<PAGE>
UAM FUNDS
Annual Report
--------------------------
McKee Portfolios
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October 31, 1998
UAM
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UAM FUNDS MCKEE PORTFOLIOS
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TABLE OF CONTENTS
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<TABLE>
<S> <C>
Shareholders' Letter........................................................ 1
Performance Comparison
U.S. Government........................................................... 10
Domestic Equity........................................................... 11
International Equity...................................................... 12
Small Cap Equity.......................................................... 13
Portfolio of Investments
U.S. Government........................................................... 14
Domestic Equity........................................................... 17
International Equity...................................................... 21
Small Cap Equity.......................................................... 26
Statement of Assets and Liabilities......................................... 29
Statement of Operations..................................................... 30
Statement of Changes in Net Assets
U.S. Government........................................................... 31
Domestic Equity........................................................... 32
International Equity...................................................... 33
Small Cap Equity.......................................................... 34
Financial Highlights
U.S. Government........................................................... 35
Domestic Equity........................................................... 36
International Equity...................................................... 37
Small Cap Equity.......................................................... 38
Notes to Financial Statements............................................... 39
Report of Independent Accountants........................................... 47
</TABLE>
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UAM FUNDS MCKEE PORTFOLIOS
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MCKEE U.S. GOVERNMENT PORTFOLIO
The McKee U.S. Government Portfolio produced a return of 7.35 percent for the
12 months ended October 31, 1998. Like the market as a whole, the Portfolio
benefited from a significant decline in interest rates for the year, capped by
a substantial bond market rally in the summer months. On the negative side,
performance was negatively influenced by holdings of corporate and mortgage-
backed securities in a market that favored Treasury securities in response to
global economic uncertainties.
Economic Perspective
In the year ended October 31, 1998, the U.S. economy continued to grow vigor-
ously. Consumer spending, particularly on housing and automobiles, and busi-
ness capital spending continued to fuel growth. At the same time, inflation
continued its decline of the past 12 months, to an annual rate of 1.5 percent.
The Treasury market rallied with exuberance in August and September as invest-
ors fled stocks in the face of global economic and domestic political uncer-
tainties. But the Federal Reserve's recent reductions in the Fed funds rate
helped buoy investor confidence in the continued economic growth. The stock
market subsequently recovered much of its earlier losses, and the yield on 30-
year Treasury bonds rose significantly from its lows.
Performance
The year ended October 31, 1998 was the second in a row that the Portfolio
produced returns in excess of 7 percent, with declining interest rates the
principal reason. But performance varied considerably by market sector. Corpo-
rate bonds dramatically under-performed Treasuries during the year--an unusual
occurrence. Because of its holdings of corporate securities, results for the
Portfolio trailed the benchmark Lehman Brothers Government Bond Index which
returned 9.52 percent for the 12 months ended October 31, 1998. Investment
grade-corporate bonds rated A and BBB, especially banking and brokerage is-
sues, were severely punished in the market's rush to the safe haven of Trea-
suries. Although corporate bonds have recently rallied, and we expect them to
do very well in 1999, they negatively affected performance during the year.
Portfolio Structure
In anticipation of Federal Reserve easing of monetary policy and a declining
interest rate environment, holdings of mortgage-backed securities were reduced
in September. The issues sold were replaced by government agency securities,
which we believe will out-perform both Treasuries and mortgages during the
coming year.
1
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UAM FUNDS MCKEE PORTFOLIOS
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As of October 31, 1998, the Portfolio consisted of 31 percent corporate and
asset-backed securities, 55 percent Treasury and government agency securities,
13 percent mortgage-backed securities, and one percent cash equivalents. The
ten largest holdings in the Portfolio are listed below.
LARGEST HOLDINGS BY SECURITY
AT OCTOBER 31, 1998
<TABLE>
<CAPTION>
PERCENT OF
ISSUER COUPON DUE NET ASSETS
- ------ ------ -------- ----------
<S> <C> <C> <C>
FNMA................................................. 5.750% 2/15/08 14.1%
FNMA................................................. 5.625% 3/15/01 9.7%
FNMA................................................. 5.750% 4/15/03 9.4%
FHLMC................................................ 6.750% 5/30/06 5.5%
U.S. Treasury Bonds ................................. 8.500% 2/15/20 5.5%
U.S. Treasury Notes.................................. 9.375% 2/15/06 5.1%
FNMA 1998-26 PA...................................... 6.000% 11/18/17 4.6%
FHLMC 2034 PN........................................ 6.000% 4/15/18 4.1%
FHLMC 1995 PB........................................ 6.500% 9/20/25 3.9%
U.S. Treasury Notes.................................. 5.875% 11/30/01 3.4%
</TABLE>
Outlook
The recent decline in interest rates indicates that investors expect the econ-
omy to slow. Although we agree that economic expansion may lose momentum, we
remain cautious because the bond market appears vulnerable to rapid reversals.
Perceptions--positive or negative--about the Asian crisis, the rate of eco-
nomic growth or the possibility of recession could prompt such volatility. In
this more uncertain environment, we believe the Portfolio should perform well
given its current structure, particularly its holdings in agencies and attrac-
tively positioned corporate securities.
MCKEE DOMESTIC EQUITY PORTFOLIO
In a difficult year for equity investors, the McKee Domestic Equity Portfolio
achieved a return of 3.36 percent for the 12 months ended October 31, 1998.
This performance was well under the Portfolio's prior year return of nearly 31
percent and below the return from the large-cap dominated S&P 500 Index. The
lower returns for the past year reflect ongoing investor preference for mega-
cap growth stocks instead of the large and mid-cap value-oriented stocks which
characterize the Portfolio. Performance was also negatively affected by the
severe market correction during the summer.
2
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UAM FUNDS MCKEE PORTFOLIOS
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Economic Perspective
U.S. economic growth has recently shown signs of slowing from its
unsustainable pace earlier in the year. Nevertheless, the economy has remained
fundamentally healthy as retail sales, housing and low unemployment have con-
tinued to fuel growth. At the same time, inflation has declined by more than
one-half percent during the past 12 months, to an annual rate of 1.5 percent.
Although economic weakness abroad has affected sales, U.S. corporate earnings
have continued to increase at a reasonably strong rate. The uncertainties of
global economic conditions, however, prompted equity investors to seek to the
safe haven and liquidity of the largest-capitalization stocks during the past
year, at the expense of small and mid-cap company stocks.
Performance
Market capitalization was the primary determinant of performance during the
past 12 months. Mega-capitalization growth stocks led the market through most
of the year. Reflecting the Portfolio's emphasis on value and its smaller av-
erage market capitalization, total return lagged behind the 22.01 percent re-
turn of the Standard & Poors 500 Index for the period.
Among individual stocks in the Portfolio, Biogen, Becton Dickinson and South-
ern New England Telecom had particularly good performance, while Case Corpora-
tion, Foundation Health Systems and Sequent Computer Systems had below-average
performance.
Portfolio Structure
The Portfolio is broadly diversified by economic sector, industry and company,
but strategically weighted. Compared to the overall market, the Portfolio has
an emphasis on the consumer cyclical, capital goods and basic industry sec-
tors, all of which should perform well in the environment of continued eco-
nomic growth that we anticipate.
3
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UAM FUNDS MCKEE PORTFOLIOS
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On an industry basis, the Portfolio is over-weighted in forest products, in-
dustrial parts, retailing and computer software. It is under-weighted in me-
dia, food and energy. The ten largest holdings by industry are shown below.
LARGEST HOLDINGS BY INDUSTRY
PERCENT OF NET ASSETS AT OCTOBER 31, 1998
<TABLE>
<S> <C>
Technology................................................................ 11.8%
Pharmaceuticals........................................................... 11.8%
Retail.................................................................... 8.0%
Beverages, Food & Tobacco................................................. 7.7%
Banks..................................................................... 7.3%
Telecommunications........................................................ 5.9%
Capital Equipment......................................................... 5.6%
Energy.................................................................... 5.5%
Insurance................................................................. 5.2%
Services.................................................................. 4.6%
</TABLE>
At the close of the fiscal year, the Portfolio held 50 stocks. The ten largest
holdings by company are shown below.
LARGEST HOLDINGS BY COMPANY
PERCENT OF NET ASSETS AT OCTOBER 31, 1998
<TABLE>
<S> <C>
Mylan Laboratories, Inc................................................... 4.0%
Philip Morris Cos., Inc................................................... 3.7%
ITT Industries, Inc....................................................... 3.4%
Biogen, Inc............................................................... 3.4%
Willamette Industries..................................................... 3.0%
Computer Associates International, Inc.................................... 2.9%
Seagate Technology, Inc................................................... 2.9%
Bank One Corp............................................................. 2.9%
Modis Professional Services, Inc.......................................... 2.8%
Advance Micro Devices, Inc................................................ 2.7%
</TABLE>
Outlook
Low interest rates, low inflation and a growing economy should provide strong
support for equities over the next year. We expect smaller and mid-cap stocks
to outperform large cap stocks in 1999. Cyclical and value stocks, currently
depressed, should also perform well. These shifts in market focus should bene-
fit the Portfolio given its strong emphasis on valuation and improving funda-
mentals.
4
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UAM FUNDS MCKEE PORTFOLIOS
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MCKEE INTERNATIONAL EQUITY PORTFOLIO
In a year of global financial turmoil and plunging equity markets, the McKee
International Equity Portfolio produced a return for the 12 months ended Octo-
ber 31, 1998 of 1.18 percent. Investments in emerging markets negatively in-
fluenced the Portfolio, while positions in major European markets made a posi-
tive contribution to performance.
Economic Perspective
Global markets were rocked during the year by continued recession in Japan and
much of the rest of Asia, Russia's economic collapse, and financial crises in
Brazil and other parts of Latin America. While serious global problems remain,
we believe the potential rewards of international equity investment far out-
weigh current risks. This is in part because a great deal of bad news has al-
ready been priced into world equity markets. Indeed, current investor senti-
ment still reflects the negative recent experience of devaluations, commodity
price declines, banking crises and earnings deceleration.
Performance
During the global economic crises of the past year, the Portfolio's broad di-
versification provided a measure of protection. Nevertheless, with its expo-
sure to emerging markets, the Portfolio's performance in this difficult envi-
ronment trailed that of the benchmark Morgan Stanley Capital International
EAFE Index which returned 9.65 percent for the year ended October 31, 1998.
Portfolio Structure
At October 31, 1998, the Portfolio was invested in 24 world markets. Compared
to the benchmark EAFE Index, the Portfolio is over-weighted in Canada, Fin-
land, Mexico and Korea, while the United Kingdom, Japan, France and Germany
are under-weighted. The ten largest country positions are shown below.
LARGEST HOLDINGS BY COUNTRY
PERCENT OF NET ASSETS AT OCTOBER 31, 1998
<TABLE>
<S> <C>
Japan..................................................................... 13.1%
United Kingdom............................................................ 9.6%
The Netherlands........................................................... 6.0%
France.................................................................... 5.5%
Hong Kong................................................................. 5.2%
Germany................................................................... 5.1%
Canada.................................................................... 4.6%
Finland................................................................... 4.3%
Mexico.................................................................... 3.8%
Korea..................................................................... 3.7%
</TABLE>
5
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UAM FUNDS MCKEE PORTFOLIOS
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Holdings are widely diversified by company, economic sector and industry. As
of October 31, 1998, the Portfolio held stocks of 57 companies and was in-
vested in all global economic sectors and most major world industries. The ten
largest company holdings are shown below.
LARGEST HOLDINGS BY COMPANY
PERCENTAGE OF NET ASSETS AT OCTOBER 31, 1998
<TABLE>
<S> <C>
Nokia Oyj.................................................................. 4.3%
Nestle S.A. ............................................................... 3.6%
Elan Corp. plc............................................................. 3.6%
Bayer AG................................................................... 2.8%
Akzo Nobel N.V............................................................. 2.8%
Teva Pharmaceutical Industries Ltd. ....................................... 2.6%
Telefonos de Mexico S.A.................................................... 2.5%
YPF S.A.................................................................... 2.4%
Commerzbank AG............................................................. 2.3%
Asia Pulp & Paper Co., Ltd................................................. 2.1%
</TABLE>
On an individual stock basis, results were helped by positions in Nokia, Nes-
tle and Elan. Grupo Industrial Durango, Ionics Circuit and Nissan Motor were
under-performers.
Outlook
In our judgment, the international investment outlook will turn more positive
in coming months as investors begin to look beyond current problems to contin-
ued world GDP growth, more stable currencies, a successful Euro and the emer-
gence from recession of several developing nations. The McKee International
Equity Portfolio, with its wide global diversification and emphasis on stocks
possessing strong valuation and fundamental characteristics, is well posi-
tioned for these improving conditions.
MCKEE SMALL CAP EQUITY PORTFOLIO
Since the McKee Small Cap Equity Portfolio was launched on November 4, 1997,
small stocks have underperformed their larger cap counterparts as investors
looked to market capitalization rather than fundamentals. From its inception
through October 31, 1998, the Portfolio had a negative 15.36 percent return,
about the same as the median small cap value fund and slightly below the
benchmark Russell 2000 Index of small company stocks.
6
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UAM FUNDS MCKEE PORTFOLIOS
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Economic Perspective
In the year ended October 31, 1998, the U.S. economy continued to grow vigor-
ously despite financial turmoil and recession in several developing nations.
Consumer spending on items such as housing and automobiles, as well as busi-
ness capital spending on plant and equipment continued to fuel growth. At the
same time, inflation declined further to an annual rate of 1.5 percent.
Although economic weakness abroad has negatively affected sales, U.S. corpo-
rate earnings have continued to increase at a reasonably strong rate. The un-
certainties of global economic conditions, however, prompted equity investors
to seek the safe haven and liquidity of the largest capitalization securities
during the past 12 months, at the expense of small and mid-cap stocks.
Performance
Market capitalization was the primary determinant of performance during the
past year. In the face of global economic uncertainties, investors sought li-
quidity in mega-capitalization stocks and even fled equities for Treasury se-
curities. The Russell 2000 Index had a negative return of 11.84 percent for
the period, slightly above the return for the Portfolio.
Among individual stocks held by the Portfolio, Sierra Health Services, Owens &
Minor and Ruddick had the best performance. Friedman, Billings, Ramsey Group,
Gymboree and Titanium Metals underperformed.
Portfolio Structure
The Portfolio is broadly diversified by economic sector, industry and company,
yet strategically weighted. It has modest concentrations, compared to the
benchmark index, in the financial and basic industries sectors. It is slightly
under-weighted in consumer growth and technology.
7
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UAM FUNDS MCKEE PORTFOLIOS
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Among industries, the Portfolio has an emphasis on computer software, trans-
portation services and energy compared to the benchmark. It is under-weighted
in semiconductors, information services and chemicals. The ten largest hold-
ings by industry are shown below.
LARGEST HOLDINGS BY INDUSTRY
PERCENT OF NET ASSETS AT OCTOBER 31, 1998
<TABLE>
<S> <C>
Technology................................................................ 13.4%
Insurance................................................................. 11.9%
Banks..................................................................... 11.1%
Services.................................................................. 11.0%
Metals.................................................................... 7.1%
Retail.................................................................... 6.2%
Pharmaceuticals........................................................... 6.1%
Utilities................................................................. 4.1%
Energy.................................................................... 3.1%
Capital Goods............................................................. 3.1%
</TABLE>
As of October 31, 1998, there were 52 stocks in the Portfolio. The ten largest
holdings by company are shown below.
LARGEST HOLDINGS BY COMPANY
PERCENT OF NET ASSETS AT OCTOBER 31, 1998
<TABLE>
<S> <C>
Alpharma, Inc.............................................................. 3.2%
Ruddick Corp. ............................................................. 3.1%
Dollar Thrifty Automotive Group, Inc. ..................................... 3.0%
Owens & Minor, Inc., Holding Company....................................... 2.9%
Personnel Group of America, Inc. .......................................... 2.7%
First American Financial Corp. ............................................ 2.7%
Delphi Financial Group, Inc. .............................................. 2.5%
Aviall, Inc. .............................................................. 2.5%
Commerce Bancorp, Inc. .................................................... 2.4%
Brown & Sharpe Manufacturing Co. .......................................... 2.4%
</TABLE>
Outlook
As concerns about the Asian economic crisis abate, investor focus should re-
turn to small cap stocks because of their comparatively strong fundamentals
and attractive valuations. In fact, small cap stocks have recently recovered
some of the ground they lost during the summer and their performance should
improve further in the
8
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UAM FUNDS MCKEE PORTFOLIOS
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year ahead. The McKee Small Cap Equity Portfolio is positioned to capitalize
on these improved conditions.
Yours truly,
/s/ James H. Hanes
James H. Hanes
President and Chief Executive Officer
C.S. McKee & Company, Inc.
The investment results present in the Adviser's letter represent past
performance and should not be construed as a guarantee of future results. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Since the Portfolios are actively managed, holdings are subject
to change. For a complete discussion of the risks associated with
international investing, please refer to the McKee International Equity
Portfolio's prospectus.
9
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UAM FUNDS MCKEE PORTFOLIOS
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Performance Comparison
================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 PURCHASE IN THE MCKEE U.S.
GOVERNMENT PORTFOLIO, THE LEHMAN BROTHERS GOVERNMENT BOND INDEX
AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE INDEX.
-----------------------------------
AVERAGE ANNUAL TOTAL RETURN
FOR A PERIOD ENDED OCTOBER 31, 1998
-----------------------------------
1 YEAR SINCE 3/2/95*
-----------------------------------
7.35% 7.85%**
-----------------------------------
[LINE GRAPH APPEARS HERE]
LEHMAN BROTHERS
McKEE U.S. GOVERNMENT/ LEHMAN BROTHERS
DATE GOVERNMENT PORTFOLIO+ CORPORATE INDEX+ GOVERNMENT BOND INDEX+
---- --------------------- ---------------- ---------------------
3/2/95*++ 10,000 10,000 10,000
10/31/95 10,995 11,086 11,042
10/31/96 11,410 11,684 11,606
10/31/97 12,292 12,713 12,611
10/31/98 13,195 14,020 13,812
Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate. When shares are redeemed, they may
be worth more or less than the original cost.
* Commencement of Operations.
** Total return of the Portfolio reflects fees waived and expenses assumed by
the Adviser. Without such waiver of fees and expenses assumed, total return
would be lower.
+ The comparative index is not adjusted to reflect expenses or other fees that
the SEC requires to be reflected in the Portfolio's performance. The fees,
if reflected, would reduce the performance quoted. The Portfolio's
performance assumes the reinvestment of all dividends and distributions. The
comparative index has been adjusted to reflect reinvestment of dividends on
securities in the index.
++ For comparative purposes, the value of the Lehman Brothers Government Bond
Index and the Lehman Brothers Government/Corporate Index on 2/28/95 is used
as the beginning value on 3/2/95.
DEFINITIONS OF THE COMPARATIVE INDEX
The Lehman Brothers Government/Corporate Index is an unmanaged index composed
of a combination of the Government and Corporate Bond Indices. 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. All issues are investment grade (BBB)
or higher, with maturities of at least one year and outstanding par value of at
least $100 million for U.S. Government issues and $25 million for others. 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.
Lehman Brothers Government Bond Index is an unmanaged index made up of all
public obligations of the U.S. Treasury, excluding flower bonds and foreign-
targeted issues.
Please note that one cannot invest in an unmanaged index.
10
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UAM FUNDS MCKEE PORTFOLIOS
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Performance Comparison
================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 PURCHASE IN THE
MCKEE DOMESTIC EQUITY PORTFOLIO
AND THE STANDARD & POOR'S 500 INDEX (S&P 500).
---------------------------------
AVERAGE ANNUAL TOTAL RETURN
FOR PERIOD ENDED OCTOBER 31, 1998
---------------------------------
1 YEAR SINCE 3/2/95*
---------------------------------
3.36% 18.41%**
---------------------------------
[LINE GRAPH APPEARS HERE]
DATE McKEE DOMESTIC EQUITY PORTFOLIO+ S&P 500 Index+
---- ------------------------------- -------------
3/2/95*++ 10,000 10,000
10/31/95 11,513 12,128
10/31/96 13,736 15,048
10/31/97 17,989 19,879
10/31/98 18,593 22,791
Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate. When shares are redeemed, they may
be worth more or less than the original cost.
*Commencement of Operations
** Total return of the Portfolio reflects fees waived and expenses assumed by
the Adviser. Without such waiver of fees and expenses assumed, total return
would be lower.
+ The comparative index is not adjusted to reflect expenses or other fees
that the SEC requires to be reflected in the Portfolio's performance. The
fees, if reflected, would reduce the performance quoted. The Portfolio's
performance assumes the reinvestment of all dividends and distributions.
The comparative index has been adjusted to reflect reinvestment of
dividends on securities in the index.
++ For comparative purposes, the value of the S&P 500 Index on 2/28/95 is used
as the beginning value on 3/2/95.
DEFINITION OF THE COMPARATIVE INDEX
The S&P 500 Index is an unmanaged index composed of 400 industrial, 40
financial, 40 utilities and 20 transportation stocks.
Please not that one cannot invest in an unmanaged index.
11
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UAM FUNDS MCKEE PORTFOLIOS
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Performance Comparison
================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 PURCHASE IN THE
MCKEE INTERNATIONAL EQUITY PORTFOLIO
AND THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX.
---------------------------------
AVERAGE ANNUAL TOTAL RETURN
FOR PERIOD ENDED OCTOBER 31, 1998
---------------------------------
1 YEAR SINCE 5/26/94*
---------------------------------
1.18% 6.78%
---------------------------------
[LINE GRAPH APPEARS HERE]
McKEE INTERNATIONAL MORGAN STANLEY
DATE EQUITY PORTFOLIO+ CAPITAL INTERNATIONAL INDEX+
---- ---------------- ---------------------------
5/26/94*++ 10,000 10,000
10/31/94 10,431 10,489
10/31/95 10,150 10,450
10/31/96 10,991 11,544
10/31/97 13,223 12,078
10/31/98 13,379 13,244
Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate. When shares are redeemed, they may
be worth more or less than the original cost.
* Commencement of Operations
+ The comparative index is not adjusted to reflect expenses or other fees that
the SEC requires to be reflected in the Portfolio's performance. The fees,
if reflected, would reduce the performance quoted. The Portfolio's
performance assumes the reinvestment of all dividends and distributions. The
comparative index has been adjusted to reflect reinvestment of dividends on
securities in the index.
++ For comparative purposes, the value of the Morgan Stanley Capital
International EAFE Index on 5/31/94 is used as the beginning value on
5/26/94.
DEFINITION OF THE COMPARATIVE INDEX
The Morgan Stanley Capital Investment EAFE Index is an unmanaged index composed
of 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.
Please note that one cannot invest in an unmanaged index.
12
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UAM FUNDS MCKEE PORTFOLIOS
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Performance Comparison
================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 PURCHASE IN THE
MCKEE SMALL CAP EQUITY PORTFOLIO
AND THE RUSSELL 2000 INDEX.
----------------------------------
CUMULATIVE TOTAL RETURN
FOR PERIOD ENDED OCTOBER 31, 1998
----------------------------------
SINCE 11/4/97*
----------------------------------
(15.36)%
----------------------------------
[LINE GRAPH APPEARS HERE]
DATE McKEE SMALL CAP EQUITY PORTFOLIO+ RUSSELL 2000 INDEX+
---- -------------------------------- ------------------
11/4/97*++ 10,000 10,000
10/31/98 8,464 8,816
Past performance is not predicative of future performance. Your investment
return and principal value will fluctuate. When shares are redeemed they may
be worth more or less than the original cost.
* Commencement of Operations.
+ The comparative index is not adjusted to reflect expenses or other fees
that the SEC requires to be reflected in the Portfolio's performance. The
fees, if reflected, would reduce the performance quoted. The Portfolio's
performance assumes the reinvestment of all dividends and distributions.
The comparative index has been adjusted to reflect reinvestment dividends
on securities in the index.
++ For comparative purposes, the value of the Russell 2000 Index on 10/31/97
is used as the beginning value on 11/4/97.
DEFINITION OF THE COMPARATIVE INDEX
The Russell 2000 Index is an unmanaged index 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.
Please note that one cannot invest in an unmanaged index.
13
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UAM FUNDS MCKEE U.S. GOVERNMENT PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
U.S. GOVERNMENT & AGENCY SECURITIES - 55.2%
FACE
AMOUNT VALUE+
---------- -----------
<S> <C> <C>
Federal Home Loan Bank
JK-01 1, 5.967%, 3/22/01............................. $ 96,279 $ 96,363
-----------
Federal Home Loan Mortgage Corporation
6.75%, 5/30/06....................................... 1,840,000 2,011,832
7.65%, 5/10/05....................................... 85,000 88,806
-----------
2,100,638
-----------
Federal National Mortgage Association
5.625%, 3/15/01...................................... 3,470,000 3,547,211
5.75%, 4/15/03....................................... 3,310,000 3,433,499
5.75%, 2/15/08....................................... 4,940,000 5,126,616
6.70%, 8/10/01....................................... 165,000 167,484
-----------
12,274,810
-----------
U.S. Treasury Bonds
8.50%, 2/15/20....................................... 1,445,000 2,006,572
-----------
U.S. Treasury Notes
5.875%, 11/30/01..................................... 1,188,000 1,239,243
9.375%, 2/15/06...................................... 1,455,000 1,876,725
-----------
3,115,968
-----------
U.S. Treasury Principal Strips
#5.668%, 5/15/17..................................... 1,524,000 540,645
-----------
TOTAL U.S. GOVERNMENT & AGENCY SECURITIES (Cost $19,569,855).... 20,134,996
-----------
MORTGAGE OBLIGATIONS - 12.6%
Federal Home Loan Mortgage Corp.
Series 1995 PB, CMO, PAC 1, REMIC, 6.50%, 9/20/25.... 1,393,000 1,409,457
Series 2034 PN, CMO, PAC (11), REMIC, 6.00%,
4/15/18............................................. 1,500,000 1,497,975
-----------
2,907,432
-----------
Federal National Mortgage Association
Series 1998-26 PA, CMO, PAC, REMIC, 6.00%, 11/18/17.. 1,675,000 1,671,834
-----------
TOTAL MORTGAGE OBLIGATIONS (Cost $4,571,552).................... 4,579,266
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
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UAM FUNDS MCKEE U.S. GOVERNMENT PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET-BACKED SECURITIES - 4.4%
FACE
AMOUNT VALUE+
---------- -----------
<S> <C> <C>
FINANCIAL SERVICES - 4.4%
Advanta Mortgage Loan Trust, 94-1 A1 6.30%, 7/25/25.. $ 66,463 $ 67,784
Countrywide Funding Corp., Series D 6.875%, 9/15/05.. 525,000 542,719
Green Tree Financial Corp., 94-7 A4 8.35%, 3/15/20... 219,677 231,452
The Money Store Home Equity Trust, 96-C A3 7.07%,
12/15/16............................................ 350,550 354,900
World Financial Network Credit Card, Series 96-B A
6.95%, 4/15/06...................................... 405,000 430,055
-----------
TOTAL ASSET-BACKED SECURITIES (Cost $1,566,357)................. 1,626,910
-----------
CORPORATE BONDS - 26.2%
BANKS - 0.9%
BankBoston NA 6.375%, 3/25/08........................ 350,000 348,250
-----------
FINANCIAL SERVICES - 5.1%
Countrywide Capital I 8.00%, 12/15/26................ 445,000 466,694
Lehman Brothers Holdings 7.125%, 9/15/03............. 748,000 750,805
NB Capital Trust IV 8.25%, 4/15/27................... 626,000 655,735
-----------
1,873,234
-----------
INDUSTRIAL - 14.1%
Nabisco, Inc. 7.55%, 6/15/15......................... 834,000 832,957
News America Holdings, Inc. 7.60%, 10/11/15.......... 731,000 755,671
Phillip Morris Cos., Inc. 7.25%, 9/15/01............. 200,000 210,750
Phillips Petroleum Co. 7.125%, 3/15/28............... 443,000 461,274
Seagate Technology, Inc. Senior Notes 7.125%,
3/1/04.............................................. 833,000 869,444
TCI Communications, Inc. 8.00%, 8/1/05............... 300,000 334,500
Time Warner Entertainment Co. 8.375%, 3/15/23........ 775,000 906,750
Weyerhauser Co. 7.95%, 3/15/25....................... 310,000 341,000
Xerox Capital Trust I 8.00%, 2/1/27.................. 410,000 432,550
-----------
5,144,896
-----------
TELECOMMUNICATIONS - 2.4%
Frontier Corp. 7.25%, 5/15/04........................ 809,000 863,607
-----------
UTILITIES - 1.7%
Consolidated Edison Series 97-B 6.45%, 12/1/07....... 331,000 351,688
Pacific Gas & Electric 5.875%, 10/1/05............... 260,000 265,525
-----------
617,213
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
UAM FUNDS MCKEE U.S. GOVERNMENT PORTFOLIO
OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORPORATE BONDS - CONTINUED
FACE
AMOUNT VALUE+
---------- -----------
<S> <C> <C>
YANKEE BONDS - 2.0%
Barrick Gold Corp. 7.50%, 5/1/07..................... $ 675,000 $ 723,094
-----------
TOTAL CORPORATE BONDS (Cost $9,191,501)......................... 9,570,294
-----------
SHORT-TERM INVESTMENT - 0.7%
REPURCHASE AGREEMENT - 0.7%
Chase Securities, Inc. 4.90%, dated 10/30/98, due
11/2/98, to be repurchased at $259,106,
collateralized by $249,242 of various U.S. Treasury
Notes, 5.375%-6.875%, due 5/31/99-2/15/04, valued at
$259,003 (Cost $259,000)............................ 259,000 259,000
-----------
TOTAL INVESTMENTS - 99.1% (Cost $35,158,265) (a)................ 36,170,466
-----------
OTHER ASSETS AND LIABILITIES (NET) - 0.9%....................... 310,950
-----------
NET ASSETS - 100%............................................... $36,481,416
===========
</TABLE>
+ See Note A to Financial Statements.
# Effective yield as of October 31, 1998.
CMO Collateralized Mortgage Obligation
PAC Planned Amortization Class
REMIC Real Estate Mortgage Investment Conduit
(a) The cost for federal income tax purposes was $35,163,231. At October 31,
1998, net unrealized appreciation for all securities based on tax cost
was $1,007,235. This consisted of aggregate gross unrealized
appreciation for all securities of $1,033,620 and aggregate gross
unrealized depreciation for all securities of $26,385.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
UAM FUNDS MCKEE DOMESTIC EQUITY PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 97.1%
SHARES VALUE+
------ ----------
<S> <C> <C>
AUTOMOTIVE - 1.0%
General Motors Corp. ...................................... 8,200 $ 517,113
-----------
BANKS - 7.3%
Associated Banc-Corp ...................................... 15,000 523,125
Bank One Corp. ............................................ 29,300 1,432,037
BankAmerica Corp. ......................................... 12,600 723,713
Bankers Trust New York Corp. .............................. 5,250 329,766
Golden West Financial Corp. ............................... 6,800 616,675
-----------
3,625,316
-----------
BEVERAGES, FOOD & TOBACCO - 7.7%
General Mills, Inc. ....................................... 14,500 1,065,750
Philip Morris Cos., Inc. .................................. 35,800 1,830,275
Pioneer Hi-Bred International, Inc. ....................... 33,200 929,600
-----------
3,825,625
-----------
CAPITAL EQUIPMENT - 5.6%
Milacron, Inc. ............................................ 56,200 1,088,875
ITT Industries, Inc. ...................................... 47,200 1,687,400
-----------
2,776,275
-----------
CHEMICALS - 2.4%
Akzo Nobel N.V. ADR........................................ 30,000 1,181,250
-----------
CONSTRUCTION EQUIPMENT - 1.5%
Case Corp. ................................................ 33,200 730,400
-----------
COMPUTERS - 3.0%
Computer Associates International, Inc. ................... 37,000 1,456,875
-----------
ENERGY - 5.5%
Halliburton Co. ........................................... 15,700 564,219
Mitchell Energy & Development Corp., Class B .............. 38,770 545,203
Occidental Petroleum Corp. ................................ 26,200 520,725
Ultramar Diamond Shamrock Corp. ........................... 19,400 522,587
YPF S.A. ADR............................................... 20,100 581,644
-----------
2,734,378
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
UAM FUNDS MCKEE DOMESTIC EQUITY PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - CONTINUED
SHARES VALUE+
------ -----------
<S> <C> <C>
FINANCIAL SERVICES - 3.2%
Lehman Brothers Holdings, Inc. ........................... 9,800 $ 371,787
The CIT Group, Inc., Class A.............................. 26,300 718,319
The PMI Group, Inc. ...................................... 9,200 464,025
-----------
1,554,131
-----------
HEALTH CARE - 1.0%
*Foundation Health Systems, Inc., Class A................. 39,850 468,237
-----------
INSURANCE - 5.2%
CIGNA Corp. .............................................. 10,600 773,137
Travelers Property Casualty Corp., Class A................ 33,300 1,021,894
Washington Mutual, Inc. .................................. 20,200 754,975
-----------
2,550,006
-----------
MANUFACTURING - 1.5%
Tecumseh Products Co., Class A............................ 14,700 746,025
-----------
METALS - 2.4%
Aluminum Company of America............................... 15,250 1,208,562
-----------
MULTI-INDUSTRY - 1.7%
Loews Corp. .............................................. 8,800 826,650
-----------
PAPER & PACKAGING - 3.0%
Willamette Industries..................................... 47,800 1,481,800
-----------
PHARMACEUTICALS - 11.8%
American Home Products Corp. ............................. 17,400 848,250
Becton, Dickinson & Co. .................................. 31,000 1,305,875
*Biogen, Inc. ............................................ 23,900 1,659,556
Mylan Laboratories, Inc. ................................. 57,800 1,990,488
-----------
5,804,169
-----------
RETAIL - 8.0%
American Stores Co. ...................................... 33,000 1,074,562
*BJ'S Wholesale Club, Inc. ............................... 29,200 1,049,375
Dillard's Inc., Class A................................... 18,700 580,869
Gap, Inc. ................................................ 20,800 1,250,600
-----------
3,955,406
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
UAM FUNDS MCKEE DOMESTIC EQUITY PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - CONTINUED
SHARES VALUE+
------- -----------
<S> <C> <C>
SERVICES - 4.6%
*Modis Professional Services, Inc. ...................... 77,500 $ 1,365,938
Reynolds & Reynolds Co., Class A......................... 51,000 918,000
-----------
2,283,938
-----------
TECHNOLOGY - 11.8%
*Advanced Micro Devices, Inc. ........................... 59,800 1,349,237
Raytheon Co., Class A.................................... 15,850 887,600
*Seagate Technology, Inc. ............................... 55,200 1,455,900
*Sequent Computer Systems, Inc. ......................... 108,100 1,067,488
*Sterling Software, Inc. ................................ 41,292 1,081,334
-----------
5,841,559
-----------
TELECOMMUNICATIONS - 5.9%
Bell Atlantic Corp. ..................................... 18,126 962,944
SBC Communications, Inc. ................................ 23,107 1,070,137
Sprint Corp. ............................................ 11,300 867,275
-----------
2,900,356
-----------
TEXTILES & APPAREL - 1.9%
*Tommy Hilfiger Corp. ................................... 20,500 951,969
-----------
UTILITIES - 1.1%
GPU, Inc. ............................................... 12,400 534,750
-----------
TOTAL COMMON STOCKS (Cost $46,187,580)........................... 47,954,790
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
UAM FUNDS MCKEE DOMESTIC EQUITY PORTFOLIO
OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT TERM INVESTMENT - 4.2%
FACE
AMOUNT VALUE+
---------- -----------
<S> <C> <C>
REPURCHASE AGREEMENT - 4.2%
Chase Securities, Inc. 4.90%, dated 10/30/98, due
11/2/98, to be repurchased at $2,079,849,
collateralized by $2,000,674 of various U.S.
Treasury Notes, 5.375-6.875%, due 5/31/99-2/15/04
valued at $2,079,028 (Cost $2,079,000)............. $2,079,000 $ 2,079,000
-----------
TOTAL INVESTMENTS - 101.3% (Cost $48,266,580) (a).............. 50,033,790
-----------
OTHER ASSETS AND LIABILITIES (NET) - (1.3%).................... (646,292)
-----------
NET ASSETS - 100%.............................................. $49,387,498
===========
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security
ADR American Depositary Receipt
(a) The cost for federal income tax purposes was $49,120,480. At October 31,
1998, net unrealized appreciation for all securities based on tax cost was
$913,310. This consisted of aggregate gross unrealized appreciation for all
securities of $6,761,824 and aggregate gross unrealized deprecaition for all
securities of $5,848,514.
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
UAM FUNDS MCKEE INTERNATIONAL EQUITY PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 91.5%
SHARES VALUE+
--------- -----------
<S> <C> <C>
ARGENTINA - 2.4%
YPF S.A. ADR........................................... 111,100 $ 3,214,956
-----------
AUSTRALIA - 1.9%
Westpac Banking Corp. ................................. 412,675 2,510,380
-----------
CANADA - 4.6%
Alcan Aluminium Ltd. .................................. 81,925 2,056,078
Canadian Imperial Bank of Commerce..................... 92,260 1,831,455
Seagram Co., Ltd. ..................................... 39,830 1,307,889
West Coast Energy, Inc. ............................... 25,491 499,428
West Coast Energy, Inc. ADR............................ 21,100 412,769
-----------
6,107,619
-----------
CHINA - 1.4%
*Huaneng Power International, Inc. ADR................. 137,500 1,890,625
-----------
DENMARK - 1.7%
Unidanmark A/S, Class A (Registered)................... 29,650 2,258,617
-----------
FINLAND - 4.3%
Nokia Oyj, Class K..................................... 63,900 5,805,750
-----------
FRANCE - 5.5%
Alcatel Alsthom........................................ 24,215 2,695,976
Coflexip............................................... 22,610 2,033,346
Total S.A., Class B.................................... 23,100 2,663,243
-----------
7,392,565
-----------
GERMANY - 5.1%
Bayer AG............................................... 85,650 3,478,724
Bayer AG ADR........................................... 8,000 325,086
Commerzbank AG......................................... 95,800 2,879,203
Commerzbank AG ADR..................................... 6,900 207,477
-----------
6,890,490
-----------
HONG KONG - 5.2%
Cathay Pacific Airways Ltd. ........................... 1,886,100 2,009,210
Guangshen Railway Co., Ltd. ADR........................ 249,800 1,873,500
Hong Kong Electric Holdings............................ 240,000 880,108
Hong Kong Electric Holdings ADR........................ 183,800 673,903
HSBC Holdings plc...................................... 67,400 1,544,774
-----------
6,981,495
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
UAM FUNDS MCKEE INTERNATIONAL EQUITY PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - CONTINUED
SHARES VALUE+
--------- -----------
<S> <C> <C>
IRELAND - 3.6%
*Elan Corp. plc ADR.................................... 68,300 $ 4,785,269
-----------
ISRAEL - 2.6%
Teva Pharmaceutical Industries Ltd. ADR................ 89,300 3,521,769
-----------
ITALY - 2.1%
Montedison S.p.A. ..................................... 2,810,580 2,778,357
-----------
JAPAN - 13.1%
Amada Co., Ltd. ....................................... 225,000 1,345,214
Credit Saison Co. ..................................... 76,200 1,794,210
Hitachi Ltd. .......................................... 378,000 1,922,748
Hitachi Ltd. ADR....................................... 2,300 117,300
INES Corp. ............................................ 149,000 1,060,817
Ito-Yokado Co., Ltd. .................................. 30,000 1,749,871
Kao Corp. ............................................. 79,000 1,599,245
Mitsui & Co., Ltd. .................................... 59,000 314,788
Mitsui & Co., Ltd. ADR................................. 3,900 413,400
Mitsui Marine & Fire Insurance......................... 281,000 1,395,600
Mitsui Marine & Fire Insurance ADR..................... 6,330 314,526
Nintendo Corp., Ltd. .................................. 19,900 1,683,084
Nissan Motor Co., Ltd. ................................ 540,000 1,463,716
Sanwa Bank Ltd. ....................................... 154,000 1,200,772
Sanwa Bank Ltd. ADR.................................... 1,600 124,813
Toyota Motor Corp. .................................... 44,000 1,056,785
-----------
17,556,889
-----------
KOREA - 3.7%
LG Electronics......................................... 233,556 2,073,297
Pohang Iron & Steel Co., Ltd. ......................... 13,700 768,676
Pohang Iron & Steel Co., Ltd. ADR...................... 120,200 2,163,600
-----------
5,005,573
-----------
MEXICO - 3.8%
*Grupo Industrial Durango ADR.......................... 349,900 1,749,500
Telefonos de Mexico S.A. ADR, Class L.................. 62,300 3,290,219
-----------
5,039,719
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
UAM FUNDS MCKEE INTERNATIONAL EQUITY PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - CONTINUED
SHARES VALUE+
--------- ------------
<S> <C> <C>
NETHERLANDS - 6.0%
Akzo Nobel N.V. ...................................... 95,150 $ 3,692,874
KLM Royal Dutch Airlines N.V. ........................ 74,000 2,231,156
Philips Electronics N.V. ............................. 38,560 2,049,002
------------
7,973,032
------------
NORWAY - 1.6%
Den Norske Bank ASA................................... 598,100 2,109,284
------------
PHILIPPINES - 2.3%
Ionics Circuit, Inc. ................................. 2,949,700 752,100
Philippine Long Distance Telephone Co. ............... 98,500 2,364,490
------------
3,116,590
------------
SINGAPORE - 2.1%
*Asia Pulp & Paper Co., Ltd. ADR...................... 344,200 2,861,162
------------
SPAIN - 2.1%
Repsol S.A. .......................................... 55,805 2,800,748
------------
SWEDEN - 1.7%
*Fastighets AB Balder................................. 6,200 57,960
Svenska Handelsbanken, Class A........................ 54,200 2,280,052
------------
2,338,012
------------
SWITZERLAND - 3.6%
Nestle S.A. (Registered).............................. 2,270 4,821,950
------------
THAILAND - 1.5%
Advanced Info Service Public Co., Ltd. (Foreign)...... 270,900 1,992,454
------------
UNITED KINGDOM - 9.6%
*Allied Zurich AG..................................... 201,000 2,400,984
*British American Tobacco plc......................... 201,000 1,814,189
British Steel plc..................................... 656,700 1,126,123
Carlton Communications plc............................ 164,887 1,186,178
Diageo plc............................................ 263,517 2,843,566
*Professional Staff plc ADR........................... 168,100 1,638,975
Rio Tinto plc ADR..................................... 9,100 450,450
RTZ Corp. plc (Registered)............................ 118,280 1,434,644
------------
12,895,109
------------
TOTAL COMMON STOCKS - 91.5% (Cost $113,035,877)................. 122,648,414
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
UAM FUNDS MCKEE INTERNATIONAL EQUITY PORTFOLIO
OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENT - 11.2%
FACE
AMOUNT VALUE+
----------- ------------
<S> <C> <C>
REPURCHASE AGREEMENT - 11.2%
Chase Securities, Inc. 4.90%, dated 10/30/98, due
11/2/98, to be repurchased at $15,072,152,
collateralized by $14,498,393 of various U.S.
Treasury Notes, 5.375%-6.875%, due 5/31/99-
2/15/04, valued at $15,066,202
(Cost $15,066,000)............................... $15,066,000 $ 15,066,000
------------
TOTAL INVESTMENTS - 102.7% (Cost $128,101,877) (a)............ 137,714,414
------------
OTHER ASSETS AND LIABILITIES (NET) - (2.7%)................... (3,639,709)
------------
NET ASSETS - 100%............................................. $134,074,705
============
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security
ADR American Depositary Receipt
(a) The cost for federal income tax purposes was $130,354,490. At October 31,
1998, net unrealized appreciation for all securities based on tax cost was
$7,359,924. This consisted of aggregate gross unrealized appreciation for
all securities of $21,263,244 and aggregate gross unrealized depreciation
for all securities of $13,903,320.
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
UAM FUNDS MCKEE INTERNATIONAL EQUITY PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION (UNAUDITED)
At October 31, 1998 sector diversification of the Portfolio was as follows:
<TABLE>
<CAPTION>
% OF
NET
INDUSTRY ASSETS VALUE
- -------- ------ ------------
<S> <C> <C>
Automotive................................................ 1.7% $ 2,231,156
Banks..................................................... 5.8 7,753,853
Beverages, Food & Tobacco................................. 5.3 7,058,738
Capital Equipment......................................... 5.3 7,083,897
Chemicals................................................. 7.7 10,275,040
Computers................................................. 0.8 1,060,817
Consumer Durables......................................... 10.7 14,371,885
Electronics............................................... 6.6 8,834,048
Energy.................................................... 8.9 11,949,109
Financial Services........................................ 8.2 10,987,185
Health Care............................................... 6.2 8,307,038
Insurance................................................. 1.0 1,395,599
Metals.................................................... 1.8 2,370,866
Natural Resources......................................... 5.7 7,692,993
Paper & Packaging......................................... 2.1 2,861,162
Real Estate............................................... 0.0 57,960
Repurchase Agreement...................................... 11.2 15,066,000
Services.................................................. 2.8 3,802,246
Technology................................................ 0.6 752,100
Telecommunications........................................ 4.8 6,468,851
Transportation............................................ 2.9 3,882,710
Utilities................................................. 2.6 3,451,161
----- ------------
Total Investments........................................ 102.7% $137,714,414
Other Assets and Liabilities (Net)........................ (2.7) (3,639,709)
----- ------------
Net Assets............................................... 100.0% $134,074,705
===== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
UAM FUNDS MCKEE SMALL CAP EQUITY PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 89.9%
SHARES VALUE+
------- -----------
<S> <C> <C>
BANKS - 11.1%
Coastal Bancorp, Inc..................................... 47,250 $ 885,937
Commerce Bancorp, Inc.................................... 48,825 1,983,516
Friedman, Billings, Ramsey Group, Inc., Class A.......... 200,500 1,027,563
MAF Bancorp, Inc......................................... 55,950 1,339,303
*Ocwen Financial Corp.................................... 134,800 1,617,600
Peoples Heritage Financial Group, Inc.................... 76,200 1,362,075
S&T Bancorp, Inc......................................... 14,900 808,325
-----------
9,024,319
-----------
BEVERAGES, FOOD & TOBACCO - 2.1%
*Swisher International Group, Inc., Class A.............. 101,300 683,775
Tasty Baking Co. ........................................ 73,600 1,067,200
-----------
1,750,975
-----------
CAPITAL GOODS - 3.1%
Ruddick Corp............................................. 128,600 2,499,663
-----------
CONSTRUCTION - 1.9%
*Toll Brothers, Inc...................................... 67,800 1,572,113
-----------
ELECTRONICS - 0.7%
Pioneer-Standard Electronics, Inc. ...................... 60,300 538,931
-----------
ENERGY - 3.1%
*Miller Exploration Co................................... 120,000 645,000
*Stone Energy Corp. ..................................... 59,900 1,924,287
-----------
2,569,287
-----------
HEALTH CARE - 2.1%
*Sierra Health Services, Inc............................. 72,900 1,699,481
-----------
HOME FURNISHINGS & APPLIANCES - 2.2%
La-Z-Boy, Inc. .......................................... 96,300 1,769,512
-----------
INDUSTRIAL - 2.4%
*Brown & Sharpe Manufacturing Co., Class A............... 244,800 1,927,800
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
UAM FUNDS MCKEE SMALL CAP EQUITY PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - CONTINUED
SHARES VALUE+
------- -----------
<S> <C> <C>
INSURANCE - 11.9%
Arthur J. Gallagher & Co................................. 40,800 $ 1,728,900
CMAC Investment Corp..................................... 36,600 1,532,625
Delphi Financial Group, Inc., Class A.................... 44,528 2,076,118
First American Financial Corp., (The).................... 69,550 2,177,784
LandAmerica Financial Group, Inc......................... 21,500 1,116,656
Selective Insurance Group, Inc........................... 57,900 1,056,675
-----------
9,688,758
-----------
METALS - 7.1%
*Alltrista Corp.......................................... 50,300 1,153,756
Century Aluminum Co...................................... 162,200 1,601,725
Intermet Corp............................................ 99,500 1,548,469
*RTI International Metals................................ 64,500 959,438
Titanium Metals Corp..................................... 46,000 480,125
-----------
5,743,513
-----------
PAPER & PACKAGING - 1.4%
Pope & Talbot, Inc....................................... 120,900 1,140,994
-----------
PHARMACEUTICALS - 6.1%
Alpharma, Inc., Class A.................................. 94,500 2,616,469
Owens & Minor, Inc., Holding Company..................... 150,400 2,387,600
-----------
5,004,069
-----------
RETAIL - 6.2%
Claire's Stores, Inc. ................................... 91,400 1,548,087
*Gymboree Corp. ......................................... 75,900 502,838
*Lands' End, Inc. ....................................... 62,500 1,066,406
*Mortons Restaurant Group, Inc. ......................... 98,200 1,914,900
-----------
5,032,231
-----------
SERVICES - 11.0%
*Aviall, Inc. ........................................... 185,100 2,001,394
Bowne & Co., Inc. ....................................... 104,600 1,405,562
*Dollar Thrifty Automotive Group, Inc. .................. 179,900 2,439,894
*Integrated Systems Consulting Group, Inc. .............. 85,600 941,600
*Personnel Group of America, Inc. ....................... 140,900 2,183,950
-----------
8,972,400
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
UAM FUNDS MCKEE SMALL CAP EQUITY PORTFOLIO
OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS - CONTINUED
SHARES VALUE+
----------- -----------
<S> <C> <C>
TECHNOLOGY - 13.4%
*Avid Technology, Inc. ............................. 69,400 $ 1,782,712
Fair, Isaac and Co. ................................ 31,000 1,243,875
*Perceptron, Inc. .................................. 77,400 440,213
*Planar Systems, Inc. .............................. 144,900 1,285,987
*Project Software & Development, Inc. .............. 61,000 1,105,625
*Structural Dynamics Research Corp. ................ 84,700 1,217,563
*Symantec Corp. .................................... 59,500 948,281
*System Software Associates, Inc. .................. 106,700 646,869
*Systems & Computer Technology Corp. ............... 70,600 1,006,050
*Vanstar Corp. ..................................... 108,900 1,218,319
-----------
10,895,494
-----------
UTILITIES - 4.1%
CILCORP, Inc. ...................................... 31,300 1,611,950
Commonwealth Energy Systems......................... 46,900 1,749,956
-----------
3,361,906
-----------
TOTAL COMMON STOCKS (Cost $86,826,633).......................... 73,191,446
-----------
SHORT-TERM INVESTMENT - 18.7%
<CAPTION>
FACE
AMOUNT
-----------
REPURCHASE AGREEMENT - 18.7%
<S> <C> <C>
Chase Securities, Inc. 4.90%, dated 10/30/98, due
11/2/98, to be repurchased at $15,226,215,
collateralized by $14,646,591 of various U.S.
Treasury Notes, 5.375%-6.875%, due 5/31/99-2/15/04
valued at $15,220,204 (Cost $15,220,000)........... $15,220,000 15,220,000
-----------
TOTAL INVESTMENTS - 108.6% (Cost $102,046,633) (a).............. 88,411,446
-----------
OTHER ASSETS AND LIABILITIES (NET) - (8.6%)..................... (6,960,300)
-----------
NET ASSETS - 100%............................................... $81,451,146
===========
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security
(a) The cost for federal income tax purposes was $102,046,633. At October 31,
1998, net unrealized depreciation for all securities based on tax cost was
$13,635,187. This consisted of aggregate gross unrealized appreciation for
all securities of $4,547,745 and aggregate gross unrealized depreciation for
all securities of $18,182,932.
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
MCKEE MCKEE MCKEE MCKEE
U.S DOMESTIC INTERNATIONAL SMALL CAP
GOVERNMENT EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at Cost....... $35,158,265 $48,266,580 $128,101,877 $102,046,633
=========== =========== ============ ============
Investments, at Value
(Including Repurchase
Agreements of $259,000,
$2,079,000, $15,066,000
and $15,220,000,
respectively)............. $36,170,466 $50,033,790 $137,714,414 $ 88,411,446
Cash....................... -- 471 548 1,157
Receivable for Investments
Sold...................... -- -- 71,015 --
Dividends Receivable....... -- 36,678 123,017 37,732
Receivable for Portfolio
Shares Sold............... 29,125 200,000 4,622,558 42,500
Foreign Withholding Tax
Reclaim Receivable........ -- -- 110,951 --
Interest Receivable........ 428,710 566 4,101 4,143
Unrealized Gain on Foreign
Currency Exchange
Contracts................. -- -- 3,997 --
Other Assets............... 685 1,003 2,642 1,635
----------- ----------- ------------ ------------
Total Assets.............. 36,628,986 50,272,508 142,653,243 88,498,613
----------- ----------- ------------ ------------
LIABILITIES
Payable for Investments
Purchased................. -- 808,668 8,410,165 6,947,635
Payable for Portfolio
Shares Redeemed........... -- 65 -- --
Payable for Investment
Advisory Fees--
Note B.................... 13,976 25,015 66,989 53,063
Payable for Administrative
Fees--Note C.............. 12,220 11,875 23,088 11,109
Payable for Custodian
Fees--Note D.............. 6,394 9,726 21,425 1,281
Payable to Custodian Bank--
Note D.................... 86,592 -- -- --
Payable for Account Service
Fees--Note F.............. 5,598 4,902 551 175
Payable for Directors'
Fees--Note G.............. 840 726 684 757
Unrealized Loss on Foreign
Currency Exchange
Contracts................. -- -- 22,750 --
Other Liabilities.......... 21,950 24,033 32,886 33,447
----------- ----------- ------------ ------------
Total Liabilities......... 147,570 885,010 8,578,538 7,047,467
----------- ----------- ------------ ------------
NET ASSETS................. $36,481,416 $49,387,498 $134,074,705 $ 81,451,146
=========== =========== ============ ============
NET ASSETS CONSIST OF:
Paid in Capital............ $34,068,010 $28,736,583 $121,791,887 $ 94,432,977
Undistributed Net
Investment Income ........ 208,015 21,581 36,035 --
Accumulated Net Realized
Gain...................... 1,193,190 18,862,124 2,653,382 653,356
Unrealized Appreciation
(Depreciation)............ 1,012,201 1,767,210 9,593,401 (13,635,187)
----------- ----------- ------------ ------------
NET ASSETS................. $36,481,416 $49,387,498 $134,074,705 $ 81,451,146
=========== =========== ============ ============
Institutional Class Shares
Shares Issued and
Outstanding ($0.001 par
value) (Authorized
25,000,000)............... 3,338,133 3,080,853 11,942,662 9,626,681
NET ASSET VALUE, Offering
and Redemption Price Per
Share..................... $ 10.93 $ 16.03 $ 11.23 $ 8.46
=========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
FOR THE YEAR ENDED OCTOBER 31, 1998
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
MCKEE MCKEE MCKEE MCKEE
U.S DOMESTIC INTERNATIONAL SMALL CAP
GOVERNMENT EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO*
---------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends.................. $ -- $ 888,022 $ 2,471,271 $ 606,712
Interest................... 2,712,771 64,852 292,639 170,006
Less: Foreign Taxes
Withheld.................. -- -- (213,715) --
---------- ------------ ----------- ------------
Total Income.............. 2,712,771 952,874 2,550,195 776,718
---------- ------------ ----------- ------------
EXPENSES
Investment Advisory Fees--
Note B.................... 188,898 418,475 857,075 675,734
Administrative Fees--Note
C......................... 102,948 112,236 198,575 93,068
Custodian Fees--Note D..... 19,670 28,030 97,703 7,384
Account Services Fees--Note
F......................... 38,724 42,333 2,827 616
Directors' Fees--Note G.... 2,945 3,304 3,841 3,143
Audit Fees................. 13,445 13,966 14,426 15,068
Legal Fees................. 3,571 5,848 7,058 5,029
Printing Fees.............. 10,550 10,718 11,111 15,622
Registration and Filing
Fees...................... 13,370 14,018 18,113 36,358
Shareholder Servicing
Fees...................... -- 196 3,394 73
Other Expenses............. 7,048 10,395 13,963 6,704
---------- ------------ ----------- ------------
Net Expenses Before
Expense Offset........... 401,169 659,519 1,228,086 858,799
Expense Offset--Note A..... (1,071) (1,331) (4,404) (2,371)
---------- ------------ ----------- ------------
Net Expenses After Expense
Offset................... 400,098 658,188 1,223,682 856,428
---------- ------------ ----------- ------------
NET INVESTMENT INCOME
(LOSS).................... 2,312,673 294,686 1,326,513 (79,710)
---------- ------------ ----------- ------------
NET REALIZED GAIN (LOSS)
ON:
Investments............... 1,375,376 18,895,618 2,656,627 763,539
Foreign Exchange
Transactions............. -- -- (123,029) --
---------- ------------ ----------- ------------
TOTAL NET REALIZED GAIN ON
INVESTMENTS AND FOREIGN
EXCHANGE TRANSACTIONS..... 1,375,376 18,895,618 2,533,598 763,539
---------- ------------ ----------- ------------
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION
ON:
Investments............... (802,769) (15,488,247) (3,609,736) (13,635,187)
Foreign Exchange
Translations............. -- -- (3,128) --
---------- ------------ ----------- ------------
TOTAL NET CHANGE IN
UNREALIZED
APPRECIATION/DEPRECIATION.. (802,769) (15,488,247) (3,612,864) (13,635,187)
---------- ------------ ----------- ------------
NET GAIN (LOSS) ON
INVESTMENTS AND FOREIGN
EXCHANGE TRANSACTIONS..... 572,607 3,407,371 (1,079,266) (12,871,648)
---------- ------------ ----------- ------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS................ $2,885,280 $ 3,702,057 $ 247,247 $(12,951,358)
========== ============ =========== ============
</TABLE>
* The Portfolio commenced operations on November 4, 1997.
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
UAM FUNDS MCKEE U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1998 1997
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income............................ $ 2,312,673 $ 2,268,537
Net Realized Gain................................ 1,375,376 235,130
Net Change in Unrealized
Appreciation/Depreciation....................... (802,769) 1,536,088
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... 2,885,280 4,039,755
------------ ------------
DISTRIBUTIONS:
Net Investment Income............................ (2,446,189) (2,031,045)
Net Realized Gain................................ (328,407) --
------------ ------------
TOTAL DISTRIBUTIONS.............................. (2,774,596) (2,031,045)
------------ ------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued........................................... 10,245,494 46,890,798
In Lieu of Cash Distributions.................... 2,768,512 2,025,173
Redeemed......................................... (34,170,442) (16,515,553)
------------ ------------
NET INCREASE (DECREASE) FROM CAPITAL SHARE
TRANSACTIONS.................................... (21,156,436) 32,400,418
------------ ------------
TOTAL INCREASE (DECREASE)........................ (21,045,752) 34,409,128
NET ASSETS:
Beginning of Period.............................. 57,527,168 23,118,040
------------ ------------
End of Period (including undistributed net
investment income of $208,015 and $377,067,
respectively)................................... $ 36,481,416 $ 57,527,168
============ ============
(1) SHARES ISSUED AND REDEEMED:
Issued........................................... 940,224 4,485,792
In Lieu of Cash Distributions.................... 256,166 191,612
Redeemed......................................... (3,164,733) (1,556,148)
------------ ------------
(1,968,343) 3,121,256
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
UAM FUNDS MCKEE DOMESTIC EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1998 1997
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income............................ $ 294,686 $ 580,671
Net Realized Gain................................ 18,895,618 7,558,630
Net Change in Unrealized
Appreciation/Depreciation....................... (15,488,247) 14,272,224
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... 3,702,057 22,411,525
------------ ------------
DISTRIBUTIONS:
Net Investment Income............................ (338,603) (580,774)
Net Realized Gain................................ (7,577,519) (2,289,510)
------------ ------------
TOTAL DISTRIBUTIONS.............................. (7,916,122) (2,870,284)
------------ ------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued........................................... 13,074,449 42,565,470
In Lieu of Cash Distributions.................... 7,916,122 2,870,017
Redeemed......................................... (74,777,510) (19,758,239)
------------ ------------
NET INCREASE (DECREASE) FROM CAPITAL SHARE
TRANSACTIONS.................................... (53,786,939) 25,677,248
------------ ------------
TOTAL INCREASE (DECREASE)........................ (58,001,004) 45,218,489
NET ASSETS:
Beginning of Period.............................. 107,388,502 62,170,013
------------ ------------
End of Period (including undistributed net
investment income of $21,581 and $65,498,
respectively)................................... $ 49,387,498 $107,388,502
============ ============
(1) SHARES ISSUED AND REDEEMED:
Issued........................................... 806,481 2,738,317
In Lieu of Cash Distributions.................... 508,216 207,257
Redeemed......................................... (4,603,661) (1,223,564)
------------ ------------
(3,288,964) 1,722,010
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
UAM FUNDS MCKEE INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1998 1997
------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income........................... $ 1,326,513 $ 998,276
Net Realized Gain............................... 2,533,598 9,912,396
Net Change in Unrealized
Appreciation/Depreciation...................... (3,612,864) 8,498,768
------------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS..................................... 247,247 19,409,440
------------- ------------
DISTRIBUTIONS:
Net Investment Income........................... (1,178,285) (961,510)
Net Realized Gain............................... (9,931,009) (1,154,956)
------------- ------------
TOTAL DISTRIBUTIONS............................. (11,109,294) (2,116,466)
------------- ------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued.......................................... 165,875,010 56,400,614
In Lieu of Cash Distributions................... 10,208,564 1,966,598
Redeemed........................................ (134,196,595) (63,834,286)
------------- ------------
NET INCREASE (DECREASE) FROM CAPITAL SHARE
TRANSACTIONS................................... 41,886,979 (5,467,074)
------------- ------------
TOTAL INCREASE.................................. 31,024,932 11,825,900
NET ASSETS:
Beginning of Period............................. 103,049,773 91,223,873
------------- ------------
End of Period (including undistributed net
investment income of $36,035 and $10,836,
respectively).................................. $ 134,074,705 $103,049,773
============= ============
(1) SHARES ISSUED AND REDEEMED:
Issued.......................................... 14,505,088 4,401,990
In Lieu of Cash Distributions................... 940,910 170,717
Redeemed........................................ (11,800,927) (4,919,903)
------------- ------------
3,645,071 (347,196)
============= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
UAM FUNDS MCKEE SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NOVEMBER 4,
1997* TO
OCTOBER 31,
1998
------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Loss........................................... $ (79,710)
Net Realized Gain............................................. 763,539
Net Change in Unrealized Appreciation/Depreciation............ (13,635,187)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.......... (12,951,358)
------------
DISTRIBUTIONS:
Net Realized Gain............................................. (30,473)
------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued........................................................ 97,125,457
In Lieu of Cash Distributions................................. 29,824
Redeemed...................................................... (2,722,304)
------------
NET INCREASE FROM CAPITAL SHARE TRANSACTIONS.................. 94,432,977
------------
TOTAL INCREASE................................................ 81,451,146
NET ASSETS:
Beginning of Period........................................... --
------------
End of Period (including undistributed net investment income
of $0)....................................................... $ 81,451,146
============
(1) SHARES ISSUED AND REDEEMED:
Issued........................................................ 9,955,330
In Lieu of Cash Distributions................................. 3,094
Redeemed...................................................... (331,743)
------------
9,626,681
============
</TABLE>
*Commencement of Operations
The accompanying notes are an integral part of the financial statements.
34
<PAGE>
UAM FUNDS MCKEE U.S. GOVERNMENT PORTFOLIO
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
MARCH 2,
YEARS ENDED OCTOBER 31, 1995** TO
------------------------- OCTOBER 31,
1998 1997 1996 1995
------- ------- ------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 10.84 $ 10.58 $ 10.76 $10.00
------- ------- ------- ------
Income From Investment Operations:
Net Investment Income.............. 0.62 0.54 0.46 0.28
Net Realized and Unrealized Gain
(Loss)............................ 0.16 0.25 (0.07)++ 0.71
------- ------- ------- ------
Total From Investment Operations... 0.78 0.79 0.39 0.99
------- ------- ------- ------
Distributions:
Net Investment Income.............. (0.62) (0.53) (0.44) (0.23)
Net Realized Gain.................. (0.07) -- -- --
In Excess of Net Realized Gain..... -- -- (0.13) --
------- ------- ------- ------
Total Distributions................ (0.69) (0.53) (0.57) (0.23)
------- ------- ------- ------
Net Asset Value, End of Period...... $ 10.93 $ 10.84 $ 10.58 $10.76
======= ======= ======= ======
TOTAL RETURN........................ 7.35% 7.73% 3.77%+ 9.96%+***
======= ======= ======= ======
RATIO AND SUPPLEMENTAL DATA
Net Assets, End of Period
(Thousands)........................ $36,481 $57,527 $23,118 $6,069
Ratio of Expenses to Average Net
Assets............................. 0.96% 0.94% 1.13% 0.89%*
Ratio of Net Investment Income to
Average Net Assets................. 5.51% 5.67% 5.39% 5.39%*
Portfolio Turnover Rate............. 119% 124% 83% 104%
Ratio of Voluntarily Waived Fees and
Expenses Assumed by Affiliates to
Average Net Assets................. N/A N/A 0.12% 1.93%*
Ratio of Expenses to Average Net
Assets Including Expense Offsets... 0.95% 0.94% 1.13% 0.85%*
</TABLE>
* Annualized
** Commencement of Operations
*** Not Annualized
+ Total return would have been lower had certain fees not been waived and
expenses assumed by Affiliates during the periods indicated.
++ The amount shown for the year ended October 31, 1996 for a share
outstanding throughout the period does not accord with the aggregate net
gains on investments for that period because of the sales and repurchases
of Portfolio shares in relation to fluctuating market value of the
investments of the Portfolio.
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
UAM FUNDS MCKEE DOMESTIC EQUITY PORTFOLIO
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
MARCH 2,
YEARS ENDED OCTOBER 31, 1995** TO
-------------------------- OCTOBER 31,
1998 1997 1996 1995
------- -------- ------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 16.86 $ 13.38 $ 11.44 $10.00
------- -------- ------- ------
Income From Investment Operations:
Net Investment Income.............. 0.08 0.10 0.10 0.08
Net Realized and Unrealized Gain... 0.46 3.92 2.08 1.43
------- -------- ------- ------
Total From Investment Operations... 0.54 4.02 2.18 1.51
------- -------- ------- ------
Distributions:
Net Investment Income.............. (0.08) (0.10) (0.09) (0.07)
Net Realized Gain.................. (1.29) (0.44) (0.15) --
------- -------- ------- ------
Total Distributions................ (1.37) (0.54) (0.24) (0.07)
------- -------- ------- ------
Net Asset Value, End of Period...... $ 16.03 $ 16.86 $ 13.38 $11.44
======= ======== ======= ======
TOTAL RETURN........................ 3.36% 30.96% 19.31%+ 15.13%+***
======= ======== ======= ======
RATIO AND SUPPLEMENTAL DATA
Net Assets, End of Period
(Thousands)........................ $49,387 $107,389 $62,170 $6,427
Ratio of Expenses to Average Net
Assets............................. 1.02% 0.94% 0.99% 1.08%*
Ratio of Net Investment Income to
Average Net Assets................. 0.46% 0.64% 0.93% 1.12%*
Portfolio Turnover Rate............. 61% 47% 42% 27%
Ratio of Voluntarily Waived Fees and
Expenses Assumed by Affiliates to
Average Net Assets................. N/A N/A 0.04% 1.65%*
Ratio of Expenses to Average Net
Assets Including Expense Offsets... 1.02% 0.94% 0.99% 1.00%*
</TABLE>
* Annualized
** Commencement of Operations
*** Not Annualized
+ Total return would have been lower had certain fees not been waived and
expenses assumed by Affiliates during the periods indicated.
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
UAM FUNDS MCKEE INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
MAY 26,
YEARS ENDED OCTOBER 31, 1994** TO
------------------------------------ OCTOBER 31,
1998 1997 1996 1995 1994
-------- -------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 12.42 $ 10.55 $ 10.03 $ 10.40 $ 10.00
-------- -------- ------- ------- -------
Income From Investment
Operations:
Net Investment Income... 0.12 0.11 0.09 0.11 0.04
Net Realized and
Unrealized Gain
(Loss)................. (0.03) 2.01 0.73 (0.39) 0.39
-------- -------- ------- ------- -------
Total From Investment
Operations............. 0.09 2.12 0.82 (0.28) 0.43
-------- -------- ------- ------- -------
Distributions:
Net Investment Income... (0.11) (0.11) (0.09) (0.09) (0.03)
Net Realized Gain....... (1.17) (0.14) (0.21) -- --
-------- -------- ------- ------- -------
Total Distributions..... (1.28) (0.25) (0.30) (0.09) (0.03)
-------- -------- ------- ------- -------
Net Asset Value, End of
Period.................. $ 11.23 $ 12.42 $ 10.55 $ 10.03 $ 10.40
======== ======== ======= ======= =======
TOTAL RETURN............. 1.18% 20.31% 8.29% (2.69)% 4.31%***
======== ======== ======= ======= =======
RATIO AND SUPPLEMENTAL
DATA
Net Assets, End of Period
(Thousands)............. $134,075 $103,050 $91,224 $74,893 $37,257
Ratio of Expenses to
Average Net Assets...... 1.00% 0.98% 1.01% 0.97% 1.12%*
Ratio of Net Investment
Income to Average Net
Assets.................. 1.08% 0.95% 0.92% 1.16% 0.97%*
Portfolio Turnover Rate.. 20% 29% 9% 7% 11%
Ratio of Expenses to
Average Net Assets
Including Expense
Offsets................. 1.00% 0.98% 1.01% 0.96% N/A
</TABLE>
*Annualized
**Commencement of Operations
***Not Annualized
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
UAM FUNDS MCKEE SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NOVEMBER 4,
1997** TO
OCTOBER 31,
1998
-----------
<S> <C>
Net Asset Value, Beginning of Period........................... $ 10.00
-------
Income From Investment Operations:
Net Investment Loss........................................... (0.01)
Net Realized and Unrealized Loss.............................. (1.52)
-------
Total From Investment Operations.............................. (1.53)
-------
Distributions:
Net Realized Gain............................................. (0.01)
-------
Net Asset Value, End of Period................................. $ 8.46
=======
TOTAL RETURN................................................... (15.36)%***
=======
RATIO AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands).......................... $81,451
Ratio of Expenses to Average Net Assets........................ 1.27%*
Ratio of Net Investment Loss to Average Net Assets............. (0.12)%*
Portfolio Turnover Rate........................................ 5%
Ratio of Expenses to Average Net Assets Including Expense
Offsets....................................................... 1.27%*
</TABLE>
* Annualized
** Commencement of Operations
*** Not Annualized
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
UAM Funds, Inc. and UAM Funds Trust (collectively the "UAM Funds") are reg-
istered under the Investment Company Act of 1940, as amended. The McKee U.S.
Government Portfolio, McKee Domestic Equity Portfolio, McKee International Eq-
uity Portfolio and McKee Small Cap Equity Portfolio (the "Portfolios"), port-
folios of UAM Funds, Inc., are diversified and non-diversified, open-end man-
agement investment companies. At October 31, 1998, the UAM Funds were com-
prised of forty-six active portfolios. The financial statements of the remain-
ing portfolios are presented separately. The objective of the McKee Portfolios
is as follows:
MCKEE U.S. GOVERNMENT PORTFOLIO seeks to achieve a high level of current
income consistent with preservation of capital by investing primarily in
U.S. Treasury and Government agency securities.
MCKEE DOMESTIC EQUITY PORTFOLIO seeks to achieve a superior long-term
total return over a market cycle by investing primarily in equity securi-
ties of U.S. issuers.
MCKEE INTERNATIONAL EQUITY PORTFOLIO seeks to achieve a superior long-
term total return over a market cycle by investing primarily in the equity
of non-U.S. issuers.
MCKEE SMALL CAP EQUITY PORTFOLIO seeks to achieve a superior long-term
total return by investing primarily in the equity securities of small com-
panies.
A. SIGNIFICANT ACCOUNTING POLICIES: The following significant accounting
policies are in conformity with generally accepted accounting principles. Such
policies are consistently followed by the Portfolios in the preparation of its
financial statements. Generally accepted accounting principles may require
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results may differ from
those estimates.
1. SECURITY VALUATION: Investments for which market quotations are read-
ily available are stated at market value, which is determined using the
last reported sale price from the exchange where the security is primarily
traded. If no sales are reported, as in the case of some securities traded
over-the-counter, the market value is determined using the last reported
bid price. Fixed income securities are stated on the basis of valuation
provided by brokers and/or a pricing service which uses information with
respect to transactions in fixed income securities, quotations from deal-
ers, market transactions in comparable securities and various relation-
ships between securities in determining value. Securities quoted in for-
eign currencies are translated into U.S. dollars at the current exchange
rate. Short-term investments that have remaining maturities
39
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
- -------------------------------------------------------------------------------
of sixty days or less at time of purchase are valued at amortized cost, if
it approximates market value. The value of other assets and securities for
which no quotations are readily available are stated at fair value follow-
ing procedures approved by the Board of Directors.
2. FEDERAL INCOME TAXES: It is the Portfolios' intention to qualify as a
regulated investment company under Subchapter M of the Internal Revenue
Code and to distribute all of its taxable income. Accordingly, no provi-
sion for Federal income taxes is required in the financial statements.
The McKee International Equity Portfolio may be subject to taxes imposed
by countries in which it invests. Such taxes are generally based on either
income or gains earned or repatriated. The Portfolio accrues and applies
such taxes to net investment income, net realized gains and net unrealized
gains as income and/or capital gains are earned.
3. REPURCHASE AGREEMENTS: In connection with transactions involving re-
purchase agreements, the Portfolios' custodian bank takes possession of
the underlying securities ("collateral"), the value of which exceeds the
principal amount of the repurchase transaction, including accrued inter-
est. To the extent that any repurchase transaction exceeds one business
day, the value of the collateral is monitored on a daily basis to deter-
mine the adequacy of the collateral. In the event of default on the obli-
gation to repurchase, each Portfolio has the right to liquidate the col-
lateral and apply the proceeds in satisfaction of the obligation. In the
event of default or bankruptcy by the counterparty to the agreement, real-
ization and/or retention of the collateral or proceeds may be subject to
legal proceedings.
Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission, the UAM Funds may transfer their daily uninvested cash bal-
ances into a joint trading account which invests in one or more repurchase
agreement. This joint repurchase agreement is covered by the same collat-
eral requirements as discussed above.
4. FOREIGN CURRENCY TRANSLATION: The books and records of the McKee In-
ternational Equity Portfolio are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign cur-
rency are translated into U.S. dollars on the date of valuation. The McKee
International Equity Portfolio does not isolate that portion of realized
or unrealized gains and losses resulting from changes in the foreign ex-
change rate from fluctuations arising from changes in the market prices of
the securities. These gains and losses are included in net realized and
unrealized gains and losses on investments on the statement of operations.
Net realized and unrealized gains and losses on foreign currency transac-
tions represent net foreign exchange
40
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
- -------------------------------------------------------------------------------
gains or losses from forward foreign currency exchange contracts, disposi-
tion of foreign currencies, currency gains or losses realized between
trade and settlement dates on securities transactions and the difference
between the amount of the investment income and foreign withholding taxes
recorded on the McKee International Equity Portfolio's books and the U.S.
dollar equivalent amounts actually received or paid.
5. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The McKee International
Equity Portfolio may enter into forward foreign currency exchange con-
tracts to protect the value of securities held and related receivables and
payables against changes in future foreign exchange rates. A forward cur-
rency contract is an agreement between two parties to buy and sell cur-
rency at a set price on a future date. The market value of the contract
will fluctuate with changes in currency exchange rates. The contract is
marked-to-market daily using the current forward rate and the change in
market value is recorded by the McKee International Equity Portfolio as
unrealized gain or loss. The McKee International Equity Portfolio recog-
nizes realized gains or losses when the contract is closed, equal to the
difference between the value of the contract at the time it was opened and
the value at the time it was closed. Risks may arise from the unantici-
pated movements in the value of a foreign currency relative to the U.S.
dollar. Risks may also arise upon entering into these contracts from the
potential inability of counterparties to meet the terms of their contracts
and are generally limited to the amount of unrealized gain on the con-
tracts, if any, at the date of default.
Under the terms of forward foreign currency exchange contracts open at
October 31,1998, the McKee International Equity Portfolio is obligated to
receive foreign currency in exchange for U.S. dollars as indicated below:
<TABLE>
<CAPTION>
CURRENCY SETTLEMENT IN EXCHANGE NET UNREALIZED
TO DELIVER VALUE DATE FOR VALUE GAIN (LOSS)
---------- ---------- ---------- --------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
$1,001,702 $1,001,702 11/2/98 CAD 1,539,616 $ 997,161 $ (4,541)
876,544 876,544 11/2/98 NGK 6,446,283 877,750 1,206
497,310 497,310 11/3/98 ESP 69,613,497 494,168 (3,142)
333,646 333,646 11/3/98 DEM 551,851 333,042 (604)
394,493 394,493 11/4/98 CAD 607,400 393,394 (1,099)
164,364 164,364 11/4/98 ITL 268,406,145 163,684 (680)
599,357 599,357 11/4/98 NLG 1,115,704 596,611 (2,746)
509,523 509,523 11/5/98 AUD 819,380 512,314 2,791
1,001,417 1,001,417 11/6/98 GBP 594,877 994,845 (6,572)
723,597 723,597 11/30/98 FRF 3,998,088 720,231 (3,366)
---------- ---------- --------
$6,101,953 $6,083,200 $(18,753)
========== ========== ========
</TABLE>
41
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
- -------------------------------------------------------------------------------
6. DISTRIBUTIONS TO SHAREHOLDERS: Each Portfolio will normally distrib-
ute substantially all of its net investment income quarterly. Any realized
net capital gains will be distributed annually. All distributions are re-
corded on ex-dividend date.
The amount and character of income and capital gain distributions to be
paid are determined in accordance with Federal income tax regulations
which may differ from generally accepted accounting principles. These dif-
ferences are primarily due to differing book and tax treatments in the
timing of the recognition of gains or losses on investments and foreign
currency transactions.
Permanent book and tax basis differences resulted in reclassifications
as follows:
<TABLE>
<CAPTION>
UNDISTRIBUTED UNDISTRIBUTED
MCKEE PORTFOLIOS NET INCOME CAPITAL GAIN
---------------- ------------- -------------
<S> <C> <C>
U.S. Government.................................. (35,536) 35,536
International Equity............................. (123,029) 123,029
Small Cap Equity................................. 79,710 (79,710)
</TABLE>
Permanent book-tax differences, if any, are not included in ending un-
distributed net investment income (loss) for the purpose of calculating
net investment income (loss) per share in the financial highlights.
7. OTHER: Security transactions are accounted for on trade date, the
date the trade was executed. Costs used in determining realized gains and
losses on the sale of investment securities are based on the specific
identification method. Dividend income is recorded on the ex-dividend
date, except that certain dividends from foreign securities are recorded
as soon as the McKee International Equity Portfolio is informed of the ex-
dividend date. Interest income is recognized on the accrual basis. Dis-
counts and premiums on securities purchased are amortized using the effec-
tive yield basis over their respective lives. Most expenses of the UAM
Funds can be directly attributed to a particular portfolio. Expenses which
cannot be directly attributed are apportioned among the portfolios of the
UAM Funds based on their relative net assets. Custodian fees for the Port-
folios are shown gross of expense offsets, if any, for custodian balance
credits.
B. ADVISORY SERVICES: Under the terms of an investment advisory agreement,
C.S. McKee & Co., Inc. (the "Adviser"), a wholly-owned subsidiary of United
Asset Management Corporation ("UAM"), provides investment advisory services to
each Portfolio at a fee calculated at an annual rate of 0.45%, 0.65%, 0.70%
and 1.00% of average daily net assets for the month for the McKee U.S.
42
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
- -------------------------------------------------------------------------------
Government, McKee Domestic Equity, McKee International Equity and McKee Small
Cap Equity Portfolios, respectively. The Adviser has voluntarily agreed to
waive a portion of its advisory fees and to assume expenses, if necessary, in
order to keep the McKee Small Cap Portfolio's total annual operating expenses,
after the effects of expense offset arrangements, from exceeding 1.75% of av-
erage daily net assets.
C. ADMINISTRATIVE SERVICES: UAM Funds Services, Inc. (the "Administrator"),
a wholly-owned subsidiary of UAM, provides and oversees administrative, fund
accounting, dividend disbursing, shareholder servicing and transfer agent
services to the UAM Funds under a Fund Administration Agreement (the "Agree-
ment"). The Administrator has entered into a Mutual Funds Service Agreement
(the "Mutual Funds Service Agreement") with Chase Global Funds Services Com-
pany ("CGFSC"), a corporate affiliate of The Chase Manhattan Bank, under which
CGFSC provides certain services including, but not limited to, administrative,
fund accounting, dividend disbursing, shareholder servicing and transfer agent
services.
Pursuant to the Agreement, each Portfolio pays the Administrator a two part
monthly fee:
--a Portfolio-specific monthly fee of 0.04%, 0.04%, 0.06% and 0.04% per
annum of the average daily net assets of the McKee U.S. Government,
McKee Domestic Equity, McKee International Equity and McKee Small Cap
Equity Portfolios, respectively, which is retained by the Administrator.
--a sub-administration fee (the "Sub-Administration Fee") which the
Administrator in turn pays to CGFSC on a monthly basis, calculated as
0.19% of the first $200 million of the combined aggregate net assets of
the UAM Funds; plus 0.11% of the next $800 million of the combined
aggregate net assets of the UAM Funds; plus 0.07% of the next $2 billion
of the combined aggregate net assets of the UAM Funds; plus 0.05% of the
combined aggregate net assets of the UAM Funds in excess of $3 billion.
The Sub-Administration Fee is allocated among the portfolios of the UAM
Funds on the basis of their relative net assets and is subject to a
graduated minimum fee schedule per portfolio which rises from $2,000 per
month, upon inception of a portfolio, to $70,000 annually after two
years. For portfolios with more than one class of shares, the minimum
annual fee increases to $90,000 over the same period.
Effective October 23, 1998, the Mutual Funds Service Agreement with CGFSC
was revised to exclude dividend disbursing, shareholder servicing and transfer
agent services. Pursuant to the revised Mutual Funds Service Agreement, the
Sub-Administration Fee paid by each Portfolio to the Administrator and in turn
43
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
- -------------------------------------------------------------------------------
paid to CGFSC is calculated as a base fee per Portfolio of $52,500 annually
plus $7,500 annually for each additional class of shares; plus 0.039% of the
net assets of each Portfolio. Certain portfolios which commenced operations
after October 1, 1997 have a base fee of $39,500 for a period of twelve
months, which increases to $52,500 annually once the twelve months have ex-
pired.
For the period ended October 31, 1998, UAM Funds Services, Inc. earned the
following amounts from each Portfolio as Administrator and paid the following
to CGFSC for its services as Sub-Administrator:
<TABLE>
<CAPTION>
PORTION
ADMINISTRATION PAID TO
MCKEE PORTFOLIOS FEES CGFSC
- ---------------- -------------- --------
<S> <C> <C>
U.S. Government......................................... $102,948 $ 83,328
Domestic Equity......................................... 112,236 83,629
International Equity.................................... 198,575 120,940
Small Cap Equity........................................ 93,068 63,571
</TABLE>
Also, effective October 23, 1998, dividend disbursing and transfer agent
services were sub-contracted to DST Systems, Inc. and shareholder servicing
has been sub-contracted to UAM Shareholder Service Center, Inc., an affiliate
of UAM. The portfolios pay dividend disbursing, transfer agent and shareholder
servicing fees to the Administrator who in turn pays them to DST Systems, Inc.
and UAM Shareholder Services Center, Inc., as appropriate. For the period
ended October 31, 1998, the McKee U.S. Government, McKee Domestic Equity, Mc-
Kee International Equity and McKee Small Cap Equity Portfolios incurred $138,
$140, $158 and $149, respectively, in shareholder servicing fees with UAM
Shareholder Service Center, Inc. This fee is based on the number of classes of
shares and shareholder accounts.
D. CUSTODIAN: The Chase Manhattan Bank is custodian for the Portfolios' as-
sets and the assets are held in accordance with the custodian agreement. As a
part of the custodian agreement, the custodian has a lien on the securities of
the Portfolios to cover any advances made by the custodian to the Portfolio.
At October 31, 1998, the payable to the custodian bank represents the amount
due for cash advanced for settlement of security transactions on the McKee
U.S. Government Portfolio.
E. DISTRIBUTION SERVICES: UAM Fund Distributors, Inc. (the "Distributor"), a
wholly-owned subsidiary of UAM, distributes the shares of the Portfolios. The
Distributor does not receive any fee or other compensation with respect to the
Portfolios.
F. ACCOUNT SERVICES: The UAM Funds have entered into an Account Services
Agreement (the "Services Agreement") with UAM Retirement Plan Services,
44
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
- -------------------------------------------------------------------------------
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 record keeping. 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 UAM Funds in the accounts for which
they provide services.
G. DIRECTORS' FEES: Each Director, who is not an officer or affiliated per-
son, receives $2,000 per meeting attended plus reimbursement of expenses in-
curred in attending Board meetings, which is allocated proportionally among
the active portfolios of UAM Funds, plus a quarterly retainer of $150 for each
active portfolio of the UAM Funds.
H. PURCHASES AND SALES: For the year ended October 31, 1998, purchases and
sales of investment securities other than long-term U.S. Government and agency
securities and short-term securities were:
<TABLE>
<CAPTION>
MCKEE PORTFOLIOS PURCHASES SALES
- ---------------- ----------- -----------
<S> <C> <C>
U.S. Government......................................... $ 5,603,199 $15,773,732
Domestic Equity......................................... 38,257,294 99,416,376
International Equity.................................... 49,842,706 23,423,580
Small Cap Equity........................................ 89,254,547 3,191,453
</TABLE>
Purchases and sales of long-term U.S. Government securities were $43,100,381
and $54,482,438 respectively, for the McKee U.S. Government Portfolio. There
were no purchases or sales of long-term U.S. Government securities for the Mc-
Kee Domestic Equity, McKee International Equity and the McKee Small Cap Equity
Portfolios.
I. LINE OF CREDIT: The Portfolios, along with certain other portfolios of
UAM Funds, collectively entered into an agreement which enables them to par-
ticipate in a $100 million unsecured line of credit with several banks.
Borrowings will be made solely to temporarily finance the repurchase of Capi-
tal shares. Interest is charged to each participating portfolio based on its
borrowings at a rate per annum equal to the Federal Funds rate plus 0.50%. In
addition, a commitment fee of 0.08% per annum, payable at the end of each cal-
endar quarter, is accrued by each participating portfolio based on its average
daily unused portion of the line of credit. During the year ended October 31,
1998, the Portfolios had no borrowings under the agreement.
J. OTHER: At October 31, 1998, the percentage of total shares outstanding
held by record shareholders each owning 10% or greater of the aggregate total
shares outstanding for each Portfolio was as follows:
45
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NO. OF %
MCKEE PORTFOLIOS SHAREHOLDERS OWNERSHIP
- ---------------- ------------ ---------
<S> <C> <C>
U.S. Government.......................................... 2 62%
Domestic Equity.......................................... 3 51%
International Equity..................................... 2 30%
Small Cap Equity......................................... 3 39%
</TABLE>
At October 31, 1998, the net assets of the McKee International Equity Port-
folio were substantially comprised of foreign denominated securities and/or
currency. Changes in currency exchange rates will affect the value of and in-
vestment income from such securities and currency.
Foreign security and currency transactions may involve certain considera-
tions and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the possibly lower level of
governmental supervision and regulation of foreign securities markets and the
possibility of political or economic instability.
K. SUBSEQUENT EVENTS: UAM Retirement Plan Services, Inc. will no longer pro-
vide services pursuant to the Account Services Agreement, effective at the
close of business December 31, 1998.
46
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
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REPORT ON INDEPENDENT ACCOUNTANTS
To the Board of Directors of
UAM Funds Inc. and the Shareholders of
McKee U.S. Government Portfolio
McKee Domestic Equity Portfolio
McKee International Equity Portfolio
McKee Small Cap Equity Portfolio
In our opinion, the accompanying statements of assets and liabilities, in-
cluding the portfolios of investments, and the related statements of opera-
tions and of changes in net assets and the financial highlights present fair-
ly, in all material respects, the financial position of McKee U.S. Government
Portfolio, McKee Domestic Equity Portfolio, McKee International Equity Portfo-
lio and McKee Small Cap Equity Portfolio (the "Portfolios"), Portfolios in the
UAM Funds Inc., at October 31, 1998, and the results of each of their opera-
tions, the changes in each of their net assets and the financial highlights
for the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter re-
ferred to as "financial statements") are the responsibility of the Portfolios'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which re-
quire that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and dis-
closures in the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall fi-
nancial statement presentation. We believe that our audits, which included
conformation of securities at October 31, 1998 by correspondence with the cus-
todian and the application of alternative auditing procedures where securities
were not yet received by the custodian, provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 11, 1998
47
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
- -------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED):
Each of the Portfolios designate the following amounts as long-term capital
gain dividends for the purpose of the dividend paid deduction on their Federal
income tax return:
<TABLE>
<CAPTION>
28% TAX 20% TAX
MCKEE PORTFOLIOS BRACKET BRACKET
- ---------------- ---------- ----------
<S> <C> <C>
U.S. Government........................................... $ 22,483 $ 5,874
Domestic Equity........................................... 1,966,617 2,323,309
International Equity...................................... 2,027,798 7,944,807
</TABLE>
Foreign taxes during the fiscal year ended October 31, 1998 for the McKee
International Equity Portfolio amounted to $213,715 are expected to be passed
through to the shareholders as foreign tax credits on Form 1099-Dividend for
the year ending December 31, 1998, which shareholders of the McKee Interna-
tional Equity Portfolio will receive in late January, 1999. In addition, for
the year ended October 31, 1998, gross income derived from sources within for-
eign countries amounted to $2,472,030 for the McKee International Equity
Portfolio.
For the year ended October 31, 1998, the percentage of dividends paid that
qualify for the 70% dividend received deduction for corporate shareholders was
28.5% and 88.7% for the McKee Domestic Equity Portfolio and the McKee Small
Cap Portfolio, respectively.
For the year ended October 31, 1998, the percentage of income earned from
direct Treasury obligations for the McKee U.S. Government Portfolio was 27.2%.
48
<PAGE>
UAM FUNDS MCKEE PORTFOLIOS
- --------------------------------------------------------------------------------
OFFICERS AND DIRECTORS
Norton H. Reamer William H. Park
Director, President and Chairman Vice President
John T. Bennett, Jr. Michael E. DeFao
Director Secretary
Nancy J. Dunn Gary L. French
Director Treasurer
Philip D. English Robert R. Flaherty
Director Assistant Treasurer
William A. Humenuk Michael J. Leary
Director Assistant Treasurer
Peter M. Whitman, Jr. Michelle Azrialy
Director Assistant Secretary
- --------------------------------------------------------------------------------
UAM FUNDS
P.O. Box 419081
Kansas City, MO 64141-6081
(toll free)
1-877-UAM-LINK (826-5465)
INVESTMENT ADVISER
C. S. McKee & Company, Inc.
One Gateway Center
Pittsburgh, PA 15222
DISTRIBUTOR
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
This report has been prepared for
shareholders and may be distributed
to others only if preceded or
accompanied by a current prospectus.
