<PAGE>
UAM FUNDS
Annual Report
--------------------------
C & B Balanced Portfolio
- --------------------------------------------------------------------------------
October 31, 1998
UAM
- --------------------------------------------------------------------------------
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Shareholders' Letter........................................................ 1
Performance Comparison...................................................... 3
Portfolio of Investments.................................................... 4
Statement of Assets and Liabilities......................................... 7
Statement of Operations..................................................... 8
Statement of Changes in Net Assets.......................................... 9
Financial Highlights........................................................ 10
Notes to Financial Statements............................................... 11
Report of Independent Accountants........................................... 16
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
- -------------------------------------------------------------------------------
Dear Shareholder:
The following report provides a detailed description of the securities held
and the statement of operations for the Cooke & Bieler Balanced Portfolio for
the twelve month period ended October 31, 1998.
For this period, the Cooke & Bieler Balanced Fund underperformed its Benchmark
Index. This Index consists of a blended return of 60% of the S&P 500 Index and
40% of the Lehman Brothers Government/Corporate Bond Index. Over this period,
the Cooke & Bieler Balanced Portfolio advanced 8.56% versus a gain of 17.32%
for the Benchmark Index.
As of October 31, 1998, common stocks represented 50% of the Fund, bonds were
40% and cash reserves were 10%.
EQUITY ONLY ANALYSIS
The S&P 500 was on a roller coaster ride over this past year. At the end of
this one year period, the S&P 500 advanced another 22.01%. This very generous
advance seemed all but impossible just a few weeks earlier when the market was
essentially unchanged for the year. This type of volatility is disturbing to a
manager who approaches investing with a 5 to 10 year time frame.
In addition to the volatile markets, we continue to see a growing bifurcation
within the S&P 500. That is to say, the stock prices for the top 50 companies
within this benchmark are doing very well but the valuations to us look unat-
tractive, and the stock prices for the bottom 450 companies, whose performance
has been quite poor relative to the top 50 offer some selected opportunities.
Needless to say, we are finding better long term values outside of the jumbo,
top 50 companies of the S&P 500.
Our relative results have been a mirror image of this divergent trend because
we have maintained very limited exposure to the largest stocks in the S&P 500.
Though the wisdom of this position was not apparent in this past year, we be-
lieve that solid valuation support is an important differentiating factor in
an expended flat or down market. We firmly believe that the equity portion of
this portfolio of attractively valued, high quality companies will perform
well during any market correction and yet participate fully in any further
market advance.
While the market remains volatile and full of crosscurrents, we are encouraged
by some recent shifts in the tone of the market and continue to believe that
adherence to our disciplines that underpin our long-standing "high quality,
low risk" investment philosophy will prove to be rewarding.
1
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
- -------------------------------------------------------------------------------
FIXED INCOME ONLY ANALYSIS
During this period the fixed income portion of this Portfolio outperformed the
Lehman Brothers Government/Corporate Bond Index by slightly more than 1%. When
appropriate we will take advantage of high quality corporate bonds if the
spreads over the underlying treasuries is justified.
Sincerely,
/s/ Peter A. Thompson
Peter A. Thompson
The investment results presented in the Adviser's letter represent past per-
formance and should not be construed as a guarantee of future results. If Af-
filiates did not have temporary fee waivers and did not assume expenses on be-
half of the Portfolio, total return for the Portfolio would have been lower.
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.
2
<PAGE>
Performance Comparison
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 PURCHASE IN C & B BALANCE
PORTFOLIO, THE STANDARD & POOR'S 500 INDEX (S&P 500) AND
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX.
- ---------------------------------
AVERAGE ANNUAL TOTAL RETURN**
FOR PERIOD ENDED OCTOBER 31, 1998
- ---------------------------------
1 YEAR 5 YEARS SINCE 12/29/89*
- ---------------------------------
8.56% 12.22% 11.79%
- ---------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
C & B LEHMAN BROTHERS
BALANCED GOVERNMENT CORPORATE
DATE PORTFOLIO+ S&P 500 INDEX+ BOND INDEX+ COMPOSITE+
- ---- --------- ------------- -------------------- ---------
<S> <C> <C> <C> <C>
12/29/89* 10,000 10,000 10,000 10,000
10/31/90 9,738 8,855 10,440 9,489
10/31/91 12,708 11,815 12,044 11,907
10/31/92 14,070 12,990 13,311 13,118
10/31/93 15,057 14,927 15,126 15,006
10/31/94 15,169 15,502 14,424 15,074
10/31/95 17,874 19,597 16,755 18,437
10/31/96 20,501 24,316 17,658 21,498
10/31/97 24,681 32,121 19,214 26,395
10/31/98 26,794 39,191 21,189 30,967
</TABLE>
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 reflects fees waived and expenses assumed by the Affiliates.
Without such waiver of fees and expenses assumed, total return would be
lower.
+ The comparative indices are 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.
Each 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 12/31/89 is used
as the beginning value on 12/29/89.
Definition of the Comparative Indices
The S&P 500 Index is an unmanaged index composed of 400 industrial, 40
financial, 40 utilities and 20 transportation stocks.
The Lehman Brothers Government/Corporate Bond 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.
The Composite Index, a hypothetical combination of unmanaged indices, reflects
the Portfolio's typical mix of 60% stocks and 40% bonds. The index combines
returns from the S&P 500 Index and the Lehman Brothers Government/Corporate
Index.
Comparisons of performance assume reinvestment of dividends.
Please note that one cannot invest in an unmanaged index.
3
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 49.5%
<TABLE>
<CAPTION>
SHARES VALUE+
---------- -----------
<S> <C> <C>
AEROSPACE & DEFENSE - 2.7%
Boeing Co............................................. 7,600 $ 285,000
Raytheon Co., Class B................................. 4,400 255,475
-----------
540,475
-----------
AUTOMOTIVE - 4.7%
Dana Corp. ........................................... 8,000 334,500
Eaton Corp............................................ 4,300 291,056
Genuine Parts Co...................................... 3,500 110,250
Snap-On, Inc. ........................................ 6,000 212,625
-----------
948,431
-----------
BEVERAGES, FOOD & TOBACCO - 5.9%
Anheuser-Busch Cos., Inc. ............................ 6,500 386,344
McDonald's Corp. ..................................... 3,000 200,625
Ralston-Ralston Purina Group.......................... 700 23,362
UST, Inc.............................................. 9,500 323,000
Whitman Corp.......................................... 12,500 267,969
-----------
1,201,300
-----------
CAPITAL EQUIPMENT - 1.7%
Dover Corp. .......................................... 10,800 342,900
-----------
CHEMICALS - 2.9%
Eastman Chemical Co. ................................. 3,500 205,625
Hercules, Inc. ....................................... 4,300 143,244
Nalco Chemical Co..................................... 7,700 238,219
-----------
587,088
-----------
CONSTRUCTION - 2.0%
Sherwin-Williams Co................................... 16,000 403,000
-----------
CONSUMER DURABLES - 2.8%
Corning, Inc.......................................... 7,500 272,344
Rubbermaid, Inc. ..................................... 9,000 298,688
-----------
571,032
-----------
CONSUMER NON-DURABLES - 3.8%
Hasbro, Inc........................................... 11,700 410,231
NIKE, Inc., Class B................................... 8,300 362,606
-----------
772,837
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE+
---------- -----------
<S> <C> <C>
ELECTRONICS - 3.6%
Grainger (W.W.), Inc................................... 9,000 $ 414,563
Molex Inc., Class A.................................... 4,000 130,750
Motorola, Inc. ........................................ 3,600 187,200
-----------
732,513
-----------
ENERGY - 4.9%
Enron Corp............................................. 6,000 316,500
Exxon Corp............................................. 3,700 263,625
Royal Dutch Petroleum Co. (NY Shares).................. 8,500 418,625
-----------
998,750
-----------
FINANCIAL SERVICES - 5.2%
EXEL Ltd............................................... 545 41,658
Marsh & McLennan Cos., Inc............................. 8,500 471,750
MBIA, Inc.............................................. 5,200 317,850
State Street Corp. .................................... 3,600 224,550
-----------
1,055,808
-----------
MULTI-INDUSTRY - 1.7%
National Service Industries, Inc....................... 5,500 197,313
Raychem Corp........................................... 4,900 149,756
-----------
347,069
-----------
OFFICE EQUIPMENT - 2.3%
International Business Machines Corp................... 800 118,750
Pitney Bowes, Inc. .................................... 3,600 198,225
Xerox Corp............................................. 1,600 155,000
-----------
471,975
-----------
PHARMACEUTICALS - 1.7%
Bristol-Myers Squibb Co................................ 1,000 110,563
Merck & Co., Inc....................................... 1,800 243,450
-----------
354,013
-----------
SERVICES - 3.0%
Service Corp. International............................ 12,000 427,500
Sysco Corp............................................. 7,000 188,562
-----------
616,062
-----------
UTILITIES - 0.6%
NICOR, Inc. ........................................... 3,000 127,125
-----------
TOTAL COMMON STOCKS (Cost $8,355,462)............................. 10,070,378
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORPORATE OBLIGATIONS - 9.3%
FACE
AMOUNT VALUE+
---------- -----------
<S> <C> <C>
AEROSPACE & DEFENSE - 2.6%
Boeing Co. 6.35%, 6/15/03............................. $ 500,000 $ 523,870
-----------
CONSUMER NON-DURABLES - 5.4%
Clorox Co. 8.80%, 7/15/01............................. 1,000,000 1,091,540
-----------
ENERGY - 1.3%
Amoco, Canada 7.25%, 12/1/02.......................... 250,000 269,067
-----------
TOTAL CORPORATE OBLIGATIONS (Cost $1,748,468).................... 1,884,477
-----------
U.S. GOVERNMENT AND AGENCY SECURITIES - 30.3%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 8.0%
7.50%, 2/11/02........................................ 1,500,000 1,621,170
-----------
U.S. TREASURY BONDS - 8.8%
5.50%, 2/15/08........................................ 500,000 534,220
7.50%, 11/15/16....................................... 1,000,000 1,246,250
-----------
1,780,470
-----------
U.S. TREASURY NOTES - 13.5%
7.50%, 11/15/01....................................... 1,000,000 1,087,500
6.50%, 10/15/06....................................... 500,000 560,860
6.125%, 8/15/07....................................... 1,000,000 1,104,060
-----------
2,752,420
-----------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Cost $5,567,177)............................................... 6,154,060
-----------
SHORT-TERM INVESTMENT - 10.1%
REPURCHASE AGREEMENT - 10.1%
Chase Securities, Inc. 4.90%, dated 10/30/98, due
11/2/98, to be repurchased at $2,051,837,
collateralized by $1,973,729 of various U.S. Treasury
Notes, 5.375%-6.875% due 5/31/99-12/15/04, valued at
$2,051,027 (Cost $2,051,000)......................... 2,051,000 2,051,000
-----------
TOTAL INVESTMENTS - 99.2% (Cost $17,722,107) (a)................. 20,159,915
-----------
OTHER ASSETS AND LIABILITIES (Net) - 0.8%........................ 153,166
-----------
NET ASSETS - 100%................................................ $20,313,081
===========
</TABLE>
+ See Note A to Financial Statements.
(a) The cost for federal income tax purposes was $17,756,475. At October 31,
1998, net unrealized appreciation for all securities was $2,403,440. This
consisted of aggregate gross unrealized appreciation for all securities of
$2,842,934 and aggregate gross unrealized depreciation for all securities of
$439,494.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
ASSETS
Investments, at Cost............................................. $17,722,107
===========
Investments, at Value (Including Repurchase Agreement of
$2,051,000)..................................................... $20,159,915
Cash............................................................. 1,076
Interest Receivable.............................................. 160,637
Dividends Receivable............................................. 7,446
Receivable for Investments Sold.................................. 29,600
Receivable for Portfolio Shares Sold............................. 13,400
Other Assets..................................................... 371
-----------
Total Assets.................................................... 20,372,445
-----------
LIABILITIES
Payable for Investments Purchased................................ 21,288
Payable for Investment Advisory Fees--Note B..................... 2,095
Payable for Administrative Fees--Note C.......................... 11,510
Payable for Custodian Fees--Note D............................... 942
Payable for Directors' Fees--Note F.............................. 877
Other Liabilities................................................ 22,652
-----------
Total Liabilities............................................... 59,364
-----------
NET ASSETS....................................................... $20,313,081
===========
NET ASSETS CONSIST OF:
Paid in Capital.................................................. $14,867,864
Undistributed Net Investment Income.............................. 49,488
Accumulated Net Realized Gain.................................... 2,957,921
Unrealized Appreciation.......................................... 2,437,808
-----------
NET ASSETS....................................................... $20,313,081
===========
INSTITUTIONAL CLASS SHARES
Shares Issued and Outstanding ($0.001 par value) (Authorized
25,000,000)..................................................... 1,582,222
NET ASSET VALUE, Offering and Redemption Price Per Share......... $12.84
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
FOR THE YEAR ENDED OCTOBER 31,
1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
<S> <C>
INVESTMENT INCOME
Dividends......................................................... $ 229,893
Interest.......................................................... 647,637
-----------
TOTAL INCOME..................................................... 877,530
-----------
EXPENSES
Investment Advisory Fees--Note B.................................. 138,182
Administrative Fees--Note C....................................... 95,917
Audit Fees........................................................ 15,225
Registration and Filing Fees...................................... 13,521
Printing Fees..................................................... 11,743
Custodian Fees--Note D............................................ 4,322
Directors' Fees--Note F........................................... 2,378
Other Expenses.................................................... 7,906
Investment Advisory Fees Waived--Note B........................... (67,927)
-----------
Net Expenses Before Expense Offset............................... 221,267
Expense Offset--Note A............................................ (206)
-----------
Net Expenses After Expense Offset................................ 221,061
-----------
NET INVESTMENT INCOME............................................. 656,469
-----------
NET REALIZED GAIN ON INVESTMENTS.................................. 2,981,663
-----------
NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON
INVESTMENTS...................................................... (1,614,208)
-----------
NET GAIN ON INVESTMENTS........................................... 1,367,455
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. $ 2,023,924
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEARENDED
OCTOBER31, OCTOBER 31,
1998 1997
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income............................. $ 656,469 $ 739,022
Net Realized Gain................................. 2,981,663 2,730,755
Net Change in Unrealized
Appreciation/Depreciation........................ (1,614,208) 807,467
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS....................................... 2,023,924 4,277,244
----------- -----------
DISTRIBUTIONS:
Net Investment Income............................. (665,504) (766,500)
Net Realized Gain................................. (2,725,232) (1,921,313)
----------- -----------
TOTAL DISTRIBUTIONS............................... (3,390,736) (2,687,813)
----------- -----------
CAPITAL SHARE TRANSACTIONS: (1)
Issued............................................ 2,954,616 1,175,046
In Lieu Of Cash Distributions..................... 3,282,923 2,546,229
Redeemed.......................................... (8,623,476) (3,873,517)
----------- -----------
Net Decrease from Capital Share Transactions...... (2,385,937) (152,242)
----------- -----------
TOTAL INCREASE (DECREASE)......................... (3,752,749) 1,437,189
NET ASSETS:
Beginning of Period............................... 24,065,830 22,628,641
----------- -----------
End of Period (including undistributed net
investment income of $49,488 and $75,050,
respectively).................................... $20,313,081 $24,065,830
=========== ===========
(1) Shares Issued and Redeemed:
Issued............................................ 234,000 90,365
In Lieu of Cash Distributions..................... 263,863 209,198
Redeemed.......................................... (665,567) (297,984)
----------- -----------
(167,704) 1,579
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
-----------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $ 13.75 $ 12.94 $ 13.13 $ 11.86 $ 12.68
------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income... 0.41 0.42 0.45 0.52 0.48
Net Realized and
Unrealized Gain
(Loss)................. 0.66 1.98 1.29 1.51 (0.39)
------- ------- ------- ------- -------
Total From Investment
Operstions............. 1.07 2.40 1.74 2.03 0.09
------- ------- ------- ------- -------
DISTRIBUTIONS:
Net Investment Income... (0.41) (0.44) (0.45) (0.52) (0.47)
Net Realized Gain....... (1.57) (1.15) (1.48) (0.24) (0.44)
------- ------- ------- ------- -------
Total Distributions..... (1.98) (1.59) (1.93) (0.76) (0.91)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD.................. $ 12.84 $ 13.75 $ 12.94 $ 13.13 $ 11.86
======= ======= ======= ======= =======
TOTAL RETURN............. 8.56%+ 20.39%+ 14.70%+ 17.83%+ 0.74%+
======= ======= ======= ======= =======
RATIOS AND SUPPLEMENTAL
DATA
Net Assets, End of Period
(Thousands)............. $20,313 $24,066 $22,629 $24,146 $32,077
Ratio of Expenses to
Average Net Assets...... 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment
Income to Average Net
Assets.................. 2.97% 3.20% 3.51% 3.80% 3.84%
Portfolio Turnover Rate.. 24% 35% 21% 22% 24%
Ratio of Voluntarily
Waived Fees and Expenses
Assumed by Affiliates to
Average Net Assets...... 0.31% 0.24% 0.29% 0.03% 0.01%
Ratio of Expenses to
Average Net Assets
Including Expense
Offsets................. 1.00% 1.00% 1.00% 1.00% N/A
</TABLE>
+ Total return would have been lower had certain fees not been waived and ex-
penses assumed by Affiliates during the periods indicated.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
- -------------------------------------------------------------------------------
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 C & B Bal-
anced Portfolio (the "Portfolio"), a portfolio of UAM Funds, Inc., is a diver-
sified, open-end management investment company. At October 31, 1998, the UAM
Funds were comprised of forty-six active portfolios. The financial statements
of the remaining portfolios are presented separately. The objective of the
Portfolio is to provide maximum long-term total return with minimal risk to
principal by investing in a combined portfolio of common stocks which have a
consistency and predictability in their earnings growth and investment grade
fixed income securities.
A. SIGNIFICANT ACCOUNTING POLICIES: The following significant accounting
policies are in conformity with generally accepted accounting principles. Such
policies are consistently followed by the Portfolio in the preparation of its
financial statements. Generally accepted accounting principles may require
management to 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. Short-term investments that
have remaining maturities 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 following procedures approved by the Board of Di-
rectors.
2. FEDERAL INCOME TAXES: It is the Portfolio's intention to qualify as a
regulated investment company under Subchapter M of the Internal Revenue
Code and to distribute all of its taxable income. Accordingly, no provi-
sion for Federal income taxes is required in the financial statements.
3. REPURCHASE AGREEMENTS: In connection with transactions involving re-
purchase agreements, the Portfolio's custodian bank takes possession of
the underlying securities ("collateral"), the value of which exceeds the
principal amount of the repurchase transaction, including accrued inter-
est. To the
11
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
- -------------------------------------------------------------------------------
extent that any repurchase transaction exceeds one business day, the value
of the collateral is monitored on a daily basis to determine the adequacy
of the collateral. In the event of default on the obligation to repur-
chase, the Portfolio has the right to liquidate the collateral and apply
the proceeds in satisfaction of the obligation. In the event of default or
bankruptcy by the counterparty to the agreement, realization and/or reten-
tion of the collateral or proceeds may be subject to legal proceedings.
Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission, the UAM Funds may transfer their daily uninvested cash bal-
ances into a joint trading account which invests in one or more repurchase
agreement. This joint repurchase agreement is covered by the same collat-
eral requirements as discussed above.
4. DISTRIBUTIONS TO SHAREHOLDERS: The Portfolio will normally distribute
substantially all of its net investment income quarterly. Any realized net
capital gains will be distributed annually. All distributions are recorded
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.
Permanent book and tax basis differences resulted in reclassifications
of $(16,527) to undistributed net investment income and $16,527 to accumu-
lated net realized gain.
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.
5. 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. Interest income is recognized on the accrual basis. Discounts and
premiums on securities purchased are amortized using the effective 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 Portfolio are
shown gross of expense offsets, if any, for custodian balance credits.
12
<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
- -------------------------------------------------------------------------------
B. ADVISORY SERVICES: Under the terms of an investment advisory agreement,
Cooke & Bieler, Inc. (the "Adviser"), a wholly-owned subsidiary of United As-
set Management Corporation ("UAM"), provides investment advisory services to
the Portfolio at a fee calculated at an annual rate of 0.625% of average daily
net assets for the month. The Adviser has voluntarily agreed to waive a por-
tion of its advisory fees and to assume expenses, if necessary, in order to
keep the Portfolio's total annual operating expenses, after the effect of ex-
pense offset arrangements, from exceeding 1.00% of average daily net assets.
C. ADMINISTRATION 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, the Portfolio pays the Administrator a two part
monthly fee:
--a Portfolio-specific monthly fee of 0.06% per annum of the average daily
net assets of the Portfolio 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 the Portfolio to the Administrator and in turn
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UAM FUNDS C & B BALANCED PORTFOLIO
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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 the Portfolio. Certain portfolios which commenced operations af-
ter 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 expired.
For the year ended October 31, 1998, UAM Funds Services, Inc. earned $95,917
from the Portfolio as Administrator of which $79,810 was paid to CGFSC for its
services as Sub-Administrator.
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 year ended
October 31, 1998, the Portfolio incurred $147 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 Portfolio's as-
sets and the assets are held in accordance with the custodian agreement.
E. DISTRIBUTION SERVICES: UAM Fund Distributors, Inc. (the "Distributor"), a
wholly-owned subsidiary of UAM, distributes the shares of the Portfolio. The
Distributor does not receive any fee or other compensation with respect to the
Portfolio.
F. 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.
G. PURCHASES AND SALES: For the year ended October 31, 1998, the Portfolio
made purchases of $4,465,607 and sales of $10,395,961 of investment securities
other than long-term U.S. Government and short-term securities. Purchases and
sales of long-term U.S. Government securities were $500,469 and $1,430,813,
respectively.
H. LINE OF CREDIT: The Portfolio, along with certain other portfolios of UAM
Funds, collectively entered into an agreement which enables them to partici-
pate in a $100 million unsecured line of credit with several banks. Borrowings
will
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UAM FUNDS C & B BALANCED PORTFOLIO
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be made solely to temporarily finance the repurchase of Capital shares. Inter-
est 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 com-
mitment fee of 0.08% per annum, payable at the end of each calendar 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
Portfolio had no borrowings under the agreement.
I. OTHER: At October 31, 1998, 47.3% of total shares outstanding were held
by 2 record shareholders each owning 10% or greater of the aggregate total
shares outstanding.
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<PAGE>
UAM FUNDS C & B BALANCED PORTFOLIO
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
UAM Funds, Inc. and Shareholders of
C & B Balanced Portfolio
In our opinion, the accompanying statement of assets and liabilities, includ-
ing the portfolio of investments, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of C & B Balanced Portfolio (the
"Portfolio"), a Portfolio of the UAM Funds, Inc., at October 31, 1998, and the
results of its operations, the changes in its net assets and the financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of
the Portfolio's 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 require that we plan and perform the audit to obtain reason-
able assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence support-
ing the amounts and disclosures in the financial statements, assessing the ac-
counting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1998 by cor-
respondence with the custodian, provide a reasonable basis for the opinion ex-
pressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 11, 1998
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FEDERAL INCOME TAX INFORMATION (UNAUDITED)
The C & B Balanced Portfolio hereby designates $1,109,261 long-term dividend
at the 28% tax bracket and $1,368,079 at the 20% tax bracket, for the purpose
of the dividend paid deduction on the Portfolio's income tax return. For the
year ended October 31, 1998, the percentage of dividends paid that qualify for
the 70% dividend received deduction for corporate shareholders is 29.3%. The
percentage of income earned from direct treasury obligations for the year
ended October 31, 1998 is 55.4%.
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UAM FUNDS C & B BALANCED PORTFOLIO
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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
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UAM FUNDS
P.O. Box 419081
Kansas City, MO 64141-6081
(toll free)
1-877-UAM-LINK (825-5465)
INVESTMENT ADVISER
Cooke & Bieler, Inc.
1700 Market Street
Philadelphia, PA 19103
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.
