<PAGE>
UAM Funds
Funds for the Informed Investor(SM)
Heitman Real Estate Portfolio
Semi-Annual Report June 30, 1999
UAM(R)
<PAGE>
UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Shareholders' Letter........................................................ 1
Portfolio of Investments.................................................... 5
Statement of Assets and Liabilities......................................... 7
Statement of Operations..................................................... 8
Statement of Changes in Net Assets.......................................... 9
Financial Highlights........................................................ 10
Notes to Financial Statements............................................... 12
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
- -------------------------------------------------------------------------------
August 3, 1999
Dear Shareholder:
Performance
The second quarter of 1999 proved to be a strong one for real estate invest-
ment trusts ("REITs"), with the Wilshire Real Estate Securities Index (WRESI)
turning a positive 10.62%, its best performance since the third quarter of
1997. This second quarter WRESI return overcame the negative return of the
first quarter (-3.5%) to result in a year to date return of 6.8%. By compari-
son, the S&P 500 Index was up 12.4% year to date and the Russell 2000 was up
9.2% year to date.
The performance of the Heitman Real Estate Portfolio (the "Fund") for the
first six months of 1999 was 6.1% for the Institutional Class, and 5.9% at net
asset value and 0.9%(/1/) at public offering price for the Advisor Class. The
Fund has a long-established performance objective of exceeding the WRESI.
Since inception of the Fund in March 1989 through June 30, 1999, Fund perfor-
mance has been 8.5% for the Institutional Class shares, outperforming the
WRESI by 358 basis points. The following table compares the Fund's performance
versus the indices for the period ending June 30, 1999.
Average Annual Total Returns
<TABLE>
<CAPTION>
Advisor Advisor
Class Class
Net Public Wilshire
Institutional Asset Offering Real Estate
Class Value Price(/1/) Securities Index S&P 500
------------- ------- ---------- ---------------- -------
<S> <C> <C> <C> <C> <C>
3/13/89(/2/)-6/30/99.... 8.54% N/A N/A 4.96% 19.13%
5/15/95(/3/)-6/30/99.... N/A 13.30% 11.98% 11.42% 28.95%
10 Years Ending
6/30/99................ 8.51% N/A N/A 4.63% 15.75%
5 Years Ending 6/30/99.. 10.75% N/A N/A 10.05% 27.86%
3 Years Ending 6/30/99.. 11.71% 11.13% 9.34% 9.82% 29.11%
1 Year Ending 6/30/99... -4.11% -4.51% -9.05% -6.88% 22.76%
6 Months Ending
6/30/99................ 6.14% 5.88% 0.85% 6.78% 12.38%
Quarter Ending 6/30/99.. 12.26% 12.12% 6.79% 10.62% 7.05%
</TABLE>
- -----------
(/1/Reflects)the deduction of the maximum 4.75% sales charge and assumes
reinvestment of all dividends at net asset value.
(/2/Inception)date of Institutional Class.
(/3/Inception)date of Advisor Class. Index comparisons begin on 4/30/95.
All property sectors in the WRESI with the exception of local and regional re-
tail have posted positive returns year to date, with all sectors, including
local and regional retail, showing positive returns for the second quarter.
The apartment
1
<PAGE>
UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
- -------------------------------------------------------------------------------
sector was the biggest winner year to date, up 13.3%, with factory outlets
also posting a double-digit gain of 10.9%. Local retail lost 0.9% and regional
retail is down 3.3% for the year to date. All other sectors have positive sin-
gle-digit gains year to date.
The strong positive performance of REITs in the second quarter of 1999 repre-
sents a significant reversal of the negative performance of the five prior
quarters. Negative performance had been driven principally by a contraction in
multiples. The weighted average REIT Cash Available for Distribution (CAD)
multiple contracted from 14.8x at the end of 1997 to approximately 10x at the
end of the first quarter of 1999. Positive performance during the second quar-
ter of 1999 was driven by an expansion in the weighted average CAD multiple to
approximately 11x. These multiple changes reflect the pattern of quarterly
earnings growth rates which peaked in the first quarter of 1998 and are ex-
pected to bottom in the third quarter of 1999 before stabilizing at approxi-
mately 9% to 10% thereafter.
Market Capitalization
During the first six months of 1999 the market capitalization of the WRESI in-
creased by $10.4 billion to $130.7 billion. This was a reversal over the pre-
vious year, which saw the WRESI market cap decline by $8.8 billion. The recent
increase in market capitalization has largely been a reflection of REIT per-
formance. During the first quarter of 1999 market capitalization declined as
the REIT sector continued to struggle. When REITs rallied during the second
quarter of 1999 the market cap increased. There has been little new equity
capital raised thus far in 1999, either in the form of initial public or sec-
ondary offerings. We expect this trend to continue for the remainder of 1999
as the cost of equity is prohibitively expensive for many companies. Consoli-
dation within this sector should continue and we expect few, if any, new com-
panies coming public in the near-term. Longer term, we expect the market capi-
talization of the WRESI to increase as commercial property ownership in the
United States continues its gradual shift from private to public ownership.
Real Estate Market Conditions
Real estate markets across the nation are in remarkably good shape. Eight
years into the current economic expansion, the overbuilding that has been a
characteristic of other business cycles is largely absent. The office sector
continues to have healthy demand with limited new supply entering most mar-
kets. The outlook is particularly good for properties in downtown areas, al-
though acquisition prices are high. For many landlords the rents currently in
place are generally below current market rents, which offers significant po-
tential growth opportunities as existing leases expire.
2
<PAGE>
UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
- -------------------------------------------------------------------------------
The apartment sector in the United States still has favorable market condi-
tions but greater selectivity is required than in other property sectors. De-
mand remains high and has been outpacing supply in many markets but permit ac-
tivity has increased significantly. While most markets are healthy, the con-
centration of supply in a few large markets has caused some weakening (e.g.,
Houston, San Jose). In addition, financing for multifamily development remains
plentiful and investment demand for apartments from pension funds is strong.
These conditions make it unlikely that new supply will pull back significantly
over the next 12 months. This may result in rental rate weakness in a few met-
ropolitan areas as supply exceeds demand. The industrial sector appears to be
in equilibrium. New supply has kept up with demand in many of the primary mar-
kets. In many cases, when there has been modest over-supply in individual mar-
kets, development has been scaled back. This is an important characteristic of
the industrial sector, which historically has been a stable property type. The
short development horizon (9-12 months) and the importance of the build-to-
suit transactions allow supply to adjust quickly to any demand fluctuations.
We believe this sector should remain attractive and grow in step with the
overall economy. Internet-based retailing is the hottest topic in the retail
sector and perceived impact from e-commerce may have contributed to the nega-
tive returns for retail during the first quarter. During the second quarter
however, we saw the retail sectors stage a sharp comeback. Overall, for the
first half of the year, both the local and regional retail property sectors of
WRESI are down slightly, but the future looks promising as the demand is pro-
jected to stay ahead of supply for the near-term outlook.
Near Term Outlook
We believe there is compelling value in the REIT sector. As of June 30, the
weighted average yield on stocks in the Wilshire REIT Index (WREIT) was 7.1%,
compared with a 5.8% yield on the 10-year treasury. The yield on the WREIT
also compares favorably to the yield on the S&P 500 Index (1.3%) and the S&P
Utilities Index (3.7%). Current earnings coverage averages over 1.3 times. In
addition to safe and attractive dividends, REIT earnings are expected to grow
10% this year (1999 vs. 1998) and 8-9% next year (2000 vs. 1999). This sug-
gests an impressive potential total return (15-17%) assuming current multiples
remain unchanged.
3
<PAGE>
UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
- --------------------------------------------------------------------------------
As Adviser to the Portfolio we will continue to maintain a cautious eye for
companies which no longer meet our expectations for stable growth in cash flow
per share. At the same time, we will continue to remain loyal to our value
style which we interpret as growth at a reasonable price (GARP).
Sincerely,
/s/ Timothy J. Pire /s/ Randy Newsome
Timothy J. Pire, CFA Randy Newsome
Portfolio Manager Portfolio Manager
The investment results presented in the Adviser's letter represent past
performance and should not be
construed as a guarantee of future results. The Portfolio's performance assumes
the reinvestment of
all dividends and distributions.
There are no assurances that the Portfolio will meet its stated objectives.
The investment return and principal value of an investment will fluctuate so
that an investor's shares,
when redeemed, may be worth more or less than their original cost.
The Portfolio's holdings are subject to change because it is actively managed.
Portfolio changes should not be considered recommendations for action by
individual investors.
Definition of the Comparative Indices
-------------------------------------
Russell 2000 Index is an unmanaged index composed of the 2,000 smallest stocks
in the Russell 3000 Index, an index composed of the 3,000 largest U.S. publicly
traded companies based on total market capitalization, which represents
approximately 98% of the investable U.S. equity market.
S&P 500 Index is an unmanaged index composed of 400 industrial, 40 financial,
40 utility and 20 transportation stocks.
S&P Utilities Index is a market capitalization weighted index of stocks used to
measure the performance of the utility sector. At the end of 1998 the index
contained 39 companies with a market capitalization over $280 billion.
Wilshire Real Estate Securities Index (WRESI) is a market capitalization
weighted index of publicly traded real estate securities including real estate
investment trusts, real estate operating companies and partnerships. The index
is used by the institutional investment community as a broad measure of the
performance of public real estate equity for asset allocation and performance
comparison.
Wilshire REIT (WREIT) Index includes 112 REITs but excludes 7 real estate
operating companies that are included in the WRESI.
The comparative index assumes reinvestment of dividends and, unlike the
Portfolio's returns, does not reflect any fees or expenses. If such fees were
reflected in the comparative index's return, the performance would have been
lower.
Please note that one cannot invest directly in an unmanaged index.
4
<PAGE>
UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
JUNE 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 87.3%
<TABLE>
<CAPTION>
NAREIT(b)
Shares Classification Value+
---------- -------------- ------------
<S> <C> <C> <C>
Amil Residential Properties Trust...... 80,600 Equity $ 1,803,425
Apartment Investment & Management
Co. .................................. 54,400 Equity 2,325,600
Archstone Communities Trust............ 194,120 Equity 4,258,507
Arden Realty, Inc. .................... 130,900 Equity 3,223,413
Bedford Property Investors, Inc. ...... 233,800 Equity 4,179,175
Berkshire Realty Co. .................. 98,788 Equity 1,142,236
*Cadillac Fairview Corp. .............. 99,000 Equity 1,868,625
CenterPoint Properties Corp. .......... 46,200 Equity 1,692,075
Centertrust Retail Properties, Inc. ... 254,500 Equity 2,990,375
Chelsea GCA Realty, Inc. .............. 85,193 Equity 3,162,790
Developers Diversified Realty Corp. ... 116,060 Equity 1,929,498
Eastgroup Properties................... 103,818 Equity 2,082,849
Equity Office Properties Trust......... 183,700 Equity 4,707,313
Equity Residential Properties Trust.... 78,566 Equity 3,540,380
Essex Property Trust, Inc. ............ 136,352 Equity 4,823,452
*Excel Legacy Corp. ................... 365,545 Equity 1,736,339
Franchise Finance Corp. of America..... 119,400 Equity 2,626,800
Home Properties of NY, Inc. ........... 76,000 Equity 2,099,500
Kilroy Realty Corp. ................... 132,300 Equity 3,216,544
Kimco Realty Corp. .................... 67,800 Equity 2,652,675
Mack-Cali Realty Corp. ................ 137,400 Equity 4,250,813
Manufactured Home Communities, Inc. ... 8,500 Equity 221,000
New Plan Excel Realty Trust............ 95,800 Equity 1,724,400
Parkway Properties, Inc. .............. 72,300 Equity 2,394,938
Philips International Realty Corp. .... 181,800 Equity 3,067,875
Prentiss Properties Trust.............. 79,900 Equity 1,877,650
ProLogis Trust......................... 214,770 Equity 4,349,092
PS Business Parks, Inc. ............... 50,400 Equity 1,228,500
Public Storage, Inc. .................. 128,820 Equity 3,606,960
Reckson Associates Realty Corp.,
Class B.............................. 207,629 Equity 4,957,142
Regency Realty Corp. .................. 112,800 Equity 2,474,550
*Security Capital Group, Inc.,
Class B ............................. 331,700 Equity 4,830,381
Sovran Self Storage, Inc. ............. 80,400 Equity 2,165,775
Sun Communities, Inc. ................. 29,200 Equity 1,036,600
Taubman Centers, Inc. ................. 82,900 Equity 1,093,244
Trizec Hahn Corp. ..................... 222,100 Equity 4,525,286
U.S. Restaurants Properties, Inc. ..... 59,300 Equity 1,260,125
Walden Residential Properties, Inc. ... 109,200 Equity 2,347,800
Weeks Corp. ........................... 93,500 Equity 2,851,750
------------
TOTAL COMMON STOCKS (Cost $95,360,588).......................... 106,325,452
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
JUNE 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
PREFERRED STOCKS - 7.6%
<TABLE>
<CAPTION>
NAREIT(b)
Shares Classification Value+
---------- -------------- ------------
<S> <C> <C> <C> <C>
Health Care Property Investments,
Inc., 7.875%, Series A........... 37,600 Equity $ 853,050
Highwoods Properties, Inc., 8.00%,
Series B......................... 35,900 Equity 839,163
Prologis Trust, 8.54%, Series C... 24,670 Equity 1,066,731
Taubman Center, Inc., 8.30%,
Series A......................... 140,400 Equity 3,220,425
Vornado Realty Trust, 6.50%,
Series A......................... 64,100 Equity 3,237,050
------------
TOTAL PREFERRED STOCKS (Cost $14,355,643).................. 9,216,419
------------
SHORT-TERM INVESTMENT - 6.0%
<CAPTION>
Face
Amount
--------------
<S> <C> <C>
REPURCHASE AGREEMENT
Chase Securities, Inc. 4.50%, dated 6/30/99,
due 07/01/99, to be repurchased at
$7,332,917, collateralized by $6,955,026
U.S. Treasury Notes, 6.875%, due 05/15/06,
valued at $7,391,923 (Cost $7,332,000)..... $7,332,000 7,332,000
------------
TOTAL INVESTMENTS - 100.9% (Cost $117,048,231)............. 122,873,871
------------
OTHER ASSETS AND LIABILITIES (NET) - (0.9)%................ (1,106,257)
------------
NET ASSETS - (100%)........................................ $121,767,614
============
</TABLE>
+ See Note A to Financial Statements.
* Non-income producing security
(a) The cost for federal income tax purposes was $117,048,231. At June 30,
1999, net unrealized appreciation for all securities based on tax cost was
$5,825,640. This consisted of aggregate gross unrealized appreciation for
all securities of $9,346,604 and aggregate gross unrealized depreciation
for all securities of $3,520,964.
(b) NAREIT -- National Association of Real Estate Investment Trusts
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
JUNE 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
Assets
Investments, at Cost............................................. $117,048,231
============
Investments, at Value............................................ 122,873,871
Cash............................................................. 1,942
Receivable for Investments Sold.................................. 906,918
Dividends Receivable............................................. 800,193
Interest Receivable.............................................. 917
Receivable for Portfolio Shares Sold............................. 42,300
Other Assets..................................................... 460
------------
Total Assets.................................................... 124,626,601
------------
Liabilities
Payable for Investments Purchased................................ 2,670,219
Payable for Investment Advisory Fees -- Note B................... 69,825
Payable for Administrative Fees -- Note C........................ 21,857
Payable for Trustee Fees -- Note F............................... 388
Other Liabilities................................................ 96,698
------------
Total Liabilities............................................... 2,858,987
------------
Net Assets....................................................... $121,767,614
============
Net Assets Consist of:
Paid in Capital.................................................. $114,822,639
Undistributed Net Investment Income.............................. 831,781
Accumulated Net Realized Gain.................................... 287,554
Unrealized Appreciation.......................................... 5,825,640
------------
Net Assets....................................................... $121,767,614
============
Institutional Class Shares
Net Assets....................................................... $ 80,691,605
Shares Issued and Outstanding+................................... 8,954,012
Net Asset Value, Offering, and Redemption Price Per Share........ $9.01
=====
Advisor Class Shares
Net Assets....................................................... $ 41,076,009
Shares Issued and Outstanding+................................... 4,564,206
Net Asset Value, and Redemption Price Per Share.................. $9.00
=====
Offering price Per Share ($9.00/.9525)........................... $9.45
=====
</TABLE>
+ Unlimited Number of Shares Authorized
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
FOR THE SIX MONTHS ENDED
JUNE 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
Investment Income
Dividends.......................................................... $3,288,099
Interest........................................................... 114,828
----------
Total Income...................................................... 3,402,927
----------
Expenses
Investment Advisory Fees -- Note B................................. 444,076
Administrative Fees -- Note C...................................... 180,942
Shareholder Servicing Fees -- Note E............................... 52,634
Distribution Fees -- Note E........................................ 52,634
Printing Fees...................................................... 15,245
Registration and Filing Fees....................................... 12,985
Custodian Fees -- Note D........................................... 12,193
Legal Fees......................................................... 10,254
Audit Fees......................................................... 8,790
Trustees' Fees -- Note F........................................... 1,504
Other Expenses..................................................... 48,027
----------
Total Expenses.................................................... 839,284
----------
Net Investment Income.............................................. 2,563,643
----------
Net Realized Gain on Investments................................... 2,589,931
Net Change in Unrealized Appreciation/Depreciation on Investments.. 1,739,474
----------
Net Gain on Investments............................................ 4,329,405
----------
Net Increase in Net Assets Resulting from Operations............... $6,893,048
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 1999 December 31,
(Unaudited) 1998
------------- ------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income............................. $ 2,563,643 $ 4,914,015
Net Realized Gain (Loss).......................... 2,589,931 (1,119,614)
Net Change in Unrealized
Appreciation/Depreciation........................ 1,739,474 (32,818,271)
------------ ------------
Net Increase (Decrease) in Net Assets Resulting
From Operations.................................. 6,893,048 (29,023,870)
------------ ------------
Distributions:
Net Investment Income:
Institutional Class............................... (1,181,287) (2,991,800)
Advisor Class..................................... (550,575) (1,920,451)
------------ ------------
Total Distributions............................... (1,731,862) (4,912,251)
------------ ------------
Capital Share Transactions: (1)
Institutional Class:
Issued............................................ 9,796,506 25,351,539
In Lieu of Cash Distributions..................... 646,046 1,228,296
Redeemed.......................................... (13,034,168) (62,055,189)
------------ ------------
Net Decrease from Institutional Class Shares..... (2,591,616) (35,475,354)
------------ ------------
Advisor Class:
Issued............................................ 3,617,840 17,255,816
In Lieu of Cash Distributions..................... 505,972 1,783,126
Redeemed.......................................... (11,308,590) (43,212,483)
------------ ------------
Net Decrease from Advisor Class Shares........... (7,184,778) (24,173,541)
------------ ------------
Net Decrease from Capital Share Transactions..... (9,776,394) (59,648,895)
------------ ------------
Total Decrease................................... (4,615,208) (93,585,016)
Net Assets:
Beginning of Period............................... 126,382,822 219,967,838
------------ ------------
End of Period (including undistributed net
investment income of $831,781 and $0,
respectively).................................... $121,767,614 $126,382,822
============ ============
(1)Shares Issued and Redeemed:
Institutional Class:
Issued........................................... 1,147,683 2,780,776
In Lieu of Cash Distributions.................... 80,555 130,019
Redeemed......................................... (1,519,797) (6,508,467)
------------ ------------
Net Decrease in Institutional Class Shares....... (291,559) (3,597,672)
------------ ------------
Advisor Class:
Issued........................................... 424,727 1,747,978
In Lieu of Cash Distributions.................... 63,089 189,561
Redeemed......................................... (1,335,965) (4,639,720)
------------ ------------
Net Decrease from Advisor Class Shares........... (848,149) (2,702,181)
------------ ------------
Net Decrease in Capital Shares................... (1,139,708) (6,299,853)
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Per Share Data & Ratios
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Institutional Class Shares
-------------------------------------------------------------------------------
Six Months Three-Month Fiscal Year
Ended Years Ended December 31, Period Ended Ended
June 30, 1999 ------------------------------------- December 31, September 30,
(Unaudited) 1998 1997 1996 1995 1994 1994
------------- ------- -------- -------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 8.62 $ 10.49 $ 10.96 $ 8.65 $ 8.30 $ 9.23 $ 10.95
------- ------- -------- -------- ------- -------- --------
Income From Investment
Operations
Net Investment Income.. 0.32 0.32 0.40 0.37 0.33 0.10 0.32
Net Realized and
Unrealized
Gain (Loss)........... 0.19 (1.88) 1.82 2.82 0.53 (0.05) (0.92)
------- ------- -------- -------- ------- -------- --------
Total from Investment
Operations............ 0.51 (1.56) 2.22 3.19 0.86 0.05 (0.60)
------- ------- -------- -------- ------- -------- --------
Distributions:
Net Investment Income.. (0.12) (0.31) (0.40) (0.37) (0.33) (0.10) (0.31)
In Excess of Net
Investment Income..... -- -- (0.05) (0.10) -- -- --
Net Realized Gain...... -- -- (2.24) (0.41) -- (0.77) (0.67)
Tax Return of
Capital(a)............ -- -- -- -- (0.18) (0.11) (0.14)
------- ------- -------- -------- ------- -------- --------
Total Distributions.... (0.12) (0.31) (2.69) (0.88) (0.51) (0.98) (1.12)
------- ------- -------- -------- ------- -------- --------
Net Asset Value, End of
Period................. $ 9.01 $ 8.62 $ 10.49 $ 10.96 $ 8.65 $ 8.30 $ 9.23
======= ======= ======== ======== ======= ======== ========
Total Return............ 6.14% (15.12)% 21.12% 38.06% 10.87% 0.65% (5.22)%
======= ======= ======== ======== ======= ======== ========
Ratios and Supplemental
Data
Net Assets,
End of Period
(Thousands)............ $80,692 $79,717 $134,746 $129,275 $95,692 $105,569 $116,268
Ratio of Expenses to
Average Net Assets..... 1.22%* 1.22% 1.09% 1.23% 1.29% 1.28%* 1.22%
Ratio of Net Investment
Income to Average Net
Assets................. 4.41%* 3.14% 3.57% 4.09% 3.97% 4.35%* 2.87%
Portfolio Turnover
Rate................... 32% 80% 90% 60% 65% 38% 90%
</TABLE>
* Annualized
(a) Historically, the Portfolio has distributed to its shareholders amounts
approximating dividends received from the REITs. Such distributions may
include a portion which may be a return of capital.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected Per Share Data & Ratios
For a Share Outstanding Throughout Each Period
Advisor Class Shares
--------------------------------------------------------------
Six Months
Ended Years Ended December 31, May 15,
June 30, 1999 ----------------------------- 1995+ to
(Unaudited) 1998 1997 1996 December 31, 1995
------------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 8.62 $ 10.50 $ 10.98 $ 8.67 $ 8.00
------- -------- -------- -------- ------
Income From Investment
Operations
Net Investment Income.. 0.29 0.25 0.35 0.31 0.23
Net Realized and
Unrealized Gain
(Loss)................ 0.20 (1.86) 1.80 2.84 0.80
------- -------- -------- -------- ------
Total from Investment
Operations............ 0.49 (1.61) 2.15 3.15 1.03
------- -------- -------- -------- ------
Distributions:
Net Investment Income.. (0.11) (0.27) (0.35) (0.31) (0.23)
In Excess of Net
Investment Income..... -- -- (0.04) (0.12) --
Net Realized Gain...... -- -- (2.24) (0.41) --
Tax Return of
Capital(a)............ -- -- -- -- (0.13)
------- -------- -------- -------- ------
Total Distributions.... (0.11) (0.27) (2.63) (0.84) (0.36)
------- -------- -------- -------- ------
Net Asset Value, End of
Period................. $ 9.00 $ 8.62 $ 10.50 $ 10.98 $ 8.67
======= ======== ======== ======== ======
Total Return(b)......... 5.88% (15.54)% 20.44% 37.44% 13.19%
======= ======== ======== ======== ======
Ratios and Supplemental
Data
Net Assets, End of
Period (Thousands)..... $41,076 $ 46,665 $ 85,222 $ 79,805 $5,520
Ratio of Expenses to
Average Net Assets..... 1.70%* 1.73% 1.59% 1.73% 1.99%*(c)
Ratio of Net Investment
Income to Average Net
Assets................. 3.87%* 2.65% 3.14% 3.91% 4.27%*(c)
Portfolio Turnover
Rate................... 32% 80% 90% 60% 65%
</TABLE>
* Annualized
+ Initial Offering of Advisor Shares
(a) Historically, the Portfolio has distributed to its shareholders amounts
approximating dividends received from the REITs. Such distributions may
include a portion which may be a return of capital.
(b) This result does not include the sales charge. If the charge had been in-
cluded, the return would have been lower.
(c) During 1995, the Advisor agreed to reimburse a portion of the Advisor
Shares' expenses. Without reimbursement, the expense ratio would have been
5.34% and the ratio of net investment income to average net assets would
have been 0.92%.
The accompanying notes are an integral part of the financial statements.
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UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
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NOTES TO FINANCIAL STATEMENTS (Unaudited)
UAM Funds, Inc., UAM Funds, Inc. II and UAM Funds Trust (collectively the
"UAM Funds") are registered under the Investment Company Act of 1940, as
amended. The Heitman Real Estate Portfolio (the "Portfolio"), a portfolio of
UAM Funds Trust, is a diversified open-end management investment company. At
June 30, 1999, the UAM Funds were comprised of forty-nine active portfolios.
The information presented in these financial statements pertains only to the
Portfolio. The Portfolio currently offers two separate classes of shares--In-
stitutional Class Shares and Advisor Class Shares. Both classes of shares have
identical voting rights (except Advisor Class shareholders have exclusive vot-
ing rights with respect to matters relating to distribution and shareholder
servicing of such shares), dividend, liquidation and other rights. The Portfo-
lio's investment objective is to obtain high total return consistent with rea-
sonable risk by investing primarily in equity securities of public companies
principally engaged in the real estate business.
On July 1, 1998, the Portfolio, a newly established portfolio of UAM Funds
Trust, acquired the assets and certain liabilities of the Heitman Real Estate
Fund, a series of Heitman Securities Trust (the "Trust"), pursuant to a plan
of reorganization approved by its shareholders. The acquisition was accompa-
nied by a tax-free exchange of shares of the Portfolio in an amount equal to
the outstanding shares of the Trust. The financial statements of the Portfolio
reflect the historical financial results of the Trust prior to the reorganiza-
tion.
Because the Portfolio may invest a substantial portion of its assets in
REITs, the Portfolio may also be subject to certain risks associated with di-
rect investments in REITs. REITs may be affected by changes in the value of
their underlying properties and by defaults by borrowers or tenants. Further-
more, REITs are dependent upon specialized management skills, have limited di-
versification and are, therefore, subject to risks inherent in financing a
limited number of projects. REITs depend generally on their ability to gener-
ate cash flow to make distributions to shareholders, and certain REITs have
self-liquidation provisions by which mortgages held may be paid in full and
distributions of capital returns may be made at any time. In addition, the
performance of a REIT may be affected by its failure to qualify for tax-free
pass-through of income under the Internal Revenue Code or its failure to main-
tain exemption from registration under the 1940 Act.
A. Significant Accounting Policies: The following significant accounting
policies are in conformity with generally accepted accounting principles. Such
policies are consistently followed by the Portfolio in the preparation of its
financial statements. Generally accepted accounting principles may require
management to
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UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
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make estimates and assumptions that affect the reported amounts and disclo-
sures in the financial statements. Actual results may differ from those esti-
mates.
1. Security Valuation: Investments for which market quotations are read-
ily available are stated at market value, which is determined using the
last reported sale price from the exchange where the security is primarily
traded. If no sales are reported, as in the case of some securities traded
over-the-counter, the market value is determined by using the average be-
tween the last reported bid and the last reported offer prices quoted on
such day. Short-term investments that have remaining maturities of sixty
days or less at time of purchase are valued at amortized cost, if it ap-
proximates market value. The value of other assets and securities for
which no quotations are readily available is determined in good faith at
fair value using methods determined by the Board of Trustees.
2. Federal Income Taxes: It is the Portfolio's intention to qualify as a
regulated investment company under Subchapter M of the Internal Revenue
Code and to distribute all of its taxable income. Accordingly, no provi-
sion for Federal income taxes is required in the financial statements.
3. Repurchase Agreements: In connection with transactions involving re-
purchase agreements, the Portfolio's custodian bank takes possession of
the underlying security ("collateral"), the value of which exceeds the
principal amount of the repurchase transaction, including accrued inter-
est. To the extent that any repurchase transaction exceeds one business
day; the value of the collateral is monitored on a daily basis to deter-
mine the adequacy of the collateral. In the event of default on the obli-
gation to repurchase, the Portfolio has the right to liquidate the collat-
eral and apply the proceeds in satisfaction of the obligation. In the
event of default or bankruptcy by the counterparty to the agreement, real-
ization and/or retention of the collateral or proceeds may be subject to
legal proceedings.
Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission, the UAM Funds may transfer their daily uninvested cash bal-
ances into a joint trading account which invests in one or more repurchase
agreement. This joint repurchase agreement is covered by the same collat-
eral requirements as discussed above.
4. Distributions to Shareholders: The Portfolio will normally distribute
all of its net investment income quarterly. Any realized net capital gains
will be distributed annually. All distributions are recorded on ex-divi-
dend date. The Portfolio's distributions to shareholders may include a re-
turn of capital received from the REITs as well as returns of capital at-
tributed to
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UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
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distributions of other income for financial reporting purposes which was
not subject to taxation.
The amount and character of income and capital gain distributions to be
paid are determined in accordance with Federal income tax regulations,
which may differ from generally accepted accounting principles. These dif-
ferences are primarily due to differing book and tax treatments in the
recognition of gains and losses on securities and permanent differences
such as the gain (loss) on in-kind redemptions and return of capital ad-
justments on REIT distributions.
Permanent book-tax differences, if any, are not included in ending un-
distributed net investment income for the purpose of calculating net in-
vestment income (loss) per share in the financial highlights.
5. Other: Security transactions are accounted for on trade date, the
date the trade was executed. Costs used in determining realized gains or
losses on the sale of investment securities are based on the specific
identification method. Dividend income is recorded on the ex-dividend
date. Interest income is recorded on the accrual basis. Discounts and pre-
miums on securities purchased are amortized using the effective yield ba-
sis over their respective lives. Most expenses of the UAM Funds can be di-
rectly attributed to a particular portfolio. Expenses that cannot be di-
rectly attributed are apportioned among the portfolios of the UAM Funds
based on their relative net assets. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses are allo-
cated to each class of shares based upon their relative net assets. Custo-
dian fees for the Portfolio are shown gross of expense offsets, if any,
for custodian balance credits.
B. Investment Advisory Services: Under the terms of an investment advisory
agreement, Heitman/PRA Securities Advisors, L.L.C. (the "Adviser"), an indi-
rect wholly-owned subsidiary of United Asset Management Corporation ("UAM"),
provides investment advisory services to the Portfolio at a fee calculated at
an annual rate of 0.75% of the first $100 million of daily average net assets
and 0.65% of daily average net assets in excess of $100 million.
The adviser may voluntarily agree to limit the expenses of the portfolio.
The adviser may further reduce its compensation to the extent that the ex-
penses of the portfolio exceed such lower expense limitation as the adviser
may, by notice to the Portfolio, declare to be appropriate.
C. Administrative Services: UAM Fund Services, Inc. (the "Administrator"), a
wholly-owned subsidiary of UAM, provides and oversees administrative, fund ac-
counting, dividend disbursing, shareholder servicing, and transfer agent
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UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
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services to the UAM Funds under a Fund Administration agreement with the UAM
Funds (the "agreement"). The Administrator has entered into a Mutual Funds
Service Agreement with Chase Global Funds Services Company ("CGFSC"), a corpo-
rate affiliate of The Chase Manhattan Bank, under which CGFSC provides certain
services including administrative and fund accounting services. The Adminis-
trator has entered into an Agency Agreement with DST Systems, Inc. ("DST"),
under which DST provides transfer agent and dividend disbursing services. The
Administrator has also entered into an agreement with UAM Shareholder Service
Center, Inc. ("UAMSSC"), an affiliate of UAM, to serve as the shareholder ser-
vicing agent for the UAM Funds.
In exchange for administrative services, the Portfolio pays the following
fees to the Administrator:
-- effective April 15, 1999, an annual base fee, which is retained by the
Administrator, calculated at the annual rate equal to $14,500 the first
operational share class and $3,000 for each additional share class.
-- a portfolio-specific fee to the Administrator of 0.04% per annum of the
daily average net assets of the Portfolio which is retained by the
Administrator.
-- an annual base fee that the Administrator pays to CGFSC for its admin-
istrative and fund accounting services calculated at the annual rate of no
more than $52,500 for the first operational share class, $7,500 for each
additional share class plus 0.039% of their pro rata share of the combined
average net assets of the UAM Funds.
-- an annual base fee that the Administrator pays to DST for its services
as transfer agent and dividend disbursing agent equal to $10,500 for each
operational class.
-- an annual base fee that the Administrator pays to UAMSSC for its serv-
ices as shareholder servicing agent equal to $7,500 for each operational
share class and $2,500 for each additional share class.
The Portfolio also pays certain account and transaction fees and out-of-
pocket expenses that may be based on the number of open and closed accounts,
the type of account or the services provided to the account.
For the six months ended June 30, 1999, the Administrator earned $180,942
from the Portfolio as Administrator, of which $56,375, $41,641 and $39,561 was
paid to CGFSC, UAMSSC and DST, respectively, for their services.
D. Custodian: The Chase Manhattan Bank serves as custodian for the Portfo-
lio's assets and the assets are held in accordance with the custodian agree-
ment.
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UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
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E. Distribution Services: UAM Fund Distributors, Inc., a wholly-owned sub-
sidiary of UAM, distributes the shares of the Portfolio. UAM Fund Distribu-
tors, Inc. does not receive any fee or other compensation with respect to the
Portfolio. At the discretion of UAM Fund Distributors, Inc., the entire sales
charge it receives for distribution of the Advisor Class Shares may at times
be reallowed to authorized dealers responsible for the sale.
The Portfolio has adopted a Distribution and Service Plan (the "Plan") for
the Advisor Class Shares in accordance with Rule 12b-1 under the 1940 Act. Un-
der the provisions of the Plan, the Portfolio may not incur distribution and
service fees which exceed the annual rate of 0.50% of the average daily net
assets of Advisor Class Shares' net assets, without first obtaining share-
holder approval.
The Portfolio's Advisor Class Shares are currently making payments for dis-
tribution fees at an annual rate of 0.25% of average daily net assets. In ad-
dition, the Portfolio pays service fees at an annual rate of 0.25% of the av-
erage daily net assets of Advisor Class shares owned by the clients of the
Service Agents.
ACG Capital Corporation acts as limited distributor of Advisor Class Shares
by providing certain administrative and support services to those broker-
dealer firms and registered representatives who have offered and sold Advisor
Class Shares prior to March 31, 1999.
F. Trustees' Fees: Each Trustee, who is not an officer or affiliated person,
receives $2,000 per meeting attended plus reimbursement of expenses incurred
in attending Trustees meetings, which is allocated proportionally among the
active portfolios of UAM Funds, plus a quarterly retainer of $150 for each ac-
tive portfolio of the UAM Funds.
G. Purchases and Sales: For the six months ended June 30, 1999, the Portfo-
lio made purchases of $37,455,568 and sales of $47,433,211 of investment secu-
rities other than long-term U.S. Government and short-term securities. There
were no purchases or sales of long-term U.S. Government securities.
H. Other: At June 30, 1999, 66% of total Institutional Class Shares out-
standing were held by 3 record shareholders owning 10% or greater of the ag-
gregate total Institutional Class Shares outstanding and 43% of total Advisor
Class Shares were held by 1 record shareholder owning 10% or greater of the
aggregate total Advisor Class Shares outstanding.
At December 31, 1998, the Portfolio had available a capital loss carryover
for Federal Income tax purposes of approximately $1,616,313 which will expire
on December 31, 2006.
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UAM FUNDS HEITMAN REAL ESTATE PORTFOLIO
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Officers and Trustees
Norton H. Reamer William H. Park
Trustee, President and Chairman Vice President
John T. Bennett, Jr. Michael E. DeFao
Trustee Secretary
Nancy J. Dunn Gary L. French
Trustee Treasurer
Philip D. English Robert R. Flaherty
Trustee Assistant Treasurer
William A. Humenuk Michael J. Leary
Trustee Assistant Treasurer
James P. Pappas Michelle Azrialy
Trustee Assistant Secretary
Peter M. Whitman, Jr.
Trustee
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UAM Funds
P.O. Box 419081
Kansas City, MO 64141-6081
(toll free)
1-877-UAM-LINK (826-5465)
www.uam.com
Investment Adviser
Heitman/PRA Securities Advisors, L.L.C.
180 North LaSalle Street
Chicago, IL 60601
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
This report has been prepared for
shareholders and may be distributed
to others only if preceded or
accompanied by a current prospectus.
