FIDUCIARY MANAGEMENT ASSOCIATES -
GROWTH PORTFOLIO
500 PLAZA DRIVE, SECAUCUS, NJ 07094, (201) 319-4000
ANNUAL REPORT
SEPTEMBER 30, 1996
LETTER TO SHAREHOLDERS FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
November 4, 1996
Dear Shareholder:
We are pleased to report on equity market activity and investment results for
Fiduciary Management Associates - Growth Portfolio. Shown below are FMA's total
returns for the most recent six- and twelve-month periods ended September 30,
1996. For comparison, we've also shown returns for the S&P 500 Stock Index, a
common measure of the broad stock market, and for the Russell 2000 Index, which
measures the performance of small-cap U.S. stocks.
TOTAL RETURN
PERIODS ENDED SEPTEMBER 30, 1996
6-MONTH PERIOD 12-MONTH PERIOD
-------------- ---------------
FMA - GROWTH PORTFOLIO 8.03% 41.04%
S&P 500 STOCK INDEX 7.71 20.32
RUSSELL 2000 INDEX 5.36 13.13
THE S&P AND RUSSELL INDICES ARE UNMANAGED.
On page 3, we've also provided a chart that shows the performance of a
hypothetical $10,000 investment in FMA over the 10-year period ended September
30, 1996.
THE FISCAL YEAR IN REVIEW
Throughout the past year, the Portfolio has benefited from many of the
investment strategies implemented in 1995. We continued to underweight
technology holdings relative to the Portfolio's benchmark, the Russell 2000
Index, during most of the past year. Not until the general sell-off of
technology issues in July did we increase our technology stake to approximately
15-17% of net assets, the highest level since July 1995.
The Portfolio continued to overweight energy holdings relative to the
benchmark, with energy issues accounting for 11% of net assets at the time of
this report. Within the energy sector, we continue to see rising daily rates
for offshore drilling rigs. At the same time, the worldwide shortage of
offshore drilling rigs is becoming increasingly apparent to the investment
community. After strong performance in 1995, drilling companies have been the
best performing equity sector to-date in 1996.
We continue to like Diamond Offshore Drilling, Rowan Companies, and Noble
Drilling. We also believe the outlook for the U.S. refining business is
positive and have increased our exposure to Diamond Shamrock.
The Portfolio has also benefited from an overweight position in the lodging
sector. We began amassing this stake, which currently accounts for 7% of the
portfolio's holdings, in late 1995. We see a tremendous room shortage relative
to demand in the high-end segment of this business, and we particularly favor
Host Marriott. In addition, we have purchased holdings in three companies which
offer business and leisure travelers accommodations on an extended basis. While
the average stay in these facilities is six weeks, approximately a quarter of
all guests stay at least six months. Holdings servicing this new and rapidly
expanding market are: Extended Stay America, Suburban Lodges of America, and
Studio Plus Hotels.
Footwear and apparel companies have continued to report strong earnings.
Holdings in Nine West Group and Timberland have added to the Portfolio's gains.
Trends favoring casual wear have likewise benefited our positions in Tommy
Hilfiger and Jones Apparel Group.
With oil at $25 per barrel, the airline industry has suffered and our exposure
in this area has hurt performance during the last several months. Nevertheless,
we continue to own Continental Airlines, Alaska Air Group, and America West
Airlines. Airplanes are flying with record average passenger loads--71% for the
year-to-date period compared with 66% in 1995. Last year was the first time in
several years airlines were generally profitable, and we believe we are in the
second year of a positive, multi-year cycle for the industry. Airlines are
using their cash flow to pay down debt and restructure their balance sheets. As
demand outpaces capacity growth, pricing power is increasing. This contrasts
sharply with past cycles when airlines used profits to buy more planes and
increase capacity in order to maximize revenue growth, only to erode their
pricing power.
1
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
MARKET AND ENVIRONMENT OUTLOOK
The market continues to benefit from modest economic growth and modest
inflation. Companies reporting better-than-average earnings are gaining
attention in the marketplace, driving market valuations higher.
Looking forward, our outlook for the U.S. economy and equities remains
positive. However, an increase in interest rates would put some pressure on
price/earnings ratios, which means that stocks with higher P/Es could become
vulnerable. As a result, we continue to focus on the underlying earnings of
each company, working to avoid the risk of unsustainable valuations.
We remain enthusiastic about the growth potential of small-cap stocks. After
underperforming large-cap stocks in 1994, 1995, and 1996 year-to-date, we
believe that small-cap stocks offer very attractive valuations on a relative
basis. We are hopeful that the relative value of small-cap issues will soon be
recognized in the marketplace.
Thank you for your continued interest and investment in FMA - Growth Portfolio.
We look forward to reporting to you on future market activity and Portfolio
investment results.
Sincerely,
Alden M. Stewart
President
Randall E. Hasse
Vice President and Portfolio Manager
2
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
GROWTH OF A $10,000 INVESTMENT:
9/30/86 TO 9/30/96
$39,000
$34,000
$34,000
$29,000
$24,000
$19,000
$14,000
$9,000
S&P 500
FMA: $33,658
RUSSELL 2000
9/30/86
9/30/96
This chart illustrates the total value of a hypothetical $10,000 investment in
FMA with dividends and capital gains reinvested. Past performance is not
indicative of future results.
For comparison, we've shown the unmanaged Russell 2000 and S&P 500 Stock
Indices. The S&P 500 Stock Index is a common measure of the broad U.S. stock
market while the Russell 2000 Index measures small-cap stocks.
FMA
S&P 500
Russell 2000
3
TEN LARGEST HOLDINGS
SEPTEMBER 30, 1996 FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
COMPANY VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Nine West Group, Inc. $ 5,208,000 3.3%
Telephone and Data Systems, Inc. 4,359,075 2.7
USA Waste Services, Inc. 4,170,600 2.6
Host Marriott Corp. 3,959,950 2.5
Diamond Offshore Drilling, Inc. 3,895,320 2.4
Rowan Cos., Inc. 3,844,200 2.4
Republic Industries, Inc. 3,413,300 2.1
Office Max, Inc. 3,219,300 2.0
Diamond Shamrock, Inc. 3,103,162 1.9
Millicom International Cellular, S.A. 2,866,625 1.8
$38,039,532 23.7%
4
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996 FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-92.3%
CONSUMER PRODUCTS & SERVICES-26.9%
ADVERTISING-2.0%
HA-LO Industries, Inc. * 48,400 $ 1,403,600
Outdoor Systems, Inc. * 37,400 1,757,800
------------
3,161,400
AIRLINES-2.4%
Alaska Air Group, Inc. * 45,500 972,562
America West Airlines, Inc. * 123,400 1,449,950
Continental Airlines, Inc. * 61,600 1,378,300
------------
3,800,812
APPAREL-2.7%
Jones Apparel Group, Inc. * 18,900 1,204,875
Timberland Co. * 38,100 781,050
Tommy Hilfiger Corp. * 40,700 2,411,475
------------
4,397,400
COMMERCIAL SERVICES-1.3%
TeleSpectrum Worldwide, Inc. * 108,000 2,106,000
ENTERTAINMENT & LEISURE-0.5%
Heritage Media Corp. * 41,700 787,088
RESTAURANTS & LODGING-6.6%
Doubletree Corp. * 21,600 861,300
Extended Stay America, Inc. * 75,900 1,555,950
Host Marriott Corp. * 273,100 3,959,950
Interstate Hotels Co. * 34,000 939,250
La Quinta Inns, Inc. 53,650 1,046,175
Studio Plus Hotels, Inc. * 70,700 1,166,550
Suburban Lodges of America, Inc. * 46,700 980,700
------------
10,509,875
RETAILING-8.6%
Cross-Continent Auto Retailers, Inc. * 35,600 818,800
Designer Holdings, Ltd. * 74,400 1,943,700
Industrie Natuzzi S.p.A. (ADR) (a) 37,900 1,762,350
Marker International * 92,000 897,000
Nine West Group, Inc. * 96,000 5,208,000
Office Max, Inc. * 229,950 3,219,300
------------
13,849,150
OTHER-2.8%
Equity Corp. International * 34,600 1,098,550
Loewen Group, Inc. (b) 63,200 2,646,500
Stewart Enterprises, Inc. 23,450 791,437
------------
4,536,487
------------
43,148,212
TECHNOLOGY-25.4%
COMPUTER PERIPHERALS-2.3%
Western Digital Corp. * 37,800 1,516,725
Xircom, Inc. * 137,400 2,232,750
------------
3,749,475
5
PORTFOLIO OF INVESTMENTS
(CONTINUED) FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES-8.6%
Applix, Inc. * 65,600 $ 1,722,000
Business Objects, S.A. (ADR) *(c) 56,000 1,078,000
Comverse Technology, Inc. * 38,100 1,481,138
DST Systems, Inc. * 28,100 899,200
Exabyte Corp. * 86,100 1,291,500
IDT Corp. * 81,200 1,360,100
Integrated Systems, Inc. * 35,400 1,168,200
Madge Networks N.V. *(d) 6,200 78,275
Network General Corp. * 67,700 1,548,637
Radius, Inc. * 457 743
Sterling Software, Inc. * 20,400 1,558,050
Storage Technology Corp. * 42,000 1,590,750
------------
13,776,593
ELECTRONICS-4.7%
BMC Industries, Inc. 50,200 1,436,975
Cable Design Technologies Corp. * 33,100 1,324,000
Harman International Industries, Inc. 41,400 2,018,250
Kent Electronics Corp.* 14,700 319,725
Uniphase Corp. * 28,500 1,204,125
VLSI Technology, Inc. * 75,000 1,218,750
------------
7,521,825
OFFICE EQUIPMENT-0.7%
Lexmark International Group, Inc. * 54,200 1,104,325
TELECOMMUNICATIONS-9.1%
Advanced Fibre Communications * 4,300 107,500
Andrew Corp. * 23,800 1,187,025
ICG Communications, Inc. * 71,853 1,508,913
Millicom International Cellular, S.A. *(e) 71,000 2,866,625
Premisys Communications, Inc. * 35,900 1,319,325
Telephone and Data Systems, Inc. 108,300 4,359,075
United States Cellular Corp. * 52,800 1,597,200
Westell Technologies, Inc. * 37,000 1,637,250
------------
14,582,913
------------
40,735,131
BASIC INDUSTRIES-22.4%
CHEMICALS-3.5%
Crompton & Knowles Corp. 94,900 1,553,987
Cytec Industries, Inc. * 66,000 2,565,750
Landec Corp. 14,396 140,361
Polymer Group, Inc. * 100,689 1,409,646
------------
5,669,744
ENGINEERING & CONSTRUCTION-0.8%
EMCOR Group, Inc. * 82,300 1,244,788
ENVIRONMENTAL CONTROL-7.1%
Allied Waste Industries, Inc. * 112,900 1,044,325
Republic Industries, Inc. * 117,700 3,413,300
United Waste Systems, Inc. * 80,200 2,786,950
USA Waste Services, Inc. * 132,400 4,170,600
------------
11,415,175
6
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
FOREST PRODUCTS-0.7%
Buckeye Cellulose Corp. * 46,100 $ 1,198,600
METAL HARDWARE-5.0%
AK Steel Holding Corp. 26,500 1,086,500
Alumax, Inc. * 46,900 1,571,150
Century Aluminum Co. 95,400 1,407,150
Gibraltar Steel Corp. * 21,500 483,750
Kaiser Aluminum Corp. * 76,900 893,962
Olympic Steel, Inc. * 21,500 577,813
Titanium Metals Corp. * 44,700 1,296,300
Uranium Resources, Inc. * 54,000 702,000
------------
8,018,625
SURFACE TRANSPORTATION & SHIPPING-2.8%
Team Rental Group, Inc. * 138,100 2,623,900
Xtra Corp. 44,900 1,902,637
------------
4,526,537
TEXTILE PRODUCTS-2.5%
Mohawk Industries, Inc. * 99,500 2,549,688
Unifi, Inc. 50,600 1,391,500
------------
3,941,188
------------
36,014,657
ENERGY-10.4%
OIL & GAS SERVICES-10.4%
Diamond Offshore Drilling, Inc. * 70,824 3,895,320
Diamond Shamrock, Inc. 99,700 3,103,162
Global Marine, Inc. * 46,500 732,375
KCS Energy, Inc. 44,600 1,588,875
Noble Drilling Corp. * 168,500 2,548,563
Reading & Bates Corp. * 36,400 987,350
Rowan Cos., Inc. * 206,400 3,844,200
------------
16,699,845
HEALTH CARE-3.9%
BIOTECHNOLOGY-1.7%
Centocor, Inc. * 35,900 1,274,450
Medimmune, Inc. * 40,100 571,425
Neurex Corp. * 42,200 807,075
------------
2,652,950
DRUGS, HOSPITAL SUPPLIES &
MEDICAL SERVICES-2.2%
Algos Pharmaceutical Corp. * 55,500 777,000
GelTex Pharmaceuticals, Inc. * 83,100 1,662,000
National Surgery Centers, Inc. * 39,900 1,117,200
------------
3,556,200
------------
6,209,150
FINANCIAL SERVICES-3.0%
FINANCE-1.7%
First Merchants Acceptance Corp. * 39,000 780,000
Oxford Resources Corp. * 87,800 1,876,725
------------
2,656,725
INSURANCE-1.3%
Riscorp, Inc. * 28,900 502,138
Twentieth Century Industries, Inc. * 86,100 1,517,512
------------
2,019,650
------------
4,676,375
7
PORTFOLIO OF INVESTMENTS
(CONTINUED) FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
RESTRICTED SECURITIES & PRIVATE
PLACEMENTS-0.3%
Menlo Ventures III, A Limited
Partnership *(f) 1,000,000 $ 168,791
Oak Investment Partners III *(f) 2,000,000 273,832
Oscco II, A Limited Partnership *(f) 750,000 10,161
RCS II, A Limited Partnership *(f) 1,000,000 63,550
------------
516,334
Total Common Stocks & Other Investments
(cost $130,958,333) 147,999,704
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
SHORT-TERM DEBT SECURITIES-5.4%
Federal Home Loan Bank
5.70%, 10/01/96 $3,700 $ 3,700,000
Federal Home Loan Mortgage Corp.
5.20%, 11/04/96 5,000 4,975,445
Total Short-Term Debt Securities
(amortized cost $8,675,445) 8,675,445
TOTAL INVESTMENTS-97.7%
(cost $139,633,778) 156,675,149
Other assets less liabilities-2.3% 3,765,384
NET ASSETS-100% $160,440,533
* Non-income producing security.
(a) Country of origin - Italy.
(b) Country of origin - Canada.
(c) Country of origin - France.
(d) Country of origin - Netherlands.
(e) Country of origin - Luxembourg.
(f) Illiquid security, valued at fair value (see Notes A & D).]
Glossary:
ADR - American Depository Receipt
See notes to financial statements.
8
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $139,633,778) $156,675,149
Cash 483,140
Receivable for investment securities sold 9,813,988
Dividends receivable 2,207
Total assets 166,974,484
LIABILITIES
Payable for investment securities purchased 6,155,792
Advisory fee payable 300,868
Accrued expenses 77,291
Total liabilities 6,533,951
NET ASSETS $160,440,533
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 41,144
Additional paid-in capital 94,168,340
Accumulated net realized gain 49,189,678
Net unrealized appreciation of investments 17,041,371
$160,440,533
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(based on 4,114,385 shares of beneficial interest outstanding) $39.00
See notes to financial statements.
9
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 701,027
Dividends (net of foreign taxes withheld of $3,189) 254,806 $ 955,833
EXPENSES
Advisory fee 1,155,617
Administrative 118,966
Custodian 106,973
Audit and legal 80,082
Trustees' fees 28,626
Transfer agency 18,190
Printing 11,137
Registration 4,183
Miscellaneous 9,281
Total expenses 1,533,055
Net investment loss (577,222)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 51,214,394
Net change in unrealized appreciation of investments (1,028,571)
Net gain on investments 50,185,823
NET INCREASE IN NET ASSETS FROM OPERATIONS $49,608,601
STATEMENT OF CHANGES IN NET ASSETS
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (577,222) $ (281,092)
Net realized gain on investments 51,214,394 20,853,916
Net change in unrealized appreciation of
investments (1,028,571) 9,662,236
Net increase in net assets from operations 49,608,601 30,235,060
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments (21,476,505) (15,581,382)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 4,173,519 7,046,188
Total increase 32,305,615 21,699,866
NET ASSETS
Beginning of year 128,134,918 106,435,052
End of year $160,440,533 $128,134,918
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Fiduciary Management Associates - Growth Portfolio (the "Fund") which is a
Massachusetts business trust, is registered under the Investment Company Act of
1940, as a diversified, open-end management investment company. The following
is a summary of significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on national securities exchanges are valued at the
last reported sales price, or, if no sale occurred, at the mean of the bid and
ask price at the regular close of the New York Stock Exchange. Over-the-counter
securities not traded on national securities exchanges are valued at the mean
of the closing bid and asked price. Securities which mature in 60 days or less
are valued at amortized cost which approximates market value. Securities for
which current market quotations are not readily available (including
investments which are subject to limitations as to their sale) are valued at
their fair value as determined in good faith by the Board of Trustees. In
determining fair value, consideration is given to cost, operating, and other
financial data.
2. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Security transactions are accounted for on the date securities are
purchased or sold. Security gains and losses are determined on the identified
cost basis.
4. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
5. RECLASSIFICATION OF NET ASSETS
As the Fund may not utilize net investment losses in future periods for tax
purposes, the Fund reclassified net investment losses of $577,222 to
accumulated net realized gain at September 30, 1996. This reclassification had
no effect on net assets.
NOTE B: ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser"), an advisory fee at a quarterly rate
equal to .1875 of 1% (approximately .75 of 1% on an annual basis) of the net
assets of the Fund valued on the last business day of the previous quarter. The
Adviser has agreed, under the terms of the investment advisory agreement, to
reimburse the Fund to the extent that its aggregate expenses (excluding
interest, taxes, brokerage and extraordinary expenses) exceed the limits
prescribed by any state in which the Fund's shares are qualified for sale. The
Fund believes that the most restrictive expense limitation imposed by any state
is 2.5% of the first $30 million of its average daily net assets, 2% of the
next $70 million of its average daily net assets and 1.5% of its average daily
net assets in excess of $100 million. No reimbursement was required for the
year ended September 30, 1996. Pursuant to the advisory agreement, the Fund
paid $118,966 to the Adviser representing the cost of certain legal and
accounting services provided to the Fund by the Adviser for the year ended
September 30, 1996.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) for providing personnel and facilities to perform transfer agency
services for the Fund. Such compensation amounted to $17,980 for the year ended
September 30, 1996.
Brokerage commissions paid on securities transactions for the year ended
September 30, 1996 amounted to $609,329, none of which was paid to affiliated
brokers.
11
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. Government Securities) aggregated $259,498,322 and $277,519,919,
respectively, for the year ended September 30, 1996. At September 30, 1996, the
cost of securities for federal income tax purposes was $140,198,544.
Accordingly, gross unrealized appreciation of investments was $22,859,103 and
gross unrealized depreciation of investments was $6,382,498 resulting in net
unrealized appreciation of $16,476,605.
NOTE D: ILLIQUID SECURITIES
DATE
ACQUIRED COST VALUE
-------- ---------- ---------
Menlo Ventures III, A Limited Partnership 7/28/83 $ 401,747 $168,791
Oak Investment Partners III 9/28/83 1,410,836 273,832
Oscco II, A Limited Partnership 2/16/84 663,779 10,161
RCS II, A Limited Partnership 12/29/82 147,462 63,550
$2,623,824 $516,334
The securities shown above are restricted as to sale and have been valued at
fair value in accordance with procedures described in Note A.
The value of these securities at September 30, 1996 represents 0.3% of net
assets.
NOTE E: SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $0.01 par value shares of beneficial interest
authorized. Transactions in shares were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
------------ ------------ -------------- --------------
Shares sold 31,000 673,646 $ 1,145,925 $15,835,914
Shares issued in
reinvestment of
distributions 736,943 -0- 21,430,299 -0-
Shares redeemed (548,790) (332,821) (18,402,705) (8,789,726)
Net increase 219,153 340,825 $ 4,173,519 $ 7,046,188
12
FINANCIAL HIGHLIGHTS FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $32.90 $29.94 $31.29 $27.41 $30.93
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.14) (.07) (.20) (.10) (.07)
Net realized and unrealized gain (loss)
on investments 11.75 7.51 (.93) 7.29 (2.24)
Net increase (decrease) in net asset
value from operations 11.61 7.44 (1.13) 7.19 (2.31)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- -0- -0- (.07)
Distributions from net realized gains (5.51) (4.48) (.22) (3.31) (1.14)
Total dividends and distributions (5.51) (4.48) (.22) (3.31) (1.21)
Net asset value, end of year $39.00 $32.90 $29.94 $31.29 $27.41
TOTAL RETURN
Total investment return based on net
asset value (a) 41.04% 30.94% (3.63)% 27.79% (7.52)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $160,441 $128,135 $106,435 $138,932 $129,188
Ratio of expenses to average net assets 1.05% 1.11% .98% .97% .92%
Ratio of net investment loss to average
net assets (.40)% (.26)% (.42)% (.31)% (.19)%
Portfolio turnover rate 194% 159% 116% 100% 122%
Average commission rate(b) $.0598 -- -- -- --
</TABLE>
(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(b) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on which
commissions are charged.
13
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
FIDUCIARY MANAGEMENT ASSOCIATES-GROWTH PORTFOLIO
We have audited the accompanying statement of assets and liabilities of
Fiduciary Management Associates-Growth Portfolio, including the portfolio of
investments, as of September 30 1996, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the years indicated therein. 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 audits.
We conducted our audits 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 September 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 audits provide 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
Fiduciary Management Associates-Growth Portfolio at September 30, 1996, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
New York, New York
November 1, 1996
14
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
BOARD OF TRUSTEES
JOHN D. CARIFA, CHAIRMAN
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
ALDEN M. STEWART, PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
RANDALL E. HAASE, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
JACK KOLTES, VICE PRESIDENT
TIMOTHY D. RICE, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
DISTRIBUTOR
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800) 221-5672
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee.
15
