<PAGE>
As filed with the Securities and Exchange Commission on June 10, 1998
Investment Company Act of 1940 File No. 811-5683
Securities Act File No. 33-25355
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [_]
Post-Effective Amendment No. 51 [X]
--
And/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY [X]
ACT OF 1940
Amendment No. 53 [X]
--
(Check appropriate boxes or boxes.)
UAM FUNDS, INC.
----------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
One International Place, Boston, Massachusetts 02110
----------------------------------------------------------------------------
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Areas Code (617) 330-8900
----------------
Michael E. DeFao, Secretary, 211 Congress Street, Boston, Massachusetts 02110
-----------------------------------------------------------------------------
(Name and Address of Agent for Service)
Copy to: Audrey C. Talley, Esq., Drinker Biddle & Reath LLP, 1345 Chestnut
Street, Philadelphia, PA 19107-3496
It is proposed that this filing become effective (check appropriate box)
[_] immediately upon filing pursuant to Paragraph (b)
[_] on (date) pursuant to Paragraph (b)
[_] 60 days after filing pursuant to Paragraph (a)(1)
[_] on (date) pursuant to Paragraph (a)(1)
[_] 75 days after filing pursuant to Paragraph (a)(2)
[X] on July 10, 1998 pursuant to Paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
UAM FUNDS, INC.
POST-EFFECTIVE AMENDMENT NO. 51
PART A
The prospectus of DSI Small Cap Value Portfolio Institutional Class Shares is
included in this Post-Effective Amendment No. 51.
The following prospectuses are contained in Post-Effective Amendment No. 50,
filed on January 22, 1998:
. Acadian Emerging Markets Portfolio and Acadian International Equity
Portfolio Institutional Class Shares.
. The C&B Portfolios Institutional Class Shares.
. The DSI Portfolios Institutional Class Shares.
. DSI Disciplined Value Portfolio Institutional Class Shares.
. DSI Disciplined Value Portfolio Institutional Service Class Shares.
. FMA Small Company Portfolio Institutional Class Shares.
. FMA Small Company Portfolio Institutional Service Class Shares.
. ICM Fixed Income Portfolio Institutional Class Shares.
. ICM Small Company & ICM Equity Portfolios Institutional Class Shares.
. The McKee Portfolios Institutional Class Shares.
. The NWQ Portfolios Institutional Class Shares.
. The NWQ Portfolios Institutional Service Class Shares.
. Rice, Hall, James Small Cap Portfolio and Rice, Hall, James Small/Mid Cap
Portfolio Institutional Class Shares.
. SAMI Preferred Stock Income Portfolio Institutional Class Shares.
. Sirach Portfolios Institutional Class Shares.
. Sirach Portfolios Institutional Service Class Shares.
. Sterling Partners' Portfolios Institutional Class Shares.
. Sterling Partners' Portfolios Institutional Service Class Shares.
. The TS&W Portfolios Institutional Class Shares.
<PAGE>
UAM Funds
DSI Small Cap Value Portfolio
Institutional Class Shares
, 1998
P R O S P E C T U S
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Fund Expenses............................................................... 3
Prospectus Summary.......................................................... 5
Risk Factors................................................................ 6
Investment Objectives....................................................... 7
Investment Policies......................................................... 7
Other Investment Policies................................................... 8
Investment Limitations...................................................... 12
Purchase of Shares.......................................................... 13
Redemption of Shares........................................................ 16
Shareholder Services........................................................ 19
Valuation of Shares......................................................... 20
Performance Calculations.................................................... 21
Dividends, Capital Gains Distributions and Taxes............................ 22
Investment Adviser.......................................................... 23
Adviser's Historical Performance............................................ 26
Administrative Services..................................................... 27
Distributor................................................................. 27
Portfolio Transactions...................................................... 28
General Information......................................................... 28
UAM Funds -- Institutional Class Shares..................................... 30
</TABLE>
1
<PAGE>
UAM FUNDS DSI SMALL CAP VALUE PORTFOLIO
INSTITUTIONAL CLASS SHARES
- -------------------------------------------------------------------------------
PROSPECTUS -- , 1998
UAM Funds, Inc. (the "Fund") is an open-end, management investment company
known as a "mutual fund." The Fund consists of multiple series (known as
"Portfolios"), each of which has different investment objectives and policies.
The DSI Small Cap Value Portfolio currently offers only one class of shares.
The securities offered in this Prospectus are Institutional Class Shares of
one diversified, no-load Portfolio of the Fund managed by Dewey Square Invest-
ors Corporation.
DSI SMALL CAP VALUE PORTFOLIO. The objective of the DSI Small Cap Value
Portfolio (the "Portfolio") is to provide maximum capital appreciation consis-
tent with reasonable risk to principal by investing in primarily small and me-
dium capitalization companies.
There can be no assurance the Portfolio will achieve its stated objective.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A "Statement of Additional Information" (SAI)
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated and has been incorpo-
rated by reference into this Prospectus. For a free copy of the SAI contact
the UAM Funds Service Center at 1-800-638-7983.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
2
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Institutional Class Shares would incur. The Fund does not charge
transaction expenses. Transaction fees may be charged if a broker-dealer or
other financial intermediary deals with the Fund on your behalf. (See "PUR-
CHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
DSI SMALL CAP
VALUE
PORTFOLIO
INSTITUTIONAL
CLASS SHARES
-------------
<S> <C>
Sales Load Imposed on Purchases................................ NONE
Sales Load Imposed on Reinvested Dividends..................... NONE
Deferred Sales Load............................................ NONE
Redemption Fees................................................ NONE
Exchange Fees.................................................. NONE
</TABLE>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
DSI SMALL CAP
VALUE
PORTFOLIO
INSTITUTIONAL
CLASS SHARES
-------------
<S> <C>
Investment Advisory Fees (after fee waiver).................... 0.75%
12b 1 Fees..................................................... NONE
Other Expenses................................................. 0.35%
Administrative Fees............................................ 0.20%
----
Total Operating Expenses (after fee waiver):................... 1.30%*
====
</TABLE>
- -----------
* The Adviser has voluntarily agreed to waive a portion of its advisory fees.
Absent the Adviser's fee waiver, Investment Advisory fees would be 0.85% and
total operating expenses would be 1.40% The annualized Total Operating Ex-
penses includes the effect of expense offsets. If expense offsets were ex-
cluded, annualized Total Operating Expenses of the Portfolio would not dif-
fer from the figure shown in the table.
The table above shows various fees and expenses and investor would bear di-
rectly or indirectly. The expenses and fees set forth above for the Portfo-
lio are based on estimates. For purposes of calculating the fees set forth
above, the table assumes that the Portfolio's average daily assets will be
$25 million.
3
<PAGE>
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. As noted in the ta-
ble above, the Portfolio charges no redemption fee of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
DSI Small Cap Value Portfolio Institutional Class Shares.... $13 $41
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
4
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Dewey Square Investors Corporation (the "Adviser"), an investment counseling
firm founded in 1989, serves as investment adviser to the Fund's five DSI
Portfolios, including the DSI Small Cap Value Portfolio. The Adviser was
formed as the successor to the business of The Dewey Square Investors Division
of The First National Bank of Boston, which division was established in 1984.
The Adviser presently manages over $[3.4] billion in assets for institutional
clients and high net worth individuals. (See "INVESTMENT ADVISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), to investors at net asset value without a sales commission.
Share purchases may be made by sending investments directly to the Fund. The
minimum initial investment is $2,500. The minimum for subsequent investments
is $100. Certain exceptions to the initial or minimum investment amounts may
be made by the officers of the Fund. (See "PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in annual dividends. The Portfolio will distribute any realized
net capital gains annually. Distributions will be reinvested in Portfolio
shares automatically unless an investor elects to receive cash distributions.
(See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTIONS AND EXCHANGES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. Shares of the Portfolio may be exchanged for shares of the same class
of any other portfolio of the UAM Funds. (See "REDEMPTION OF SHARES" and "EX-
CHANGE PRIVILEGE.")
ADMINISTRATIVE SERVICES
UAM Fund Services Inc. ("UAMFSI"), a wholly-owned subsidiary of United Asset
Management Corporation ("UAM"), is responsible for performing and overseeing
administration, fund accounting, dividend disbursing and transfer agency serv-
ices provided to the Fund and its Portfolios by third-party service providers.
(See "ADMINISTRATIVE SERVICES.")
5
<PAGE>
RISK FACTORS
The value of a Portfolio's shares can be expected to fluctuate in response
to changes in market and economic conditions, as well as the financial condi-
tions and prospects of the issuers in which a Portfolio invests. Prospective
investors should consider the following: (1) The Portfolio may invest a por-
tion of its assets in derivatives including futures contracts and options (See
"FUTURES CONTRACTS AND OPTIONS"); (2) The Portfolio invests primarily in small
and medium capitalization companies, some of which may be foreign based, which
may exhibit greater volatility than common stock of companies which have
larger market capitalization (See "INVESTMENT POLICIES" and "FOREIGN INVEST-
MENTS"); (3) In general, the Portfolio will not trade for short-term profits,
but when circumstances warrant, investments may be sold without regard to the
length of time held. High rates of portfolio turnover may result in additional
transaction costs and the realization of capital gains (See "OTHER INVESTMENT
POLICIES -- PORTFOLIO TURNOVER"); (4) In addition, the Portfolio may use vari-
ous investment practices, including investing in repurchase agreements, when-
issued, forward delivery and delayed settlement securities and lending of se-
curities. (See "OTHER INVESTMENT POLICIES.")
6
<PAGE>
INVESTMENT OBJECTIVES
The objective of the DSI Small Cap Value Portfolio is to provide maximum
capital appreciation consistent with reasonable risk to principal by investing
in primarily small and medium capitalization companies. Normally, the advisor
intends to pursue this objective by investing at least 65% of the Portfolio's
assets in equity securities of companies whose market capitalization is essen-
tially between $200 million and $2 billion, using a value-oriented approach to
stock selection.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
INVESTMENT POLICIES
Normally, the DSI Small Cap Value Portfolio seeks to achieve its objective
by investing at least 65% of its assets in companies with a market capitaliza-
tion of between $200 million and $2 billion. The equity securities in the DSI
Small Cap Value Portfolio will consist of common stock and securities convert-
ible into common stock, including convertible preferred stocks and/or convert-
ible bonds.
The bottom-up selection process for the portfolio focuses upon stocks of
statistically undervalued yet sound companies that are likely to show improv-
ing fundamental prospects with an identifiable catalyst for change, which may
include any of the following: improving fundamentals; a new product; new man-
agement; industry or company restructuring; a strategic acquisition; adopting
[EVA]; regulatory changes, etc. Using quantitative screening parameters such
as relative price/ earnings ratio, relative dividend yield, relative price to
book ratio, debt adjusted price to sales and other financial ratios, the advi-
sor identifies potentially undervalued securities. These securities are
screened by "earnings per share" revisions, which measure the change in earn-
ings estimate expectations. The list of stocks is further narrowed by the use
of fundamental security analysis which may include on-site visits, outside re-
search and analytical judgment.
The Advisor expects that a majority of the investments in the DSI Small Cap
Value Portfolio will be in U.S. based companies; however, shares of non-U.S.
based companies may be purchased if they meet the DSI Small Cap Value Portfo-
lio's selection criteria. Under normal circumstances, investments in foreign-
based companies will comprise no more than 20% of the Portfolio's assets.
The advisor expects the cash reserves will represent a relatively small per-
centage of the portfolio's assets (no more than 20% under most circumstances).
In unusual circumstances, or for temporary purposes when market or economic
conditions may warrant, the DSI Small Cap Value Portfolio may invest all or a
portion of its assets in short term investments, cash, or cash equivalents.
When the DSI Small Cap Value Portfolio is in a defensive position, it may not
be pursuing its investment objective.
7
<PAGE>
OTHER INVESTMENT POLICIES
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated redemp-
tions, or for temporary defensive purposes, the Portfolio may invest a portion
of its assets in domestic and foreign money market instruments including cer-
tificates of deposit, bankers' acceptances, time deposits, U.S. Government ob-
ligations, U.S. Government agency securities, short-term corporate debt secu-
rities, and commercial paper rated A-1 or A-2 by Standard & Poor's Ratings
Services or Prime-1 or Prime-2 by Moody's Investors Service, Inc. or if
unrated, determined by the Adviser to be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in
other currencies, (ii) in the case of U.S. banks, it is a member of the Fed-
eral Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an invest-
ment quality comparable with other debt securities which may be purchased by
the Portfolio.
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's Port-
folios, as well as cash for investment purposes, into one or more joint ac-
counts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable rate demand notes and tax-exempt money instruments. By en-
tering into these investments on a joint basis, a Portfolio may earn a higher
rate of return on investments relative to what it could earn individually.
The Fund has received permission from the SEC for each of its Portfolios to
invest, for cash management purposes, the greater of 5% of its total assets or
$2.5 million in the Fund's DSI Money Market Portfolio. (See "INVESTMENT COMPA-
NIES.")
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities, certificates of deposit, and certain bankers' accept-
ances and other securities outlined above under "SHORT-TERM INVESTMENTS." In a
repurchase agreement, a Portfolio buys a security and simultaneously commits
to sell that security back at an agreed upon price plus an agreed upon market
rate of interest. Under a repurchase agreement, the seller is required to
maintain the value
8
<PAGE>
of securities subject to the agreement at not less than 100% of the repurchase
price. The value of the securities will be evaluated daily, and the Adviser
will, if necessary, require the seller to maintain additional securities to
ensure that the value is in compliance with the previous sentence. The use of
repurchase agreements involves certain risks. For example, a default by the
seller of the agreement may cause a Portfolio to experience a loss or delay in
the liquidation of the collateral securing the repurchase agreement. The Port-
folio might also incur disposition costs in liquidating the collateral. While
the Fund's management acknowledges these risks, it is expected that they can
be controlled through stringent security selection criteria and careful moni-
toring procedures. The Fund has received permission from the SEC to pool daily
uninvested cash balances of the Fund's Portfolios in order to invest in repur-
chase agreements on a joint basis. By entering into joint repurchase agree-
ments, a Portfolio may incur lower transaction costs and earn higher rates of
interest on joint repurchase agreements. Each Portfolio's contribution would
determine its return from a joint repurchase agreement (See "SHORT TERM IN-
VESTMENTS").
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. A Portfolio will not loan securities
to the extent that greater than one-third of its total assets at fair market
value would be committed to loans. During the term of a loan, the Portfolio is
subject to a gain or loss depending on any increase or decrease in the market
price of the securities loaned. Lending of securities is subject to review by
the Fund's Board of Directors. All relevant facts and circumstances, including
the creditworthiness of the broker, dealer or institution, will be considered
by the Adviser in making decisions about securities lending.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Directors. The Portfolio will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on a loan, the loan must be called and the securities
voted.
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES
The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement," or "forward delivery" basis. "When-issued" or "forward delivery"
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more be-
fore delivery is due. Delayed settlement is a term used to describe settlement
of a securities transaction in the secondary market which will occur sometime
in the future. No payment or delivery is made by a Portfolio until it receives
payment or
9
<PAGE>
delivery from the other party to any of the above transactions. It is possible
that the market price of the securities at the time of delivery may be higher
or lower than the purchase price. The Portfolio will maintain a separate ac-
count of cash or liquid securities at least equal to the value of purchase
commitments until payment is made. Typically, no income accrues on securities
purchased on a delayed delivery basis prior to the time delivery is made al-
though the Portfolio may earn income on securities it has deposited in a seg-
regated account.
The Portfolio may engage in these types of purchases in order to buy securi-
ties that fit with its investment objectives at attractive prices -- not to
increase its investment leverage.
PORTFOLIO TURNOVER
The portfolio turnover rate for the Portfolio is estimated to be %. In ad-
dition to Portfolio trading costs, higher rates of portfolio turnover may re-
sult in the realization of capital gains. (See "DIVIDENDS, CAPITAL GAINS DIS-
TRIBUTIONS AND TAXES" for more information on taxation.) The Portfolio will
not normally engage in short-term trading, but reserves the right to do so.
INVESTMENT COMPANIES
The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets may be invested in the securities of any one investment company
nor may it acquire more than 3% of the voting securities of any other invest-
ment company. The Portfolio will indirectly bear its proportionate share of
any management fees paid by an investment company in which it invests in addi-
tion to the advisory fee paid by the Portfolio.
The Fund has received permission from the SEC to allow each of its Portfo-
lios to invest, for cash management purposes, the greater of 5% of its total
assets or $2.5 million in the Fund's DSI Money Market Portfolio provided that
the investment is consistent with the Portfolio's investment policies and re-
strictions. Based upon a Portfolio's assets invested in the DSI Money Market
Portfolio, the investing Portfolio's adviser will waive its investment advi-
sory fee and any other fees earned as a result of the Portfolio's investment
in the DSI Money Market Portfolio. The investing Portfolio will bear expenses
of the DSI Money Market Portfolio on the same basis as all of its other share-
holders.
FOREIGN INVESTMENTS
Investing in foreign companies may involve additional risks and considera-
tions which are not typically associated with investing in U.S. companies.
Since securities of foreign companies are normally denominated in foreign cur-
rencies, the Portfolio may be affected favorably or unfavorably by changes in
currency rates
10
<PAGE>
and in exchange control regulations, and may incur costs in connection with
conversions between various currencies.
As non-U.S. companies are not generally subject to uniform accounting, au-
diting and financial reporting standards and practices comparable to those ap-
plicable to U.S. companies, comparable information may not be readily avail-
able about certain foreign companies. Securities of some non-U.S. companies
may be less liquid and more volatile than securities of comparable U.S. compa-
nies. In addition, in certain foreign countries, there is the possibility of
expropriation or confiscatory taxation, political or social instability, or
diplomatic developments which could affect U.S. investments in those coun-
tries. Additionally, there may be difficulty in obtaining and enforcing judg-
ments against foreign issuers.
FUTURES CONTRACTS AND OPTIONS
In order to remain fully invested, and to reduce transaction costs, the
Portfolio may invest in futures and options and interest rate futures con-
tracts. Because transaction costs associated with futures and options may be
lower than the costs of investing in the securities directly, it is expected
that use of index futures and options to facilitate cash flows may reduce the
Portfolio's overall transaction costs. The Portfolio may enter into futures
contracts provided that not more than 5% of its total assets are at the time
of acquisition required as margin deposit to secure obligations under such
contracts. The Portfolio will engage in futures and options transactions for
hedging purposes only, and not for speculative purposes.
Futures and options can be volatile and involve various degrees and types of
risk. If the Portfolio judges market conditions incorrectly or employs a
strategy that does not correlate well with its investments, use of futures and
options contracts could result in a loss. The Portfolio could also suffer
losses if it is unable to liquidate its position due to an illiquid secondary
market. In the opinion of the Directors of the Fund, the risk that the Portfo-
lio will be unable to close out a futures position or options contract will be
minimized only by entering into futures contracts or options transactions
traded on national exchanges and for which there appears to be a liquid sec-
ondary market.
RESTRICTED SECURITIES
The Portfolio may purchase restricted securities that are not registered for
sale to the general public but which are eligible for resale to qualified in-
stitutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Directors, the Adviser determines the li-
quidity of such investments by considering all relevant factors. Provided that
a dealer or institutional trading market in such securities exists, these re-
stricted securities are not treated as illiquid securities for purposes of the
Portfolio's investment limitations. The Portfolio may also invest up to 15% of
its net assets in illiquid securities. Prices realized from sales of these se-
curities could be more or less than those originally
11
<PAGE>
paid by the Portfolio or less than what may be considered the fair value of
such securities.
Except as specified above and as described under "INVESTMENT LIMITATIONS,"
the foregoing investment policies are not fundamental and the Directors may
change such policies without an affirmative vote of a "majority of the out-
standing voting securities of a Portfolio," as defined in the 1940 Act.
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and in-
terest by the U.S. Government or any of its agencies or instrumentali-
ties);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding voting securities of any issuer;
(c) invest more than 5% of its assets at the time of purchase in the secu-
rities of companies that have (with predecessors) a continuous operat-
ing history of less than 3 years;
(d) invest more than 25% of its assets in companies within a single indus-
try; however, there are no limitations on investments made in instru-
ments issued or guaranteed by the U.S. Government and its agencies
when the Portfolio adopts a temporary defensive position;
(e) make loans except (i) by purchasing bonds, debentures or similar obli-
gations which are publicly distributed, (including repurchase agree-
ments provided, that repurchase agreements maturing in more than seven
days, together with securities which are not readily marketable, will
not exceed 15% of the Portfolio's total assets), and (ii) by lending
its portfolio securities to banks, brokers, dealers and other finan-
cial institutions so long as such loans are not inconsistent with the
1940 Act or the rules and regulations or interpretations of the SEC
thereunder;
(f) (i) borrow, except from banks and as a temporary measure for extraor-
dinary or emergency purposes and then, in no event, in excess of 33
1/3% of the Portfolio's gross assets valued at the lower of market or
cost, and (ii) a Portfolio may not purchase additional securities when
borrowings exceed 5% of total gross assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent greater
than 33 1/3% of its total assets at fair market value.
The investment objectives of the Portfolio are non-fundamental and may be
changed without shareholder approval. Except for limitations (a), (b), (d),
(e) and
12
<PAGE>
(f)(i), the Portfolio's investment limitations and policies described in this
Prospectus and in the SAI are not fundamental and may be changed by the Fund's
Board of Directors upon reasonable notice to investors. All other investment
limitations described here and in the SAI are fundamental policies and may be
changed only with the approval of the holders of a majority of the outstanding
shares of the Portfolio. If a percentage limitation on investment or utiliza-
tion of assets as set forth above is adhered to at the time an investment is
made, a later change in percentage resulting from changes in the value or to-
tal cost of the Portfolio's assets will not be considered a violation of the
restriction.
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), without a sales commission at the net asset value per share
next determined after an order is received by the Fund or the designated Serv-
ice Agent. (See "VALUATION OF SHARES.") The minimum initial investment re-
quired is $2,500. Certain exceptions may be made by the officers of the Fund.
Shares of the Portfolio may be purchased by customers of brokers-dealers or
other financial intermediaries ("Service Agents") which have established a
shareholder servicing relationship with the Fund on behalf of their customers.
Service Agents may impose additional or different conditions on purchases or
redemptions of Portfolio shares and may charge transaction or other account
fees. Each Service Agent is responsible for transmitting to its customers a
schedule of any such fees and information regarding additional or different
purchase or redemption conditions. Shareholders who are customers of Service
Agents should consult their Service Agent for information regarding these fees
and conditions. Amounts paid to Service Agents may include transaction fees
and/or service fees paid by the Fund from the Fund assets attributable to the
Service Agent, which would not be imposed if shares of the Portfolio were pur-
chased directly from the Fund or the Distributor. Service Agents may provide
shareholder services to their customers that are not available to a share-
holder dealing directly with the Fund. A salesperson and any other person en-
titled to receive compensation for selling or servicing Portfolio shares may
receive different compensation with respect to one particular class of shares
over another in the Fund.
Service Agents, or if applicable, their designees, that have entered into
agreements with the Fund or its agent may enter confirmed purchase or redemp-
tion orders on behalf of clients and customers, with payment to follow no
later than the Portfolio's pricing on the following business day. If payment
is not received by the Fund's Sub-Transfer Agent, Chase Global Funds Services
Company by such time, the Service Agent could be held liable for resulting
fees or losses. The Portfolio may be deemed to have received a purchase or re-
demption order when a Service Agent, or, if applicable, its authorized desig-
nee, accepts the order. Orders received
13
<PAGE>
by the Fund in proper form will be priced at the Portfolio's net asset value
next computed after they are accepted by the Service Agent or its authorized
designee. Service Agents are responsible to their customers and the Fund for
timely transmission of all subscription and redemption requests, investment
information, documentation and money.
INITIAL INVESTMENTS
BY MAIL
. Complete and sign an Application and mail it together with a check made
payable to "UAM Funds" to:
UAM Funds, Inc.
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment. The Fund will not accept third-party checks to purchase
shares of the Portfolio. If you purchase shares by check, please be sure that
your check is made payable to "UAM Funds."
BY WIRE
. Telephone the UAM Funds Service Center and provide the account name, ad-
dress, telephone number, social security or taxpayer identification num-
ber, Portfolio selected, amount being wired and the name of the bank
wiring the funds. The call must be received prior to the close of regu-
lar trading on the NYSE (generally 4:00 PM Eastern Time) to receive that
day's price. An account number and a wire control number will then be
provided to you, in addition to wiring instructions. Next,
. Instruct your bank to wire the specified amount to the Fund's Custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
DDA Acct. #9102772952
Ref: Portfolio Name
Your Account Number
Your Account Name
Wire Control Number
(assigned by UAM Funds Service Center)
14
<PAGE>
. Forward a completed Application to the Fund at the address shown on the
form. Federal Funds purchases will be accepted only on a day on which
both the NYSE and the Custodian Bank are open for business.
. To be sure that a bank wire order is received on the same day it is
sent, and investors bank should wire funds as early in the day as possi-
ble. The bank sending funds may charge for this service. The Fund's
agent reserves the right to charge investors for receipt of wired funds,
but no charge is currently imposed for this service. It is necessary to
obtain a new wire control number every time money is wired into an ac-
count in the Portfolio. Wire control numbers are effective for one
transaction only and cannot be used more than once. Wired money that is
not properly identified with a currently effective wire control number
will be returned to the bank from which it was wired and will not be
credited to the shareholder's account.
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check made payable to "UAM Funds" to the above address or by wiring money to
the Custodian Bank using the instructions outlined above. When making addi-
tional investments, be sure that the account number, account name and the
Portfolio to be purchased are identified on the check or wire. Prior to wiring
additional investments, notify the UAM Funds Service Center by calling the
number on the cover of this Prospectus. Mail orders should include, when pos-
sible, the "Invest by Mail" stub which accompanies any Fund confirmation
statement.
PURCHASE BY ACH
If you have made this election, shares of the Portfolio may be purchased via
Automated Clearing House ("ACH"). Investors purchasing via ACH should complete
the bank information section on the Account Application and attach a voided
check or deposit slip to the Account Application. This option must be estab-
lished on your account at least 15 days prior to your initiating an ACH trans-
action. (See "SHAREHOLDER SERVICES -- AUTOMATIC INVESTMENT PLAN.")
OTHER PURCHASE INFORMATION
Investments received by the close of regular trading on the NYSE (generally
4 p.m. Eastern Time) will be invested at the share price calculated after the
NYSE closes on that day. Investments received after the close of the NYSE will
be executed at the price computed on the next day the NYSE is open. The Fund
reserves the right, in its sole discretion, to suspend the offering of shares
of the Portfolio or to reject purchase orders when, in the judgment of manage-
ment, such suspension or rejection is in the best interests of the Fund. The
Portfolio is intended to be a long-term investment vehicle and is not designed
to provide investors with a means of speculation on short-term market move-
ments. A pattern of frequent
15
<PAGE>
purchases can be disruptive to efficient portfolio management and, consequent-
ly, can be detrimental to the Portfolio's performance and its shareholders.
Accordingly, if the Fund's management determines that an investor is engaged
in excessive trading, the Fund, with or without prior notice, may reject in
whole or part any purchase request with respect to such investor's account.
Such investor also may be barred from purchasing other Portfolios of the Fund.
Purchases of the Portfolio's shares will be made in full and fractional shares
of the Portfolio calculated to three decimal places. Certificates for frac-
tional shares will not be issued. Certificates for whole shares will not be
issued except at the written request of the shareholder.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by the Port-
folio in exchange for securities will be issued at net asset value determined
as of the same time. All dividends, interest, subscription, or other rights
pertaining to such securities shall become the property of the Portfolio and
must be delivered to the Fund by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for invest-
ment and not for immediate resale.
The Fund will not accept securities in exchange for shares of a Portfolio
unless:
. at the time of exchange, such securities are eligible to be included in
the Portfolio (current market quotations must be readily available for
such securities);
. the investor represents and agrees that all securities offered to be ex-
changed are liquid securities and not subject to any restrictions upon
their sale by the Portfolio under the Securities Act of 1933, or other-
wise; and
. the value of any such securities (except U.S. Government securities) be-
ing exchanged together with other securities of the same issuer owned by
the Portfolio will not exceed 5% of the net assets of the Portfolio im-
mediately after the transaction.
Investors who are subject to federal taxation upon exchange may realize a
gain or loss for federal income tax purposes depending upon the cost of secu-
rities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. No charge is made for redemptions. Any re-
demption may
16
<PAGE>
be more or less than the purchase price of the shares depending on the market
value of investment securities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of shares
or dollar amount to be redeemed, signed by all registered owners of the
shares in the exact names in which they are registered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of es-
tates, trusts, guardianships, custodianships, corporations, pension and
profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the wire
redemption privilege) by completing appropriate sections of the Applica-
tion; and
. call the Fund and instruct that the redemption proceeds be mailed to you
or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated to
receive redemption proceeds (this can be accomplished only by a written
request signed by each shareholder, with each signature guaranteed);
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the investor to provide certain personal identification at the time an
account is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded
and investors may be required to provide additional telecopied written in-
structions of such transaction requests. The Fund or Sub-Transfer Agent may be
liable for any losses due to unauthorized or fraudulent telephone instructions
if the Fund or the Sub-Transfer Agent do not employ the procedures described
above. Neither the Fund nor the Sub-Transfer Agent will be responsible for any
loss, liability, cost or expense for following instructions received by tele-
phone that it reasonably believes to be genuine.
17
<PAGE>
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than the
registered shareowner(s);
. redemptions where the proceeds are to be sent to someplace other than
the registered address; or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securi-
ties exchanges, registered securities associations, clearing agencies and sav-
ings associations. Broker-dealers guaranteeing signatures must be a member of
a clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees.
OTHER REDEMPTION INFORMATION
The Fund ordinarily will make payment for all shares redeemed with in seven
days after receipt by the UAM Funds Service Center or a redemption request in
proper form. Although the Fund will redeem shares purchased by check before
the check clears, payment of the redemption proceeds may be delayed for a pe-
riod of up to fifteen days after their purchase, pending determination that
the check has cleared. Investors should consider purchasing shares using a
certified or bank check or money order if they anticipate an immediate need
for redemption proceeds. The Fund may suspend the right of redemption or post-
pone the date at times when both the NYSE and Custodian Bank are closed, or
under any emergency circumstances determined by the SEC.
If the Board of Directors determines that it would be detrimental to the
best interests of remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay redemption proceeds in whole or in part by a
distribution in-kind of liquid securities held by a Portfolio in lieu of cash
in conformity with applicable rules of the SEC. Investors may incur brokerage
charges on the sale of portfolio securities received in payment of redemp-
tions.
The Portfolio reserves the right to liquidate any account that is below
fifty percent of the required minimum initial investment amount for the Port-
folio as set forth in the Prospectus, where the reduction in value has oc-
curred due to a redemption or exchange out of the account. If at any time your
total investment does not have a value of at least fifty percent of the re-
quired minimum initial investment amount, you may be notified that the value
of your account is below the Portfolio's minimum account balance requirement.
You would then be allowed 60 days to make an additional investment before the
account is liquidated. Retirement accounts and certain other accounts will not
be subject to automatic liquidation.
18
<PAGE>
Reductions in value that result solely from market activity will not trigger
an involuntary redemption.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for Institu-
tional Class Shares of any other UAM Funds Portfolio. See the list of Portfo-
lios of the UAM Funds at the end of this Prospectus. Exchange requests should
be made by contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you are interested. Exchanges can only be made with Portfolios that
are qualified for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to the
close of regular trading on the NYSE (generally 4 p.m. Eastern Time) will be
processed as of the close of business on the same day. Requests received after
the close of regular trading on the NYSE (generally 4 p.m. Eastern Time) will
be processed on the next business day. The Fund may modify or terminate the
exchange program at any time upon 60 days' written notice to shareholders, and
may reject any exchange request. If the Fund's management determines that an
investor is engaged in excessive trading, the Fund, with or without prior no-
tice may reject in whole or part any exchange request, with respect to such
investor's account. Such investors also may be barred from exchanging into
other Portfolios of the Fund. For additional information regarding responsi-
bility for the authenticity of telephoned instructions, see "REDEMPTION OF
SHARES--BY TELEPHONE." An exchange into another UAM Funds portfolio is a sale
of shares and may result in a gain or loss for income tax purposes.
AUTOMATIC INVESTMENT PLAN
An Automatic Investment Plan permits shareholders of a Portfolio with a min-
imum value of $2,500 or more to purchase shares automatically (minimum of $100
per transaction) at regular intervals selected by the shareholder. Provided
the shareholder's bank or other financial institution allows automatic with-
drawals, shares are purchased by transferring funds via the Automated Clearing
House ("ACH"). Investment made through ACH will be automatically transferred
from a shareholder's checking, bank money market or NOW account designated by
the
19
<PAGE>
shareholder. Such withdrawals are made electronically, if the shareholder's
bank or financial institution so permits, or by pre-authorized checks or
drafts drawn on the shareholder's bank or other account. The bank or financial
institution must be a member of ACH. At the shareholder's option, the account
designated will be debited in the specified amount, and shares will be pur-
chased monthly or quarterly.
To establish an Automatic Investment Plan, a shareholder must complete the
Optional Services Form available from the UAM Funds Service Center at 1-800-
638-7983 and mail it to Chase Global Funds Service Company. A shareholder may
cancel his/her participation or change the amount of purchase at any time by
mailing written notification to Chase Global Funds Services Company, P.O./ Box
2798, Boston, MA 02208-2798. Notification generally will be effective three
business days following receipt. The Fund may modify or terminate this privi-
lege at any time, or may charge a service fee, although no such fee currently
is contemplated.
SYSTEMATIC WITHDRAWAL PLAN
Any shareholder whose account balance totals at least $10,000 may establish
a Systematic Withdrawal Plan under which an amount pre-determined by the
shareholder (but at least $100) is automatically redeemed from the sharehold-
er's account either monthly or quarterly. A shareholder may participate in the
Systematic Withdrawal Plan by using ACH. Redemption made through ACH will be
automatically transferred to the shareholder's bank or other similar financial
institution account or a properly designated third party. The bank or finan-
cial institution must be a member of ACH. Redemptions ordinarily are made on
the third business day of the month and payments ordinarily will be transmit-
ted within five business days after the redemption date. Because the prices of
Fund shares fluctuate, the number of shares redeemed to finance systematic
withdrawal payments or a given amount will vary from payment to payment. If a
shareholder owns shares in more than one Portfolio, the shareholder must des-
ignate the Portfolio from which the redemptions under a Systematic Withdrawal
Plan should be made. An additional sheet may be attached to the Optional Serv-
ices Form if a shareholder selects more than one Portfolio. A Systematic With-
drawal Plan may be terminated or suspended at any time by the Fund. A share-
holder may elect at any time, in writing, to terminate participation in the
Systematic Withdrawal Plan. Such written election must be sent to an received
by the Fund before a termination becomes effective. There is currently no
charge to the shareholder for a Systematic Withdrawal Plan.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets, less any liabilities, by the number of shares out-
standing. The net asset value per share of the Portfolio is determined as of
the close of the NYSE on each day that the NYSE is open for business.
20
<PAGE>
Equity securities listed on a securities exchange for which market quota-
tions are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where
the security is primarily traded. Unlisted equity securities and listed secu-
rities not traded on the valuation date for which market quotations are read-
ily available are valued neither exceeding the current asked prices nor less
than the current bid prices. Quotations of foreign securities in a foreign
currency are converted to U.S. dollar equivalents. The converted value is
based upon the bid price of the foreign currency against U.S. dollars quoted
by any major bank or by a broker.
Bonds and other fixed income securities are valued according to the broadest
and most representative market, which will ordinarily be the over-the-counter
market. Bonds and other fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities. Securities purchased with remaining
maturities of 60 days or less are valued at amortized cost when the Board of
Directors determines that amortized cost reflects fair value.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Directors.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating yield and total return.
Both yield and total return figures are based on historical earnings and are
not intended to indicate future performance.
Yield refers to the income generated by an investment in the Portfolio over
a given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all bond funds. As
this differs from other accounting methods, the quoted yield may not equal the
income actually paid to shareholders.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of time. An average annual total return is a hypothetical rate of re-
turn that, if achieved annually, would have produced the same cumulative total
return if performance had been constant over the entire period.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices as further de-
scribed in the Portfolio's SAI. This information may also be included in sales
literature and advertising.
21
<PAGE>
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or telephone number on the
cover of this Prospectus.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders in quarterly dividends. If any
net capital gains are realized, the Portfolio will normally distribute them
annually.
All dividends and capital gains distributions will be automatically rein-
vested in additional shares of the Portfolio unless the Fund is notified in
writing that the shareholder elects to receive the distributions in cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal in-
come tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends. To do this, the Portfolio must,
among other things, distribute substantially all of its ordinary income and
net capital gains on a current basis and maintain a portfolio of investments
which satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income.
Short-term capital gains will be taxed as ordinary income. Long-term capital
gains distributions are taxed as long-term capital gains. Shareholders will be
notified annually of dividend income earned for tax purposes.
Dividends declared in October, November or December to shareholders of rec-
ord in such a month and paid in January of the following year will be deemed
to have been paid by the Fund and received by the shareholders on December 31.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
22
<PAGE>
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you. Consult a tax adviser for more information regarding deduc-
tions and credits for foreign taxes.
INVESTMENT ADVISER
Dewey Square Investors Corporation, a Delaware corporation formed in 1989 as
the successor to the business of the Dewey Square Investors Division of the
First National Bank of Boston (which division was established in 1984), is lo-
cated at One Financial Center, Boston, MA 02111. The Adviser is a wholly-owned
subsidiary of United Asset Management Corporation, a holding company, and pro-
vides investment management services to corporations, foundations, endowments,
pension and profit sharing plans, trusts, estates and other institutions and
individuals. As of the date of this prospectus, the Adviser has over $[3.4]
billion in assets under management.
The investment professionals of the Adviser who are primarily responsible
for the day-to-day operations of the Portfolio and a description of their
business experience during the past five years are as follows:
RONALD L. MCCULLOUGH, CFA, MANAGING DIRECTOR--EQUITY, is part of the team
that founded Dewey Square in 1984. He has 28 years of investment experience.
Prior to joining Dewey Square, Mr. McCullough was Senior Portfolio Manager and
a member of the Trust Investment Committee at Bank of Boston's Institutional
Investment Division. He has a BA from Harvard College and is a member of the
Boston Security Analysts Society and the Institute of Chartered Financial Ana-
lysts (CFA). Mr. McCullough co-manages the equity portion of the DSI Balanced
Portfolio with Ms. Dewitz and co-manages the DSI Disciplined Value Portfolio
with Mr. Stephenson and co-manages the DSI Small Cap Value Portfolio with Mr.
Stephenson and Mr. Pitz.
ROBERT S. STEPHENSON, CPA, SENIOR PORTFOLIO MANAGER, EQUITY, has 25 years
experience in the investment business and joined Dewey Square in 1991. He was
most recently at The Putnam Management Company from 1978 through 1990 where he
managed the Putnam Option Trust. He graduated from Rochester Institute of
Technology with a BS and earned an MBA from Columbia University. Mr. Stephen-
son has co-managed the DSI Disciplined Value Portfolio since 1993 with Mr.
McCullough and co-manages the DSI Small Cap Value Portfolio with Mr.
McCullough and Mr. Pitz.
SCOTT D. PITZ, CFA, SENIOR QUANTITATIVE ANALYST & PORTFOLIO MANAGER, EQUITY,
joined Dewey Square in 1985. He is responsible for Dewey Square's quantitative
research. Prior to his current responsibilities, he was in charge of all
23
<PAGE>
the operational/systems functions at Dewey Square. He has 12 years of invest-
ment experience. Mr. Pitz is a member of the Institute of Chartered Financial
Analysts and the Boston Security Analyst Society. He holds a BS from Middle-
bury College and an MBA from Northeastern University. Mr. Pitz co-manages the
DSI Small Cap Value Portfolio with Mr. Stephenson and Mr. McCullough.
Additional members of Dewey Square's team of professionals are:
PETER M. WHITMAN, JR., PRESIDENT & CHIEF INVESTMENT OFFICER, is part of the
team that founded Dewey Square in 1984. He was appointed President in 1988 and
was previously Managing Director of Fixed Income, a position he held for seven
years. Prior to the formation of Dewey Square, he served as Head of Fixed In-
come for the Bank of Boston's Institutional Investment Division. He joined the
Bank of Boston in 1971 as a Credit Analyst and was appointed head of Fixed In-
come Research in 1975. He has 29 years of investment experience. Mr. Whitman
holds a BA from Harvard College and an MBA from the New York University Gradu-
ate School of Business. Mr. Whitman also serves as a Director of the UAM
Funds, which are mutual funds managed by various UAM affiliates. He is a mem-
ber and former Director of the Boston Security Analysts Society and a member
and former President of the Boston Economic Club.
EVA S. DEWITZ, SENIOR PORTFOLIO MANAGER, EQUITY, is part of the team that
founded Dewey Square in 1984. Prior to the formation of Dewey Square, she was
a Portfolio Manager and Research Analyst for the Bank of Boston's Institu-
tional Investment Division, which she joined in 1970. She has 27 years of in-
vestment experience. Ms. Dewitz is a member of the Boston Security Analysts
Society. She holds a BA from Smith College and an MBA from Northeastern Uni-
versity. Ms. Dewitz co-manages the equity portion of the DSI Balanced Portfo-
lio with Mr. McCullough.
RICHARD M. KANE, CFA, SENIOR PORTFOLIO MANAGER, EQUITY, is part of the team
that founded Dewey Square in 1984. Prior to the formation of Dewey Square, he
was a Portfolio Manager and a Research Analyst for the Bank of Boston's Insti-
tutional Investment Division, which he joined in 1981. He has 17 years of in-
vestment experience. He is a member of the Institute of Chartered Financial
Analysts and the Boston Security Analysts Society. He holds a BS and an MBA in
Finance from the State University of New York at Buffalo.
ROBERT P. CLANCY, SENIOR PORTFOLIO MANAGER, FIXED INCOME, joined Dewey
Square in 1994. Prior to that, he was a Vice President at Standish, Ayer &
Wood responsible for the management of institutional bond portfolios, syn-
thetic GIC's and quantitative research. Previously, he worked as a Vice Presi-
dent at First Boston Company working primarily with insurance company and
structured bond portfolios. Prior to that, Mr. Clancy worked for State Street
Bank and John Hancock Mutual Life Insurance Company. He has 18 years of in-
vestment experience and is
24
<PAGE>
a Fellow of the Society of Actuaries and a recipient of the Halmstad Prize for
his research paper on options on bonds. Mr. Clancy holds a BS from Brown Uni-
versity. Mr. Clancy co-manages the fixed income portion of the DSI Balanced
Portfolio.
FREDERICK C. MELTZER, PH.D. SENIOR PORTFOLIO MANAGER, FIXED INCOME, joined
Dewey Square in 1995. Prior to that he was Managing Director of Fixed Income
at World Asset Management. Previously, he held positions as Senior Manager of
Fixed income at PanAgora Asset Management and Senior Fixed Income Portfolio
Manager at The Boston Company. He has also held positions as Director of Re-
search for the Farm Credit Banks Funding Corporation, Fixed Income Strategist
at Chase Investors, and a staff economist at the Federal Reserve Bank of New
York. He has 23 years of investment experience. Mr. Meltzer holds a MA in Eco-
nomics from John Hopkins University and a Ph.D. in Economics from the Univer-
sity of Virginia. Mr. Meltzer currently co-manages the DSI Limited Maturity
Bond Portfolio and the DSI Money Market Portfolio.
Under an Investment Advisory Agreement (the "Advisory Agreement") with the
Fund, dated as of , 1998, the Adviser manages the investment and rein-
vestment of the assets of the Portfolio. The Adviser must adhere to the stated
investment objectives and policies of the Portfolio, and is subject to the
control and supervision of the Fund's Board of Directors.
As compensation for its services as an Adviser, the Portfolio pays the Ad-
viser an annual fee, in monthly installments, calculated by applying the an-
nual rate of 0.85% to the Portfolio's average daily net assets for the month.
Until further notice, the Adviser has voluntarily agreed to waive a portion of
its advisory fees to maintain the advisory fees at 0.75% of the Portfolio's
average daily net assets for the Portfolio's first twelve months of operation.
The Adviser may compensate its affiliated companies for referring investors
to the Portfolios. The Distributor, UAM, the Adviser, or any of their affili-
ates, may, at its own expense, compensate a Service Agent or other person for
marketing, shareholder servicing, record-keeping and/or other services per-
formed with respect to the Fund, the Portfolio or any class of Shares. Pay-
ments made for any of these purposes may be made from its revenues, its prof-
its or any other source available to it. When such service arrangements are in
effect, they are made generally available to all qualified service providers.
The Distributor, the Adviser, and certain of their affiliates also partici-
pate, at the date of this Prospectus, in an arrangement with Smith Barney Inc.
under which Smith Barney provides certain defined contribution plan marketing
and shareholder services of its Consulting Group and receives .15 of 1% of the
daily net asset value of Institutional Class Shares held by Smith Barney's el-
igible customer accounts in addition to amounts payable to all selling deal-
ers. The Fund also compensates
25
<PAGE>
Smith Barney for services it provides to certain defined contribution plan
shareholders that are not otherwise provided by UAMFSI.
ADVISER'S HISTORICAL PERFORMANCE
Below are certain performance data provided by the Adviser pertaining to the
composite of separately managed accounts of the Adviser that are managed with
substantially similar (although not necessarily identical) objectives, poli-
cies and strategies as those of the Portfolio. The investment returns of the
Portfolio may differ from those of the separately managed accounts because
such separately managed accounts may have fees and expenses that differ from
those of the Portfolio. Further, the separately managed accounts are not sub-
ject to investment limitations, diversification requirements and other re-
strictions imposed by the 1940 Act and Internal Revenue Code; such conditions,
if applicable, may have lowered the returns for separately managed accounts.
The results presented are not intended to predict or suggest the return to be
experienced by the Portfolio or the return an investor might achieve by in-
vesting in the Portfolio.
Dewey Square Investors Corporation MidCap Value Equity Composite Returns
(Percentage returns Net of Management Fees)
<TABLE>
<CAPTION>
DEWEY SQUARE INVESTORS
CALENDAR YEARS CORPORATION [BENCHMARK]
-------------- ---------------------- -----------
<S> <C> <C>
1997...................................... 30.29% %
1/1/98-3/31/98............................ 7.78% %
10/1/96-3/31/98...........................
Annualized.............................. 33.50% %
Cumulative.............................. 54.26% %
Value of $1 invested from
10/1/96-3/31/98......................... $ $
</TABLE>
Notes:
1. The ANNUALIZED RETURN is calculated from monthly data, allowing for com-
pounding. Market Value of the account was the sum of the account's total
assets, including cash, cash equivalents, short term investments, and secu-
rities valued at current market prices.
2. The [BENCHMARK] is an unmanaged index which assumes reinvestment of divi-
dends and are generally considered representative of securities similar to
those invested in by the Adviser for the purpose of the composite perfor-
mance numbers set forth above.
3. The Adviser's average annual management fee over the from October 1, 1996
through March 31, 1998 was % or basis points. During the period, fees
on the Adviser's individual accounts ranged from % to % ( basis
points to basis points). Net returns to investors vary depending on the
management fee.
26
<PAGE>
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of UAM, is re-
sponsible for performing and overseeing administrative, fund accounting, divi-
dend disbursing and transfer agent services provided to the Fund and its Port-
folios. UAMFSI's principal office is located at 211 Congress Street, Boston,
MA 02110. UAMFSI has subcontracted some of these services to Chase Global
Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan Bank, by
a Mutual Funds Service Agreement dated April 15, 1996. CGFSC is located at 73
Tremont Street, Boston, MA 02108.
The Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
DSI Small Cap Value Portfolio........................................... [ ]
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Fund assets;
0.11 of 1% of the next $800 million of combined UAM Fund assets;
0.07 of 1% of combined UAM Fund assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Fund assets in excess of $3 billion.
Fees are allocated among the Portfolios on the basis of their relative as-
sets and are subject to a graduated minimum fee schedule per Portfolio, which
starts at $2,000 per month and increases to $70,000 annually after two years.
If a separate class of shares is added to a Portfolio, its minimum annual fee
increases by $20,000.
DISTRIBUTOR
UAM Fund Distributors, Inc., a wholly-owned subsidiary of UAM, with its
principal office located at 211 Congress Street, Boston, MA 02110, distributes
shares of the Fund. Under the Distribution Agreement (the "Agreement"), the
Distributor, as agent of the Fund, agrees to use its best efforts as sole dis-
tributor of Fund shares. The Distributor does not receive any fee or other
compensation under the Agreement with respect to the Shares offered in this
Prospectus The Agreement continues in effect as long as it is approved at
least annually by the Fund's Board of Directors. Those approving the Agreement
must include a majority of Directors who are neither parties to the Agreement
nor interested persons of any such party. The Agreement provides that the Fund
will bear costs of registration of its shares
27
<PAGE>
with the SEC and various states as well as the printing of its prospectuses,
its SAIs and its reports to shareholders.
PORTFOLIO TRANSACTIONS
The Advisory Agreement authorizes the Adviser to select the brokers or deal-
ers that will execute the purchases and sales of investment securities for the
Portfolio. The Advisory Agreement directs the Adviser to use its best efforts
to obtain the best available price and most favorable execution for all trans-
actions of the Portfolio. If consistent with the interests of the Portfolio,
the Adviser may select brokers on the basis of research, statistical and pric-
ing services these brokers provide to the Portfolio in addition to required
Adviser services. Such brokers may be paid a higher commission than that which
another qualified broker would have charged for effecting the same transac-
tion, provided that such commissions are paid in compliance with the Securi-
ties Exchange Act of 1934, as amended, and that the Adviser determines in good
faith that the commission is reasonable in terms either of the transaction or
the overall responsibility of the Adviser to the Portfolio and the Adviser's
other clients. Although not a typical practice, the Adviser may place portfo-
lio orders with qualified broker-dealers who refer clients to the Adviser.
If a purchase or sale of securities is consistent with the investment poli-
cies of the Portfolio and one or more other clients served by the Adviser is
considering a purchase at or about the same time, transactions in such securi-
ties will be allocated among the Portfolio and clients in a manner deemed fair
and reasonable by the Adviser. Although there is no specified formula for al-
locating such transactions, allocations are subject to periodic review by the
Fund's Directors.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Maryland corporation on October 11, 1988 under
the name "ICM Fund, Inc." On January 18, 1989, the name of the Fund was
changed to "The Regis Fund, Inc." On October 31, 1995, the name of the Fund
was changed to "UAM Funds, Inc." The Fund's Articles of Incorporation, as
amended, permit the Directors to issue three billion shares of common stock,
with an $.001 par value. The Directors have the power to designate one or more
series or classes of shares of common stock and to classify or reclassify any
unissued shares without further action by shareholders. At its discretion, the
Board of Directors may create additional Portfolios and classes of shares. The
Board of Directors of the Fund has authorized a third class of shares, Advisor
Class Shares, which is not currently being offered by this Portfolio. For in-
formation about the Service Class Shares of the Portfolios, contact the UAM
Funds Service Center.
The shares of the Portfolio are fully paid and nonassessable, and have no
preference as to conversion, exchange, dividends, retirement or other features
and
28
<PAGE>
no pre-emptive rights. They have non-cumulative voting rights, which means
that holders of more than 50% of shares voting for the election of Directors
can elect 100% of the Directors if they choose to do so. A shareholder is en-
titled to one vote for each full share held (and a fractional vote for each
fractional share held), then standing in his name on the books of the Fund.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Directors will call a
meeting of shareholders if such a meeting is requested in writing by the hold-
ers of not less than 10% of the outstanding shares of the Fund. The Fund will
assist shareholder communications in such matters to the extent required by
the undertaking.
CUSTODIAN
The Chase Manhattan Bank, N.A. serves as Custodian of the Fund's assets.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP serves as the independent accountants for the Fund.
REPORTS
Shareholders receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the address or telephone number on the cover of this Prospectus.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT OF AD-
DITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTI-
TUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY
NOT LAWFULLY BE MADE.
29
<PAGE>
UAM FUNDS -- INSTITUTIONAL CLASS SHARES
Acadian Emerging Markets Portfolio
Acadian International Equity Portfolio
BHM&S Total Return Bond Portfolio
Chicago Asset Management Intermediate Bond Portfolio
Chicago Asset Management Value/Contrarian Portfolio
C&B Balanced Portfolio
C&B Equity Portfolio
C&B Equity Portfolio for Taxable Investors
C&B Mid Cap Equity Portfolio
Cambiar Opportunity Portfolio
DSI Balanced Portfolio
DSI Disciplined Value Portfolio
DSI Limited Maturity Bond Portfolio
DSI Money Market Portfolio
FMA Small Company Portfolio
FPA Crescent Portfolio
Hanson Equity Portfolio
Heitman Real Estate Portfolio
ICM Equity Portfolio
ICM Fixed Income Portfolio
ICM Small Company Portfolio
Jacobs International Octagon Portfolio
McKee Domestic Equity Portfolio
McKee International Equity Portfolio
McKee Small Cap Equity Portfolio
McKee U.S. Government Portfolio
MJI International Equity Portfolio
NWQ Balanced Portfolio
NWQ Small Cap Value Portfolio
NWQ Special Equity Portfolio
NWQ Value Equity Portfolio
Rice, Hall, James Small Cap Portfolio
Rice, Hall, James Small/Mid Cap Portfolio
SAMI Preferred Stock Income Portfolio
Sirach Bond Portfolio
Sirach Equity Portfolio
Sirach Growth Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Small Cap Value Portfolio
TS&W Balanced Portfolio
TS&W Equity Portfolio
TS&W Fixed Income Portfolio
TS&W International Equity Portfolio
30
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Dewey Square Investors Corporation
One Financial Center
Boston, MA 02111
(617) 526-1300
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
Date , 1998
<PAGE>
UAM FUNDS, INC.
POST-EFFECTIVE AMENDMENT NO. 51
PART B
The statement of additional information for DSI Small Cap Value Portfolio
Institutional Class Shares is included in this Post-Effective Amendment No. 51.
The following statements of additional information are contained in Post-
Effective Amendment No. 50, filed on January 22, 1998:
. Acadian Emerging Markets Portfolio and Acadian International Equity
Portfolio Institutional Class Shares.
. The C&B Portfolios Institutional Class Shares.
. The DSI Portfolios Institutional Class Shares.
. DSI Disciplined Value Portfolio Institutional Class Shares.
. DSI Disciplined Value Portfolio Institutional Service Class Shares.
. FMA Small Company Portfolio Institutional Class Shares.
. FMA Small Company Portfolio Institutional Service Class Shares.
. ICM Fixed Income Portfolio Institutional Class Shares.
. ICM Small Company & ICM Equity Portfolios Institutional Class Shares.
. McKee Portfolios Institutional Class Shares.
. The NWQ Portfolios Institutional Class Shares.
. The NWQ Portfolios Institutional Service Class Shares.
. Rice, Hall, James Small Cap Portfolio and Rice, Hall, James Small/Mid Cap
Portfolio Institutional Class Shares.
. SAMI Preferred Stock Income Portfolio Institutional Class Shares.
. Sirach Portfolios Institutional Class Shares.
. Sirach Portfolios Institutional Service Class Shares.
. Sterling Partners' Portfolios Institutional Class Shares.
. Sterling Partners' Portfolios Institutional Service Class Shares.
. The TS&W Portfolios Institutional Class Shares.
<PAGE>
PART B
UAM FUNDS, INC.
- --------------------------------------------------------------------------------
DSI SMALL CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION --- _____________, 1998
This Statement is not a Prospectus but should be read in conjunction with
the Prospectus of the UAM Funds, Inc. (the UAM Funds" or the "Fund") for the DSI
Small Cap Value Portfolio (the "Portfolio") dated ______________, 1998. To
obtain a Prospectus for the Portfolio, contact the UAM Funds Service Center at
1-800-638-7983.
TABLE OF CONTENTS
<TABLE>
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES....................................... 2
PORTFOLIO TURNOVER....................................................... 9
PURCHASE AND REDEMPTION OF SHARES........................................ 10
VALUATION OF SHARES...................................................... 11
SHAREHOLDER SERVICES..................................................... 11
INVESTMENT LIMITATIONS................................................... 12
MANAGEMENT OF THE FUND................................................... 13
INVESTMENT ADVISER....................................................... 16
PORTFOLIO TRANSACTIONS................................................... 17
ADMINISTRATIVE SERVICES.................................................. 18
CUSTODIAN................................................................ 19
INDEPENDENT ACCOUNTANTS.................................................. 20
DISTRIBUTOR.............................................................. 20
PERFORMANCE CALCULATIONS................................................. 20
GENERAL INFORMATION...................................................... 22
FEDERAL TAXES............................................................ 23
CODE OF ETHICS........................................................... 23
APPENDIX A -- DESCRIPTION OF SECURITIES AND RATINGS...................... 1
APPENDIX B -- COMPARISONS................................................ 7
</TABLE>
1
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The following policies supplement the investment objectives and policies of
the Portfolios as set forth in its Prospectus.
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified brokers,
dealers, domestic and foreign banks or other financial institutions, so long as
the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940, as amended, (the "1940
Act") or the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "SEC") thereunder, which currently require that (a) the
borrower pledge and maintain with the Portfolio collateral consisting of cash,
an irrevocable letter of credit issued by a domestic U.S. bank or securities
issued or guaranteed by the United States Government having a value at all times
not less than 100% of the value of the securities loaned, (b) the borrower add
to such collateral whenever the price of the securities loaned rises (i.e., the
borrower "marks to the market" on a daily basis), (c) the loan be made subject
to termination by the Portfolio at any time, and (d) the Portfolio receives
reasonable interest on the loan (which may include the Portfolio investing any
cash collateral in interest bearing short-term investments). A portfolio will
not loan more than one-third of its assets (including the vlaue of the
collateral for the loans) at fair market value would be committed to loans. As
with other extensions of credit, there are risks of delay in recovery or even
loss of rights in the securities loaned if the borrower of the securities fails
financially. These risks are similar to the ones involved with repurchase
agreements as discussed in the prospectus.
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated redemptions, or
for temporary defensive purposes, the Portfolio may invest a portion of its
assets in the short-term investment described below.
(1) Time deposits, certificates of deposit (including marketable variable
rate certificates of deposit) and bankers' acceptances issued by a
commercial bank or savings and loan association. Time deposits are
non-negotiable deposits maintained in a banking institution for a
specified period of time at a stated interest rate. Time deposits
maturing in more than seven days will not be purchased by a Portfolio,
and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of a Portfolio.
Certificates of deposit are negotiable short-term obligations issued by
commercial banks or savings and loan associations collateralized by funds
deposited in the issuing institution. Variable rate certificates of deposit are
certificates of deposit on which the interest rate is periodically adjusted
prior to their stated maturity based upon a specified market rate. A banker's
acceptance is a time draft drawn on a commercial bank by a borrower, usually in
connection with an international commercial transaction (to finance the import,
export, transfer or storage of goods).
The Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in other
currencies, (ii) in the case of U.S. banks, it is a member of the Federal
Deposit Insurance Corporation, and (iii) in the case of foreign branches of U.S.
banks, the security is, in the opinion of the Adviser, of an investment quality
comparable with other debt securities which may be purchased by the Portfolio;
(2) Commercial paper rated A-1 or A-2 by S&P or Prime-1 or Prime-2 by
Moody's or, if not rated, issued by a corporation having an
outstanding unsecured debt issue rated A or better by Moody's or by
S&P;
2
<PAGE>
(3) Short-term corporate obligations rated BBB or better by S&P or Baa by
Moody's;
(4) U.S. Government obligations including bills, notes, bonds and other
debt securities issued by the U.S. Treasury. These are direct
obligations of the U.S. Government and differ mainly in interest
rates, maturities and dates of issue;
(5) U.S. Government agency securities issued or guaranteed by U.S.
Government sponsored instrumentalities and Federal agencies. These
include securities issued by the Federal Home Loan Banks, Federal Land
Bank, Farmers Home Administration, Federal Farm Credit Banks, Federal
Intermediate Credit Bank, Federal National Mortgage Association,
Federal Financing Bank, the Tennessee Valley Authority, and others;
and
(6) Repurchase agreements collateralized by securities listed above.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The U.S. dollar value of the assets of the Portfolio may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Portfolio may incur costs in connection
with conversions between various currencies. The Portfolio will conduct foreign
currency exchange transactions either on a spot (i.e. cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through entering
into forward contracts to purchase or sell foreign currencies. A forward
foreign currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. These contracts are traded in the interbank market and are
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit requirement and no
commissions are charged at any stage for such trades.
The Portfolio may enter in forward foreign currency exchange contracts in
several circumstances. When the Portfolio enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when the
Portfolio anticipates the receipt in a foreign currency of dividends or interest
payments on a security which it holds, the Portfolio may desire to "lock-in" the
U.S. dollar price of the security or the U.S. dollar equivalent of such dividend
or interest payment, as the case may be. By entering into a forward contract
for a fixed amount of dollars, for the purchase or sale of the amount of foreign
currency involved in the underlying transactions, the Portfolio will be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the subject foreign currency during the
period between the date on which the security is purchased or sold, or on which
the dividend or interest payment is declared, and the date on which such
payments are made or received.
Additionally, when the Portfolio anticipates that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract for a fixed amount of dollars to
sell the amount of foreign currency approximating the value of some or all of
the Portfolio's securities denominated in such foreign currency. The precise
matching of the forward contract amounts and the value of the securities
involved generally will not be possible since the future value of securities in
foreign contact amounts and the value of the securities involved generally will
not be possible since the future value of securities in foreign currencies will
change as a consequence of market movements in the value of these securities
between the date on which the forward contract is entered into and the date it
matures. The projection of short-term currency market movement is extremely
difficult and the successful execution of short-term hedging strategy is highly
uncertain. The Portfolio does not intend to enter into such forward contracts to
protect the value of portfolio securities on a regular or continuous basis. The
Portfolio will not enter into such forward contracts or maintain a net exposure
to such
3
<PAGE>
contracts where the consummation of the contracts would obligate the
Portfolio to deliver an amount of foreign currency in excess of the value of the
Portfolio's securities or other assets denominated in that currency.
Under normal circumstances, consideration of the prospect for currency
parities will be incorporated into the long-term investment decisions made with
regard to overall diversification strategies. However, the Adviser believes
that it is important to have the flexibility to enter into such forward
contracts when it determines that the best interests of the performance of each
Portfolio will thereby be served. Except when the Portfolio enters into a
forward contract for the purchase or sale of a security denominated in a foreign
currency, which requires no segregation, a forward contract which obligates the
Portfolio to buy or sell currency will generally require the Fund's custodian to
hold an amount of that currency or liquid securities denominated in that
currency equal to the Portfolio's obligations, or to segregate liquid assets
equal to the amount of the Portfolio's obligation. If the value of the
segregated assets declines, additional liquid assets will be segregated on a
daily basis so that the value of the segregated assets will be equal to the
amount of the Portfolio's commitments with respect to such contracts. The
Portfolio generally will not enter into a forward contract with a term of
greater than one year. At the maturity of a forward contract, the Portfolio may
either sell the portfolio security and make delivery of the foreign currency, or
it may retain the security and terminate its contractual obligation to deliver
the foreign currency by purchasing an "offsetting " contract with the same
currency trader obligating it to purchase, on the maturity date, the same amount
of the foreign currency.
It is impossible to forecast with absolute precision the market value of a
particular portfolio security at the expiration of the contract. Accordingly,
it may be necessary for the Portfolio to purchase additional foreign currency on
the spot market (and bear the expense of such purchase) if the market value of
the security is less than the amount of foreign currency that the Portfolio is
obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency.
If the Portfolio retains the portfolio security and engages in an
offsetting transaction, the Portfolio will incur a gain or loss (as described
below) to the extent that there has been movement in forward contract prices.
Should forward prices decline during the period between the Portfolio entering
into a forward contract for the sale of a foreign currency and the date it
enters into an offsetting contract for the purchase of the foreign currency, the
Portfolio will realize a gain to the extent that the price of the currency it
has agreed to sell exceeds the price of the currency it has agreed to purchase.
Should forward prices increase, the Portfolio would suffer a loss to the extent
that the price of the currency it has agreed to purchase exceeds the price of
the currency it has agreed to sell.
The Portfolio's dealings in forward foreign currency exchange contracts
will be limited to the transactions described above. Of course, the Portfolio
is not required to enter into such transactions with regard to their foreign
currency-denominated securities. It also should be realized that this method of
protecting the value of portfolio securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of the
securities. It simply established a rate of exchange which one can achieve at
some future point in time. Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of hedged currency, at
the same time, they tend to limit any potential gain which might result should
the value of such currency increase.
FUTURES CONTRACTS
The Portfolio may enter into futures contracts (including interest rate
futures) for the purposes of hedging, remaining fully invested and reducing
transaction costs. Futures contracts provide for the future sale by one party
and purchase by another party of a specified amount of a specific security at a
specified future time and at a specified price. Futures contracts which are
standardized as to maturity date and underlying financial instrument are
4
<PAGE>
traded on national futures exchanges. Futures exchanges and trading are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CTFC"), a U.S. Government agency.
Although futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery.
Closing out an open futures position is done by taking an opposite position
("buying" a contract which has previously been "sold" or "selling" a contract
previously "purchased") in an identical contract to terminate the position.
Brokerage commissions are incurred when a futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in cash or
acceptable securities with a broker or custodian to initiate and maintain open
positions in futures contracts. A margin deposit is intended to assure
completion of the contract (delivery or acceptance of the underlying security)
if it is not terminated prior to the specified delivery date. Minimal initial
margin requirements are established by the futures exchange and may be changed.
Brokers may establish deposit requirements which are higher that the exchange
minimums. Generally, margin deposits are structured as percentages (e.g. 5%) of
the market value of the contracts being traded. After a futures contract
position is opened, the value of the contract is marked to market daily. If the
futures contract price changes to the extent that the margin on deposit does not
satisfy margin requirements, payment of additional "variation" margin will be
required. Conversely, a change in the contract value may reduce the required
margin, resulting in a repayment of excess margin to the contract holder.
Variation margin payments are made to and from the futures broker for as long as
the contact remains open. The Portfolio expects to earn interest income on its
margin deposits.
Traders in futures contracts may be broadly classified as either "hedgers"
or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes n the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade and use
futures contracts with the expectation of realizing profits from a fluctuation
in interest rates. The Portfolio intends to use futures contracts only for
hedging, as opposed to speculative, purposes.
Regulations of the CFTC applicable to the Fund require that all of its
futures transactions constitute bona fide straddles or that the Fund's commodity
futures and option positions be for other purposes, to the extent that the
aggregate initial margins and premiums required to establish such non-hedging
positions do not exceed five percent of the liquidation value of the Portfolio.
The Portfolio will only sell futures contracts to protect securities it owns
against price declines or purchase contracts to protect against an increase in
the price of securities it intends to purchase. As evidence of this hedging
interest, the Portfolio expects that approximately 75% of its futures contracts
purchases will be "completed," that is, equivalent amounts of related securities
will have been purchased or will be purchased by the Portfolio on the settlement
date of the futures contracts.
Although techniques other than the sale and purchase of futures contracts
could be used to control the Portfolio's exposure to market fluctuations, the
use of futures contracts may be a more effective means of hedging this exposure.
While the Portfolio will incur commission expenses in both opening and closing
out futures positions, these costs are lower than transaction costs incurred in
the purchase and also of the underlying securities.
RESTRICTIONS IN FUTURES CONTRACTS
The Portfolio will not enter into futures contract transactions to the
extent that, immediately thereafter, the sum of its initial margin deposits on
open contracts exceeds 5% of the market value of its total assets. In addition,
the Portfolio will not enter into futures contracts to the extent that its
outstanding obligations to purchase securities under these contracts would
exceed 20% of its total assets.
5
<PAGE>
RISKS IN FUTURES TRANSACTIONS
The Portfolio will minimize the risk that it will be unable to close out a
futures position by only entering into futures which are traded on national
futures exchanges and for which there appears to be a liquid secondary market.
However, there can be no assurance that a liquid secondary market will exist for
any particular futures contract at any specific time. Thus, it may not be
possible to close a futures position. In the event of adverse price movements,
the Portfolio would continue to be required to make daily cash payments to
maintain its required margin. In such situations, if the portfolio has
insufficient cash, it may have to sell securities to meet daily margin
requirements at a time when it may be disadvantageous to do so. In addition the
Portfolio may be required to make delivery of the instruments underlying futures
contracts it holds. The inability to close futures positions also could have an
adverse impact on the Portfolio's ability to effectively hedge.
The risk of loss in trading futures contracts in some strategies can be
substantial due both to the low margin deposits required and the extremely high
degree of leverage involved in futures pricing. As a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss (as well as gain) to the investor. For example, if at the time of
purchase, 10% of the value of the futures contract is deposited as margin, a
subsequent 10% decrease in the value of the futures contract would result in a
total loss of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out. A 15% decrease would result in a
loss equal to 150% of the original margin deposit if the contract were closed
out. Thus, a purchase or sale of a futures contract may result in excess of the
amount invested in the contract . However, because the futures strategies of
the Portfolio are engaged in only for hedging purposes, the Adviser does not
believe that he Portfolio is subject to risks of loss frequently associated with
futures transactions. The Portfolio would presumably have sustained comparable
losses if, instead of the futures contract, it had invested in the underlying
financial instrument and sold it after the decline.
Utilization of futures transactions by the Portfolio does involve the risk
of imperfect or no correlation where the securities underlying the futures
contracts have difference maturities than the portfolio securities being hedged.
It is also possible that the risk of loss by the Portfolio of margin deposits in
the event of bankruptcy of a broker with whom the Portfolio has an open position
in a futures contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit has been
reached in a particular type of contract, no trade may be made on that day at a
price beyond that limit. The daily limit governs only price movement during a
particular trading day and, therefore, does not limit potential losses because
the limit may prevent the liquidation of unfavorable positions. Futures
contract prices have occasionally moved to the daily limit for several
consecutive trading days, with little or no trading, thereby preventing prompt
liquidation of futures positions and subjecting some futures traders to
substantial losses.
FEDERAL TAX TREATEMENT ON FUTURES CONTRACTS
Except for transactions the Portfolio has identified as hedging
transactions, the Portfolio is required for federal income tax purposes to
recognize as income for each taxable year its net unrealized gains and losses on
regulated futures contracts as of the end of each taxable year as well as those
actually realized during the year. In most cases, any such gain or loss
recognized with respect to a regulated futures contract is considered to be 60%
long-term capital gain or loss and 40% short-term capital gain or loss without
regard to the holding period of the contract.
6
<PAGE>
In order for the Portfolio to continue to qualify for federal income tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended at least 90% of its gross income for a taxable year must be
derived from certain qualifying income, i.e., dividends, interest, income
derived from loans of securities and gains from the sale or other disposition of
stock, securities, or foreign currencies, or other related income, including
gains from options, futures, and forward contracts, derived with respect to its
business investing in stock, securities or currencies. Any net gain realized
from the closing out of futures contracts will, therefore, generally be
qualifying income for purposes of the 90% requirement.
The Portfolio will distribute to shareholders annually any net capital
gains which have been recognized for federal income tax purposes (including
unrealized gains at the end of the Portfolio's taxable year) on futures
transactions. Such distribution will be combined with distributions of capital
gains realized on the Portfolio's other investments, and shareholders will be
advised on the nature of the payment.
OPTIONS
The Portfolio may purchase and sell put and call options on securities on
futures contracts for hedging purposes. Investments in options involve some of
the same considerations that are involved in connection with investments in
futures contracts. (e.g., the existence of a liquid secondary market). In
addition, the purchase of an option also entails the risk that changes in the
value of the underlying security or contract will not be fully reflected in the
value of the option purchases, Depending on the pricing of the option compared
to either the futures contract on which it is based or the price of the
securities being hedged, an option may or may not be less risky than ownership
of the futures contract or such securities. For example, there are significant
differences between the securities, futures and options markets that could
result in an imperfect correlation between these markets, causing a given
transaction not to achieve its objective. A decision as to whether, when, and
how to use options involves the exercise of skill and judgement by the Adviser,
and even a well-conceived transaction may be unsuccessful because of market
behavior or unexpected events. In general, the market prices of options can be
expected to be more volatile than the market prices on the underlying futures
contract or securities.
WRITING COVERED CALL OPTIONS
The principal reason for writing call options is to attempt to realize,
through the receipt of premiums, a greater return than would be realized on
securities alone. By writing covered call options, the Portfolio gives up the
opportunity, while the option is in effect, to profit from any price increase in
the underlying security above the option exercise price. In addition, the
Portfolio's ability to sell the underlying security will be limited while the
option is in effect unless the Portfolio effects a closing purchase transaction.
A closing purchase transaction cancels out the Portfolio's position as the
writer of an option by means of an offsetting purchase of an identical option
prior to the expiration of the option it has written. Covered call options serve
as a partial hedge against the price of the underlying security declining.
The Portfolio writes only covered put options, which means that so long as
a Portfolio is obligated as the writer of the option it will, through its
custodian, have deposited and maintained cash or liquid securities denominated
in U.S. dollars or non-U.S. currencies with a securities depository with a value
equal to or greater than the exercise price of the underlying securities. By
writing a put, the Portfolio will be obligated to purchase the underlying
security at a price that may be higher than the market value of that security at
the time of exercise for as long as the option is outstanding. the Portfolio
may engage in closing transactions in order to terminate put options that it has
written.
OPTIONS ON FOREIGN CURRENCIES
7
<PAGE>
The Portfolio may purchase and write options on foreign currencies for
hedging purposes in a manner similar to that in which futures contracts on
foreign currencies, or forward contracts, will be utilized. For example, a
decline in the dollar value of a foreign currency in which portfolio securities
are denominated will reduce the dollar value of such securities, even if their
value in the foreign currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, the Portfolio may purchase put
options on the foreign currency. If the value of the currency does decline, the
Portfolio will have the right to sell such currency for a fixed amount in
dollars and will thereby offset, in whole or in part, the adverse effect on its
portfolio which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Portfolio may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of options,
however, the benefit to the Portfolio deriving from purchases of foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, where currency exchange rates do not move in the
direction or to the extent anticipated, the Portfolio could sustain losses on
transactions in foreign currency options which would require it to forego a
portion or all of the benefits of advantageous changes in such rates.
The Portfolio may write options on foreign currencies for the same types of
hedging purposes. For example, where the Portfolio anticipates a decline in the
dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the anticipated decline occurs,
the option will most likely not be exercised, and the diminution in value of
portfolio securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the
Portfolio could write a put option on the relevant currency which, if rates move
in the manner projected, will expire unexercised and allow the Portfolio to
hedge such increased cost up to the amount of the premium. As in the case of
other types of options, however, the writing of a foreign currency option will
constitute only a partial hedge up to the amount of the premium, and only if
rates move in the expected direction. If this does not occur, the option may be
exercised and the Portfolio would be required to purchase or sell the underlying
currency at a loss which may not be offset by the amount of the premium. Through
the writing of options on foreign currencies, the Portfolio also may be required
to forego all or a portion of the benefits which might otherwise have been
obtained from favorable movements in exchange rates.
The Portfolio intends to write covered call options on foreign currencies.
A call option written on a foreign currency by the Portfolio is "covered" if the
Portfolio owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without additional
cash consideration (or for additional cash consideration held in a segregated
account by the Custodian) upon conversion or exchange of other foreign currency
held in its portfolio. A call option is also covered if the Portfolio has a call
on the same foreign currency and in the same principal amount as the call
written where the exercise price of the call held (a) is equal to or less than
the exercise price of the call written or (b) is greater than the exercise price
of the call written if the difference is maintained by the Portfolio in cash or
liquid securities in a segregated account with the Custodian.
The Portfolio also intends to write call options on foreign currencies that
are not covered for cross-hedging purposes. A call option on a foreign currency
is for cross-hedging purposes if it is not covered but is designed to provide a
hedge against a decline in the U.S. dollar value of a security which the
Portfolio owns or has the right to acquire and which is denominated in the
currency underlying the option due to an adverse change in the exchange rate. In
such circumstances, the Portfolio will collateralize the option by maintaining
in a segregated account with the Custodian, cash or liquid securities in an
amount not less than the value of the underlying foreign currency in U.S.
dollars marked to market daily.
8
<PAGE>
RISKS OF OPTIONS ON FUTURES CONTRACTS, FORWARD CONTRACTS AND OPTIONS ON FOREIGN
CURRENCIES
Options on foreign currencies and forward contracts are not traded on
contract markets regulated by the CFTC or (with the exception of certain foreign
currency options) by the Commission. To the contrary, such instruments are
traded through financial institutions acting as market-makers, although foreign
currency options are also traded on certain national securities exchanges, such
as the Philadelphia Stock Exchange and the Chicago Board Options Exchange,
subject to the regulation of the Commission. Similarly, options on currencies
may be traded over-the-counter. In an over-the-counter trading environment, many
of the protections afforded to exchange participants will not be available. For
example, there are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a period of time.
Although the purchaser of an option cannot lose more than the amount of the
premium plus related transaction costs, this entire amount could be lost.
Moreover, the option writer and a trader of forward contracts could lose amounts
substantially in excess of their initial investments, due to the margin and
collateral requirements associated with such positions.
Options on foreign currencies traded on national securities exchanges are
within the jurisdiction of the Commission, as are other securities traded on
such exchanges. As a result, many of the protections provided to traders on
organized exchanges will be available with respect to such transactions. In
particular, all foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the Options Clearing
Corporation ("OCC"), thereby reducing the risk of counterparty default.
Furthermore, a liquid secondary market in options traded on a national
securities exchange may be more readily available than in the over-the-counter
market, potentially permitting the Portfolio to liquidate open positions at a
profit prior to exercise or expiration, or to limit losses in the event of
adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however,
is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effect of other
political and economic events. In addition, exchange-traded options of foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions, on exercise.
In addition, futures contracts, options on futures contracts, forward
contracts and options on foreign currencies may be traded on foreign exchanges.
Such transactions are subject to the risk of governmental actions affecting
trading in, or the prices of, foreign currencies or securities. The value of
such positions also could be adversely affected by (i) other complex foreign
political and economic factors, (ii) lesser availability than in the United
States of data on which to make a trading decision, (iii) delays in the
Portfolio's ability to act upon economic events occurring in foreign markets
during non-business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) lesser trading volume.
PORTFOLIO TURNOVER
The portfolio turnover rates described in the Prospectus are calculated by
dividing the lesser of purchases or sales of portfolio securities for the year
by the monthly average of the value of the portfolio securities. The
calculation excludes all securities, including options, whose maturities at the
time of acquisition were one year or
9
<PAGE>
less. Portfolio turnover may vary greatly from year to year as well as within a
particular year, and may also be affected by cash requirements for redemptions
of shares.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Portfolio may be purchased without sales commission at the
net asset value per share next determined after an order is received in proper
form by the Fund, and payment is received by the Fund's custodian. The minimum
initial investment required is $2,500 with certain exceptions as may be
determined from time to time by officers of the Fund. Other Institutional Class
investment minimums are: initial IRA investment, $500; initial spousal IRA
investment, $250; minimum additional investment for all accounts, $100. An
order received in proper form prior to the close of regular trading on the New
York Stock Exchange (the "Exchange") (generally 4:00 p.m. Eastern Time) will be
executed at the price computed on the date of receipt; and an order received not
in proper form or after the close of the Exchange will be executed at the price
computed on the next day the Exchange is open after proper receipt. The Exchange
will be closed on the following days: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The Portfolio reserves the right in its sole discretion (1) to suspend the
offering of its shares, (2) to reject purchase orders when in the judgment of
management such rejection is in the best interests of the Fund, and (3) to
reduce or waive the minimum for initial and subsequent investment for certain
fiduciary accounts such as employee benefit plans or under circumstances where
certain economies can be achieved in sales of the Portfolio's shares.
The Portfolio may suspend redemption privileges or postpone the date of
payment (1) during any period that both the Exchange and custodian bank are
closed or trading on the Exchange is restricted as determined by the SEC, (2)
during any period when an emergency exists as defined by the rules of the SEC as
a result of which it is not reasonably practicable for a Portfolio to dispose of
securities owned by it or to fairly determine the value of its assets, and (3)
for such other periods as the SEC may permit. The Fund has made an election with
the SEC to pay in cash all redemptions requested by any shareholder of record
limited in amount during any 90-day period to the lesser of $250,000 or 1% of
the net assets of the Fund at the beginning of such period. Such commitment is
irrevocable without the prior approval of the SEC. Redemptions in excess of the
above limits may be paid, in whole or in part, in investment securities or in
cash as the Board of Directors may deem advisable; however, payment will be made
wholly in cash unless the Directors believe that economic or market conditions
exist which would make such a practice detrimental to the best interests of the
Fund. If redemptions are paid in investment securities, such securities will be
valued as set forth in the Prospectus under "VALUATION OF SHARES," and a
redeeming shareholder would normally incur brokerage expenses if those
securities were converted to cash.
No charge is made by the Portfolio for redemptions. Any redemption may be
more or less than the shareholder's initial cost depending on the market value
of the securities held by the Portfolio.
SIGNATURE GUARANTEES
To protect your account, the Fund and Chase Global Funds Services Company
("CGFSC") from fraud, signature guarantees are required for (1) redemptions
where the proceeds are to be sent to someone other than the registered
shareowner(s) or the registered address or (2) share transfer requests.
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, and as
further described in the Portfolio's Prospectus. Eligible guarantor institutions
include banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
A complete definition of eligible guarantor institutions is available from the
Fund's transfer agent. Broker-dealers guaranteeing signatures must be a member
of a clearing corporation or
10
<PAGE>
maintain net capital of at least $100,000. The signature guarantee must appear
either: (1) on the written request for redemption; (2) on a separate instrument
for assignment ("stock power") which should specify the total number of shares
to be redeemed; or (3) on all stock certificates tendered for redemption and, if
shares held by the Fund are also being redeemed, on the letter or stock power.
VALUATION OF SHARES
Equity securities listed on a securities exchange for which market
quotations are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where the
security is primarily traded. Unlisted equity securities and listed securities
not traded on the valuation date for which market quotations are readily
available are valued neither exceeding the current asked prices nor less than
the current bid prices. Quotations of foreign securities in a foreign currency
are converted to U.S. dollar equivalents. The converted value is based upon the
bid price of the foreign currency against U.S. dollars quoted by any major bank
or by a broker.
Bonds and other fixed income securities are valued according to the
broadest and most representative market, which will ordinarily be the over-the-
counter market. Bonds and other fixed income securities may be valued on the
basis of prices provided by a pricing service when such prices are believed to
reflect the fair market value of such securities. Securities purchased with
remaining maturities of 60 days or less are valued at amortized cost when the
Board of Directors determines that amortized cost reflects fair value.
The value of other assets and securities for which no quotations are
readily available (including restricted securities) is determined in good faith
at fair value using methods determined by the Directors.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for
Institutional Class Shares of any other UAM Portfolio, which is comprised of the
Fund and UAM Funds Trust. Exchange requests should be made by calling the Fund
(1-800-638-7983) or by writing to UAM Funds Inc., UAM Funds Service Center, c/o
Chase Global Funds Services Company, P.O. Box 2798, Boston, MA 02208-2798. The
exchange privilege is only available with respect to Portfolios that are
qualified for sale in the shareholder's state of residence.
Any such exchange will be based on the respective net asset values of the
shares involved. There is no sales commission or charge of any kind. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objective of the Portfolio to be purchased. You may
obtain a Prospectus for the Portfolio(s) you are interested in by calling the
UAM Funds Service Center at 1-800-638-7983.
Exchange requests may be made either by mail or telephone. Telephone
exchanges will be accepted only if the certificates for the shares to be
exchanged have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received by the close of
regular trading on the Exchange (generally 4:00 p.m. ET) will be processed as of
the close of business on the same day. Requests received after these times will
be processed on the next business day. Neither the Fund nor CGFSC will be
responsible for the authenticity of the exchange instructions received by
telephone. Exchanges may also be subject to limitations as to
11
<PAGE>
amounts or frequency and to other restrictions established by the Fund's Board
of Directors to assure that such exchanges do not disadvantage the Fund and its
shareholders.
For federal income tax purposes an exchange between Portfolio's is a
taxable event, and, accordingly, a capital gain or loss may be realized. In a
revenue ruling relating to circumstances similar to the Fund's, an exchange
between series of a Fund was also deemed to be a taxable event. It is likely,
therefore, that a capital gain or loss would be realized on an exchange between
Portfolios. You may want to consult your tax adviser for further information in
this regard. The exchange privilege may be modified or terminated at any time.
TRANSFER OF SHARES
Shareholders may transfer shares of the Portfolio to another person by
making a written request to the Fund. The request should clearly identify the
account and number of shares to be transferred, and include the signature of all
registered owners and all stock certificates, if any, which are subject to the
transfer. The signature on the letter of request, the stock certificate or any
stock power must be guaranteed in the same manner as described under "PURCHASE
AND REDEMPTION OF SHARES." As in the case of redemptions, the written request
must be received in good order before any transfer can be made.
INVESTMENT LIMITATIONS
The following limitations supplement those set forth in each Prospectus of
the Portfolio. Whenever an investment limitation sets forth a percentage
limitation on investment or utilization of assets, such limitation shall be
determined immediately after and as a result of the Portfolio's acquisition of
such security or other asset. Accordingly, any later increase or decrease
resulting from a change in values, net assets or other circumstances will not be
considered when determining whether the investment complies with the Portfolio's
investment limitations. Investment limitations (1), (2), (3), (4) and (11)are
classified as fundamental. The Portfolio's fundamental investment limitations
cannot be changed without approval by a "majority of the outstanding shares" (as
defined in the 1940 Act) of the Portfolio. The Portfolio will not:
(1) invest in commodities except that each Portfolio may invest in futures
contracts and options to the extent that not more than 5% of a
Portfolio's assets are required as deposit to secure obligations under
futures contracts;
(2) purchase or sell real estate, although it may purchase and sell
securities of companies which deal in real estate and may purchase and
sell securities which are secured by interests in real estate;
(3) make loans except (i) by purchasing bonds, debentures or similar
obligations (including repurchase agreements, subject to the
limitation described in (10) below) which are publicly distributed,
and (ii) by lending its portfolio securities to banks, brokers,
dealers and other financial institutions so long as such loans are not
inconsistent with the 1940 Act or the rules and regulations or
interpretations of the Commission thereunder;
(6) issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Portfolio from (i)
making any permitted borrowings, mortgages or pledges, or (ii)
entering into options, futures or repurchase transactions;
(7) purchase on margin or sell short except as specified in (5) above;
12
<PAGE>
(8) with respect to 75% of its assets, purchase more than 10% of the
outstanding voting securities of any issuer;
(9) with respect to 75% of its assets, purchase securities of any issuer
(except obligations of the United States Government and its
instrumentalities) if as the result more than 5% of the Portfolio's
total assets, at the time of purchase, would be invested in the
securities of such issuer;
(10) purchase or retain securities of an issuer if those officers and
Directors of the Fund or its investment adviser owning more than 1/2
of 1% of such securities together own more than 5% of such securities;
(11) borrow money, except from banks and as a temporary measure for
extraordinary or emergency purposes and then, in no event, in excess
of 10% (33 1/3% for the DSI Balanced Portfolio) of the Portfolio's
gross assets valued at the lower of market or cost, and a Portfolio
may not purchase additional securities when borrowings exceed 5% of
total gross assets;
(12) pledge, mortgage, or hypothecate any of its assets to an extent
greater than 10%of its total assets at fair market value;
(13) underwrite the securities of other issuers or invest more than an
aggregate of 10% (33 1/3% for the DSI Balanced Portfolio) of the
assets of the Portfolio, determined at the time of investment, in
securities subject to legal or contractual restrictions on resale or
securities for which there are no readily available markets, including
repurchase agreements having maturities of more than seven days;
(14) invest for the purpose of exercising control over management of any
company;
(15) invest more than 5% of its assets at the time of purchase in the
securities of companies that have (with predecessors) continuous
operations consisting of less than three years;
(16) acquire any securities of companies within one industry if, as a
result of such acquisition, more than 25% of the value of the
Portfolio's total assets would be invested in securities of companies
within such industry; provided, however, that there shall be no
limitation on the purchase of obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, or instruments
issued by U.S. banks when the Portfolio adopts a temporary defensive
position; and
(17) write or acquire options or interests in oil, gas or other mineral
exploration or development programs.
MANAGEMENT OF THE FUND
DIRECTORS AND OFFICERS
The officers of the Fund manage its day-to-day operations and are responsible to
the Fund's Board of Directors. The Directors set broad policies for the Fund and
elect its Officers. The following is a list of the Directors and Officers of the
Fund, their addresses and dates of birth and a brief statement of their present
positions, date of birth, address and principal occupations during the past five
years.
JOHN T. BENNETT, JR. Director of the Fund; President of Squam
Investment Management Company, Inc.
13
<PAGE>
College Road--RFD 3, and Great Island Investment Company, Inc.;
Meredith, NH 03253; President of Bennett management Company
1/26/29 from 1988 to 1993.
NANCY J. DUNN Director of the Fund; Vice President for Finance
10 Garden Street, and Administration and Treasurer of Radcliffe
Cambridge MA 02138 College since 1991.
8/14/51
PHILIP D. ENGLISH Director of the Fun; President and Chief
16 West Madison Street Executive Officer of Broventure Company,Inc.;
Baltimore, MD 21201 Chairman of the Board of Chektec Corporation and
8/5/48 Cyber Scientific, Inc.
WILLIAM A. HUMENUK Director of the Fund; Partner in the Philadelphia
4000 Bell Atlantic Tower office of the law firm Dechert Price & Rhoads;
1717 Arch Street Director, Hofler Corp.
Philadelphia, PA 19103
4/21/42
NORTON H. REAMER* Director, President and Chairman of the Fund;
One International Place President, Chief Executive Officer and a Director
Boston, MA 02110 of United Asset Management Corporation; Director,
3/21/35 Partner or Trustee of each of the Investment
Companies of the Eaton Vance Group of Mutual
Funds.
CHARLES H. SALISBURY, JR.* Director of the Fund; Executive Vice President of
One International Place United Asset Management Corporation; formerly an
Boston, MA 02110 executive officer and Director of T. Rowe Price
8/24/40 and President and Chief Investment Officer of
T. Rowe Price Trust Company.
PETER M. WHITMAN, JR.* Director of the Fund; President and Chief
One Financial Center Investment Officer of Dewey Square Investors
Boston, MA 02111 Corporation ("DSI") since 1988; Director and
7/1/43 Chief Executive Officer of H. T. Investors, Inc.,
formerly a subsidiary of DSI.
WILLIAM H. PARK Vice President of the Fund; Executive Vice
One International Place President and Chief Financial Officer
Boston, MA 02110 of United Asset Management Corporation.
9/19/47
GARY L. FRENCH Treasurer of the Fund; President of UAM Fund
211 Congress Street Services, Inc. and UAM Fund Distributors, Inc.,
Boston, MA 02110 formerly Vice President of Operations,
7/4/51 Development and Control of Fidelity Investments
in 1995; Treasurer of the Fidelity Group of
Mutual Funds from 1991 to 1995.
14
<PAGE>
MICHAEL E. DEFAO Secretary of the Fund; Vice President and General
211 Congress Street Counsel of UAM Fund Services,Inc. and UAM Fund
Boston, MA 02110 Distributors, Inc.; Associate Attorney of Ropes
2/28/68 & Gray (a law firm) from 1993 to 1995.
ROBERT R. FLAHERTY Assistant Treasurer of the Fund; Vice President
211 Congress Street of UAM Fund Services, Inc.; formerly Manager of
Boston, MA 02110 Fund Administration and Compliance of Chase
9/18/63 Global Fund Services Company from 1995 to 1996;
Deloitte & Touche LLP from 1985 to 1995, Senior
Manager.
KARL O. HARTMANN Assistant Secretary of the Fund; Senior Vice
73 Tremont Street President and General Counsel of Chase Global
Boston, MA 02108 Funds Services Company.
3/7/55
GORDON M. SHONE Assistant Treasurer of the Fund; Vice President
73 Tremont Street of Fund Administration and Compliance of Chase
Boston, MA 02108 Global Funds Services Company; formerly Senior
7/30/56 Manager of Coopers & Lybrand LLP (1983-1996).
____
* Messrs. Reamer, Salisbury and Whitman are deemed to be "interested persons"
of the Fund as that term is defined in the 1940 Act.
As of June 1, 1998, the Directors and officers of the Fund owned less than 1% of
the Fund's outstanding shares.
REMUNERATION OF DIRECTORS AND OFFICERS
The Fund pays each Director, who is not also an officer or affiliated
person, a $150 quarterly retainer fee per active Portfolio which currently
amounts to $6,300 per quarter. In addition, each unaffiliated Director receives
a $2,000 meeting fee which is aggregated for all the Directors and allocated
proportionately among the Portfolios of the Fund, UAM Trust and reimbursement
for travel and other expenses incurred while attending Board meetings. Directors
who are also officers or affiliated persons receive no remuneration for their
service as Directors. The Fund's officers and employees are paid by either the
Adviser, United Asset Management Corporation ("UAM"), FSI or CGFSC and receive
no compensation from the Fund.
The following table shows aggregate compensation paid to each of the Fund's
Directors by the Fund and total compensation paid by the Fund and UAM Trust
(collectively the "Fund Complex") in the fiscal year ended October 31, 1997. As
of June 1, 1998 Directors and officers of the Fund owned less than 1% of the
Fund's outstanding shares.
COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
PENSION OR TOTAL COMPENSATION
RETIREMENT BENEFITS ESTIMATED ANNUAL FROM REGISTRANT AND
NAME OF PERSON, AGGREGATE COMPENSATION ACCRUED AS PART OF BENEFITS UPON FUND COMPLEX
POSITION FROM REGISTRANT FUND EXPENSES RETIREMENT PAID TO DIRECTORS
-------- --------------- ------------- ---------- -----------------
<S> <C> <C> <C> <C>
John T. Bennett, Jr.
</TABLE>
15
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Director..................... $26,791 0 0 $32,750
Nancy J. Dunn
Director..................... $ 6,774 0 0 $ 8,300
Philip D. English
Director..................... $26,791 0 0 $32,750
William A. Humenuk
Director..................... $26,791 0 0 $32,750
</TABLE>
PRINCIPAL HOLDERS OF SECURITIES
As of May 31, 1998, no person or organizations held of record or
beneficially 5% or more of the shares of the Portfolio.
Any persons or organizations listed above as owning 25% or more of the
outstanding shares of the Portfolio may be presumed to "control" (as that term
is defined in the 1940 Act) the Portfolio. As a result, those persons or
organizations could have the ability to vote a majority of the shares of the
Portfolio on any matter requiring the approval of shareholders of the Portfolio.
INVESTMENT ADVISER
CONTROL OF ADVISER
Dewey Square Investors Corporation (the "Adviser") is a wholly-owned
subsidiary of UAM, a holding company incorporated in Delaware in December 1980
for the purpose of acquiring and owning firms engaged primarily in institutional
investment management. Since its first acquisition in August 1983, UAM has
acquired or organized approximately 45 such wholly-owned affiliated firms (the
"UAM Affiliated Firms"). UAM believes that permitting UAM Affiliated Firms to
retain control over their investment advisory decisions is necessary to allow
them to continue to provide investment management services that are intended to
meet the particular needs of their respective clients. Accordingly, after
acquisition by UAM, UAM Affiliated Firms continue to operate under their own
firm name, with their own leadership and individual investment philosophy and
approach. Each UAM Affiliated Firm manages its own business independently on a
day-to-day basis. Investment strategies employed and securities selected by UAM
Affiliated Firms are separately chosen by each of them.
Peter M. Whitman, Jr., a director of the Fund, is President and Chief
Investment Officer of the Adviser.
SERVICE PERFORMED BY ADVISER
Pursuant to Investment Advisory Agreement ("Agreement") between the Fund
and the Adviser, the Adviser has agreed to manage the investment and
reinvestment of the Portfolios' assets, to continuously review, supervise and
administer the Portfolio's investment program, and to determine in its
discretion the securities to be purchased or sold and the portion of such
Portfolio's assets to be held uninvested.
In the absence of (i) willful misfeasance, bad faith, or gross negligence
of the part of the Adviser in the performance of its obligations and duties
under the Agreement, (ii) reckless disregard by the Adviser of its obligations
and duties under the Agreement, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services, the
Adviser shall not be subject to any liability whatsoever to the Fund, for any
error of
16
<PAGE>
judgment, mistake of law or any other act or omission in the course of, or
connected with, rendering services under the Agreement.
Unless sooner terminated, the Agreement shall continue for periods of one
year so long as such continuance is specifically approved at least annually (a)
by the vote of a majority of those members of the Board of Directors of the Fund
who are not parties to the Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Board of Directors of the Fund or (c) by vote of a majority of
the outstanding voting securities of the Portfolio. The Agreement may be
terminated at any time by the Portfolio, without the payment of any penalty, by
vote of a majority of the outstanding voting securities of the Portfolio on 60
days' written notice o the Adviser. The Agreement may be terminated by the
Adviser at any time, without the payment of any penalty, upon 90 days' written
notice to the Fund. The Agreement will automatically and immediately terminate
in the event of its assignment.
PHILOSOPHY AND STYLE
The Adviser's equity portfolio management approach is "value-oriented" and
makes use of a proprietary screen to rank a universe of 1,000 stocks according
to relative attractiveness. The Adviser's philosophy is derived from a belief
that low price/earnings ration, high yield portfolios will generate superior
results over time. Portfolios are built from the "bottom-up," stock-by-stock,
subject to a disciplined diversification process which is intended to avoid
becoming overly concentrated in any one segment of the market. The objective is
to provide more consistent and less volatile performance than other typical
value managers.
REPRESENTATIVE INSTITUTIONAL CLIENTS
As of the date of this Statement of Additional Information, the Adviser's
representative institutional clients included: American Airlines, Raytheon
Corp., Bank of Boston, and Guy Gannett Publishing.
In compiling this client list, the Adviser used objective criteria such as
account size, geographic location and client classification. The Adviser did not
use any performance based criteria. It is not known whether these clients
approve or disapprove of the Adviser or the advisory services provided.
ADVISORY FEES
As compensation for services rendered by the Adviser under the Investment
Advisory Agreement, the Portfolio pays the Adviser an annual fee, in monthly
installments, calculated by applying the annual rate of 0.85% to the Portfolio's
average daily net assets for the month. As set forth in the Prospectus, the
Adviser has agreed to waive a portion of its advisory fees to maintain fees at
0.75% of the Portfolio's average daily net assets for the first 12 months of
operation.
PORTFOLIO TRANSACTIONS
The Investment Advisory Agreements authorize the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for each of the Portfolios and directs the Adviser to use its best
efforts to obtain the best execution with respect to all transactions for the
Portfolios. In doing so, a Portfolio
17
<PAGE>
may pay higher commission rates than the lowest rate available when the Adviser
believes it is reasonable to do so in light of the value of the research,
statistical, and pricing services provided by the broker effecting the
transaction.
It is not the Fund's practice to allocate brokerage or effect principal
transactions with dealers on the basis of sales of Fund shares which may be made
through broker-dealer firms. However, the Adviser may place portfolio orders
with qualified broker-dealers who refer clients to the Adviser.
Some securities considered for investment by the Portfolio may also be
appropriate for other clients served by the Adviser. If purchases or sales of
securities consistent with the investment policies of the Portfolio and one or
more of these other clients served by the Adviser is considered at or about the
same time, transactions in such securities will be allocated among the Portfolio
and clients in a manner deemed fair and reasonable by the Adviser. Although
there is no specified formula for allocating such transactions, the various
allocation methods used by the Adviser, and the results of such allocations, are
subject to periodic review by the Fund's Board of Directors.
ADMINISTRATIVE SERVICES
The Board of Directors of the Fund approved a Fund Administration
Agreement, effective April 15, 1996 ("Fund Administration Agreement") between
UAM Fund Services, Inc. ("UAMFSI"), a wholly owned subsidiary of UAM, and the
Fund. Pursuant to the terms of the Fund Administration Agreement, UAMFSI
manages, administers and conducts the general business activities of the Fund
other than those which have been contracted to other third parties by the Fund.
Additionally, UAMFSI has agreed to provide transfer agency services to the
Portfolio pursuant to the terms of the Agreement.
UAMFSI has subcontracted some of these services to Chase Global Funds
Services Company ("CGFSC"), an affiliate of The Chase Manhattan Bank, pursuant
to a Mutual Fund Service Agreement between UAMFSI and CGFSC (collectively, with
the Fund Administration Agreement between UAMFSI and the Fund, the
"Agreements").
Pursuant to the terms of the Agreements, the Portfolio pays UAMFSI a two
part monthly fee: a Portfolio-specific fee which is retained by UAMFSI and a
sub-administration fee which UAMFSI in turn pays to CGFSC. The following
portfolio-specific fees are calculated at the annual rate of __% of the
aggregate net assets of the Portfolio:
CGFSC's monthly fee for its services is calculated on an annualized basis
as follows:
0.19 of 1% of the first $200 million of combined Fund net assets;
0.11 of 1% of the next $800 million of combined Fund net assets;
0.07 of 1% of combined Fund net assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined Fund net assets in excess of $3 billion.
Fees are allocated among the Portfolios on the basis of their relative
assets and are subject to a graduated minimum fee schedule per Portfolio, which
starts at $2,000 per month and increases to $70,000 annually after two years. If
a separate class of shares is added to a Portfolio, its minimum annual fee
increases by $20,000.
18
<PAGE>
Prior to April 15, 1996, CGFSC or its predecessor, Mutual Funds Service
Company, provided certain administrative services to the Fund under an
Administration Agreement between the Fund and U.S. Trust Company of New York.
The basis of the fees paid to CGFSC for the fiscal periods prior to April 14,
1996 was as follows: the Fund paid a monthly fee for its services which on an
annualized basis equaled 0.20% of the first $200 million in combined assets;
plus 0.12% of the next $800 million in combined assets; plus 0.08% on assets
over $1 billion but less than $3 billion; plus 0.06% on assets over $3 billion.
The fees were allocated among the Portfolios on the basis of their relative
assets and were subject to a designated minimum fee schedule per Portfolio,
which from $2,000 per month upon inception of a Portfolio to $70,000 annually
after two years.
UAMFSI bears all expenses in connection with the performance of its
services under the Fund Administration Agreement. Other expenses to be incurred
in the operation of the Fund are borne by the Fund or other parties, including
taxes, interest, brokerage fees and commissions, if any, salaries and fees of
officers and members of the Board who are not officers, directors, shareholders
or employees of UAMFSI, or the Fund's investment adviser or distributor, SEC
fees and state Blue Sky fees, EDGAR filing fees, processing services and related
fees, advisory and administration fees, charges and expenses of pricing and data
services, independent public accountants and custodians, insurance premiums
including fidelity bond premiums, outside legal expenses, costs of maintenance
of corporate existence, typesetting and printing of prospectuses for regulatory
purposes and for distribution to current shareholders of the Fund, printing and
production costs of shareholders' reports and corporate meetings, cost and
expenses of Fund stationery and forms, costs of special telephone and data lines
and devices, trade association dues and expenses, and any extraordinary expenses
and other customary Fund expenses.
Unless sooner terminated, the Fund Administration Agreement shall continue
in effect from year to year provided such continuance is specifically approved
at least annually by the Board. The Fund Administration Agreement is
terminable, without penalty, by the Board or by UAMFSI, on not less than ninety
(90) days' written notice. The Fund Administration Agreement shall
automatically terminate upon its assignment by UAMFSI without the prior written
consent of the Fund.
UAMFSI will from time to time employ or associate with such person or
persons as may be fit to assist them in the performance of the Fund
Administration Agreement. Such person or persons may be officers and employees
who are employed by both UAMFSI and the Fund. The compensation of such person
or persons for such employment shall be paid by UAMFSI and no obligation will be
incurred by or on behalf of the Fund in such respect.
Effective February 28, 1997, the Fund entered into an Account Services
Agreement (the "Services Agreement") with UAM Retirement Plan Services, Inc.
(the "Service Provider"), a wholly-owned subsidiary of UAM. Under the Services
Agreement, the Service Provider agrees to perform certain services for
participants in a self-directed, defined contribution plan, and for whom the
Service Provider provides participant recordkeeping. Pursuant to the Services
Agreement, the Service Provider is entitled to receive, after the end of each
month, a fee at the annual rate of 0.15% of the average aggregate daily net
asset value of shares of the Portfolios in the accounts for which it provides
services.
CUSTODIAN
The Chase Manhattan Bank, 3 Chase MetroTech Center, Brooklyn, New York
11245, provides for the custody of the Fund's assets pursuant to the terms of a
custodian agreement with the Fund.
19
<PAGE>
INDEPENDENT ACCOUNTANTS
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110,
serves as independent accountants for the Fund.
DISTRIBUTOR
UAM Fund Distributors, Inc., a wholly-owned subsidiary of UAM, serves as
the Funds distributor. Shares of the Fund are offered continuously. While the
Distributor will use its best efforts to sell shares of the Fund, it is not
obligated to sell any particular amount of shares.
PERFORMANCE CALCULATIONS
PERFORMANCE
The Portfolio may quote various performance figures to illustrate the past
performance of each class of the Portfolio. Performance quotations by investment
companies are subject to rules adopted by the SEC, which require the use of
standardized performance quotations or, alternatively, that every non-
standardized performance quotation furnished by the Fund be accompanied by
certain standardized performance information computed as required by the SEC.
Current yield and average annual compounded total return quotations used by the
Fund are based on the standardized methods of computing performance mandated by
the SEC. An explanation of the method used to compute or express performance
follows.
TOTAL RETURN
The average annual total return of a Portfolio is determined by finding the
average annual compounded rates of return over 1, 5 and 10 year periods that
would equate an initial hypothetical $1,000 investment to its ending redeemable
value. The calculation assumes that all dividends and distributions are
reinvested when paid. The quotation assumes the amount was completely redeemed
at the end of each 1, 5 and 10 year period and the deduction of all applicable
Fund expenses on an annual basis.
The average annual total return for the Portfolio is calculated according
to the following formula:
P (1 + T)/n/ = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
20
<PAGE>
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1, 5 or 10 year periods at the end of
the 1, 5 or 10 year periods (or fractional portion thereof).
YIELD
Current yield reflects the income per share earned by the Portfolio's
investments.
Current yield is determined by dividing the net investment income per share
earned during a 30-day base period by the maximum offering price per share on
the last day of the period and annualizing the result. Expenses accrued for the
period include any fees charged to all shareholders during the base period.
Yield for a Portfolio is calculated according to the following formula:
Yield = 2[( a - b + 1 )/6/ - 1]
-----
cd
where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that
were entitled to receive income distributions
d = the maximum offering price per share on the last day of the period.
COMPARISONS
To help investors better evaluate how an investment in a Portfolio of the
Fund might satisfy their investment objective, advertisements regarding the Fund
may discuss various measures of Fund performance as reported by various
financial publications. Advertisements may also compare performance (as
calculated above) to performance as reported by other investments, indices and
averages. Please see Appendix B for publications, indices and averages which may
be used.
In assessing such comparisons of performance, an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the composition of investments in the Portfolio,
that the averages are generally unmanaged, and that the items included in the
calculations of such averages may not be identical to the formula used by the
Portfolio to calculate its performance. In addition, there can be no assurance
that the Portfolio will continue this performance as compared to such other
averages.
21
<PAGE>
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized under the name ''ICM Fund, Inc.'' as a Maryland
corporation on October 11, 1988. On January 18, 1989, the name of the Fund was
changed to ''The Regis Fund, Inc.'' On October 31, 1995, the name of the Fund
was changed to UAM Funds, Inc. The Fund's principal executive office is located
at One International Place, Boston, MA 02110; however, all investor
correspondence should be directed to the Fund at the UAM Funds Service Center,
c/o Chase Global Funds Services Company, P.O. Box 2798, Boston, MA 02208-2798.
The Fund's Articles of Incorporation, as amended, authorize the Directors to
issue 3,000,000,000 shares of common stock, $.001 par value. The Board of
Directors has the power to designate one or more series (Portfolios) or classes
of common stock and to classify or reclassify any unissued shares with respect
to such Portfolios, without further action by shareholders. The Board of
Directors has classified an additional class of shares in the Portfolio, known
as Advisor Shares. As of the date of this Statement of Additional Information,
no Advisor shares of this Portfolio have been offered by the Fund.
Each class of shares of the Portfolio of the Fund, when issued and paid for
as provided for in the Prospectus, will be fully paid and nonassessable, have no
preference as to conversion, exchange, dividends, retirement or other features
and have no preemptive rights. The shares of the Fund have non-cumulative voting
rights, which means that the holders of more than 50% of the shares voting for
the election of Directors can elect 100% of the Directors if they choose to do
so. A shareholder is entitled to one vote for each full share held (and a
fractional vote for each fractional share held), then standing in his or her
name on the books of the Fund. Each class of shares represents interests in the
same assets of the Portfolio and are identical in all respects.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund's policy is to distribute substantially all of the Portfolio's net
investment income, if any, together with any net realized capital gains annually
in the amount and at the times that will avoid both income (including capital
gains) taxes incurred on it and the imposition of the Federal excise tax on
undistributed income and capital gains. The amounts of any income dividends or
capital gains distributions cannot be predicted. See the discussion under
"Dividends, Capital Gains Distributions and Taxes" in the Prospectus.
Any dividend or distribution paid shortly after the purchase of shares of a
Portfolio by an investor may have the effect of reducing the per share net asset
value of the Portfolio by the per share amount of the dividend or distribution.
Furthermore, such dividends or distributions, although in effect a return of
capital, are subject to income taxes as set forth in the Prospectus.
As set forth in the Prospectus, unless the shareholder elects otherwise in
writing, all dividend and capital gains distributions are automatically received
in additional shares of the respective Portfolio of the Fund at net asset value
(as of the business day following the record date). This will remain in effect
until the Fund is notified by the shareholder in writing at least three days
prior to the record date that either the Income Option (income dividends in cash
and capital gains distributions in additional shares at net asset value) or the
Cash Option (both income dividends and capital gains distributions in cash) has
been elected. An account statement is sent to shareholders whenever an income
dividend or capital gains distribution is paid.
Each Portfolio of the Fund will be treated as a separate entity (and hence
as a separate "regulated investment company") for federal tax purposes. Any net
capital gains recognized by a Portfolio will be distributed to its investors
without need to offset (for federal income tax purposes) such gains against any
net capital losses realized by another Portfolio.
22
<PAGE>
FEDERAL TAXES
In order for the Portfolio to continue to qualify for federal income tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended, at least 90% of its gross income for a taxable year must be
derived from certain qualifying income, i.e., dividends, interest, income
derived from loans of securities and gains from the sale of securities or
foreign currencies, or other income derived with respect to its business of
investing in such securities
The Portfolio will distribute to shareholders annually any net capital
gains which have been recognized for Federal income tax purposes. Shareholders
will be advised as to the nature of the payments.
CODE OF ETHICS
The Fund has adopted a Code of Ethics which restricts to a certain extent
personal transactions by access persons of the Fund and imposes certain
disclosure and reporting obligations.
23
<PAGE>
APPENDIX A -- DESCRIPTION OF SECURITIES AND RATINGS
I. DESCRIPTION OF CORPORATE BOND RATINGS
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS
AAA -- Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
AA -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
Moody's applies numerical modifiers 1, 2 and 3 in the Aa and A rating
categories. The modifier 1 indicates that the security ranks at a higher end of
the rating category, modifier 2 indicates a mid-range rating and the modifier 3
indicates that the issue ranks at the lower end of the rating category.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
BAA -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
BA -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
CAA -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
CA -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
24
<PAGE>
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
STANDARD & POOR'S RATINGS SERVICES CORPORATE BOND RATINGS:
AAA -- Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation and indicate an extremely strong capacity to pay
principal and interest.
AA -- Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only to a small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher rated categories.
BB, B, CCC, CC -- Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
C -- The rating C is reserved for income bonds on which no interest is
being paid.
D -- Debt rated D is in default, and payment of interest and/or repayment
of principal is in arrears.
II. DESCRIPTION OF MORTGAGE-BACKED SECURITIES
Mortgage-backed securities represent ownership interests in a pool of
residential mortgage loans. These securities are designed to provide monthly
payments of interest and principal to the investor. The mortgagor's monthly
payments to his/her lending institution are "passed-through" to investors. Most
issuers or poolers provide guarantees of payments, regardless of whether or not
the mortgagor actually makes the payment. The guarantees made by issuers or
poolers are supported by various forms of credit, collateral, guarantees or
insurance, including individual loan, title, pool and hazard insurance purchased
by the issuer. There can be no assurance that the private issuers can meet
their obligations under the policies. Mortgage-backed securities issued by
private issuers, whether or not such securities are subject to guarantees, may
entail greater risk. If there is no guarantee provided by the issuer, mortgage-
backed securities purchased will be rated investment grade by Moody's or S&P.
UNDERLYING MORTGAGES
25
<PAGE>
Pools consist of whole mortgage loans or participations in loans. The
majority of these loans are made to purchasers of 1-4 family homes. The terms
and characteristics of the mortgage instruments are generally uniform within a
pool but may vary among pools. For example, in addition to fixed-rate, fixed-
term mortgages, the DSI Portfolios may purchase mortgage securities consisting
of pools of variable rate mortgages (VRM), growing equity mortgages (GEM),
graduated payment mortgages (GPM) and other types where the principal and
interest payment procedures vary. VRM's are mortgages which reset the
mortgage's interest rate on pools of VRM's. GPM and GEM pools maintain constant
interest with varying levels of principal repayment over the life of the
mortgage. These different interest and principal payment procedures should not
impact a Portfolio's net asset value since the prices at which these securities
are valued each day will reflect the payment procedures.
All poolers apply standards for qualification to local lending institutions
which originate mortgages for the pools. Poolers also establish credit
standards and underwriting criteria for individual mortgages included in the
pools. In addition, many mortgages included in pools are insured through
private mortgage insurance companies.
AVERAGE LIFE
The average life of pass-through pools varies with the maturities of the
underlying mortgage instruments. In addition, a pool's term may be shortened by
unscheduled or early payments of principal and interest on the underlying
mortgages. The occurrence of mortgage prepayment is affected by factors
including the level of interest rates, general economic conditions, the location
and age of the mortgage and other social and demographic conditions.
As prepayment rates of individual pools vary widely, it is not possible to
accurately predict the average life of a particular pool. For pools of fixed-
rate 30-year mortgages, common industry practice is to assume the prepayments
will result in a 12-year average life. Pools of mortgages with other maturities
or different characteristics will have varying assumptions for average life.
RETURNS ON MORTGAGE-BACKED SECURITIES
Yields on mortgage-backed pass-through securities are typically quoted on
the maturity of the underlying instruments and the associated average life
assumption. Actual prepayment experience may cause the yield to differ from the
assumed average life yield. Reinvestment of prepayments may occur at higher or
lower interest rates than the original investment, thus affecting the yields of
the Portfolios. The compounding effect from reinvestment of monthly payments
received by a Portfolio will increase its yield to shareholders, compared to
bonds that pay interest semiannually.
ABOUT MORTGAGE-BACKED SECURITIES
Interests in pools of mortgage-backed securities differ from other forms of
debt securities, which normally provide for periodic payment of interest in
fixed amounts with principal payments at maturity or specified call dates.
Instead, these securities provide a monthly payment which consists of both
interest and principal payments. In effect, these payments are a "pass-through"
of the monthly payments made by the individual borrowers on their residential
mortgage loans, net of any fees paid to the issuer or guarantor of such
securities. Additional payments are caused by repayments resulting from the
sale of the underlying residential property, refinancing or foreclosure net of
fees or costs which may be incurred.
26
<PAGE>
Some mortgage-backed securities are described as "modified pass-through." These
securities entitle the holders to receive all interest and principal payments
owed on the mortgages in the pool, net of certain fees, regardless of whether or
not the mortgagors actually make the payment.
Residential mortgage loans are pooled by the Federal Home Loan Mortgage
Corporation (FHLMC). FHLMC is a corporate instrumentality of the U.S.
Government and was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. Its stock is owned by
the twelve Federal Home Loan Banks. FHLMC issues Participation Certificates
("PCs") which represent interests in mortgages from FHLMC's national portfolio.
FHLMC guarantees the timely payment of interest and ultimate collection of
principal.
The Federal National Mortgage Association (FNMA) is a government sponsored
corporation owned entirely by private stockholders. It is subject to general
regulation by the Secretary of Housing and Urban Development. FNMA purchases
residential mortgages from a list of approved seller/servicers which include
state and federally-chartered savings and loan associations, mutual savings
banks, commercial banks and credit unions and mortgage bankers. Pass-through
securities issued by FNMA are guaranteed as to timely payment of principal and
interest by FNMA.
The principal government guarantor of mortgage-backed securities is the
Government National Mortgage Association (GNMA). GNMA is a wholly-owned U.S.
Government corporation within the Department of Housing and Urban Development.
GNMA is authorized to guarantee, with the full faith and credit of the U.S.
Government, the timely payment of principal and interest on securities issued by
approved institutions and backed by pools of FHA-insured or VA-guaranteed
mortgages.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create pass-
through pools of conventional residential mortgage loans. Pools created by such
non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government guarantees of payments in the former pools. However, timely payment
of interest and principal of these pools is supported by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance purchased by the issuer. The insurance and guarantees are issued by
governmental entities, private insurers and mortgage poolers. There can be no
assurance that the private insurers can meet their obligations under the
policies. Mortgage-backed securities purchased for the DSI Limited Maturity
Bond Portfolio will, however, be rated of investment grade quality by Moody's or
S&P.
The DSI Limited Maturity Bond Portfolio expects that Governmental or
private entities may create mortgage loan pools offering pass-through
investments in addition to those described above. The mortgages underlying these
securities may be alternative mortgage instruments, that is mortgage instruments
whose principal or interest payment may vary or whose terms to maturity may be
shorter than previously customary. As new types of mortgage-backed securities
are developed and offered to investors, the Portfolios will, consistent with
their investment objective and policies, consider making investments in such new
types of securities.
III. DESCRIPTION OF U.S. GOVERNMENT SECURITIES
27
<PAGE>
The term "U.S. Government Securities" refers to a variety of securities
which are issued or guaranteed by the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government.
U.S. Treasury securities are backed by the "full faith and credit" of the
United States. Securities issued or guaranteed by federal agencies and U.S.
Government sponsored instrumentalities may or may not be backed by the full
faith and credit of the United States.
In the case of securities not backed by the full faith and credit of the
United States, the investor must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for ultimate repayment,
and may not be able to assert a claim against the United States itself in the
event the agency or instrumentality does not meet its commitment. Agencies
which are backed by the full faith and credit of the United States include the
Export-Import Bank, Farmers Home Administration, Federal Financing Bank, and
others. Certain agencies and instrumentalities, such as the Government National
Mortgage Association are, in effect, backed by the full faith and credit of the
United States through provisions in their charters that they may make
"indefinite and unlimited" drawings on the Treasury, if needed to service its
debt. Debt from certain other agencies and instrumentalities, including the
Federal Home Loan Bank and Federal National Mortgage Association, is not
guaranteed by the United States, but those institutions are protected by the
discretionary authority of the U.S. Treasury to purchase certain amounts of
their securities to assist the institution in meeting its debt obligations.
Finally, other agencies and instrumentalities, such as the Farm Credit System
and the Federal Home Loan Mortgage Corporation, are federally chartered
institutions under government supervision, but their debt securities are backed
only by the credit worthiness of those institutions, not the U.S. Government.
Some of the U.S. Government agencies that issue or guarantee securities
include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and The Tennessee Valley Authority.
IV. DESCRIPTION OF FOREIGN INVESTMENTS
Investors should recognize that investing in foreign companies involves
certain special considerations which are not typically associated with investing
in U.S. companies. Since the securities of foreign companies are frequently
denominated in foreign currencies, the Fund's Portfolios may be affected
favorably or unfavorably by changes in currency rates and in exchange control
regulations, and may incur costs in connection with conversions between various
currencies.
As foreign companies are not generally subject to uniform accounting,
auditing and financing reporting standards and they may have policies that are
not comparable to those of domestic companies, there may be less information
available about certain foreign companies than about domestic companies.
Securities of some foreign companies are generally less liquid and more volatile
than securities of comparable domestic companies. There is generally less
government supervision and regulation of stock exchanges, brokers and listed
companies than in the U.S. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
U.S. investments in those countries.
28
<PAGE>
Although the Fund will endeavor to achieve the most favorable execution
costs in its Portfolio transactions, fixed commissions on many foreign stock
exchanges are generally higher than negotiated commissions on U.S. exchanges.
Certain foreign governments levy withholding taxes on dividend and interest
income. Although in some countries a portion of these taxes are recoverable,
the non-recovered portion of foreign withholding taxes will reduce the income
received from the companies comprising the Fund's Portfolios. However, these
foreign withholding taxes are not expected to have a significant impact.
29
<PAGE>
APPENDIX B - COMPARISONS
With respect to the comparative measures of performance for equity
securities described herein, comparisons of performance assume reinvestment of
dividends, except as otherwise stated below.
(a) Donoghue's Money Fund Average -- is an average of all major money
market fund yields, published weekly for 7 and 30-day yields.
(b) Dow Jones Composite Average or its component averages -- an
unmanaged index composed of 30 blue-chip industrial corporation
stocks (Dow Jones Industrial Average), 15 utilities company stocks
and 20 transportation stocks. Comparisons of performance assume
reinvestment of dividends.
(c) Standard & Poor's 500 Stock Index or its component indices - an
unmanaged index composed of 400 industrial stocks, 40 financial
stocks, 40 utilities stocks and 20 transportation stocks.
Comparisons of performance assume reinvestment of dividend.
(d) The New York Stock Exchange composite or component indices --
unmanaged indices of all industrial, utilities, transportation and
finance stocks listed on the New York Stock Exchange.
(e) Wilshire 5000 Equity Index or its component indices -- represents
the return on the market value of all common equity securities for
which daily pricing is available. Comparisons of performance
assume reinvestment of dividends.
(f) Lipper -- Mutual Fund Performance Analysis and Lipper -- Fixed
Income Fund Performance Analysis -- measures total return and
average current yield for the mutual fund industry. Rank individual
mutual fund performance over specified time periods, assuming
reinvestments of all distributions, exclusive of any applicable
sales charges.
(g) Lipper 1-5 Year Short Investment Grade Debt Funds Average -- is an
average of 160 funds that invest at least 65% of assets in
investment grade debt issues (rated in top four grades with dollar-
weighted average maturities of 5 years or less.
(h) Merrill Lynch 1-4.99 Year Corporate/Government Bond Index -- is an
unmanaged index composed of U.S. Treasuries, agencies and
corporates with maturities from 1 to 4.99 years. Corporates are
investment grade only (rated in the top four grades).
(i) Morgan Stanley Capital International EAFE Index and World Index --
respectively, arithmetic, market value-weighted averages of the
performance of over 900 securities listed on the stock exchanges of
countries in Europe, Australia and the Far East, and over 1,400
securities listed on the stock exchanges of these continents,
including North America.
(j) Goldman Sachs 100 Convertible Bond Index -- currently includes 67
bonds and 33 preferred. The original list of names was generated by
screening for convertible issues of 100 million or greater in
market capitalization. The index is priced monthly.
(k) Salomon Brothers GNMA Index -- includes pools of mortgages
originated by private lenders and guaranteed by the mortgage pools
of the Government National Mortgage Association.
(l) Salomon Brothers High Grade Corporate Bond Index -- consists of
publicly issued, non-convertible corporate bonds rated AA or AAA.
It is a value-weighted, total return index, including approximately
800 issues with maturities of 12 years or greater.
(m) Salomon Brothers Broad Investment Grade Bond -- is a market-
weighted index that contains approximately 4,700 individually
priced investment grade corporate bonds rated BBB or better. U.S.
Treasury/agency issues and mortgage pass-through securities.
30
<PAGE>
(n) Lehman Brothers Long-Term Treasury Bond -- is composed of all bonds
covered by the Lehman Brothers Treasury Bond Index with maturities
of 10 years or greater.
(o) Lehman Brothers Intermediate Government/Corporate Index -- is a
combination of the Government and Corporate Bond Indices. All
issues are investment grade (BBB) or higher, with maturities of one
to ten years and an outstanding par value of at least $100 million
for U.S. Government issues and $25 million for others. The
Government Index includes public obligations of the U.S. Treasury,
issues of Government agencies, and corporate debt backed by the
U.S. Government. The Corporate Bond Index includes fixed-rate
nonconvertible corporate debt. Also included are Yankee Bonds and
nonconvertible debt issued by or guaranteed by foreign or
international governments and agencies. Any security downgraded
during the month is held in the index until month-end and then
removed. All returns are market value weighted inclusive of accrued
income.
(p) NASDAQ Industrial Index -- is composed of more than 3,000
industrial issues. It is a value-weighted index calculated on price
change only and does not include income.
(q) Value Line -- composed of over 1,600 stocks in the Value Line
Investment Survey.
(r) Russell 2000 -- composed of the 2,000 smallest stocks in the
Russell 3000, a market value weighted index of the 3,000 largest
U.S. publicly-traded companies.
(s) Composite Indices -- 70% Standard & Poor's 500 Stock Index and 30%
NASDAQ Industrial Index; 35% Standard & Poor's 500 Stock Index and
65% Salomon Brothers High Grade Bond Index; all stocks on the
NASDAQ system exclusive of those traded on an exchange, and 65%
Standard & Poor's 500 Stock Index and 35% Salomon Brothers High
Grade Bond Index.
(t) Merrill Government/Corporate 1 to 5 Year Index -- is an unmanaged
index composed of U.S. Treasuries, agencies and corporates with
maturities from 1 to 4.99 years. Corporates are investment grade
only (rated in the top four grades).
(u) CDA Mutual Fund Report, published by CDA Investment Technologies,
Inc.-- analyzes price, current yield, risk, total return and
average rate of return (average annual compounded growth rate) over
specified time periods for the mutual fund industry.
(v) Mutual Fund Source Book, published by Morningstar, Inc. - analyzes
price, yield, risk and total return for equity funds.
(w) Financial publications: Business Week, Changing Times, Financial
World, Forbes, Fortune, Money, Barron's, Consumer's Digest,
Financial Times, Global Investor, Investor's Daily, Lipper
Analytical Services, Inc., Morningstar, Inc., New York Times,
Personal Investor, Wall Street Journal and Weisenberger Investment
Companies Service --publications that rate fund performance over
specified time periods.
(x) Consumer Price Index (or Cost of Living Index), published by the
U.S. Bureau of Labor Statistics -- a statistical measure of change,
over time in the price of goods and services in major expenditure
groups .
(y) Stocks, Bonds, Bills and Inflation, published by Ibbotson
Associates -- historical measure of yield, price and total return
for common and small company stock, long-term government bonds,
U.S. Treasury bills and inflation.
(z) Savings and Loan Historical Interest Rates -- as published by the
U.S. Savings and Loan League Fact Book.
(aa) Historical data supplied by the research departments of First
Boston Corporation, the J.P. Morgan Companies, Salomon Brothers,
Merrill Lynch, Pierce, Fenner & Smith, Lehman Brothers and
Bloomberg L.P.Lehman Brothers, Inc.; and Bloomberg L.P.
31
<PAGE>
PART C
UAM FUNDS, INC.
POST-EFFECTIVE AMENDMENT NO. 51
OTHER INFORMATION
ITEM 23. EXHIBITS
Exhibits previously filed by the Fund are incorporated by reference to such
filings. The following table describes the location of all exhibits. In the
table, the following references are used:
. RS = original Registration Statement on Form N-1A filed October 31, 1988
. Pre EA = Pre-Effective Amendment No. 1 filed March, 1989
. PEA# = Post-Effective Amendment (pertinent numbers for each PEA are
included after "PEA", e.g., PEA #3 means the third PEA under the Securities
Act of 1933.)
<TABLE>
<CAPTION>
Exhibit No. Description Incorporated By Reference to Location:
- ----------- -------------------------------------------------- -------------------------------------------------------
<S> <C> <C>
A. Articles of Incorporation PEA#37
1. Amendments PEA#37
2. Articles Supplementary PEA#37, PEA#41, PEA#42, PEA#44, PEA#45, PEA#47, PEA#49
B. By-Laws Pre EA
C. Specimen of Securities PEA #1, PEA #2, PEA #12, PEA #13, PEA #16, PEA #19, PEA
#21, PEA #24, PEA# 25, PEA#33, PEA#37, PEA#39, PEA#40,
PEA#41, PEA#42, PEA#45, PEA#47, PEA#49
D. Investment Advisory Agreements RS, Pre EA, PEA #1, PEA #2, PEA#5, PEA #7, PEA #12, PEA
#13, PEA#16, PEA #19, PEA #21, PEA #24, PEA# 25,
PEA#31, PEA#33, PEA#37, PEA#40, PEA#41, PEA#42, PEA#44,
PEA#45, PEA#47, PEA#49, filed herewith
E. 1. Distribution Agreement PEA #2
2. Form of Amended and Restated Distribution PEA #28
Agreement between RFI Distributors and The
Regis Fund, Inc.
3. Distribution Agreement between UAM Fund PEA#49
Distributors, Inc. and UAM Funds, Inc.
F. Directors' and Officers' Contracts and Programs Not Applicable
G. 1. Custody Agreement Pre EA
2. Corporate Custody Agreement PEA#2
3. Global Custody Agreement PEA#44
H. 1. Fund Administration Agreement between UAM PEA#40
Funds, Inc. and UAM Fund Services, Inc.
2. Mutual Funds Service Agreement between UAM Fund PEA#40, PEA#49
Services, Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
and Chase Global Funds Services
Company
I. Opinion and Consent of Counsel Pre EA, filed herewith
J. Other Opinions and Consents Not Applicable
K. Other Financial Statements Not Applicable
L. Purchase Agreement Pre EA
M. 1. Form of Distribution Plan PEA #28
2. Form of Selling Dealer Agreement PEA #28
3. Form of Shareholder Services Plan PEA #28
4. Form of Service Agreement (12b-1 Plan) PEA #28
5. Form of Service Agreement (Shareholder Services PEA #28
Plan)
N. Financial Data Schedules Not Applicable
O. Rule 18f-3 Multiple Class Plan PEA #36
P. Powers of Attorney PEA #5, PEA #8, PEA#35, PEA#48
</TABLE>
ITEM 25. INDEMNIFICATION
Reference is made to Article NINTH of the Registrant's Articles of
Incorporation, which was filed as Exhibit No. 1 to the Registrant's initial
registration statement. Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provision, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefor, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Provisions for indemnification of UAM Fund Services, Inc. are contained in
Section 6 of its Fund Administration Agreement with the Registrant.
Provisions for indemnification of the Registrant's investment advisers are
contained in Section 7 of their respective Investment Advisory Agreements with
the Registrant.
Provisions for indemnification of Registrant's principal underwriter, UAM
Fund Distributors, Inc., are contained in its Distribution Agreement with the
Registrant.
Provisions for indemnification of Registrant's custodian, The Chase
Manhattan Bank, are contained in Section 12 of its Fund Administration Agreement
with the Registrant.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS
Information as to any other business, profession, vocation or employment of
substantial nature in which any directors and officer of the following
investment adviser(s) are, or at any time during the past two (2) years have
been, engaged for their own accounts or in the capacity of director, officer,
employee, partner or trustee is incorporated by reference to the adviser(s) Form
ADV as listed below.
. Acadian Asset Management filed on 3/25/97 (File No. 801-28078)
<PAGE>
. Cooke & Bieler, Inc filed on 11/3/97 (File No. 801-210)
. Dewey Square Investors Corporation filed on 10/15/97 (File No. 801-34179)
. Fiduciary Management Associates, Inc. filed on 2/1/97 (File No. 801-21271)
. Investment Counselors of Maryland, Inc. filed on 11/7/97 (File No. 801-8761)
. C.S. McKee & Company, Inc. filed on 1/24/97 (File No. 801-08545)
. NWQ Investment Management Company filed on 7/25/97 (File No. 801-42159)
. Rice, Hall, James & Associates filed on 11/19/97 (File No. 801-30441)
. Sirach Capital Management, Inc. filed on 3/14/97 (File No. 801-33477)
. Spectrum Asset Management, Inc. filed on 12/2/97 (File No. 801-30405)
. Sterling Capital Management Company filed on 9/27/97 (File No. 801-8776)
. Thompson, Siegel & Walmsley, Inc. filed on 2/15/97 (File No. 801-6273)
ITEM 27. PRINCIPAL UNDERWRITERS
(a) UAM Fund Distributors, Inc., (the "Distributor") the firm which acts as
sole distributor of the Registrant's shares, also acts as distributor for UAM
Funds Trust, Analytic Optioned Equity Fund, Inc. and The Analytic Series Fund,
Inc.
(b) The information required with respect to each Director and officer of
the Distributor is incorporated by reference to Schedule A of Form BD filed by
the Distributor pursuant to the Securities and Exchange Act of 1934 (SEC File
No. 8-41126).
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The books, accounts and other documents required by Section 3(a) under the
Investment Company Act of 1940, as amended (the "1940 Act") and rules
promulgated thereunder will be maintained in the physical possession of the
Registrant, the Registrant's Advisers, the Registrant's Sub-Transfer and Sub-
Administrative Agent (Chase Global Funds Services Company, 73 Tremont Street,
Boston, Massachusetts 02108) and the Registrant's Custodian Bank (The Chase
Manhattan Bank, 4 Chase MetroTech Center, Brooklyn, New York 11245.)
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, duly
authorized, in the city of Boston and Commonwealth of Massachusetts on the 10th
day of June, 1998.
UAM FUNDS, INC.
/s/ Michael E. DeFao
--------------------------
Michael E. DeFao
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated on the 10th day of June, 1998:
<TABLE>
<CAPTION>
Name/Signature Title
- ---------------------------------- -----------------------------------------
<S> <C>
*Norton H. Reamer
- ----------------------------------
Norton H. Reamer Chairman and President
*John T. Bennett, Jr.
- ----------------------------------
John T. Bennett, Jr. Director
*Nancy J. Dunn
- ----------------------------------
Nancy J. Dunn Director
*Philip D. English
- ----------------------------------
Philip D. English Director
*William A. Humenuk
- ----------------------------------
William A. Humenuk Director
*Peter M. Whitman, Jr.
- ----------------------------------
Peter M. Whitman, Jr. Director
*Charles H. Salisbury
- ----------------------------------
Charles H. Salisbury Director
*Gary L. French Treasurer and Principal Financial and
- ----------------------------------
Gary L. French Accounting Officer
Michael E. DeFao
- ----------------------------------
Michael E. DeFao
(Attorney-in-Fact)
</TABLE>
<PAGE>
*Michael E. DeFao, by signing his name hereto, does hereby sign this document on
behalf of each of the above-named individuals pursuant to powers of attorney
duly executed by such persons.
<PAGE>
UAM FUNDS, INC.
FILE NOS. 811-5683/33-25355
POST-EFFECTIVE AMENDMENT #51
EXHIBIT INDEX
Exhibit No. Description
- ------------- ---------------------------------------------------------------
Investment Advisory Agreement
Opinion of Drinker Biddle & Reath LLP
<PAGE>
EXHIBIT 5
---------
INVESTMENT ADVISORY AGREEMENT
-----------------------------
UAM FUNDS, INC.
DSI SMALL CAP VALUE PORTFOLIO
AGREEMENT made this ____ day of _____, 1998 by and between UAM Funds, Inc.,
a Maryland corporation (the "Fund"), and Dewey Square Investors Corporation, a
Delaware corporation (the "Adviser").
1. DUTIES OF ADVISER. The Fund hereby appoints the Adviser to act as
investment adviser to the Fund's DSI Small Cap Value Portfolio (the "Portfolio")
for the period and on such terms as set forth in this Agreement. The Fund
employs the Adviser to manage the investment and reinvestment of the assets of
the Portfolio, to continuously review, supervise and administer the investment
program of the Portfolio, to determine in its discretion the securities to be
purchased or sold and the portion of the Portfolio's assets to be held
uninvested, to provide the Fund with records concerning the Adviser's activities
which the Fund is required to maintain, and to render regular reports to the
Fund's officers and Board of Directors concerning the Adviser's discharge of the
foregoing responsibilities. The Adviser shall discharge the foregoing
responsibilities subject to the control of the officers and the Board of
Directors of the Fund, and in compliance with the objectives, policies and
limitations set forth in the Portfolio's prospectus and applicable laws and
regulations. The Adviser accepts such employment and agrees to render the
services and to provide, at its own expense, the office space, furnishings and
equipment and the personnel required by it to perform the services on the terms
and for the compensation provided herein.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of securities of
the Portfolio and is directed to use its best efforts to obtain the best
available price and most favorable execution, except as prescribed herein.
Subject to policies established by the Board of Directors of the Fund, the
Adviser may also be authorized to effect individual securities transactions at
commission rates in excess of the minimum commission rates available, if the
Adviser determines in good faith that such amount of commission is
<PAGE>
reasonable in relation to the value of the brokerage or research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the Adviser's overall responsibilities with respect to the Fund.
The execution of such transactions shall not be deemed to represent an unlawful
act or breach of any duty created by this Agreement or otherwise. The Adviser
will promptly communicate to the officers and Directors of the Fund such
information relating to portfolio transactions as they may reasonably request.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Section 1 of this Agreement, the Fund shall pay to the
Adviser in monthly installments, an advisory fee calculated by applying the
following annual percentage rate to the Portfolio's average daily net assets for
the month: 0.85%.
In the event of termination of this Agreement, the fee provided in this
Section shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect subject to a pro rata adjustment based
on the number of days elapsed in the current fiscal month as a percentage of the
total number of days in such month.
4. OTHER SERVICES. At the request of the Fund, the Adviser in its
discretion may make available to the Fund office facilities, equipment,
personnel and other services. Such office facilities, equipment, personnel and
services shall be provided for or rendered by the Adviser and billed to the Fund
at the Adviser's cost.
5. REPORTS. The Fund and the Adviser agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.
6. STATUS OF ADVISER. The services of the Adviser to the Fund are not to
be deemed exclusive, and the Adviser shall be free to render similar services to
others so long as its services to the Fund are not impaired thereby.
7. LIABILITY OF ADVISER. In the absence of (i) willful misfeasance, bad
faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the Investment Company Act of 1940, as amended
("1940 Act"), the Adviser shall not be subject to any liability whatsoever to
the Fund, or to any shareholder of the Fund, for any error or judgment, mistake
of law or any other act or omission in the course of, or connected with,
rendering services hereunder including, without
<PAGE>
limitation, for any losses that may be sustained in connection with the
purchase, holding, redemption or sale of any security on behalf of the
Portfolio.
8. PERMISSIBLE INTERESTS. Subject to and in accordance with the Articles
of Incorporation of the Fund and the Articles of Incorporation of the Adviser,
Directors, officers, agents and shareholders of the Fund are or may be
interested in the Adviser (or any successor thereof) as Directors, officers,
agents, shareholders or otherwise; Directors, officers, agents and shareholders
of the Adviser are or may be interested in the Fund as Directors, officers,
agents, shareholders or otherwise; and the Adviser (or any successor) is or may
be interested in the Fund as a shareholder or otherwise; and the effect of any
such interrelationships shall be governed by said Articles of Incorporation and
the provisions of the 1940 Act.
9. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall continue until the earlier of ____________, 2000 or the
date of the first annual or special meeting of the shareholders of the Portfolio
and, if approved by a majority of the outstanding voting securities of the
Portfolio, thereafter shall continue for periods of one year so long as such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Directors of the Fund who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Board of Directors of the Fund or (c) by vote of a majority of the
outstanding voting securities of the Portfolio; provided however, that if the
----------------
shareholders of the Portfolio fail to approve the Agreement as provided herein,
the Adviser may continue to serve in such capacity in the manner and to the
extent permitted by the 1940 Act and rules thereunder. This Agreement may be
terminated by the Portfolio at any time, without the payment of any penalty, by
vote of a majority of the entire Board of Directors of the Fund or by vote of a
majority of the outstanding voting securities of the Portfolio on 60 days'
written notice to the Adviser. This Agreement may be terminated by the Adviser
at any time, without the payment of any penalty, upon 90 days' written notice to
the Fund. This Agreement will automatically and immediately terminate in the
event of its assignment. Any notice under this Agreement shall be given in
writing, addressed and delivered or mailed postpaid, to the other party at the
principal office of such party.
<PAGE>
As used in this Section 9, the terms "assignment", "interested persons",
and "a vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the 1940 Act.
10. AMENDMENT OF AGREEMENT. This Agreement may be amended by mutual
consent, but the consent of the Fund must be approved (a) by vote of a majority
of those members of the Board of Directors of the Fund who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such amendment, and (b) for changes
or amendments requiring shareholder approval pursuant to the 1940 Act or other
applicable law, by vote of a majority of the outstanding voting securities of
the Portfolio.
11. SEVERABILITY. If any provisions of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of this ___ day of _________, 1998.
DEWEY SQUARE INVESTROS CORPORATION UAM FUNDS, INC.
By__________________________ By_______________________________
[Name] Norton H. Reamer
[Title] President and Chairman of the Board
<PAGE>
EXHIBIT 10
----------
LAW OFFICES
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496
Telephone: (215) 988-2700
Fax: (215) 988-2757
June 1998
UAM Funds, Inc.
P.O. Box 2798
Boston, MA 02208-2798
Re: Shares Registered by Post-Effective Amendment No. 51 to Registration
Statement on Form N-1A (File Nos. 33-25355 and 811-05683)
---------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to UAM Funds, Inc. (the "Company") in connection
with the preparation and filing with the Securities and Exchange Commission
of Post-Effective Amendment No. 51 (the "Amendment") to the Company's
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended, registering Institutional Shares ("Shares") representing interests
in the DSI Small Cap Value Portfolio. The Amendment seeks to register an
indefinite number of Shares.
We have reviewed the Company's Certificate of Incorporation, By-Laws,
resolutions of its Board of Directors, certificates of public officials and
of the Fund's officers and such other legal and factual matters as we have
deemed appropriate.
We have assumed that, prior to the effectiveness of the Amendment under the
Securities Act of 1933, the Company will have filed with the Maryland
Department of Assessments and Taxation all necessary documents (the
"Documents") to authorize, classify and establish the Shares.
This opinion is based exclusively on the Maryland General Corporation Law
and the federal law of the United States of America.
Based upon the foregoing, it is our opinion that the Shares, when issued
for payment as described in the Company's prospectus and in accordance with
the Company's Articles of Incorporation and the Documents for not less than
$.001 per share, will be legally issued, fully paid and non-assessable by the
Company.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Amendment to the Company's Registration Statement.
Very truly yours,
/s/ Drinker Biddle & Reath LLP
------------------------------
Drinker Biddle & Reath LLP
