Friends Ivory Funds
Semi-Annual
Report
December 31, 1999
(Unaudited)
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1
TABLE OF CONTENTS
Page
STATEMENT OF NET ASSETS ......................................... 2
STATEMENTS OF ASSETS AND LIABILITIES ............................ 5
STATEMENTS OF OPERATIONS ........................................ 6
STATEMENTS OF CHANGES IN NET ASSETS ............................. 7
FINANCIAL HIGHLIGHTS ............................................ 8
NOTES TO FINANCIAL STATEMENTS ................................... 10
HOW TO OBTAIN MORE INFORMATION ABOUT
FRIENDS IVORY FUNDS ....................................... Back Cover
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STATEMENT OF NET ASSETS (000)
Friends Ivory Funds -- December 31, 1999 (Unaudited)
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MARKET
VALUE
SOCIAL AWARENESS FUND SHARES (000)
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COMMON STOCKS (98.9%)
CAPITAL GOODS (12.6%)
Applied Materials* ............................. 6,000 $ 760
Colgate-Palmolive .............................. 8,500 553
Gillette ....................................... 7,000 288
Johnson & Johnson .............................. 9,500 885
Procter & Gamble ............................... 9,000 986
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3,472
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COMMUNICATION SERVICES (11.2%)
AT&T ........................................... 18,000 914
BellSouth ...................................... 13,500 632
MCI WorldCom* .................................. 10,500 557
SBC Communications ............................. 20,186 984
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3,087
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COMPUTERS (2.6%)
Dell Computer* ................................. 14,000 714
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CONSUMER CYCLICALS (13.8%)
Dayton Hudson .................................. 10,000 734
Federated Department Stores* ................... 7,000 354
Home Depot ..................................... 20,250 1,388
McDonald's ..................................... 12,500 504
Walgreen ....................................... 12,000 351
Williams-Sonoma* ............................... 10,500 483
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3,814
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CONSUMER STAPLES (6.5%)
Ben & Jerry's Homemade* ........................ 16,000 398
Bestfoods ...................................... 6,100 321
Coca-Cola ...................................... 12,500 728
PepsiCo ........................................ 9,500 335
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1,782
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MARKET
VALUE
SHARES (000)
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ENERGY (3.1%)
Enron ......................................... 9,000 $ 399
Nabors Industries* ............................ 8,000 248
Schlumberger .................................. 3,500 197
Transocean Sedco Forex ........................ 677 23
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867
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ENTERTAINMENT (1.1%)
Walt Disney ................................... 10,500 307
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FINANCIALS (12.2%)
American Express .............................. 4,500 748
Equity Residential Properties Trust ........... 5,500 235
Fannie Mae .................................... 10,000 624
J.P. Morgan ................................... 3,650 462
Mellon Financial .............................. 14,000 477
Wells Fargo ................................... 20,500 829
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3,375
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HEALTH CARE (8.3%)
Amgen* ........................................ 6,000 360
Medtronic ..................................... 14,000 510
Merck ......................................... 14,500 972
Schering-Plough ............................... 11,000 464
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2,306
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SERVICE INDUSTRIES (21.0%)
America Online* ............................... 6,000 453
Automatic Data Processing ..................... 8,700 469
Cisco Systems* ................................ 18,500 1,982
Microsoft* .................................... 24,800 2,895
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5,799
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STATEMENT OF NET ASSETS (000)
Friends Ivory Funds -- December 31, 1999 (Unaudited)
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MARKET
VALUE
SOCIAL AWARENESS FUND (CONCLUDED) SHARES (000)
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TECHNOLOGY (6.5%)
Lucent Technologies ........................... 16,000 $ 1,197
Texas Instruments ............................. 6,250 606
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1,803
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Total Common Stocks
(Cost $27,464) 27,326
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Total Investments (98.9%)
(Cost $27,464) 27,326
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OTHER ASSETS AND LIABILITIES, NET (1.1%) 308
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NET ASSETS:
Portfolio capital of Advisor Shares (unlimited
authorization -- no par value) based on 2,776,792
outstanding shares of beneficial interest ............... 27,768
Undistributed net investment income ........................ 4
Net unrealized depreciation on investments ................. (138)
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TOTAL NET ASSETS (100.0%) $27,634
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Net Asset Value, Offering and Redemption Price
Per Share -- Advisor Shares $9.95
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* Non-income producing security
The accompanying notes are an integral part of the financial statements.
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STATEMENT OF ASSETS AND LIABILITIES (000)
Friends Ivory Funds -- December 31, 1999 (Unaudited)
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EUROPEAN
SOCIAL AWARENESS
FUND
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ASSETS:
Cash ....................................................... $ 53
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Total Assets ............................................... 53
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LIABILITIES: .................................................. --
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NET ASSETS:
Portfolio Capital of the Advisor Shares (unlimited
authorization -- no par value) based on 5,250
outstanding shares of beneficial interest .................. 53
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Total Net Assets ........................................... $ 53
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Net Asset Value, Offering and Redemption Price
Per Share-- Advisor Shares ................................ $10.00
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The Accompanying Notes are an Integral Part of the Financial Statements.
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STATEMENTS OF OPERATIONS (000)
Friends Ivory Funds -- For the Period Ended December 31, 1999 (Unaudited)
EUROPEAN
SOCIAL SOCIAL
AWARENESS AWARENESS
FUND FUND
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1999(1) 1999(2)
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INVESTMENT INCOME:
Dividend Income ............................. $ 5 $ --
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Total Investment Income ..................... 5 --
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EXPENSES:
Investment Advisory Fee ..................... 2 --
Less: Investment Advisory Fees Waived ....... (2) --
Administration Fee .......................... -- --
Custodian Fee ............................... 1 --
Transfer Agent Fee .......................... -- --
Professional Fees ........................... -- --
Registration Fees ........................... -- --
Printing Fees ............................... -- --
Trustee Fees ................................ -- --
Distribution Fees ........................... -- --
Other Fees .................................. -- --
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Total Expenses .............................. 1 --
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NET INVESTMENT INCOME ....................... 4 --
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NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net Realized Gain (Loss) on Securities Sold . -- --
Net Change in Unrealized Appreciation/
Depreciation on Investments ................. (138) --
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Total Net Realized and Unrealized Gain (Loss)
on Investments .............................. (138) --
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NET DECREASE IN NET ASSETS
FROM OPERATIONS ............................. $(134) $ --
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(1) Social Awareness Fund commenced operations 12/28/99.
(2) European Social Awareness Fund commenced operations 12/31/99.
Amounts designated as "--" Are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
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STATEMENTS OF CHANGES IN NET ASSETS (000)
Friends Ivory Funds -- For the Period Ended December 31, 1999 (Unaudited)
European
Social Social
Awareness Awareness
Fund Fund
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1999 (1) 1999 (2)
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OPERATIONS:
Net Investment Income ........................ $ 4 $ --
Net Realized Gain (Loss) on Investments ...... -- --
Net Change in Unrealized Appreciation/
Depreciation on Investments ................ (138) --
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Net Decrease in Net Assets
from Operations ............................ (134) --
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CAPITAL SHARE TRANSACTIONS (A):
ADVISOR SHARES:
Proceeds from Shares Issued ................ 27,718 3
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INCREASE IN NET ASSETS FROM
ADVISOR SHARE TRANSACTIONS ................... 27,718 3
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Net Increase in Net Assets ...................... 27,584 3
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NET ASSETS:
Beginning of Period .......................... 50 50
End of Period ................................ $27,634 $ 53
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(A) SHARES ISSUED AND REDEEMED:
ADVISOR SHARES:
Shares Issued .............................. 2,772 --
Shares Redeemed ............................ -- --
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Net Change in
Capital Shares ............................. 2,772 --
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(1) Social Awareness Fund commenced operations 12/28/99.
(2) European Social Awareness Fund commenced operations 12/31/99.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
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FINANCIAL HIGHLIGHTS
Friends Ivory Funds -- For the Period Ended December 31 (Unaudited)
For a share outstanding throughout each period
Net
Net Asset Net Realized Distributions
Value Investment and from Net
Beginning of Income Unrealized Investment
Period (Loss) Gains (Losses) Income
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SOCIAL AWARENESS FUND
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Advisor Shares
1999 (1) $10.00 -- (0.05) --
EUROPEAN SOCIAL AWARENESS FUND
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Advisor Shares
1999 (2) $10.00 -- -- --
Distributions
from
Realized Net Asset
Capital Value End
Gains of Period
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SOCIAL AWARENESS FUND
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Advisor Shares
1999 (1) -- $ 9.95
EUROPEAN SOCIAL AWARENESS FUND
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Advisor Shares
1999 (2) -- $ 10.00
+ Return is for the period indicated and has not been annualized.
(1) Social Awareness Fund commenced operations on 12/28/99. All ratios for the
period have been annualized.
(2) European Social Awareness Fund commenced operations on 12/31/99.
All ratios for the period have been annualized.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
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Ratio of
Net Assets Expenses
Total End of to Average
Return+ Period (000) Net Assets
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SOCIAL AWARENESS FUND
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Advisor Shares
1999 (1) -0.50% $27,634 0.62%
EUROPEAN SOCIAL AWARENESS FUND
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Advisor Shares
1999 (2) 0.00% 53 0.00%
Ratio of
Ratio of Ratio of Net Investment
Net Expenses Income (Loss)
Investment to Average to Average
Income (Loss) Net Assets Net Assets Portfolio
to Average (Excluding (Excluding Turnover
Net Assets Waivers) Waivers) Rate
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SOCIAL AWARENESS FUND
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Advisor Shares
1999 (1) 1.83% 1.68% 0.77% 0.00%
EUROPEAN SOCIAL AWARENESS FUND
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Advisor Shares
1999 (2) 0.00% 0.00% 0.00% 0.00%
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NOTES TO FINANCIAL STATEMENTS
Friends Ivory Funds -- December 31, 1999 (Unaudited)
1. ORGANIZATION
Friends Ivory Funds (the "Trust") was organized as a Delaware business trust on
September 29, 1999. The Trust is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company consisting of two
Funds: Friends Ivory Social Awareness Fund and Friends Ivory European Social
Awareness Fund (collectively the "Funds", and each of these, a "Fund"). The
Funds' prospectus provides a description of each Fund's investment objectives,
policies and strategies. The assets of each Fund are segregated, and a
shareholder's interest is limited to the Fund in which shares are held. The
Funds are authorized to offer an unlimited number of shares of beneficial
interest with no par value. Friends Ivory & Sime, Inc. (the "Adviser") absorbed
all expenses of organizing the Trust.
The Trust offers Advisor shares. Advisor shares are subject to a distribution
fee of 0.25% per year.
2. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Funds are as follows:
SECURITY VALUATION: Securities listed on an exchange are valued at the last
quoted sales price as of the close of the New York Stock Exchange on the
valuation date. Securities not traded or securities not listed on an exchange
are valued at the mean of the last quoted bid and ask prices. Securities listed
on a foreign exchange are valued at the last quoted sales price before the Fund
is valued. Long-term debt securities are valued by an independent pricing
service and such prices are believed to reflect the fair value of such
securities. Other securities and assets for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the direction of the Fund's Board of Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are recorded
on trade date. Realized gains and losses on investments sold are recorded on the
identified cost basis. Interest income is accrued on a daily basis. Dividends
are recorded on the ex-dividend date. Expenses common to all of the Funds in the
Trust are allocated among the Funds on the basis of average net assets.
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DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment
income of the Social Awareness Fund and European Social Awareness Fund are
declared and paid at least annually.
FEDERAL INCOME TAXES: Each Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company and
to make the requisite distributions of taxable income and gains to its
shareholders which will be sufficient to relieve it from all federal income
taxes. Therefore, no provision for federal income tax
has been made.
NET ASSET VALUE PER SHARE: The net asset value per share of each Fund is
calculated on each business day by dividing the total value of the Fund's
assets, less liabilities, by the number of shares outstanding.
USE OF ESTIMATES: The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS
Under an Investment Advisory Agreement with the Trust, Friends Ivory & Sime,
Inc. will act as investment adviser to each Fund. Friends Ivory & Sime plc, an
affiliate of the Adviser, serves as the sub-adviser to the European Social
Awareness Fund and administers the Fund's investment program under the
supervision of the Adviser. For its investment advisory services to the Trust,
the Adviser receives an annual fee which is calculated daily and paid monthly
based on the aggregate average daily net assets of the Trust as follows: Social
Awareness Fund, 0.75%; and European Social Awareness Fund, 0.85%. The
sub-adviser receives a sub-advisory fee from the Adviser for its services
calculated at the rate of 0.15% of the aggregate average daily net assets of the
European Social Awareness Fund. The Adviser has agreed, on a voluntary basis, to
waive all or a portion of its investment advisory fee and to reimburse expenses
in order to keep total operating expenses from exceeding 1.25% and 1.70%. Fee
waivers and expense reimbursements are voluntary and may be terminated at
anytime.
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NOTES TO FINANCIAL STATEMENTS
Friends Ivory Funds -- December 31, 1999 (Unaudited)
Under an Administration Agreement with the Trust, SEI Investments Mutual Fund
Services (the "Administrator") will provide the Trust with overall
administrative and accounting services. For its services, the Administrator will
receive an annual fee which is calculated daily and paid monthly based on the
aggregate average daily net assets of the Trust as follows: 0.15% up to $100
million; 0.12% from $100 million to $300 million; 0.10% from $300 million to
$600 million; and 0.08% in excess of $600 million. Each Fund pays the
Administrator a minimum annual fee of $85,000 with a minimum of $10,000 per each
additional class.
Under a Distribution Agreement with the Trust, SEI Investments Distribution Co.
(the "Distributor") will provide the Trust with distribution services.
DISTRIBUTION OF FUND SHARES: Each Fund has adopted a distribution plan for
Advisor Shares that allows the Fund to pay distribution fees for the sale and
distribution of Advisor Shares.
Distributions fees for Advisor Shares, as a percentage of average daily net
assets, are 0.25% for each Fund.
Under a Custodian Agreement with the Trust, Chase Manhattan Bank will serve as
custodian for the assets of the Trust.
4. INVESTMENTS
During the period ended December 31, 1999, purchases and sales of securities,
other than short-term investments or U.S. government obligations, aggregated:
PURCHASES SALES
(000) (000)
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Social
Awareness
Fund $-- $--
European Social
Awareness Fund -- --
The aggregate gross unrealized appreciation and depreciation for securities held
by the Funds at December 31, 1999 is as follows:
AGGREGATE AGGREGATE
GROSS GROSS
APPRECIATION DEPRECIATION NET
(000) (000) (000)
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Social
Awareness
Fund $197 $(335) $(138)
European
Social
Awareness
Fund -- -- --
5. IN-KIND TRANSFERS OF SECURITIES
During the period ended December 31, 1999, the Social Awareness Fund issued
2,771,792 shares of beneficial interest in exchange for securities from an
account managed by Friends Ivory & Sime, Inc. valued at $27,717,923.
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NOTES
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FUND
Friends Ivory Funds
P.O. Box 446
Portland, ME 04112
INVESTMENT ADVISER
Friends Ivory & Sime, Inc.
One World Trade Center
Suite 2101
New York, New York 10048
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
ADMINISTRATOR
SEI Investments
One Freedom Valley Drive
Oaks, PA 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP
Two Commerce Square
Suite 4000
2001 Market St.
Philadelphia, PA 19103
TO OBTAIN MORE INFORMATION:
Call 1-800-481-4404
This semi-annual report and the financial statements contained herein are
submitted for the general information of the shareholders of the Trust and must
be preceded or accompanied by a current prospectus.
FIS-F-003-01 [Recycle Symbol omitted]
