. Guarantee,
6.25%, 7/15/1998 $54,413
---------
SPAIN--4.4%
19,500,000 Bonos Y Obligation Del
Estado, (Spanish
Government), Deb., 8.40%,
4/30/2001 163,027
8,030,000 Spain (Government), 10.25%,
11/30/1998 66,830
---------
TOTAL SPAIN 229,857
---------
SWEDEN--1.1%
400,000 Kingdom of Sweden, 6.00%,
2/9/2005 56,417
----------
UNITED KINGDOM--7.2%
115,000 (e)European Investment Bank,
Sr. Unsub. Deb., 8.00%,
6/10/2003 199,384
10,000 United Kingdom Treasury,
10.00%, 2/26/2001 18,599
87,000 United Kingdom Treasury,
8.50%, 7/16/2007 156,781
----------
TOTAL UNITED KINGDOM 374,764
----------
<CAPTION>
PRINCIPAL VALUE IN
AMOUNT U.S. DOLLARS
- -----------------------------------------------------------
<C> <S> <C>
GOVERNMENT AGENCIES (continued)
UNITED STATES--3.5%
20,000,000 (f)Federal National Mortgage
Association, 2.00%,
12/20/1999 $180,312
---------
TOTAL GOVERNMENT AGENCIES
(identified cost
$4,239,313) 4,369,244
---------
(G)REPURCHASE AGREEMENT--1.9%
$101,000 J.P. Morgan & Co., Inc.,
4.50%, dated 11/27/1996,
due 12/2/1996 (at amortized
cost) 101,000
----------
TOTAL INVESTMENTS (identified
cost $4,868,744)(h) $5,016,658
==========
</TABLE>
(a) Denominated in Italian Lira.
(b) Denominated in Spanish Peseta.
(c) Denotes a restricted security which is subject to restrictions on resale
under Securities laws. At the end of the period, this security represented
1.8% net assets.
(d) Denominated in U.S. Dollars.
(e) Supranational Issuer.
(f) Denominated in Japanese Yen.
(g) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(h) The cost of investments for federal tax purposes amounts to $4,871,448. The
net unrealized appreciation of investments on a federal tax basis amounts to
$145,210 which is comprised of $169,714 appreciation and $24,504
depreciation at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($5,201,893) at November 30, 1996.
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $4,868,744 and tax cost 4,871,448) $5,016,658
- -------------------------------------------------------------------------------------------------------
Cash denominated in foreign currency (identified and tax cost $119,826) 122,030
- -------------------------------------------------------------------------------------------------------
Income receivable 183,009
- -------------------------------------------------------------------------------------------------------
Receivable for investments sold 305,898
- ------------------------------------------------------------------------------------------------------- ----------
Total assets 5,627,595
- -------------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------------
Payable for investments purchased $364,242
- -------------------------------------------------------------------------------------------
Payable to bank 5,918
- -------------------------------------------------------------------------------------------
Payable for foreign exchange contracts 12,035
- -------------------------------------------------------------------------------------------
Payable for taxes withheld 4,489
- -------------------------------------------------------------------------------------------
Accrued expenses 39,018
- ------------------------------------------------------------------------------------------- -------
Total liabilities 425,702
- ------------------------------------------------------------------------------------------------------- ----------
NET ASSETS for 510,209 shares outstanding $5,201,893
- ------------------------------------------------------------------------------------------------------- ----------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------------
Paid in capital $5,067,094
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets
and liabilities in foreign currency 137,680
- -------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (15,581)
- -------------------------------------------------------------------------------------------------------
Undistributed net investment income 12,700
- ------------------------------------------------------------------------------------------------------- ----------
Total Net Assets $5,201,893
- ------------------------------------------------------------------------------------------------------- ----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------------
$5,201,893 / 510,209 shares outstanding $10.20
- ------------------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI INTERNATIONAL BOND FUND
STATEMENT OF OPERATIONS
PERIOD ENDED NOVEMBER 30, 1996(A)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $7,025) $ 244,338
- -------------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------------------
Investment advisory fee $ 25,680
- -------------------------------------------------------------------------------------------
Administrative personnel and services fee 66,394
- -------------------------------------------------------------------------------------------
Custodian fees 10,398
- -------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 14,327
- -------------------------------------------------------------------------------------------
Directors'/Trustees' fees 9,024
- -------------------------------------------------------------------------------------------
Legal fees 10,741
- -------------------------------------------------------------------------------------------
Portfolio accounting fees 43,590
- -------------------------------------------------------------------------------------------
Share registration costs 15,689
- -------------------------------------------------------------------------------------------
Printing and postage 9,605
- -------------------------------------------------------------------------------------------
Insurance premiums 2,582
- -------------------------------------------------------------------------------------------
Miscellaneous 5,795
- ------------------------------------------------------------------------------------------- --------
Total expenses 213,825
- -------------------------------------------------------------------------------------------
Reimbursement of operating expenses (169,800)
- ------------------------------------------------------------------------------------------- --------
Net expenses 44,025
- ------------------------------------------------------------------------------------------------------- ---------
Net investment income 200,313
- ------------------------------------------------------------------------------------------------------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
- -------------------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions (133,892)
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and translation of assets and liabilities in
foreign currency 137,680
- ------------------------------------------------------------------------------------------------------- ---------
Net realized and unrealized gain on investments and foreign currency 3,788
- ------------------------------------------------------------------------------------------------------- ---------
Change in net assets resulting from operations $ 204,101
- ------------------------------------------------------------------------------------------------------- ---------
</TABLE>
(a) For the period from December 22, 1995 (start of performance) to November 30,
1996.
(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
NOVEMBER 30, 1996(A)
--------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------------------
Net investment income $ 200,313
- -------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions
($13,444 net loss as computed for federal tax purposes) (133,892)
- -------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and translation of assets and
liabilities in foreign currency 137,680
- ------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations 204,101
- ------------------------------------------------------------------------------------------- ----------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------------------
Distributions from net investment income (69,302)
- ------------------------------------------------------------------------------------------- ----------
SHARE TRANSACTIONS--
- -------------------------------------------------------------------------------------------
Proceeds from sale of shares 5,549,752
- -------------------------------------------------------------------------------------------
Cost of shares redeemed (482,658)
- ------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from share transactions 5,067,094
- ------------------------------------------------------------------------------------------- ----------
Change in net assets 5,201,893
- -------------------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------------------
Beginning of period --
- ------------------------------------------------------------------------------------------- ----------
End of period (including undistributed net investment income of $12,700) $5,201,893
- ------------------------------------------------------------------------------------------- ----------
</TABLE>
(a) For the period from December 22, 1995 (start of performance) to November 30,
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
NOVEMBER 30, 1996(A)
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------
Net investment income 0.47(b)
- ------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments and foreign currency (0.10)
- ------------------------------------------------------------------------------------------ -------
Total from investment operations 0.37
- ------------------------------------------------------------------------------------------ -------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------
Distributions from net investment income (0.17)
- ------------------------------------------------------------------------------------------ -------
NET ASSET VALUE, END OF PERIOD $ 10.20
- ------------------------------------------------------------------------------------------ -------
TOTAL RETURN (C) 3.75%
- ------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------------
Expenses 1.20%*
- ------------------------------------------------------------------------------------------
Net investment income 5.46%*
- ------------------------------------------------------------------------------------------
Expense reimbursement (d) 4.63%*
- ------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 5,201
- ------------------------------------------------------------------------------------------
Portfolio turnover 190%
- ------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from December 22, 1995 (start of
performance) to November 30, 1996.
(b) Per share information is based on average shares outstanding.
(c) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d) 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
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE IN
PAR AMOUNT U.S. DOLLARS
- -----------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS--12.1%
FRANCE--3.4%
TELECOMMUNICATIONS-3.4%
180,000 France Telecom, Sr. Unsub.,
6.50%, 7/19/1999 $ 36,417
----------
GERMANY--5.5%
FINANCE-5.5%
40,000,000 (a)Bayerische Landesbank
Girozentrale, Unsub.,
7.50%, 2/11/1999 26,947
29,000 (b)KFW International Finance,
Company Guarantee, 7.50%,
4/21/2005 30,921
----------
TOTAL GERMANY 57,868
----------
SWEDEN--3.2%
FINANCE-3.2%
200,000 Statens Bostads, Bond,
10.25%, 5/5/2000 33,748
----------
TOTAL CORPORATE BONDS
(identified cost $125,350) 128,033
----------
GOVERNMENT AGENCIES--82.3%
ARGENTINA--1.7%
37,000 (c)Republic of Argentina,
Bond, 5.5625%, 4/1/2000 18,130
----------
AUSTRALIA--6.7%
22,000 Australian Government, Bond,
7.50%, 7/15/2005 18,303
17,000 Australian Government, Bond,
10.00%, 2/15/2006 16,431
20,000 Treasury Corp. of Victoria,
Local Gov't. Guarantee,
8.75%, 7/9/2003 35,474
----------
TOTAL AUSTRALIA 70,208
----------
CANADA--4.6%
15,000 (b)Canada, Government of,
Bond, 6.75%, 8/28/2006 15,455
42,000 Canada, Government of, Deb.,
6.50%, 6/1/2004 32,559
----------
TOTAL CANADA 48,014
----------
<CAPTION>
FOREIGN
CURRENCY VALUE IN
PAR AMOUNT U.S. DOLLARS
- -----------------------------------------------------------
<C> <S> <C>
GOVERNMENT AGENCIES (continued)
DENMARK--3.0%
171,000 Denmark, Bond, 8.00%,
3/15/2006 $ 31,671
----------
FRANCE--1.0%
50,000 French Treasury Bill, 7.00%,
11/12/1999 10,359
----------
GERMANY--3.5%
50,000 Deutsche Bundespost, Bond,
7.50%, 12/2/2002 36,204
2,000 Deutschland Republic, Deb.,
6.25%, 1/4/2024 1,244
----------
TOTAL GERMANY 37,448
----------
SUPRANATIONAL--1.6%
10,000 (d)European Investment Bank,
Sr. Unsub., 8.00%,
6/10/2003 17,338
----------
IRELAND--1.6%
10,000 Treasury, Deb., 6.25%,
4/1/1999 16,997
----------
ITALY--13.9%
210,000,000 Buoni Poliennali Del Tes,
Deb., 10.50%, 7/15/1998 146,589
----------
JAPAN--2.0%
2,300,000 Japan-186, Bond, 3.20%,
3/20/2006 21,242
----------
</TABLE>
FTI GLOBAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR FOREIGN
CURRENCY VALUE IN
PAR AMOUNT U.S. DOLLARS
- ---------------------------------------------------------
<C> <S> <C>
GOVERNMENT AGENCIES (continued)
NETHERLANDS--0.6%
10,000 Netherlands Government,
6.25%, 7/15/1998 $ 6,046
----------
SPAIN--5.3%
6,770,000 Bonos Y Oblig. Del Estado,
Bond, 8.40%, 4/30/2001 56,600
----------
SWEDEN--1.3%
100,000 Sweden (Kingdom of), 6.00%,
2/9/2005 14,104
----------
UNITED KINGDOM--3.7%
13,000 United Kingdom Treasury,
Bond, 7.50%, 12/7/2006 21,829
10,000 United Kingdom Treasury,
Bond, 8.00%, 12/7/2015 17,642
----------
TOTAL UNITED KINGDOM 39,471
----------
UNITED STATES--31.8%
10,000,000 (e)Federal National Mortgage
Association, 2.00%,
12/20/1999 90,156
$ 70,000 United States Treasury Bill,
3/27/1997 68,893
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR VALUE IN
CONTRACTS U.S. DOLLARS
- ----------------------------------------------------------
<C> <S> <C>
GOVERNMENT AGENCIES (continued)
UNITED STATES (continued)
$ 50,000 United States Treasury Bond,
6.25%, 8/15/2023 $ 48,578
35,000 United States Treasury Bond,
8.125%, 8/15/2019 41,847
30,000 United States Treasury Note,
5.625%, 11/30/2000 29,841
35,000 United States Treasury Note,
6.375%, 8/15/2002 35,897
20,000 United States Treasury Note,
7.875%, 8/15/2001 21,669
-----------
TOTAL UNITED STATES 336,881
-----------
TOTAL GOVERNMENT AGENCIES
(identified cost $853,467) 871,098
-----------
(F)REPURCHASE AGREEMENT--13.0%
$138,000 J.P. Morgan & Co., Inc., 4.50%,
dated 11/27/1996, due
12/2/1996 (at amortized cost) 138,000
-----------
OPTIONS--0.1%
100,000 Eurostyle Put Option on U.S.
Treasuries expires 2/25/97,
strike @ 105.25 (identified
cost $1,281) 1,281
-----------
TOTAL INVESTMENTS (identified
cost $1,118,098)(g) $ 1,138,412
===========
</TABLE>
(a) Denominated in Italian Lira
(b) Denominated in U.S. Dollars.
(c) Denotes a restricted security which is subject to restrictions on resale
under securities laws. At the end of the period, this security represented
1.7% net assets.
(d) Denominated in British Pounds.
(e) Denominated in Japanese Yen.
(f) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(g) The cost of investments for federal tax purposes amounts to $1,118,098. The
net unrealized appreciation of investments on a federal tax basis amounts to
$20,314 which is comprised of $26,954 appreciation and $6,640 depreciation
at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($1,057,876) at November 30, 1996.
(See Notes which are an integral part of the Financial Statements)
37
FTI GLOBAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 138,000
- ------------------------------------------------------------------------------------------
Investments in securities 1,000,412
- ------------------------------------------------------------------------------------------ ---------
Total investments in securities, at value (identified and tax cost $1,118,098) $1,138,412
- -------------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified and tax cost $6,905) 6,852
- -------------------------------------------------------------------------------------------------------
Income receivable 28,198
- -------------------------------------------------------------------------------------------------------
Receivable for investments sold 48,637
- ------------------------------------------------------------------------------------------------------ ----------
Total assets 1,222,099
- -------------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------------
Payable for investments purchased 56,310
- ------------------------------------------------------------------------------------------
Payable to bank 74,812
- ------------------------------------------------------------------------------------------
Payable for taxes withheld 786
- ------------------------------------------------------------------------------------------
Net payable for foreign exchange contracts 328
- ------------------------------------------------------------------------------------------
Accrued expenses 31,987
- ------------------------------------------------------------------------------------------ ---------
Total liabilities 164,223
- ------------------------------------------------------------------------------------------------------- ----------
Net Assets for 101,490 shares outstanding $1,057,876
- ------------------------------------------------------------------------------------------------------- ----------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------------
Paid in capital $1,004,948
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets
and liabilities in foreign currency 19,923
- -------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 3,639
- -------------------------------------------------------------------------------------------------------
Undistributed net investment income 29,366
- ------------------------------------------------------------------------------------------------------- ----------
Total Net Assets $1,057,876
- ------------------------------------------------------------------------------------------------------- ----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------------
$1,057,876 / 101,490 shares outstanding $10.42
- ------------------------------------------------------------------------------------------------------ ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FTI GLOBAL BOND FUND
STATEMENT OF OPERATIONS
PERIOD ENDED NOVEMBER 30, 1996(A)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $808) $43,128
- ---------------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------
Investment advisory fee $ 4,453
- ---------------------------------------------------------------------------------------------
Administrative personnel and services fee 60,861
- ---------------------------------------------------------------------------------------------
Custodian fees 4,473
- ---------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 14,408
- ---------------------------------------------------------------------------------------------
Directors'/Trustees' fees 7,635
- ---------------------------------------------------------------------------------------------
Legal fees 21,363
- ---------------------------------------------------------------------------------------------
Portfolio accounting fees 39,502
- ---------------------------------------------------------------------------------------------
Share registration costs 11,304
- ---------------------------------------------------------------------------------------------
Printing and postage 5,998
- ---------------------------------------------------------------------------------------------
Insurance premiums 2,553
- ---------------------------------------------------------------------------------------------
Miscellaneous 4,871
- --------------------------------------------------------------------------------------------- --------
Total expenses 177,421
- ---------------------------------------------------------------------------------------------
Reimbursement of operating expenses (171,400)
- --------------------------------------------------------------------------------------------- --------
Net expenses 6,021
- --------------------------------------------------------------------------------------------------------- -------
Net investment income 37,107
- --------------------------------------------------------------------------------------------------------- -------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY:
- ---------------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign currency transactions 3,629
- ---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign
currency 19,923
- --------------------------------------------------------------------------------------------------------- -------
Net realized and unrealized gain on investments and foreign currency 23,552
- --------------------------------------------------------------------------------------------------------- -------
Change in net assets resulting from operations $60,659
- --------------------------------------------------------------------------------------------------------- -------
</TABLE>
(a) For the period from December 22, 1995 (start of performance) to November 30,
1996.
(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
NOVEMBER 30, 1996(A)
---------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------------------------
Net investment income $ 37,107
- ------------------------------------------------------------------------------------------
Net realized gain on investments and foreign currency transactions
($3,639 net gain, as computed for federal tax purposes) 3,629
- ------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and translation of assets and
liabilities in foreign currency 19,923
- ------------------------------------------------------------------------------------------ -----------
Change in net assets resulting from operations 60,659
- ------------------------------------------------------------------------------------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------------------------
Distributions from net investment income (7,731)
- ------------------------------------------------------------------------------------------ -----------
SHARE TRANSACTIONS--
- ------------------------------------------------------------------------------------------
Proceeds from sale of shares 1,428,150
- ------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions declared 770
- ------------------------------------------------------------------------------------------
Cost of shares redeemed (423,972)
- ------------------------------------------------------------------------------------------ ------------
Change in net assets resulting from share transactions 1,004,948
- ------------------------------------------------------------------------------------------ ------------
Change in net assets 1,057,876
- ------------------------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------------------------
Beginning of period --
- ------------------------------------------------------------------------------------------ -----------
End of period (including undistributed net investment income of $29,366) $ 1,057,876
- ------------------------------------------------------------------------------------------ -----------
</TABLE>
(a) For the period from December 22, 1995 (start of performance) to November 30,
1996.
(See Notes which are an integral part of the Financial Statements)
FTI GLOBAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30, 1996(A)
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------
Net investment income 0.37
- ------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign currency 0.13
- ------------------------------------------------------------------------------------------ -------
Total from investment operations 0.50
- ------------------------------------------------------------------------------------------ -------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------
Distributions from net investment income (0.08)
- ------------------------------------------------------------------------------------------ -------
NET ASSET VALUE, END OF PERIOD $ 10.42
- ------------------------------------------------------------------------------------------ -------
TOTAL RETURN (B) 5.02%
- ------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------------
Expenses 0.95%*
- ------------------------------------------------------------------------------------------
Net investment income 5.83%*
- ------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 26.94%*
- ------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 1,058
- ------------------------------------------------------------------------------------------
Portfolio turnover 287%
- ------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from December 22, 1995 (start of
performance) to November 30, 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
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
(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:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT OBJECTIVE
- ----------------------------------------- -----------------------------------------
<S> <C>
FTI Small Capitalization Equity Fund To provide growth of principal.
("Small Capitalization Equity Fund")
FTI International Equity Fund To provide growth of principal.
("International Equity Fund")
FTI International Bond Fund To provide total return.
("International Bond Fund")
FTI Global Bond Fund ("Global Bond Fund") To provide total return.
</TABLE>
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 Funds in the preparation of their 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, 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 at the prices
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 valuation of 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.
FTI FUNDS
- --------------------------------------------------------------------------------
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 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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
tax net operating losses, foreign currency transactions, mark to market of
passive foreign investment companies, and options. The following
reclassifications have been made to the financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
---------------------------------------------------
ACCUMULATED
PAID-IN NET REALIZED UNDISTRIBUTED NET
FUND NAME CAPITAL GAIN/LOSS INVESTMENT INCOME
--------------------------------------- -------- ------------ -----------------
<S> <C> <C> <C>
Small Capitalization Equity Fund $(67,424) -- $ 67,424
International Equity Fund (2,227) $ (171,604) 173,831
International Bond Fund -- 118,311 (118,311)
Global Bond Fund -- 10 (10)
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by these reclassifications.
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 their income. Accordingly, no
provisions for federal tax are necessary.
Withholding taxes on foreign interest and dividends have been provided for
in accordance with the Funds' understanding of the applicable country's tax
rules and rates.
FTI FUNDS
- --------------------------------------------------------------------------------
At November 30, 1996, the Funds, for federal tax purposes, had capital loss
carryforwards, as noted below, which will reduce the Funds' taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Funds of
any liability for federal tax.
<TABLE>
<CAPTION>
TOTAL TAX
FUND EXPIRATION DATE LOSS CARRYFORWARD
--------------------------------------- ---------------- ------------------
<S> <C> <C>
Small Capitalization Equity Fund 2004 $197,668
International Equity Fund 2004 $119,531
International Bond Fund 2004 $ 13,444
</TABLE>
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 EXCHANGE CONTRACTS--The Funds may enter into foreign currency
commitments for the delayed delivery of securities or foreign currency
exchange transactions. Purchased contracts are used to acquire exposure to
foreign currencies; whereas contracts to sell are used to hedge the Funds'
securities against currency fluctuations. Risks may arise upon entering
these transactions from the potential inability of counter parts 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.
At November 30, 1996, the Funds had outstanding foreign currency
commitments as set forth below:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
UNREALIZED
CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION)
--------------- --------------------------- ----------- ---------- --------------
CONTRACTS PURCHASED:
<S> <C> <C> <C> <C>
12/4/96 36,198 Pound Sterling $ 60,737 $ 60,856 $ 119
12/3/96 5,762,032 Japanese Yen 50,834 50,588 (246)
12/2/96 5,000 Swedish Krona 750 745 (5)
12/3/96 80,913 Swiss Franc 62,121 62,073 (48)
CONTRACTS SOLD:
12/9/96 248,344,091 Japanese Yen 2,193,275 2,183,907 9,368
--------
Net Unrealized Appreciation on Foreign
Exchange Contracts $ 9,188
========
</TABLE>
FTI FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL BOND FUND
UNREALIZED
CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION)
--------------- --------------------------- ----------- ---------- --------------
CONTRACTS PURCHASED:
<S> <C> <C> <C> <C>
1/17/97 17,000 Australian Dollar $ 13,379 $ 13,818 $ 439
12/18/96 10,000 Canadian Dollar 7,406 7,426 20
12/18/96 107,000 Canadian Dollar 79,406 79,457 51
2/21/97 878,000 Deutsche Mark 587,330 573,770 (13,560)
2/21/97 544,027 Deutsche Mark 361,000 355,520 (5,480)
1/13/97 6,095,110 Spanish Peseta 47,000 46,984 (16)
1/17/97 1,163,000 French Franc 224,517 223,272 (1,245)
12/9/96 53,722,000 Japanese Yen 474,138 472,424 (1,714)
12/9/96 308,000 Japanese Yen 2,740 2,709 (31)
2/12/97 2,011,714 Swedish Krona 304,000 300,282 (3,718)
CONTRACTS SOLD:
2/21/97 455,064 Deutsche Mark 304,000 297,382 6,618
2/21/97 71,840 Deutsche Mark 47,000 46,947 53
2/13/97 498,000 Danish Krone 86,100 84,828 1,272
1/13/97 30,487,000 Spanish Peseta 239,104 235,007 4,097
1/17/97 511,060 French Franc 100,426 98,113 2,313
1/17/97 651,941 French Franc 127,952 125,159 2,793
1/17/97 1,848,056 French Franc 361,000 354,789 6,211
5/8/97 112,000 Pound Sterling 184,050 187,512 (3,462)
5/8/97 158,000 Pound Sterling 262,122 264,526 (2,404)
12/12/96 212,000 Irish Pound 348,104 356,410 (8,306)
12/18/96 748,423,000 Italian Lira 492,850 493,194 (344)
12/18/96 94,000 Netherlands Guilder 55,729 54,590 1,139
2/12/97 1,486,000 Swedish Krona 225,049 221,810 3,239
--------
Net Unrealized Depreciation on Foreign
Exchange Contracts $(12,035)
========
</TABLE>
FTI FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL BOND FUND
UNREALIZED
CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION)
--------------- --------------------------- ----------- ---------- --------------
CONTRACTS PURCHASED:
<S> <C> <C> <C> <C>
12/18/96 28,000 Canadian Dollar $ 20,736 $ 20,793 $ 57
2/21/97 152,829 Deutsche Mark 101,853 99,873 (1,980)
2/13/97 82,000 Danish Krone 14,177 13,968 (209)
1/17/97 89,000 French Franc 17,181 17,086 (95)
12/9/96 66,000 Japanese Yen 587 580 (7)
2/12/97 211,759 Swedish Krona 32,000 31,609 (391)
CONTRACTS SOLD:
1/17/97 4,000 Australian Dollar $ 3,148 3,251 (103)
2/21/97 47,901 Deutsche Mark 32,000 31,303 697
1/13/97 1,997,000 Spanish Paseta 15,662 15,394 268
1/17/97 342,141 French Francs 66,952 65,684 1,268
5/8/97 22,000 Pound Sterling 36,498 36,833 (335)
12/12/96 10,000 Irish Pound 16,420 16,812 (392)
12/18/96 152,061,000 Italian Lira 100,135 100,205 (70)
12/9/96 4,862,000 Japanese Yen 42,911 42,756 155
12/18/96 10,000 Netherlands Guilder 5,929 5,808 121
2/27/97 316,000 Swedish Krona 47,856 47,168 688
--------
Net Unrealized Depreciation on Foreign
Exchange Contracts $ (328)
========
</TABLE>
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 date 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
FTI FUNDS
- --------------------------------------------------------------------------------
actually received or paid. Net unrealized foreign 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.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under federal securities laws or in
transactions exempt from such registration. In some cases, the issuer of
restricted securities has agreed to register such securities for resale, at
the issuer's expense either upon demand by the Funds or in connection with
another registered offering of the securities. Many restricted securities
may be resold in the secondary market in transactions exempt from
registration. Such restricted securities may be determined to be liquid
under criteria established by the Board of Trustees. The Funds will not
incur any registration costs upon such resales. The Funds' restricted
securities are valued at the price provided by dealers in the secondary
market or, if no market prices are available, at the fair value as
determined by the Funds' pricing committee.
Additional information on each restricted security held at November 30,
1996 is as follows:
<TABLE>
<CAPTION>
INTERNATIONAL BOND
FUND
SECURITY ACQUISITION DATE ACQUISITION COST
------------------------------ ---------------------- ----------------------
<S> <C> <C>
Republic of Argentina, Bond 11/27/96 $ 98,603
</TABLE>
<TABLE>
<CAPTION>
GLOBAL BOND FUND
SECURITY ACQUISITION DATE ACQUISITION COST
------------------------------ ---------------------- ----------------------
<S> <C> <C>
Republic of Argentina, Bond 11/27/96 $ 19,615
</TABLE>
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).
FTI FUNDS
- --------------------------------------------------------------------------------
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
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996(A) 1996(A) 1996(A) 1996(A)
- ----------------------------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares sold 1,795,446 1,131,990 559,265 143,789
- -----------------------------------
Shares issued to shareholders in
payment of distributions declared -- 34 -- 79
- -----------------------------------
Shares redeemed (196,753) (34,285) (49,056) (42,378)
- ----------------------------------- ---------- ---------- -------- --------
Net change resulting from
share transactions 1,598,693 1,097,739 510,209 101,490
- ----------------------------------- ---------- ---------- --------- --------
</TABLE>
(a) For the period from December 22, 1995 (start of performance) to November 30,
1996.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Fiduciary International, Inc., the Funds' investment
adviser (the "Adviser"), receives for its services an annual investment advisory
fee equal to the percentage of the Funds' average daily net assets as follows:
<TABLE>
<CAPTION>
INVESTMENT ADVISORY
FUND FEE PERCENTAGE
-------------------------------------------------------------- -------------------
<S> <C>
Small Capitalization Equity Fund 1.00%
--------------------------------------------------------------
International Equity Fund 1.00%
--------------------------------------------------------------
International Bond Fund 0.70%
--------------------------------------------------------------
Global Bond Fund 0.70%
--------------------------------------------------------------
</TABLE>
The Adviser may voluntarily choose to reimburse certain operating expenses of
the Funds. The Adviser can modify or terminate this voluntary reimbursement at
any time at its sole discretion.
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 Trust for the period.
DISTRIBUTION SERVICES FEE--The Funds have adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Funds will compensate Edgewood Services, Inc., the principal distributor, from
the net assets of the Funds to finance activities intended to result in the sale
of
FTI FUNDS
- --------------------------------------------------------------------------------
each Fund's shares. The Plan provides that each Fund may incur distribution
expenses up to 0.75% of average daily net assets annually, to compensate
Edgewood Services, Inc.
For the period ended November 30, 1996, the Funds did not incur a distribution
services fee.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Fiduciary International, Inc. ("FII"), the Funds will pay FII up to 0.25%
of average daily net assets of the Funds for the period. The fee paid to FII is
used to finance certain services for shareholders and to maintain shareholder
accounts. For the period ended November 30, 1996, the Funds did not incur a
shareholder services fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the Funds.
The fee paid to FSSC 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
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.
ORGANIZATIONAL EXPENSES--Organizational expenses were borne initially 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
November 30, 1996, pursuant to this agreement, the Funds paid FAS as follows:
<TABLE>
<CAPTION>
INITIAL ORGANIZATIONAL
ORGANIZATIONAL EXPENSES
FUND EXPENSES REIMBURSED
------------------------------------------------- -------------- --------------
<S> <C> <C>
Small Capitalization Equity Fund $ 34,076 $2,082
-------------------------------------------------
International Equity Fund $ 34,072 $2,082
-------------------------------------------------
International Bond Fund $ 34,077 $2,082
-------------------------------------------------
Global Bond Fund $ 38,216 $2,335
-------------------------------------------------
</TABLE>
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
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 November 30, 1996, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
------------------------------------------------------- ----------- ----------
<S> <C> <C>
Small Capitalization Equity Fund $26,935,823 $8,939,583
-------------------------------------------------------
International Equity Fund $12,912,954 $1,671,050
-------------------------------------------------------
International Bond Fund $11,531,849 $6,732,681
-------------------------------------------------------
Global Bond Fund $ 2,871,309 $1,901,997
-------------------------------------------------------
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
CONCENTRATION OF CREDIT RISK--The International Equity Fund, International Bond
Fund, and Global Bond Fund invest in securities of non-U.S. issuers. Although
these Funds maintain diversified investment portfolios, the political or
economic developments within a particular country or region may have an adverse
effect on the ability of domiciled issuers to meet their obligations.
Additionally, political or economic developments may have an effect on the
liquidity and volatility of portfolio securities and currency holdings.
At November 30, 1996, the diversification of industries for the International
Equity Fund was as follows:
<TABLE>
<CAPTION>
% OF
INDUSTRY NET ASSETS
- -------------------------------- ----------
<S> <C>
Aerospace and Defense 3.8
Automobile 1.7
Banking 1.9
Chemicals 2.3
Clothing & Textiles 2.3
Computer Software 1.2
Diversified 2.9
Electrical Equipment 1.0
Electronics 13.7
Entertainment 0.9
Financial Services 9.9
Food & Beverage 0.6
Healthcare 1.0
Hotels 1.1
Industrial Services 3.8
Insurance 1.4
Manufacturing 1.2
Machinery & Equipment 2.6
Office Equipment 2.6
Oil 3.0
Pharmaceuticals 6.2
Printing & Publishing 0.9
Real Estate 2.6
Restaurants 1.4
Retail Trade 11.1
Steel 1.0
Telecommunications 4.6
Transportation 3.1
Utilities 6.7
</TABLE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
FTI FUNDS:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of FTI Small Capitalization Equity Fund, FTI
International Equity Fund, FTI International Bond Fund, and FTI Global Bond Fund
(portfolios of FTI Funds) as of November 30, 1996 and the related statements of
operations, the statements of changes in net assets, and the financial
highlights for the periods ended November 30, 1996. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of November 30, 1996, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of FTI
Small Capitalization Equity Fund, FTI International Equity Fund, FTI
International Bond Fund, and FTI Global Bond Fund of FTI Funds at November 30,
1996, and the results of their operations, the changes in their net assets, and
the financial highlights for the periods ended November 30, 1996, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 17, 1997
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
Peter A. Aron Edward C. Gonzales
Nancy L. Close Chairman, President and Treasurer
James C. Goodfellow C. Christine Thomson
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 a Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
A1. The graphic presentation here displayed consists of a two bar charts
depicting projected price to earnings and earnings per share growth for
1996 and 1997 as measured by the Russell 2000 Index and S&P 500. Russell
2000 projected price to earnings for 1996 and 1997 are 17.1x and 14.5x,
respectively. Russell 2000 earnings per share growth for 1996 and 1997 are
19.1% and 19.9%, respectively. S&P 500 projected price to earnings for
1996 and 1997 are 18.1x and 15.9x, respectively. S&P 500 earnings per
share growth for 1996 and 1997 are 10.6% and 13.5%, respectively.
A2. The graphic presentation here displayed consists of a pie chart
entitled `Sector Analysis'' of the FTI Small Capitalization Equity Fund.
The chart is divided as follows: Cash 1%, Utilities 1%, Intermediate and
Capital Goods 3%, Transportation 4%, Energy 8%, Drug 9%, Consumer Services
15%, Financial 17%, Consumer Goods 18% and Science and Technology 24%.
A3. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The FTI
Small Capitalization Equity Fund is represented by a solid line. The
Russell 2000 Index (Russell) is represented by a dotted line. The line
graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in the fund and the Russell. The `x''
axis reflects computation periods from 12/22/95 to 11/30/96. The `y''
axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the fund as compared to the
Russell. The ending values were $12,080 and $11,500, respectively. The
legend in the bottom quadrant of the graphic presentation indicates the
fund's Cumulative Total Return from the fund's start of performance
(12/22/95) to 11/30/96. The total return was 20.80%.
A4. The graphic presentation here displayed consists of two pie charts
entitled `Regional Allocation'' and ``Sector Allocation'' of the FTI
International Equity Fund. The chart entitled `Regional Allocation'' is
divided as follows: Cash 4%, Latin America/Other 8%, Asia Pacific 12%,
U.K./Ireland 19% and Japan 26%. The chart entitled `Sector Allocation''
is divided as follows: Energy 3%, Transportation 4%, Drug and Health 6%,
Utilities 13%, Science and Technology 16%, Financials 18%, Inter. and
Capital Goods 18% and Consumer 21%.
A5. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The FTI
International Equity Fund is represented by a solid line. The Morgan
Stanley Capital International Europe, Australia, and Far East Index (EAFE)
is represented by a dotted line. The line graph is a visual representation
of a comparison of change in value of a $10,000 hypothetical investment in
the fund and the EAFE. The `x'' axis reflects computation periods from
12/22/95 to 11/30/96. The `y'' axis reflects the cost of the investment.
The right margin reflects the ending value of the hypothetical investment
in the fund as compared to the EAFE. The ending values were $11,004 and
$10,740, respectively. The legend in the bottom quadrant of the graphic
presentation indicates the fund's Cumulative Total Return from the fund's
start of performance (12/22/95) to 11/30/96. The total return was 10.04%.
A6. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The FTI
International Bond Fund is represented by a solid line. The Salomon
Brothers Non-U.S. Dollar World Government Bond Index (SBNUSDWGBI) is
represented by a dotted line. The line graph is a visual representation of
a comparison of change in value of a $10,000 hypothetical investment in the
fund and the SBNUSDWGBI. The `x'' axis reflects computation periods from
12/22/95 to 11/30/96. The `y'' axis reflects the cost of the investment.
The right margin reflects the ending value of the hypothetical investment
in the fund as compared to the SBNUSDWGBI. The ending values were $10,375
and $10,513, respectively. The legend in the bottom quadrant of the
graphic presentation indicates the fund's Cumulative Total Return from the
fund's start of performance (12/22/95) to 11/30/96. The total return was
3.75%.
A7. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The FTI
Global Bond Fund is represented by a solid line. The Salomon Brothers
World Government Bond Index (SBWGBI) is represented by a dotted line. The
line graph is a visual representation of a comparison of change in value of
a $10,000 hypothetical investment in the fund and the SBWGBI. The `x''
axis reflects computation periods from 12/22/95 to 11/30/96. The `y''
axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the fund as compared to the
SBWGBI. The ending values were $10,502 and $10,504, respectively. The
legend in the bottom quadrant of the graphic presentation indicates the
fund's Cumulative Total Return from the fund's start of performance (12/22/95)
to 11/30/96. The total return was 5.02%.
