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<PAGE> PAGE 2
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<PAGE> PAGE 12
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SIGNATURE WILLIAM E. VASTARDIS
TITLE ASSISTANT SECRETARY
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<ACCUM-APPREC-OR-DEPREC> (678)
<NET-ASSETS> 126645
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<INTEREST-INCOME> 2807
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<EXPENSES-NET> 320
<NET-INVESTMENT-INCOME> 2486
<REALIZED-GAINS-CURRENT> 455
<APPREC-INCREASE-CURRENT> (1600)
<NET-CHANGE-FROM-OPS> 1341
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2486
<DISTRIBUTIONS-OF-GAINS> 2562
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17294
<NUMBER-OF-SHARES-REDEEMED> 8215
<SHARES-REINVESTED> 509
<NET-CHANGE-IN-ASSETS> 92640
<ACCUMULATED-NII-PRIOR> 105
<ACCUMULATED-GAINS-PRIOR> (4)
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<GROSS-EXPENSE> 354
<AVERAGE-NET-ASSETS> 53426
<PER-SHARE-NAV-BEGIN> 10.19
<PER-SHARE-NII> 0.47
<PER-SHARE-GAIN-APPREC> (0.15)
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<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> STABLE RETURN PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 41370
<INVESTMENTS-AT-VALUE> 41484
<RECEIVABLES> 1596
<ASSETS-OTHER> 24
<OTHER-ITEMS-ASSETS> 8
<TOTAL-ASSETS> 43112
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 992
<OTHER-ITEMS-LIABILITIES> 20
<TOTAL-LIABILITIES> 1002
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41939
<SHARES-COMMON-STOCK> 4241
<SHARES-COMMON-PRIOR> 508
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 43
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 118
<NET-ASSETS> 42100
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1414
<OTHER-INCOME> 0
<EXPENSES-NET> 109
<NET-INVESTMENT-INCOME> 1305
<REALIZED-GAINS-CURRENT> 179
<APPREC-INCREASE-CURRENT> 89
<NET-CHANGE-FROM-OPS> 1573
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<DISTRIBUTIONS-OF-INCOME> 1305
<DISTRIBUTIONS-OF-GAINS> 138
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<NUMBER-OF-SHARES-SOLD> 3600
<NUMBER-OF-SHARES-REDEEMED> 12
<SHARES-REINVESTED> 145
<NET-CHANGE-IN-ASSETS> 37020
<ACCUMULATED-NII-PRIOR> 1
<ACCUMULATED-GAINS-PRIOR> 3
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<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 143
<AVERAGE-NET-ASSETS> 22518
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .55
<PER-SHARE-GAIN-APPREC> (0.04)
<PER-SHARE-DIVIDEND> .55
<PER-SHARE-DISTRIBUTIONS> .03
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 9.93
<EXPENSE-RATIO> .31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> MORTGAGE TOTAL RETURN PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 485247
<INVESTMENTS-AT-VALUE> 484739
<RECEIVABLES> 151466
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<TOTAL-LIABILITIES> 415225
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 221531
<SHARES-COMMON-STOCK> 21756
<SHARES-COMMON-PRIOR> 0
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<OVERDISTRIBUTION-NII> (1260)
<ACCUMULATED-NET-GAINS> 262
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 457
<NET-ASSETS> 220990
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5164
<OTHER-INCOME> 0
<EXPENSES-NET> 557
<NET-INVESTMENT-INCOME> 4607
<REALIZED-GAINS-CURRENT> 379
<APPREC-INCREASE-CURRENT> 457
<NET-CHANGE-FROM-OPS> 5443
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<DISTRIBUTIONS-OF-INCOME> 5867
<DISTRIBUTIONS-OF-GAINS> 117
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<NUMBER-OF-SHARES-SOLD> 24698
<NUMBER-OF-SHARES-REDEEMED> 3530
<SHARES-REINVESTED> 588
<NET-CHANGE-IN-ASSETS> 220990
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> INTERNATIONAL PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 41812
<INVESTMENTS-AT-VALUE> 42009
<RECEIVABLES> 1054
<ASSETS-OTHER> 118
<OTHER-ITEMS-ASSETS> 56
<TOTAL-ASSETS> 43237
<PAYABLE-FOR-SECURITIES> 7450
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<OTHER-ITEMS-LIABILITIES> 41
<TOTAL-LIABILITIES> 7491
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 35389
<SHARES-COMMON-STOCK> 3506
<SHARES-COMMON-PRIOR> 0
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 243
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 114
<NET-ASSETS> 35746
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 924
<OTHER-INCOME> 0
<EXPENSES-NET> 88
<NET-INVESTMENT-INCOME> 836
<REALIZED-GAINS-CURRENT> 519
<APPREC-INCREASE-CURRENT> 114
<NET-CHANGE-FROM-OPS> 1469
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 836
<DISTRIBUTIONS-OF-GAINS> 276
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<NUMBER-OF-SHARES-SOLD> 3397
<NUMBER-OF-SHARES-REDEEMED> 1
<SHARES-REINVESTED> 110
<NET-CHANGE-IN-ASSETS> 35746
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-EXPENSE> 134
<AVERAGE-NET-ASSETS> 22657
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.38
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<PER-SHARE-DISTRIBUTIONS> 0.08
<RETURNS-OF-CAPITAL> 0.00
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</TABLE>
Board of Directors
FFTW Funds, Inc.
In planning and performing our audit of the FFTW Funds, Inc.
for the year ended December 31, 1996, we considered
its internal control structure, including procedures for safeguarding
securities, in order to determine our auditing procedures for the purpose
of expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, not to provide assurance on the internal
control structure.
The management of the FFTW Funds, Inc. is responsible for establishing
and maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs of internal control structure
policies and procedures. Two of the objectives of an internal control
structure are to provide management with reasonable, but not absolute,
assurance that assets are safeguarded against loss from unauthorized use or
disposition and that transactions are executed in accordance with management's
authorization and recorded properly to permit preparation of financial
statements in conformity with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce
to a relatively low level the risk that errors or irregularities in amounts
that would be material in relation to the financial statements being audited
may occur and not be detected within a timely period by employees in the
normal course of performing their assigned functions. However, we noted no
matters involving the internal control structure, including procedures for
safeguarding securities, that we consider to be material weaknesses as defined
above as of December 31, 1996.
This report is intended solely for the information and use of management and
the Securities and Exchange Commission.
ERNST & YOUNG LLP
March 3, 1997
Exhibit 77I to FFTW Funds, Inc.'s NSAR-B.
Item 77I- Terms of New or Amended Securities
FFTW Funds, Inc. (the "Fund") filed Post-Effective Amendment No. 20 to the
Fund's Registration Statement on November 1, 1996 and it became effective with
the Securities and Exchange Commission on January 23, 1997.
Pursuant to the Amendment the Board of Directors reclassified and designated
50,000,000 shares of the authorized but unissued shares of the Broad Market
Fixed Income Portfolio stock, par value $.001 per share, as Inflation-Indexed
Portfolio (the "II Portfolio") stock, par value $.001 per share, Directors
reclassified and designated 50,000,000 shares of the authorized but unissued
shares of the Worldwide Short-Term Fixed Income Portfolio stock, par value
$.001 per share, as Inflation-Indexed Hedged Portfolio (the "IIH Portfolio")
stock, par value $.001 per share, Directors reclassified and designated
50,000,000 shares of the authorized but unissued shares of the U.S. Treasury
Portfolio stock, par value $.001 per share, as Money Market Portfolio (the
"MM Portfolio") stock, par value $.001 per share, and the Directors
reclassified and designated 50,000,000 shares of the authorized but unissued
shares of the Stable Return Portfolio stock, par value $.001 per share, as
Emerging Markets Portfolio (the "EM Portfolio") stock, par value $.001 per
share.
The II Portfolio has the following investment objective:
The investment objective of the II Portfolio is to attain a high level of return
in excess of inflation as may be consistent with the preservation of capital by
investing primarily in securities with a coupon rate or principal amount or both
linked to the inflation rate from bond markets worldwide, denominated in both
U.S. dollars and foreign currencies.
The IIH Portfolio has the following investment objective:
The investment objective of the IIH Portfolio is to attain a high level of
return in excess of inflation as may be consistent with the preservation of
capital by investing primarily in securities with a coupon rate or principal
amount or both linked to the inflation rate from bond markets worldwide,
denominated in both U.S. dollars and foreign currencies and by actively
utilizing currency hedging techniques.
The MM Portfolio has the following investment objective:
The investment objective of the MM Portfolio is to attain current income,
liquidity, and the maintenance of a stable net asset value per share through
investments in high quality, short-term obligations.
The EM Portfolio has the following investment objective:
The investment objective of the EM Portfolio is to attain a high level of total
return as may be consistent with the preservation of capital by investing
primarily in fixed income securities from bond markets in emerging markets
countries, denominated in local currencies or currencies of OECD countries,
with an average U.S. dollar-weighted duration of less than eight years.
FFTW FUNDS, INC.
Form N-SAR for the period ending December 31, 1996
File Number 811-5796
This report is signed on behalf of the Registrant in the City of New York and
the State of New York on the 20th day of March, 1997
FFTW FUNDS, INC.
By: /s/ William E. Vastardis
William E. Vastardis
Secretary
Witness: /s/ Eric P. Nachimovsky
Eric P. Nachimovsky
