FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
--------------------------------------------------
500 PLAZA DRIVE, SECAUCUS, NJ 07094, (201) 319-4000
ANNUAL REPORT
SEPTEMBER 30, 1997
LETTER TO SHAREHOLDERS
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
October 24, 1997
Dear Shareholder:
We are pleased to report the performance numbers for our fiscal year ending
September 30, 1997. Portfolio results have been strong, although we were unable
to match the performance of the Russell 2000 Index, which measures the
performance of small cap U.S. stocks. Shown below are the Portfolio's total
returns for the most recent six- and twelve-month periods ending September 30,
1997, based on net asset value. For comparison, we have also shown the returns
for the S&P 500 Stock Index, a common measure of the broad stock market.
INVESTMENT RESULTS*
Total Returns for Periods Ended
September 30, 1997
6 MONTHS 12 MONTHS
---------- -----------
FIDUCIARY MANAGEMENT
ASSOCIATES - GROWTH PORTFOLIO 27.00% 27.28%
RUSSELL 2000 INDEX 33.51% 33.19%
S&P 500 STOCK INDEX 26.24% 40.43%
REVIEW OF INVESTMENT STRATEGY
Throughout the past six months, we have made some changes in the investment
strategies that were implemented back in 1994 and 1995. First, within the
energy sector, we have eliminated our holdings in offshore drillers. However,
we are still bullish about onshore drillers and hold a position in Parker
Drilling.
We continue to see a tightening in the demand/supply for oil tankers similar to
the demand crunch faced by drilling rig operators over the last two years. Both
OMI Corporation and Knightsbridge Tankers are likely beneficiaries of this
trend. We continue to feel confident about the prospects for the U.S. refining
business and have maintained a position in Valero Energy.
On the cyclical side, we continue to look for industries where demand is
growing much greater than supply and capacity to meet demand is insufficient.
As a result, companies can raise prices to meet this greater demand and most of
this falls right to the bottom line as incremental profitability. We continue
to overweight the airline industry, hotel industry, and rental car industry,
believing that they exhibit superior pricing power.
Specifically, the airline industry today is more fundamentally sound than it
has ever been. Airline operators are much more focused on their bottom line
than was the case in previous cycles, and are taking their excess cash flow and
instead paying down debt and buying back stock. We feel that both Continental
Airlines and Alaska Air Group should perform well. Similarly, both the hotel
industry and rental car industry are experiencing close to 10% price growth on
a year-over-year basis, substantially adding to profitability. This year is the
first time the auto rental industry has increased rental rates in 10 years. We
should continue to see less inventory, higher inventory turns, higher prices
and therefore greater profitability going forward. We feel Budget Group and
Avis Rent A Car should do well as a result of these trends.
We have added to the Portfolio's healthcare holdings, focusing specifically on
biotechnology companies with products either approved by the FDA or nearing the
end of the approval process. Therefore, many of the risk hurdles that these
companies typically face are already behind them. We currently hold positions
in GelTex Pharmaceuticals, Medimmune, Neurex and IDEC Pharmaceuticals.
The retail and apparel sectors continue to present attractive growth stocks
with very low price/earnings ratio multiples. We believe that the strong trend
favoring casual wear will continue to benefit Nautica Enterprises, Tommy
Hilfiger and Abercrombie & Fitch. Furthermore, the changing landscape within
the automobile retail sector will likely benefit Circuit City's Car Max as the
superstore format further penetrates the automobile market. Miller Industries,
a leading auto towing manufacturer, is trying to consolidate the towing service
industry. We are very excited about the prospects for this investment.
Within the technology sector, we increased our weighting in the summer from 9%
to 12% of the portfolio. However, our technology stake is still less than that
of the Russell 2000, and the recent sell-off in the group has hurt us less than
other small cap portfolios with greater exposure to technology stocks.
1
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
Lastly, we have added a few holdings in the real estate investment trust (REIT)
sector. The Portfolio now holds positions in Security Capital Group, Chelsea
GCA Realty and Glenborough Realty Trust. We feel that the strength of the
economy, coupled with minimal new construction, has led to higher valuations.
The real estate industry is also going through a structural change, from
private companies to publicly traded REITs.
Thank you for your continued interest in the FMA - Growth Portfolio. We look
forward to reporting to you on future market activity and investment results.
Sincerely,
Alden M. Stewart
Chairman and President
Randall E. Haase
Senior Vice President
2
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
GROWTH OF A $10,000 INVESTMENT
9/30/87 TO 9/30/97
$37,000
$31,000
$25,000
$19,000
$13,000
$10,000
$7,000
S&P 500: $39,500
FMA- GROWTH PORTFOLIO: $33,186
RUSSELL 2000 INDEX: $31,749
9/30/87 9/30/88 9/30/89 9/30/90 9/30/91 9/30/92 9/30/93 9/30/94 9/30/95
9/30/96 9/30/97
This chart illustrates the total value of an assumed $10,000 investment in
Fiduciary Management Associates - Growth Portfolio (from 9/30/87 to 9/30/97) as
compared to the performance of appropriate broad-based indices. The chart
assumes the reinvestment of dividends and capital gains. Past performance is
not indicative of future results, and is not representative of future gain or
loss in capital value or dividend income.
The unmanaged Standard & Poor's 500 Stock Index includes 500 U.S. stocks and is
a common measure of the performance of the overall U.S. stock market.
The unmanaged Russell 2000 Index measures small-cap stock performance.
Fiduciary Management Associates - Growth Portfolio
Standard &Poor's 500 Stock Index
Russell 2000 Index
3
TEN LARGEST HOLDINGS
SEPTEMBER 30, 1997
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
COMPANY VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Parker Drilling Co. $ 3,096,731 3.6%
OMI Corp. 2,918,750 3.4
Mohawk Industries, Inc. 2,597,888 3.0
Consolidated Freightways Corp. 2,481,600 2.9
Budget Group, Inc. Cl.A 2,095,500 2.4
Continental Airlines, Inc. Cl.B 2,047,500 2.4
GelTex Pharmaceuticals, Inc. 1,968,800 2.3
Alaska Air Group, Inc. 1,719,363 2.0
Miller Industries, Inc. 1,709,450 2.0
Telephone and Data Systems, Inc. 1,701,000 1.9
$22,336,582 25.9%
4
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS AND OTHER INVESTMENTS-95.7%
CONSUMER PRODUCTS & SERVICES-33.3%
ADVERTISING-1.0%
Snyder Communications, Inc. (a) 32,100 $ 882,750
AIRLINES-4.4%
Alaska Air Group, Inc. (a) 52,300 1,719,363
Continental Airlines, Inc. Cl.B (a) 52,000 2,047,500
------------
3,766,863
APPAREL-4.6%
Nautica Enterprises, Inc. (a) 43,800 1,231,875
Stride Rite Corp. 71,900 975,144
Tefron, Ltd. (a) 4,900 98,000
Timberland Co. Cl.A (a) 4,900 390,775
Tommy Hilfiger Corp. (a) 24,900 1,243,443
------------
3,939,237
AUTO & RELATED-6.8%
Avis Rent A Car, Inc. (a) 22,700 541,963
Budget Group, Inc. Cl.A (a) 63,500 2,095,500
Miller Industries, Inc. (a) 143,200 1,709,450
Monaco Coach Corp. (a) 32,500 767,812
Watsco, Inc. 24,600 768,750
------------
5,883,475
BROADCASTING & CABLE-1.5%
Globecomm Systems, Inc. (a) 25,000 437,500
Sinclair Broadcast Group, Inc. Cl.A (a) 22,200 896,325
------------
1,333,825
CONTAINERS & PACKAGING-1.8%
Silgan Holdings, Inc. (a) 20,200 808,000
U.S. Can Corp. (a) 43,400 721,525
------------
1,529,525
ENTERTAINMENT & LEISURE-0.8%
Florida Panthers Holdings, Inc. Cl.A (a) 25,800 607,913
Trendwest Resorts, Inc. (a) 4,100 96,350
------------
704,263
RESTAURANTS & LODGING-1.8%
Extended Stay America, Inc. (a) 34,908 523,620
Interstate Hotels Co. (a) 15,100 492,638
Suburban Lodges of America, Inc. (a) 19,900 524,862
------------
1,541,120
RETAILING-8.3%
Abercrombie & Fitch Co. Cl.A (a) 26,500 695,625
Circuit City Stores, Inc -
Car Max Group (a) 76,300 1,263,719
Filene's Basement Corp. (a) 32,500 270,156
Furniture Brands International, Inc. (a) 39,300 741,787
Industrie Natuzzi S.p.A. (ADR) (b) 48,800 1,155,950
Pacific Sunwear of California (a) 25,500 1,045,500
St. John Knits, Inc. 21,300 957,169
The Finish Line Cl.A (a) 32,200 609,787
Wet Seal, Inc. Cl.A (a) 18,500 432,438
------------
7,172,131
MISCELLANEOUS-2.3%
Equity Corp. International (a) 22,900 533,856
International Alliance Services, Inc. (a) 55,000 543,125
warrants, expiring 12/30/99 (a) 191,000 357,743
5
PORTFOLIO OF INVESTMENTS (CONTINUED)
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
TeleTech Holdings, Inc. (a) 38,100 $ 535,781
------------
1,970,505
------------
28,723,694
BASIC INDUSTRIES-23.2%
BUILDING & RELATED-0.8%
Hughes Supply, Inc. 21,800 658,088
CHEMICALS-1.6%
Crompton & Knowles Corp. 40,000 1,062,500
Polymer Group, Inc. (a) 28,389 365,508
------------
1,428,008
ENVIRONMENTAL CONTROL-1.8%
American Disposal Services, Inc. (a) 26,520 828,750
Superior Services, Inc. (a) 26,100 743,850
------------
1,572,600
FOREST PRODUCTS-0.6%
Buckeye Cellulose Corp. (a) 12,500 503,906
METAL HARDWARE-4.7%
Bethlehem Steel Corp. (a) 132,100 1,362,281
Birmingham Steel Corp. 26,400 457,050
Kaiser Aluminum Corp. (a) 61,900 878,206
Steel Dynamics, Inc. (a) 21,100 495,850
WHX Corp. (a) 67,400 876,200
------------
4,069,587
METALS & MINING-0.4%
Pegasus Gold, Inc. (a) 23,500 132,188
Royal Oak Mines, Inc. (a) 79,200 222,750
------------
354,938
TEXTILE PRODUCTS-4.1%
Mohawk Industries, Inc. (a) 94,900 2,597,888
Novel Denim Holdings, Ltd. (a) 33,900 915,300
------------
3,513,188
TRANSPORTATION & SHIPPING-9.2%
Consolidated Freightways Corp. (a) 140,800 2,481,600
Genesee & Wyoming, Inc. Cl.A (a) 17,100 540,788
Knightsbridge Tankers, Ltd. 43,400 1,228,762
OMI Corp. (a) 233,500 2,918,750
Roadway Express, Inc. 27,100 741,862
------------
7,911,762
------------
20,012,077
TECHNOLOGY-15.6%
AEROSPACE & DEFENSE-0.6%
Doncasters Plc (ADR) (a)(c) 16,200 486,000
COMMUNICATION EQUIPMENT-1.4%
Comverse Technology, Inc. (a) 23,300 1,229,075
COMPUTER PERIPHERALS-0.4%
Read-Rite Corp. (a) 13,900 340,550
COMPUTER SOFTWARE & SERVICES-5.1%
Check Point Software Technologies, Ltd. (a) 30,800 954,800
Checkfree Corp. (a) 39,400 832,325
Cognos, Inc. (a) 21,900 520,125
DBT Online, Inc. (a) 12,100 747,175
QAD, Inc. (a) 31,300 582,962
Rational Software Corp. (a) 48,900 782,400
------------
4,419,787
NETWORKING SOFTWARE-1.1%
The Registry, Inc. (a) 20,100 927,113
6
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
SEMI-CONDUCTOR EQUIPMENT-2.7%
Actel Corp. (a) 45,400 $ 873,950
CFM Technologies, Inc. (a) 18,000 705,375
PMC-Sierra, Inc. (a) 29,900 762,450
------------
2,341,775
TELECOMMUNICATIONS-4.3%
ACC Corp. (a) 14,100 463,538
Millicom International Cellular, SA (a)(d) 30,000 1,567,500
Telephone and Data Systems, Inc. 37,800 1,701,000
------------
3,732,038
------------
13,476,338
HEALTH CARE-10.5%
BIOTECHNOLOGY-6.7%
Endovascular Technologies (a) 22,300 381,887
GelTex Pharmaceuticals, Inc. (a) 73,600 1,968,800
IDEC Pharmaceuticals Corp. (a) 18,000 753,750
Medimmune, Inc. (a) 41,200 1,514,100
Neurex Corp. (a) 75,000 1,106,250
------------
5,724,787
DRUGS, HOSPITAL SUPPLIES &
MEDICAL SERVICES-3.8%
AutoCyte, Inc. (a) 31,900 271,150
Mid Atlantic Medical Services, Inc. (a) 50,900 804,856
National Surgery Centers, Inc. (a) 53,600 1,165,800
Physio-Control International Corp. (a) 39,000 660,563
Synetic, Inc. (a) 9,700 397,700
------------
3,300,069
------------
9,024,856
ENERGY-7.4%
OIL & GAS SERVICES-7.4%
Costilla Energy, Inc. (a) 65,000 926,250
Parker Drilling Co. (a) 203,900 3,096,731
Southern Union Co. 45,900 1,118,813
Valero Energy Corp. 37,700 1,237,031
------------
6,378,825
FINANCIAL SERVICES-4.4%
REAL ESTATE-4.4%
CCA Prison Realty Trust 17,100 645,525
Chelsea GCA Realty, Inc. 20,400 851,700
Glenborough Realty Trust, Inc. 22,000 609,125
Security Capital Group, Inc. Cl.B (a) 49,000 1,684,375
------------
3,790,725
MULTI INDUSTRY-0.9%
Culligan Water Technologies, Inc. (a) 17,100 786,600
PRIVATE PLACEMENTS-0.4%
Menlo Ventures III, A Limited
Partnership (a)(e) 1,000,000 83,405
Oak Investment Partners III (a)(e) 2,000,000 162,728
Oscco II, A Limited Partnership (a)(e) 750,000 13,878
RCS II, A Limited Partnership (a)(e) 1,000,000 62,774
------------
322,785
Total Common Stocks and Other Investments
(cost $71,031,250) 82,515,900
7
PORTFOLIO OF INVESTMENTS (CONTINUED)
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
SHORT-TERM DEBT SECURITY-5.1%
Federal Home Loan Bank
5.90%, 10/01/97
(amortized cost $4,400,000) $4,400 $ 4,400,000
TOTAL INVESTMENTS-100.8%
(cost $75,431,250) $86,915,900
Other assets less liabilities-(0.8%) (674,842)
NET ASSETS-100% $86,241,058
(a) Non-income producing security.
(b) Country of origin--Italy.
(c) Country of origin--Great Britain.
(d) Country of origin--Luxembourg.
(e) Restricted and illiquid securities, 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, 1997
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $75,431,250) $86,915,900
Cash 18,994
Receivable for investment securities sold 942,318
Dividends receivable 21,225
Total assets 87,898,437
LIABILITIES
Payable for investment securities purchased 1,378,672
Advisory fee payable 161,735
Accrued expenses 116,972
Total liabilities 1,657,379
NET ASSETS $86,241,058
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 25,538
Additional paid-in capital 44,848,659
Undistributed net investment income 1,507
Accumulated net realized gain on investment transactions 29,880,704
Net unrealized appreciation of investments 11,484,650
$86,241,058
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(based on 2,553,778 shares of beneficial interest outstanding) $33.77
See notes to financial statements.
9
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1997
FIDUCIARY MANAGEMENT ASSOCIATES - GROWTH PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $1,747) $401,762
Interest 339,867 $ 741,629
EXPENSES
Advisory fee 942,821
Custodian 122,443
Administrative 108,000
Audit and legal 100,106
Transfer agency 19,336
Printing 17,131
Trustees' fees 16,000
Registration 3,923
Miscellaneous 8,991
Total expenses 1,338,751
Net investment loss (597,122)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment transactions 33,153,626
Net change in unrealized appreciation of investments (5,556,721)
Net gain on investment transactions 27,596,905
NET INCREASE IN NET ASSETS FROM OPERATIONS $26,999,783
STATEMENT OF CHANGES IN NET ASSETS
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (597,122) $ (577,222)
Net realized gain on investment transactions 33,153,626 51,214,394
Net change in unrealized appreciation
of investments (5,556,721) (1,028,571)
Net increase in net assets from operations 26,999,783 49,608,601
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments (51,863,971) (21,476,505)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (decrease) (49,335,287) 4,173,519
Total increase (decrease) (74,199,475) 32,305,615
NET ASSETS
Beginning of year 160,440,533 128,134,918
End of year (including undistributed
net investment income of $1,507) $ 86,241,058 $160,440,533
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
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 are valued at their
fair value as determined in good faith by the Board of Trustees.
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 INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Investment 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. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences, do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to net investment loss, resulted in a net increase in accumulated
net investment loss and a corresponding decrease in accumulated net realized
gain on investment transactions. 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.
Pursuant to the advisory agreement, the Fund paid $108,000 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, 1997.
The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of
the Adviser, under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $18,000 for the year ended September 30, 1997.
Brokerage commissions paid on investment transactions for the year ended
September 30, 1997 amounted to $940,817, 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 $269,732,258 and $362,365,624,
respectively, for the year ended September 30, 1997. There were no purchases or
sales of U.S. government and government agency obligations for the year ended
September 30, 1997. At September 30, 1997, the cost of securities for federal
income tax purposes was $76,762,340. Accordingly, gross unrealized appreciation
of investments was $14,559,702 and gross unrealized depreciation of investments
was $4,406,142 resulting in net unrealized appreciation of $10,153,560.
NOTE D: RESTRICTED AND ILLIQUID SECURITIES
DATE
ACQUIRED COST
---------- ----------
Menlo Ventures III, A Limited Partnership 7/28/83 $ 371,161
Oak Investment Partners III 9/28/83 1,337,231
Oscco II, A Limited Partnership 2/16/84 617,218
RCS II, A Limited Partnership 12/29/82 147,462
----------
$2,473,072
The securities shown above are restricted and illiquid and have been valued at
fair value in accordance with procedures described in Note A.
The value of these securities at September 30, 1997 was $322,785 representing
0.4% 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,
1997 1996 1997 1996
------------- ------------ -------------- --------------
Shares sold 83,725 31,000 $ 2,874,332 $ 1,145,925
Shares issued in
reinvestment of
distributions 1,948,769 736,943 51,759,317 21,430,299
Shares redeemed (3,593,101) (548,790) (103,968,936) (18,402,705)
Net increase
(decrease) (1,560,607) 219,153 $(49,335,287) $ 4,173,519
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,
----------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $39.00 $32.90 $29.94 $31.29 $27.41
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.14)(a) (.14) (.07) (.20) (.10)
Net realized and unrealized gain (loss)
on investment transactions 7.39 11.75 7.51 (.93) 7.29
Net increase (decrease) in net asset
value from operations 7.25 11.61 7.44 (1.13) 7.19
LESS: DISTRIBUTIONS
Distributions from net realized gains (12.48) (5.51) (4.48) (.22) (3.31)
Net asset value, end of year $33.77 $39.00 $32.90 $29.94 $31.29
TOTAL RETURN
Total investment return based on net
asset value (b) 27.28% 41.04% 30.94% (3.63)% 27.79%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $86,241 $160,441 $128,135 $106,435 $138,932
Ratio of expenses to average net assets .99% 1.05% 1.11% .98% .97%
Ratio of net investment loss to
average net assets (.44)% (.40)% (.26)% (.42)% (.31)%
Portfolio turnover rate 212% 194% 159% 116% 100%
Average commission rate (c) $.0543 $.0598 -- -- --
</TABLE>
(a) Based on average shares outstanding.
(b) 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.
(c) 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 1997, 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, 1997, 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, 1997, 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 4, 1997
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
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
RANDALL E. HAASE, VICE PRESIDENT
DANIEL V. PANKER, 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