<PAGE>
UAM Funds
Annual Report
-------------------------
Sterling Partners'
Portfolios
- --------------------------------------------------------------------------------
October 31, 1998
[LOGO OF UAM APPEARS HERE]
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
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TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Shareholder's Letter........................................................ 1
Performance Comparison
Balanced.................................................................. 5
Equity.................................................................... 6
Small Cap Value........................................................... 7
Portfolio of Investments
Balanced.................................................................. 8
Equity.................................................................... 13
Small Cap Value........................................................... 16
Statement of Assets and Liabilities......................................... 19
Statement of Operations..................................................... 20
Statement of Changes in Net Assets
Balanced.................................................................. 21
Equity.................................................................... 22
Small Cap Value........................................................... 23
Financial Highlights
Balanced.................................................................. 24
Equity.................................................................... 25
Small Cap Value........................................................... 26
Notes to the Financial Statements........................................... 27
Report of Independent Accountants........................................... 33
</TABLE>
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<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
To Our Fellow Shareholders:
OVERVIEW OF ECONOMIC AND MARKET CONDITIONS
1998 will certainly be remembered for many years to come. Unfortunately, the
memories will not be pleasant as the events that unfolded were quite damaging
to the world's financial markets. What truly characterized the year as "out of
the box" was the fact that so many significant events occurred over a very
short period of time. We feel that underlying everything is a growing concern
that the world is void of strong leadership just at a time when direction is
clearly needed. Nowhere has this lack of leadership been more acute than in
Russia which announced in late summer it was placing a moratorium on its for-
eign debt. This action amounted to a virtual default and started a global rip-
ple effect whose full impact has likely not yet been realized. Already, many
domestic and international financial institutions have been forced to realize
billions of dollars in losses due to devalued Russian bond holdings. More
broadly, capital markets throughout the world have witnessed a massive flight-
to-quality by investors of all sorts. Virtually all emerging market debt, high
yield instruments and even U.S. corporate bonds have experienced unprecedented
spread widening versus U.S. Treasuries. Long-term interest rates, in large
part driven by this search for a safe haven, fell below 5% during the last
days of September. This is the first time since 1967 such levels have been
seen in the U.S. Perhaps the most well publicized victim of the Russian fall-
out was the hedge fund Long Term Capital (LTC). This investment partnership,
led by some of Wall Street's most respected investors, leveraged $4 billion of
equity capital into a $100 billion bet on international bond spreads. The Rus-
sian default started a domino process that moved world markets in the opposite
direction of LTC's positions. Because of its inherent leverage and the magni-
tude of the market's volatility, LTC found itself bankrupt in a frightening
few short weeks. It took a back room deal among leading bankers (the likes of
which had not been seen since the days of J. Peirpont Morgan) to temporarily
save this hedge fund and spare world markets from further duress.
Unfortunately, like many of our international counterparts, the U.S. is also
struggling with a leadership vacuum as talk in Washington has moved from tax
reform to impeachment. The scandal surrounding the White House has certainly
added to investors' anxiety and called into question the ability of the
world's free market leader to orchestrate global financial reforms. Fortunate-
ly, wisdom and leadership still reside at the Federal Reserve which saw fit to
lower interest rates by 25 basis points in late September and again in Octo-
ber. Remarkably, the rate cut comes at a time when domestic unemployment re-
mains at historic lows. Nevertheless, it was clear to Federal Reserve Chairman
Alan Greenspan that the U.S. could not remain
1
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UAM FUNDS STERLING PARTNERS' PORTFOLIOS
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an "economic island" and therefore immune from the worldwide downturn. With
inflation concerns quickly turning into deflationary worries, it is highly
likely the Federal Reserve will continue to move interest rates down over the
next few months. The accommodating Federal Reserve, more than any other single
variable, should provide investors some reason for near-term optimism.
EQUITY COMMENTARY
We continue to believe that, over the long-term, stocks will provide superior
returns to virtually any other investment asset class. However, as we have in
the past, it is always important to stress that stocks are an investment vehi-
cle suited for those with truly a long-term investment horizon. The last few
years have produced almost uninterrupted positive returns for equity investors
with cumulative three and four year gains approaching 100%. Unfortunately, the
current market environment is a harsh reminder of the volatility inherent in
any stock investment. During times of high investor anxiety, it is always
helpful to consult history and gauge what lessons might be learned from past
experiences. Searching the archives, we attempted to calculate a long-term in-
vestor's odds of generating a positive return in the stock market.
Assuming that, at a minimum a long-term investor claims a three year timeframe
(we would actually view this as short), we analyzed Ibbotson & Associates
stock market data dating back to 1928. From the period 1928 to 1997 there have
been only eight three-year spans when aggregate returns from the stock market
have been negative. Conversely, over that same time period, sixty-two three-
year periods have generated positive results for investors. Postured a differ-
ent way, since 1928, long-term investors in the stock market have realized
positive returns 87% of the time. Life rarely provides any assurances, but we
like these odds and believe it is prudent to structure portfolios accordingly.
Although the Sterling Partners' Equity and Small Cap Value Portfolios are per-
forming in line with other value based managers, we are disappointed by the
absolute results posted for the twelve months ended October 31, 1998. The Eq-
uity Portfolio returned 4.34%; the Small Cap Value Portfolio returned -10.08%.
The S&P 500 Index and the Russell 2000 Index returned 22.01% and -11.84%, re-
spectively, for the same time period. It has been a frustrating period for
value investors as the market seems oblivious to company valuations and en-
tirely focused on liquidity. The trends that we have previously discussed re-
garding the concentration of S&P 500 Index returns seem to have continued even
during a more turbulent market environment. Specifically, the largest twenty
companies within this widely followed market index have accounted for more
than 50% of its total
2
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UAM FUNDS STERLING PARTNERS' PORTFOLIOS
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year-to-date performance. Unfortunately, these largest stocks are generally
trading at significant P/E premiums making them (in our judgement) ultimately
exposed to valuation compression. This analysis and perspective has certainly
been wrong over the last few months, but we remain committed to an investment
philosophy that incorporates the assessment of intrinsic value as a primary
foundation. Once again, turning to history, it is clear that value investing
has produced investment results which at least equal if not exceed those of
growth/momentum investing. Further, over the long-term, value investing has
achieved its results while producing lower volatility as measured by standard
deviation.
FIXED INCOME COMMENTARY
During the volatile third quarter of 1998, bonds outperformed stocks for the
first quarter since late 1994. The difference in the quarter, however, was a
stunning 15%, with bonds up almost 5% while stocks suffered declines of more
than 10%. Until recently, most investors questioned the need to own any bonds
during the strong bull market in stocks. The recent period of volatility re-
minded us of the risk inherent in stocks and the virtue of a balanced approach
for those who need or desire less risk.
To say that "the bond market" was up nicely during the recent period misstates
the true nature of what occurred. In fact, it was really a meltdown in emerg-
ing market debt, specifically Russian bonds, which triggered the problems in
the U.S. stock market. Within debt markets, there was a clear distinction be-
tween liquid, high quality bonds and everything else. Portfolios weighted to-
wards U.S. Treasury securities performed the best, while those with heavy con-
centrations in lower quality corporate bonds and exotic derivative products
did very poorly. For example, contrast the return on the Lehman Aggregate Bond
Index (heavily weighted towards Treasury securities and high quality corporate
notes) with the Lehman High Yield Index. The two indices have nearly identical
durations or maturity but while the Aggregate Index had a return of 4.2% for
the quarter ended September 30, 1998, the High Yield Index lost 4.6%. The em-
phasis towards high quality fixed income securities in the Sterling Partners'
Balanced Portfolio has served our shareholders well.
For the twelve months ended October 31, 1998, the Sterling Partners' Balanced
Portfolio returned 6.58%. The Balanced Index, consisting of 60% S&P 500 and
40% Lehman Government/Corporate Bond Index returned 17.32%.
Our duration management model remains constructive and implies the trend in
interest rates over the long-term is still lower. Over the near-term, however,
we are concerned that the magnitude of the recent rate decline has moved too
far too fast
3
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UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
and we have used the recent market strength to lock in some gains in the Ster-
ling Partners' Balanced Portfolio. The Portfolio is currently neutral its com-
parative benchmark on a duration basis and is biased towards higher credit
quality than the norm. We believe the volatility in the financial markets will
remain high as the market continues to force the deleveraging of hedge fund
positions. We believe that an active management approach will continue to pro-
vide us with opportunities to generate incremental returns for our clients.
STERLING CAPITAL MANAGEMENT
The investment results presented in the Adviser's letter represent past
performance and should not be construed as a guarantee of future results.
Without Affiliates temporary fee waivers and/or expenses assumed by
Affiliates, total returns for the portfolios 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. Since the portfolios are actively managed, its holdings are
subject to change.
Definitions of Comparative Indices
The Lehman Aggregate Bond Index is an unmanaged index made up of the
Government/Corporate Index, the Mortgage-Backed Securities Index and the
Asset-Backed Securities Index.
The Lehman Brothers High Yield Bond Index covers the universe of fixed rate,
noninvestment grade debt. All bonds included in the High Yield Bond Index must
be dollar denominated and nonconvertible and have at least one year remaining
to maturity and an outstanding par value of at least $100 million.
4
<PAGE>
[PERFORMANCE COMPARISON CHART APPEARS HERE]
_________________________________
AVERAGE ANNUAL TOTAL RETURN**
FOR PERIOD ENDED OCTOBER 31, 1998
_________________________________
1 YEAR 5 YEAR SINCE 3/15/91*
_________________________________
6.58% 11.65% 10.95%
_________________________________
Lehman Brothers
Sterling Partners' S&P 500 Government/ Balanced
Date Balanced Portfolio+ Index+ Corporate Index+ Index (New)+
---- ------------------- ------- ---------------- -----------
3/15/91*++ 10,000 10,000 10,000 10,000
10/31/91 10,454 10,791 10,634 10,754
10/31/92 11,358 11,776 11,753 11,813
10/31/93 12,748 13,535 13,355 13,143
10/31/94 12,832 14,058 12,735 13,337
10/31/95 14,658 17,770 14,293 15,942
10/31/96 16,933 22,049 15,590 19,864
10/31/97 20,756 29,127 16,963 24,389
10/31/98 22,122 35,538 18,707 28,613
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 for the Portfolio reflects fees waived and expenses assumed by
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 (excluding the Lehman Brothers Government/Corporate
Index) has been adjusted to reflect reinvestment of dividends on securities
in the index.
++ For comparative purposes, the value of the Balanced Index, the Lehman
Brothers Government/ Corporate Index and the S&P 500 Index on 2/28/91 is
used as the beginning value on 3/15/91.
Definitions of the Comparative Indices
The Lehman Brothers Government/Corporate Index is an unmanaged index composed
of approximately 5,000 publicly issued, fixed-rate, non-convertible corporate
and U.S. Government debt rated "BBB" or better, with at least one year to
maturity and at least $1 million par value outstanding. It is a market value-
weighted price index, in which the relative importance of each issue is
proportional to its aggregate market value. The percentage change between one
month's total market value and the next, plus one-twelfth of the current
yield, results in monthly total return. The rates of return reflect total
return, with interest reinvested.
The S&P 500 Index is an unmanaged index composed of 400 industrial, 40
financial, 40 utilities and 20 transportation stocks.
The Balanced Index, a hypothetical combination of unmanaged indices, reflects
the Portfolio's targeted asset mix of 60% stocks and 40% bonds. This index
combines returns from the S&P 500 Index and the Lehman Brothers
Government/Corporate Index.
Please note that one cannot invest in an unmanaged index.
5
<PAGE>
[PERFORMANCE COMPARISON CHART APPEARS HERE]
_________________________________
AVERAGE ANNUAL TOTAL RETURN**
FOR PERIOD ENDED OCTOBER 31, 1998
_________________________________
1 YEAR 5 YEAR SINCE 5/15/91*
_________________________________
4.34% 15.79% 14.28%
_________________________________
Date Sterling Partners' Equity Portfolio+ S&P 500 Index+
---- ------------------------------------ --------------
5/15/91*++ 10,000 10,000
10/31/91 10,351 10,801
10/31/92 11,284 11,876
10/31/93 13,028 13,650
10/31/94 13,484 14,177
10/31/95 15,724 17,921
10/31/96 19,617 22,236
10/31/97 25,985 29,374
10/31/98 27,113 35,839
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
Affiliates. 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 4/30/91 is used
as the beginning value on 5/15/91.
Definitions 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 note that one cannot invest in an unmanaged index.
6
<PAGE>
[PERFORMANCE COMPARISON CHART APPEARS HERE]
_________________________________
AVERAGE ANNUAL RETURN**
FOR PERIOD ENDED OCTOBER 31, 1998
_________________________________
1 YEAR SINCE 1/2/97*
_________________________________
(10.08)% 12.22%
_________________________________
Date Small Cap Value+ Russell 2000 Index+
---- ---------------- -------------------
1/2/97*++ 10,000 10,000
10/31/97 13,734 12,104
10/31/98 12,350 10,671
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
Affiliates. 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 Russell 2000 Index on 12/31/96
is used as the beginning value on 1/2/97.
Definitions 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.
7
<PAGE>
UAM FUNDS STERLING PARTNERS' BALANCED PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 60.0%
<TABLE>
<CAPTION>
SHARES VALUE+
---------- -----------
<S> <C> <C>
AEROSPACE & DEFENSE - 3.1%
Boeing Co. ............................................ 26,300 $ 986,250
Lockheed Martin Corp. ................................. 13,200 1,470,150
-----------
2,456,400
-----------
AUTOMOTIVE - 0.9%
The Pep Boys-Manny, Moe & Jack......................... 46,275 723,047
-----------
BANKS - 4.4%
Bank One Corp. ........................................ 23,000 1,124,125
BankAmerica Corp. ..................................... 24,800 1,424,450
J.P. Morgan & Co. ..................................... 9,445 890,191
-----------
3,438,766
-----------
BASIC RESOURCES - 1.4%
Rayonier, Inc. ........................................ 28,050 1,099,209
-----------
BEVERAGES, FOOD & TOBACCO - 5.6%
Diageo Plc ADR......................................... 33,654 1,478,673
Nabisco Holdings Corp. ................................ 29,150 1,100,412
Philip Morris Cos., Inc. .............................. 36,200 1,850,725
-----------
4,429,810
-----------
CONSTRUCTION - 1.5%
USG Corp. ............................................. 24,500 1,168,344
-----------
CONSUMER NON-DURABLES - 2.0%
Hasbro, Inc. .......................................... 45,425 1,592,714
-----------
ELECTRONICS - 1.2%
Philips Electronics N.V. .............................. 17,850 979,519
-----------
ENERGY - 5.5%
Chevron Corp. ......................................... 12,990 1,058,685
Entergy Corp. ......................................... 34,525 992,594
Exxon Corp. ........................................... 6,868 489,345
Mobil Corp. ........................................... 14,140 1,070,221
USX-Marathon Group..................................... 21,450 701,147
-----------
4,311,992
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
UAM FUNDS STERLING PARTNERS' BALANCED PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
COMMON STOCKS - CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE+
--------- -----------
<S> <C> <C>
FINANCIAL SERVICES - 9.0%
AFLAC, Inc. ............................................. 62,925 $ 2,399,016
Capital One Financial Corp. ............................. 19,550 1,989,212
H&R Block, Inc. ......................................... 37,350 1,673,747
Nationwide Financial Services, Inc., Class A............. 23,400 971,100
-----------
7,033,075
-----------
HEALTH CARE - 7.4%
Bausch & Lomb, Inc. ..................................... 14,775 615,933
Columbia/HCA Healthcare Corp. ........................... 45,300 951,300
Mallinckrodt, Inc. ...................................... 41,150 1,172,775
Merck & Co., Inc. ....................................... 8,450 1,142,863
*PacifiCare Health Systems, Inc., Class A................ 8,800 639,100
*PacifiCare Health Systems, Inc., Class B................ 16,775 1,321,031
-----------
5,843,002
-----------
HOME FURNISHINGS & APPLIANCES - 1.4%
Black & Decker Corp. .................................... 20,775 1,073,808
-----------
INDUSTRIAL - 1.2%
*Airgas, Inc. ........................................... 82,900 953,350
-----------
MANUFACTURING - 2.9%
Raychem Corp. ........................................... 32,200 984,113
Snap-On, Inc. ........................................... 36,875 1,306,758
-----------
2,290,871
-----------
PRINTING & PUBLISHING - 1.0%
Hollinger International, Inc., Class A................... 62,375 810,875
-----------
RETAIL - 2.9%
Cracker Barrel Old Country Store, Inc. .................. 17,750 459,281
*Federated Department Stores, Inc. ...................... 10,800 415,125
McDonald's Corp. ........................................ 20,800 1,391,000
-----------
2,265,406
-----------
SERVICES - 1.1%
Manpower, Inc. .......................................... 36,200 873,325
-----------
TECHNOLOGY - 2.6%
First Data Corp. ........................................ 76,425 2,025,262
-----------
TEXTILES & APPAREL - 0.9%
Unifi, Inc. ............................................. 39,725 670,359
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
UAM FUNDS STERLING PARTNERS' BALANCED PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
COMMON STOCKS - CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE+
---------- -----------
<S> <C> <C>
TRANSPORTATION - 1.2%
Canadian National Railway............................. 17,950 $ 905,353
-----------
UTILITIES - 2.8%
Duke Energy Corp. .................................... 15,750 1,018,828
Unicom Corp. ......................................... 31,725 1,195,636
-----------
2,214,464
-----------
TOTAL COMMON STOCKS (Cost $41,113,980)........................... 47,158,951
-----------
CORPORATE BONDS AND NOTES - 17.2%
<CAPTION>
FACE
AMOUNT
----------
<S> <C> <C>
BANKS - 2.0%
BankAmerica Corp. 6.65%, 5/1/01....................... $ 910,000 932,259
NationsBank Corp. 5.70%, 2/12/01...................... 640,000 641,728
-----------
1,573,987
-----------
FINANCIAL SERVICES - 7.2%
Associates Corp. of North America 6.00%, 6/15/01...... 1,750,000 1,750,700
Morgan Stanley, Dean Witter and Co. 6.375%, 8/1/02.... 2,000,000 2,055,320
Sears Roebuck Acceptance Corp. 6.54%, 5/6/99.......... 1,800,000 1,809,216
-----------
5,615,236
-----------
INDUSTRIAL - 3.1%
Dell Computer Corp. 6.55%, 4/15/08.................... 500,000 503,565
Ford Motor Corp. 7.25%, 10/1/08....................... 1,300,000 1,438,866
Nike, Inc. 6.375%, 12/1/03............................ 500,000 523,130
-----------
2,465,561
-----------
TELECOMMUNICATIONS - 1.2%
GTE South, Inc. 6.125%, 6/15/07....................... 875,000 903,219
-----------
TRANSPORTATION - 2.1%
Southern Railway Corp. 10.00%, 7/15/00................ 1,535,000 1,659,826
-----------
UTILITIES - 1.6%
Georgia Power 6.625%, 4/1/03.......................... 1,250,000 1,274,787
-----------
TOTAL CORPORATE BONDS AND NOTES (Cost $13,053,607)............... 13,492,616
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
UAM FUNDS STERLING PARTNERS' BALANCED PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY SECURITIES - 19.6%
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
---------- -----------
<S> <C> <C>
MORTGAGE PASS-THROUGHS - 6.1%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 1.8%
Pool #G50213 6.50%, 11/1/99,
Estimated Average Life 11/98........................... $ 33,452 $ 33,907
Pool #M90315 5.50%, 12/1/98,
Estimated Average Life 12/98........................... 56,005 56,127
Pool #00255 7.00%, 9/1/23,
Estimated Average Life 3/02............................ 1,328,902 1,355,896
-----------
1,445,930
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 4.3%
Pool #346932 6.50%, 12/12/23,
Estimated Average Life 11/05........................... 1,496,372 1,514,134
Pool #780615 6.50%, 8/15/27,
Estimated Average Life 4/06............................ 1,830,463 1,851,055
-----------
3,365,189
-----------
4,811,119
-----------
U.S. TREASURY NOTES - 5.6%
5.625%, 5/15/08......................................... 2,975,000 3,206,961
5.75%, 9/30/99.......................................... 1,200,000 1,213,872
-----------
4,420,833
-----------
U.S. TREASURY BONDS - 7.9%
5.50%, 8/15/28.......................................... 3,035,000 3,193,852
6.125%, 11/15/27........................................ 2,675,000 3,010,204
-----------
6,204,056
-----------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES (Cost $15,243,571)..... 15,436,008
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
UAM FUNDS STERLING PARTNERS' BALANCED PORTFOLIO
OCTOBER 31, 1998
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENT - 1.9%
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
----------- -----------
<S> <C> <C>
REPURCHASE AGREEMENT - 1.9%
Chase Securities, Inc. 4.90%, dated 10/30/98, due
11/02/98, to be repurchased at $1,461,597,
collateralized by $1,405,957 of various U.S.
Treasury Notes, 5.375%-6.875% due 5/31/99-2/15/04,
valued at $1,461,020 (Cost $1,461,000).............. $ 1,461,000 $ 1,461,000
-----------
TOTAL INVESTMENTS - 98.7% (Cost $70,872,158) (a)................. 77,548,575
-----------
OTHER ASSETS AND LIABILITIES (NET) - 1.3%........................ 995,707
-----------
NET ASSETS - 100%................................................ $78,544,282
===========
</TABLE>
+ See Note A to Financial Statements
* Non-Income Producing Security
ADR American Depositary Receipt
(a) The cost for federal income tax purposes was $70,873,000. At October 31,
1998, net unrealized appreciation for all securities based on tax cost was
$6,675,575. This consisted of aggregate gross unrealized appreciation for
all securities of $9,571,411 and aggregate gross unrealized depreciation
for all securities of $2,895,836.
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
UAM FUNDS STERLING PARTNERS' EQUITY PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 95.4%
<TABLE>
<CAPTION>
SHARES VALUE+
------ ----------
<S> <C> <C>
AEROSPACE & DEFENSE - 5.1%
Boeing Co. ................................................. 26,600 $ 997,500
Lockheed Martin Corp. ...................................... 14,275 1,589,878
----------
2,587,378
----------
AUTOMOTIVE - 1.5%
The Pep Boys-Manny, Moe & Jack.............................. 49,400 771,875
----------
BANKS - 6.9%
BankAmerica Corp. .......................................... 25,300 1,453,169
Bank One Corp. ............................................. 23,200 1,133,900
J.P. Morgan & Co. .......................................... 10,200 961,350
----------
3,548,419
----------
BASIC RESOURCES - 2.2%
Rayonier, Inc. ............................................. 28,750 1,126,641
----------
BEVERAGES, FOOD & TOBACCO - 8.8%
Diageo Plc ADR.............................................. 33,732 1,482,100
Nabisco Holdings Corp. ..................................... 29,986 1,131,971
Philip Morris Cos., Inc. ................................... 36,698 1,876,185
----------
4,490,256
----------
CONSTRUCTION - 2.4%
USG Corp. .................................................. 25,400 1,211,262
----------
CONSUMER NON-DURABLES - 3.2%
Hasbro, Inc. ............................................... 46,810 1,641,276
----------
ELECTRONICS - 2.0%
Philips Electronics N.V. ................................... 18,525 1,016,559
----------
ENERGY - 8.8%
Chevron Corp. .............................................. 13,368 1,089,492
Entergy Corp. .............................................. 35,675 1,025,656
Exxon Corp. ................................................ 7,050 502,313
Mobil Corp. ................................................ 14,500 1,097,469
USX-Marathon Group.......................................... 24,300 794,306
----------
4,509,236
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
UAM FUNDS STERLING PARTNERS' EQUITY PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
COMMON STOCKS - CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE+
---------- -----------
<S> <C> <C>
FINANCIAL SERVICES - 14.1%
AFLAC, Inc. ........................................... 65,375 $ 2,492,422
Capital One Financial Corp. ........................... 19,710 2,005,492
H&R Block, Inc. ....................................... 38,650 1,732,003
Nationwide Financial Services, Inc., Class A........... 23,450 973,175
-----------
7,203,092
-----------
HEALTH CARE - 9.8%
Bausch & Lomb, Inc. ................................... 16,350 681,590
Columbia/HCA Healthcare Corp. ......................... 48,700 1,022,700
Merck & Co., Inc. ..................................... 9,200 1,244,300
*PacifiCare Health Systems, Inc., Class A.............. 9,950 722,619
*PacifiCare Health Systems, Inc., Class B.............. 17,000 1,338,750
-----------
5,009,959
-----------
HOME FURNISHINGS & APPLIANCES - 2.1%
Black & Decker Corp. .................................. 20,750 1,072,516
-----------
INDUSTRIAL - 1.9%
*Airgas, Inc. ......................................... 85,550 983,825
-----------
MANUFACTURING - 4.5%
Raychem Corp. ......................................... 31,675 968,067
Snap-On, Inc. ......................................... 37,975 1,345,739
-----------
2,313,806
-----------
PHARMACEUTICALS - 2.2%
Mallinckrodt, Inc. .................................... 40,200 1,145,700
-----------
PRINTING & PUBLISHING - 1.6%
Hollinger International, Inc., Class A................. 64,825 842,725
-----------
RETAIL - 4.5%
Cracker Barrel Old Country Store, Inc. ................ 19,050 492,919
*Federated Department Stores, Inc. .................... 11,050 424,734
McDonald's Corp. ...................................... 20,900 1,397,688
-----------
2,315,341
-----------
SERVICES - 1.8%
Manpower, Inc. ........................................ 38,300 923,988
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
UAM FUNDS STERLING PARTNERS' EQUITY PORTFOLIO
OCTOBER 31, 1998
- -------------------------------------------------------------------------------
COMMON STOCKS - CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE+
---------- -----------
<S> <C> <C>
TECHNOLOGY - 4.2%
First Data Corp. ..................................... 80,350 $ 2,129,275
-----------
TEXTILES & APPAREL - 1.4%
Unifi, Inc. .......................................... 41,043 692,601
-----------
TRANSPORTATION - 1.9%
Canadian National Railway............................. 19,437 980,354
-----------
UTILITIES - 4.5%
Duke Energy Corp. .................................... 16,275 1,052,789
Unicom Corp. ......................................... 32,725 1,233,323
-----------
2,286,112
-----------
TOTAL COMMON STOCKS (Cost $42,486,779)........................... 48,802,196
-----------
SHORT-TERM INVESTMENT - 4.0%
<CAPTION>
FACE
AMOUNT
----------
<S> <C> <C>
REPURCHASE AGREEMENT - 4.0%
Chase Securities, Inc. 4.90%, dated 10/30/98, due
11/02/98, to be repurchased at $2,062,842,
collateralized by $1,984,315 of various U.S. Treasury
Notes, 5.375%-6.875% due 5/31/99-2/15/04, valued at
$2,062,028 (Cost $2,062,000)......................... $2,062,000 2,062,000
-----------
TOTAL INVESTMENTS - 99.4% (Cost $44,548,779) (a)................. 50,864,196
-----------
OTHER ASSETS AND LIABILITIES (NET) - 0.6%........................ 285,077
-----------
NET ASSETS - 100%................................................ $51,149,273
===========
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security
ADR American Depositary Receipt
(a) The cost for federal income tax purposes was $44,559,491. At October 31,
1998, net unrealized appreciation for all securities based on tax cost was
$6,304,705. This consisted of aggregate gross unrealized appreciation for
all securities of $9,168,432 and aggregate gross unrealized depreciation for
all securities of $2,863,727.
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
UAM FUNDS STERLING PARTNERS'
SMALL CAP VALUE PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 100.2%
<TABLE>
<CAPTION>
SHARES VALUE+
---------- -----------
<S> <C> <C>
BANKS - 5.0%
Empire Federal Bancorp, Inc. .......................... 24,675 $ 314,606
Ocean Financial Corp. ................................. 60,500 877,250
*Provident Financial Holdings, Inc. ................... 37,275 577,763
-----------
1,769,619
-----------
BUILDING MATERIALS - 3.9%
*Cameron Ashley Building Products...................... 54,325 597,575
Texas Industries, Inc. ................................ 26,350 778,972
-----------
1,376,547
-----------
COMMUNICATIONS - 2.6%
True North Communications, Inc. ....................... 39,200 926,100
-----------
COMPUTERS - 3.5%
Wallace Computer Services, Inc. ....................... 56,800 1,242,500
-----------
CONSTRUCTION - 1.4%
*Perini Corp. ......................................... 85,425 491,194
-----------
CONSUMER NON-DURABLES - 2.5%
*Ralcorp Holdings, Inc. ............................... 50,025 881,691
-----------
ELECTRONICS - 6.0%
Harman International Industries, Inc. ................. 25,200 1,019,025
*Marshall Industries................................... 37,850 1,088,187
-----------
2,107,212
-----------
ENERGY - 7.3%
*BJ Services Co. ...................................... 61,025 1,247,198
*Smith International, Inc. ............................ 36,610 1,315,672
-----------
2,562,870
-----------
ENTERTAINMENT & LEISURE TIME - 3.1%
Gaylord Entertainment Co. ............................. 41,800 1,107,700
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
UAM FUNDS STERLING PARTNERS'
SMALL CAP VALUE PORTFOLIO
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
COMMON STOCKS - CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE+
-------- -----------
<S> <C> <C>
FINANCIAL SERVICES - 11.2%
Capital Southwest Corp. ................................. 7,425 $ 642,263
Conning Corp. ........................................... 37,780 557,255
Financial Security Assurance Holdings Ltd. .............. 21,350 1,063,497
Friedman, Billings, Ramsey Group, Inc., Class A.......... 108,200 554,525
Waddell & Reed Financial, Inc., Class A.................. 53,800 1,126,437
-----------
3,943,977
-----------
HEALTH CARE - 15.3%
*Acuson Corp. ........................................... 60,900 917,306
Arrow International, Inc. ............................... 27,175 754,106
Diagnostic Products Corp. ............................... 34,000 767,125
*Haemonetics Corp. ...................................... 59,000 1,272,187
Owens & Minor, Inc., Holding Company..................... 105,100 1,668,463
-----------
5,379,187
-----------
INDUSTRIAL - 6.1%
Gleason Corp. ........................................... 62,200 1,255,662
U.S. Industries, Inc. ................................... 53,900 879,244
-----------
2,134,906
-----------
INSURANCE - 3.4%
Hilb, Rogal & Hamilton Co. .............................. 63,400 1,204,600
-----------
LODGING & RESTAURANTS - 2.1%
Marcus Corp. ............................................ 47,970 737,539
-----------
MANUFACTURING - 3.0%
*Barry (R.G.) Corp ...................................... 35,700 392,700
Milacron, Inc. .......................................... 34,560 669,600
-----------
1,062,300
-----------
METALS - 1.5%
*Steel of West Virginia, Inc. ........................... 88,300 524,281
-----------
MULTI-INDUSTRY - 4.5%
Clarcor, Inc. ........................................... 72,595 1,225,041
*Griffon Corp. .......................................... 35,060 344,026
-----------
1,569,067
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
UAM FUNDS STERLING PARTNERS'
SMALL CAP VALUE PORTFOLIO
OCTOBER 31, 1998
- -------------------------------------------------------------------------------
COMMON STOCKS - CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE+
---------- -----------
<S> <C> <C>
OFFICE EQUIPMENT - 3.1%
Brady Corp., Class A................................. 47,345 $ 1,088,935
-----------
PHARMACEUTICALS - 1.7%
*Perrigo Co. ........................................ 77,400 614,363
-----------
REAL ESTATE - 1.6%
*Avatar Holdings, Inc. .............................. 31,350 564,300
-----------
SERVICES - 5.3%
*Bell & Howell Co. .................................. 70,400 1,865,600
-----------
TELECOMMUNICATIONS - 4.2%
*Anixter International, Inc. ........................ 95,500 1,474,281
-----------
TEXTILES & APPAREL - 1.9%
Wolverine World Wide, Inc. .......................... 52,000 679,250
-----------
TOTAL COMMON STOCKS (Cost $37,924,526).......................... 35,308,019
-----------
SHORT-TERM INVESTMENT - 4.2%
<CAPTION>
FACE
AMOUNT
----------
<S> <C> <C>
REPURCHASE AGREEMENT - 4.2%
Chase Securities, Inc. 4.90%, dated 10/30/98, due
11/02/98, to be repurchased at $1,472,601,
collateralized by $1,416,543 of various U.S.
Treasury Notes, 5.375%-6.875% due 5/31/99-2/15/04,
valued at $1,472,020 (Cost $1,472,000).............. $1,472,000 1,472,000
-----------
TOTAL INVESTMENTS - 104.4% (Cost $39,396,526) (a)............... 36,780,019
-----------
OTHER ASSETS AND LIABILITIES (NET) - (4.4%)..................... (1,548,674)
-----------
NET ASSETS - 100%............................................... $35,231,345
===========
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security
(a) The cost for federal income tax purposes was $39,410,067. At October 31,
1998, net unrealized depreciation for all securities based on tax cost was
$2,630,048. This consisted of aggregate gross unrealized appreciation for
all securities of $1,819,587 and aggregate gross unrealized depreciation
for all securities of $4,449,635.
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
STERLING
STERLING STERLING PARTNERS'
PARTNERS' PARTNERS' SMALL CAP
BALANCED EQUITY VALUE
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Investments, at Cost..................... $70,872,158 $44,548,779 $39,396,526
=========== =========== ===========
Investments, at Value.................... $77,548,575 $50,864,196 $36,780,019
Cash..................................... -- 737 588
Receivable for Investments Sold.......... 3,235,437 -- 164,171
Receivable for Portfolio Shares Sold..... 8,431 305,310 37,230
Dividends Receivable..................... 41,922 42,558 20,907
Interest Receivable...................... 476,212 561 401
Other Assets............................. 1,627 1,126 704
----------- ----------- -----------
Total Assets............................ 81,312,204 51,214,488 37,004,020
----------- ----------- -----------
LIABILITIES
Payable for Investments Purchased........ 1,519,202 -- 1,711,347
Payable for Portfolio Shares Redeemed.... 146,492 5,124 3,053
Payable for Investment Advisory Fees--
Note B.................................. 48,190 23,214 18,476
Payable for Administrative Fees--Note C.. 14,853 11,089 11,225
Payable for Custodian Fees--Note D....... 1,675 2,407 1,836
Payable to Custodian Bank--Note D........ 996,489 -- --
Payable for Account Services Fees--Note
F....................................... 5,600 -- --
Payable for Directors' Fees--Note G...... 771 720 673
Other Liabilities........................ 34,650 22,661 26,065
----------- ----------- -----------
Total Liabilities....................... 2,767,922 65,215 1,772,675
----------- ----------- -----------
NET ASSETS............................... $78,544,282 $51,149,273 $35,231,345
=========== =========== ===========
NET ASSETS CONSIST OF:
Paid in Capital.......................... $65,722,894 $39,782,791 $37,560,241
Undistributed Net Investment Income...... 196,319 42,028 --
Accumulated Net Realized Gain............ 5,948,652 5,009,037 287,611
Unrealized Appreciation (Depreciation)... 6,676,417 6,315,417 (2,616,507)
----------- ----------- -----------
NET ASSETS............................... $78,544,282 $51,149,273 $35,231,345
=========== =========== ===========
INSTITUTIONAL CLASS SHARES
Shares Issued and Outstanding ($0.001 par
value) (Authorized 25,000,000).......... 6,132,806 3,043,717 2,953,300
NET ASSET VALUE, Offering and Redemption
Price Per Share......................... $12.81 $16.80 $11.93
====== ====== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
FOR THE YEAR ENDED
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
STERLING
STERLING STERLING PARTNERS'
PARTNERS' PARTNERS' SMALL CAP
BALANCED EQUITY VALUE
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends............................... $ 974,115 $ 1,058,574 $ 288,318
Interest................................ 1,919,750 107,031 111,568
----------- ----------- -----------
TOTAL INCOME........................... 2,893,865 1,165,605 399,886
----------- ----------- -----------
EXPENSES
Investment Advisory Fees--Note B........ $ 608,044 $ 412,291 $ 316,833
Administrative Fees--Note C............. 134,136 113,109 82,038
Custodian Fees--Note D.................. 10,970 8,754 8,670
Account Services Fees--Note F........... 33,115 23,437 4,001
Directors' Fees--Note G................. 3,379 3,067 2,766
Audit Fees.............................. 15,533 13,459 5,932
Legal Fees.............................. 5,855 4,106 2,392
Printing Fees........................... 11,668 10,750 18,846
Registration and Filing Fees............ 17,032 14,567 16,509
Shareholder Servicing Fees.............. 46,969 5,535 10,961
Other Expenses.......................... 10,405 8,182 5,071
Account Services Fees Waived--Note F.... -- (23,437) (4,001)
Investment Advisory Fees Waived--Note
B...................................... -- (48,983) (73,508)
----------- ----------- -----------
Net Expenses Before Expense Offset..... 897,106 544,837 396,510
Expense Offset--Note A.................. (468) (520) (687)
----------- ----------- -----------
Net Expenses After Expense Offset...... 896,638 544,317 395,823
----------- ----------- -----------
NET INVESTMENT INCOME................... 1,997,227 621,288 4,063
----------- ----------- -----------
NET REALIZED GAIN ON INVESTMENTS........ 5,990,120 5,029,257 296,141
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION ON
INVESTMENTS............................ (2,887,387) (3,341,112) (4,573,377)
----------- ----------- -----------
NET GAIN (LOSS) ON INVESTMENTS.......... 3,102,733 1,688,145 (4,277,236)
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. $ 5,099,960 $ 2,309,433 $(4,273,173)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
UAM FUNDS STERLING PARTNERS' BALANCED 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............................. $ 1,997,227 $ 1,783,977
Net Realized Gain................................. 5,990,120 8,948,061
Net Change in Unrealized
Appreciation/Depreciation........................ (2,887,387) 3,917,853
------------ ------------
Net Increase in Net Assets Resulting from
Operations....................................... 5,099,960 14,649,891
------------ ------------
DISTRIBUTIONS:
Net Investment Income............................. (2,025,122) (1,727,012)
Net Realized Gain................................. (8,946,009) (4,423,527)
------------ ------------
Total Distributions............................... (10,971,131) (6,150,539)
------------ ------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued............................................ 16,438,562 27,923,261
In Lieu of Cash Distributions..................... 10,665,905 5,943,855
Redeemed.......................................... (20,972,225) (22,774,378)
------------ ------------
Net Increase from Capital Share Transactions...... 6,132,242 11,092,738
------------ ------------
Total Increase.................................... 261,071 19,592,090
NET ASSETS:
Beginning of Period............................... 78,283,211 58,691,121
------------ ------------
End of Period (including undistributed net
investment income of $196,319 and $222,732,
respectively).................................... $ 78,544,282 $ 78,283,211
============ ============
(1) SHARES ISSUED AND REDEEMED:
Shares Issued..................................... 1,244,650 2,175,854
In Lieu of Cash Distributions..................... 843,310 483,960
Shares Redeemed................................... (1,584,086) (1,707,662)
------------ ------------
503,874 952,152
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
UAM FUNDS STERLING PARTNERS' 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.............................. $ 621,288 $ 385,182
Net Realized Gain.................................. 5,029,257 6,787,489
Net Change in Unrealized
Appreciation/Depreciation......................... (3,341,112) 4,581,781
------------ -----------
Net Increase in Net Assets Resulting from
Operations........................................ 2,309,433 11,754,452
------------ -----------
DISTRIBUTIONS:
Net Investment Income.............................. (572,655) (399,390)
Net Realized Gain.................................. (6,790,276) (3,300,956)
------------ -----------
Total Distributions................................ (7,362,931) (3,700,346)
------------ -----------
CAPITAL SHARE TRANSACTIONS: (1)
Issued............................................. 12,339,211 14,372,614
In Lieu of Cash Distributions...................... 7,005,249 3,658,369
Redeemed........................................... (13,027,623) (9,142,001)
------------ -----------
Net Increase from Capital Share Transactions....... 6,316,837 8,888,982
------------ -----------
Total Increase..................................... 1,263,339 16,943,088
NET ASSETS:
Beginning of Period................................ 49,885,934 32,942,846
------------ -----------
End of Period (including undistributed net
investment income of $42,028 and $10,502,
respectively)..................................... $ 51,149,273 $49,885,934
============ ===========
(1) SHARES ISSUED AND REDEEMED:
Shares Issued...................................... 690,610 851,392
In Lieu of Cash Distributions...................... 413,578 239,374
Shares Redeemed.................................... (727,654) (518,745)
------------ -----------
376,534 572,021
============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
UAM FUNDS STERLING PARTNERS'
SMALL CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
JANUARY 2, 1997*
YEAR ENDED TO
OCTOBER 31, OCTOBER 31,
1998 1997
----------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income........................... $ 4,063 $ 5,032
Net Realized Gain............................... 296,141 820,414
Net Change in Unrealized
Appreciation/Depreciation...................... (4,573,377) 1,956,870
----------- -----------
Net Increase/Decrease in Net Assets Resulting
from Operations................................ (4,273,173) 2,782,316
----------- -----------
DISTRIBUTIONS:
Net Investment Income........................... (7,500) (5,455)
Net Realized Gain............................... (825,084) --
----------- -----------
Total Distributions............................. (832,584) (5,455)
----------- -----------
CAPITAL SHARE TRANSACTIONS: (1)
Issued.......................................... 25,429,789 17,330,126
In Lieu of Cash Distributions................... 693,665 5,453
Redeemed........................................ (5,674,562) (224,230)
----------- -----------
Net Increase from Capital Share Transactions.... 20,448,892 17,111,349
----------- -----------
Total Increase.................................. 15,343,135 19,888,210
NET ASSETS:
Beginning of Period............................. 19,888,210 --
----------- -----------
End of Period (including undistributed net
investment income of $0 and $0, respectively).. $35,231,345 $19,888,210
=========== ===========
(1) SHARES ISSUED AND REDEEMED:
Shares Issued................................... 1,898,217 1,464,695
In Lieu of Cash Distributions................... 53,318 540
Shares Redeemed................................. (447,751) (15,719)
----------- -----------
1,503,784 1,449,516
=========== ===========
</TABLE>
*Commencement of Operations
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
UAM FUNDS STERLING PARTNERS' 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.......................... $ 13.91 $ 12.55 $ 11.86 $ 11.13 $ 11.51
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........... 0.33 0.32 0.34 0.46 0.32
Net Realized and Unrealized Gain
(Loss)......................... 0.52 2.32 1.38 1.04 (0.25)
------- ------- ------- ------- -------
Total From Investment
Operations..................... 0.85 2.64 1.72 1.50 0.07
------- ------- ------- ------- -------
DISTRIBUTIONS
Net Investment Income........... (0.34) (0.31) (0.36) (0.45) (0.32)
Net Realized Gain............... (1.61) (0.97) (0.67) (0.32) (0.13)
------- ------- ------- ------- -------
Total Distributions............. (1.95) (1.28) (1.03) (0.77) (0.45)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD... $ 12.81 $ 13.91 $ 12.55 $ 11.86 $ 11.13
======= ======= ======= ======= =======
TOTAL RETURN..................... 6.58% 22.58% 15.52% 14.23% 0.66%
======= ======= ======= ======= =======
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period
(Thousands)..................... $78,544 $78,283 $58,691 $64,933 $64,673
Ratio of Expenses to Average Net
Assets.......................... 1.11% 1.07% 1.03% 0.96% 1.01%
Ratio of Net Investment Income to
Average Net Assets.............. 2.46% 2.47% 2.77% 3.96% 3.05%
Portfolio Turnover Rate.......... 82% 133%+ 84% 130% 70%
Ratio of Expenses to Average Net
Assets Including Expense
Offsets......................... 1.11% 1.07% 1.02% 0.96% N/A
</TABLE>
+The turnover rate is higher than normally anticipated due to increased
shareholder activity within the portfolio.
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
UAM FUNDS STERLING PARTNERS' EQUITY 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.......................... $ 18.70 $ 15.72 $ 13.69 $ 12.54 $ 12.39
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........... 0.21 0.15 0.15 0.21 0.16
Net Realized and Unrealized
Gain........................... 0.60 4.55 3.01 1.73 0.27
------- ------- ------- ------- -------
Total From Investment
Operations..................... 0.81 4.70 3.16 1.94 0.43
------- ------- ------- ------- -------
DISTRIBUTIONS
Net Investment Income........... (0.19) (0.16) (0.16) (0.20) (0.15)
Net Realized Gain............... (2.52) (1.56) (0.97) (0.59) (0.13)
------- ------- ------- ------- -------
Total Distributions............. (2.71) (1.72) (1.13) (0.79) (0.28)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD... $ 16.80 $ 18.70 $ 15.72 $ 13.69 $ 12.54
======= ======= ======= ======= =======
TOTAL RETURN+.................... 4.34% 32.46% 24.76% 16.61% 3.50%
======= ======= ======= ======= =======
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period
(Thousands)..................... $51,149 $49,886 $32,943 $31,969 $23,352
Ratio of Expenses to Average Net
Assets.......................... 0.99% 0.99% 0.99% 1.00% 0.99%
Ratio of Net Investment Income to
Average Net Assets.............. 1.13% 0.86% 1.01% 1.64% 1.34%
Portfolio Turnover Rate.......... 51% 57% 78% 135% 73%
Ratio of Voluntarily Waived Fees
and Expenses Assumed by
Affiliates to Average Net
Assets.......................... 0.13% 0.16% 0.21% 0.23% 0.32%
Ratio of Expenses to Average Net
Assets Including Expense
Offsets......................... 0.99% 0.99% 0.99% 0.99% N/A
</TABLE>
+Total return would have been lower had certain fees not been waived and ex-
penses assumed by Affiliates during the periods.
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
UAM FUNDS STERLING PARTNERS'
SMALL CAP VALUE PORTFOLIO
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR JANUARY 2, 1997***
ENDED TO
OCTOBER 31, OCTOBER 31,
1998 1997
----------- ------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............ $ 13.72 $ 10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.......................... -- 0.01
Net Realized and Unrealized Gain (Loss)........ (1.35) 3.72
------- -------
Total From Investment Operations............... (1.35) 3.73
------- -------
DISTRIBUTIONS
Net Investment Income.......................... -- (0.01)
Net Realized Gain.............................. (0.44) --
------- -------
Total Distributions............................ (0.44) (0.01)
------- -------
NET ASSET VALUE, END OF PERIOD.................. $ 11.93 $ 13.72
======= =======
TOTAL RETURN+................................... (10.08)% 37.34%**
======= =======
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)........... $35,231 $19,888
Ratio of Expenses to Average Net Assets......... 1.25% 1.25%*
Ratio of Net Investment Income to Average Net
Assets......................................... 0.01% 0.06%*
Portfolio Turnover Rate......................... 70% 50%
Ratio of Voluntarily Waived Fees and Expenses
Assumed by Affiliates to Average Net Assets.... 0.24% 0.85%*
Ratio of Expenses to Average Net Assets
Including Expense Offsets...................... 1.25% 1.25%*
</TABLE>
*Annualized
**Not Annualized
***Commencement of Operations
+ Total return would have been lower had certain fees not been waived and
assumed by Affiliates during the period.
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
UAM FUNDS STERLING PARTNERS' 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 Sterling
Partners' Balanced Portfolio, Sterling Partners' Equity Portfolio and the
Sterling Partners' Small Cap Value Portfolio (the "Portfolios"), are portfo-
lios of UAM Funds, Inc., which are diversified, open-end management investment
companies. At October 31, 1998, the UAM Funds were comprised of forty-six ac-
tive portfolios. The financial statements of the remaining portfolios are pre-
sented separately. The objectives of the Portfolios are as follows:
The STERLING PARTNERS' BALANCED PORTFOLIO seeks to provide maximum long-
term total return consistent with reasonable risk to principal, by invest-
ing in a balanced portfolio of common stocks and fixed income securities.
The STERLING PARTNERS' EQUITY PORTFOLIO seeks to provide maximum long-
term total return consistent with reasonable risk to principal, by invest-
ing primarily in common stocks.
The STERLING PARTNERS' SMALL CAP VALUE PORTFOLIO seeks to provide maxi-
mum long-term total return consistent with reasonable risk to principal,
by investing primarily in equity securities of smaller companies, in terms
of market capitalization.
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
27
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
readily available are stated at fair value following procedures approved
by the Board of Directors.
2. FEDERAL INCOME TAXES: It is each 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 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. 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 for the
timing of the recognition of gains or losses on investments and in-kind
transactions.
Permanent book and tax basis differences resulted in reclassifications
as follows:
<TABLE>
<CAPTION>
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED
STERLING PARTNERS' PORTFOLIOS INCOME GAIN
----------------------------- -------------- ------------
<S> <C> <C>
Balanced....................................... $ 1,482 $(1,482)
Equity......................................... (17,107) 17,107
Small Cap Value................................ 3,437 (3,437)
</TABLE>
28
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
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 Portfolios are
shown gross of expense offsets, if any, for custodian balance credits.
B. ADVISORY SERVICES: Under the terms of an investment advisory agreement,
Sterling Capital Management Corporation (the "Adviser"), a wholly-owned sub-
sidiary of United Asset Management Corporation ("UAM"), provides investment
advisory services to the Portfolio at a fee calculated at an annual rate of
0.75% of average daily net assets for the month for the Sterling Partners'
Balanced and Sterling Partners' Equity Portfolios and an annual rate of 1.00%
of average daily net assets for the month for the Sterling Partners' Small Cap
Value Portfolio. The Adviser has voluntarily agreed to waive a portion of its
account services fees then advisory fees and to assume expenses, if necessary,
in order to keep the total annual operating expenses, after the effect of ex-
pense offset arrangements, from exceeding 1.11%, 0.99% and 1.25% of average
daily net assets for the Sterling Partners' Balanced Portfolio, the Sterling
Partners' Equity Portfolio and the Sterling Partners' Small Cap Value Portfo-
lio, respectively.
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 0.06%, 0.06% and 0.04% per annum of
the average daily net assets of the Sterling Partners' Balanced
Portfolio,
29
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
Sterling Partners' Equity Portfolio, and the Sterling Partners' Small
Cap Value Portfolio, 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
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 year 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>
ADMINISTRATION PORTION PAID
STERLING PARTNERS' PORTFOLIOS FEES TO CGFSC
- ----------------------------- -------------- ------------
<S> <C> <C>
Balanced............................................ $134,136 $82,561
Equity.............................................. 113,109 77,210
Small Cap Value..................................... 82,038 66,555
</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 Share-
30
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
holder Services Center, Inc., as appropriate. For the year ended October 31,
1998, the Sterling Partners' Balanced Portfolio, the Sterling Partners' Equity
Portfolio and the Sterling Partners' Small Cap Value Portfolio incurred $197,
$200 and $246, respectively, in shareholder servicing fees with UAM Share-
holder 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. As a
part of the custodian agreement, the custodian has a lien on the securities of
the Portfolio to cover any advances made by the custodian to the Portfolio. At
October 31, 1998, the payable in the Sterling Partners' Balanced Portfolio to
the custodian bank represents the amount due for cash advanced for the settle-
ment of a U.S. Discount Note purchased.
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. ACCOUNT SERVICES: The UAM Funds have entered into an Account Services
Agreement (the "Services Agreement") with UAM Retirement Plan Services, Inc.
(the "Service Provider"), a wholly-owned subsidiary of UAM. Under the Services
Agreement, the Service Provider agrees to perform certain services for partic-
ipants in a self-directed, defined contribution plan, and for whom the Service
Provider provides participant record keeping. Pursuant to the Services Agree-
ment, 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. The Service Provider has voluntarily agreed to waive its fees in or-
der to keep the Portfolio's total annual operating expenses, after the effect
of expense offset arrangements, from exceeding 1.11%, 0.99% and 1.25% of aver-
age daily net assets for the month for the Sterling Partners' Balanced Portfo-
lio, the Sterling Partners' Equity Portfolio and the Sterling Partners' Small
Cap Value Portfolio, respectively.
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.
31
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
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>
STERLING PARTNERS' PORTFOLIOS PURCHASES SALES
- ----------------------------- ----------- -----------
<S> <C> <C>
Balanced.............................................. $23,954,807 $35,167,893
Equity................................................ 26,948,329 27,341,978
Small Cap Value....................................... 40,985,589 20,632,948
</TABLE>
Purchases and sales of long-term U.S. Government securities were $39,846,998
and $30,811,835, respectively, for the Sterling Partners' Balanced Portfolio.
There were no purchases or sales of long-term U.S. Government securities for
the Sterling Partners' Equity Portfolio and Sterling Partners' Small Cap Value
Portfolio.
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:
<TABLE>
<CAPTION>
NO. OF %
STERLING PARTNERS' PORTFOLIOS SHAREHOLDERS OWNERSHIP
- ----------------------------- ------------ ---------
<S> <C> <C>
Balanced................................................. 1 15.9
Small Cap Value.......................................... 1 16.6
</TABLE>
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.
32
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
UAM Funds, Inc. and Shareholders of
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Small Cap Value Portfolio
In our opinion, the accompanying statements of assets and liabilities, includ-
ing the portfolios 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 the Sterling Partners' Bal-
anced Portfolio, Sterling Partners' Equity Portfolio, and Sterling Partners'
Small Cap Value Portfolio (the "Portfolios"), Portfolios of the UAM Funds,
Inc., at October 31, 1998, and the results of each of their operations, the
changes in each of their net assets and the financial highlights for the peri-
ods 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 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 require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes ex-
amining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and signif-
icant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirma-
tion of securities at October 31, 1998 by correspondence with the custodian,
provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 11, 1998
33
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED):
At October 31, 1998, each Portfolio hereby designates the following amount as
long-term capital gain dividends for the purpose of the dividend paid deduc-
tion on its federal income tax return.
<TABLE>
<CAPTION>
28% TAX 20% TAX
STERLING PARTNERS' PORTFOLIOS BRACKET BRACKET
----------------------------- ---------- ----------
<S> <C> <C>
Balanced............................................ $3,551,172 $2,573,796
Equity.............................................. 2,444,812 2,634,907
</TABLE>
For the year ended October 31, 1998, the percentage of dividends that qualify
for the 70% dividend received deduction for corporate shareholders for the
Sterling Partners' Balanced, Sterling Partners' Equity and Sterling Partners'
Small Cap Value Portfolios, is 19.4%, 49.6% and 10.0%, respectively.
For the year ended October 31, 1998, the percentage of income earned from di-
rect Treasury obligations for Sterling Partners' Balanced Portfolio was 50.2%.
For the year ended October 31, 1998, gross income derived from sources within
foreign countries amounted to $265,679 for the Sterling Partners' Equity Port-
folio.
34
<PAGE>
UAM FUNDS STERLING PARTNERS' 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
Sterling Capital Management Company
One First Union Center
301 S. College Street
Suite 3200
Charlotte, NC 28202
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.
