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UAM Funds
Funds for the Informed Investor(SM)
Sterling Partners' Portfolios
Semi-Annual Report April 30, 1999
[LOGO OF UAM FUNDS APPEARS HERE]
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UAM FUNDS STERLING PARTNERS' PORTFOLIOS
APRIL 30, 1999
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TABLE OF CONTENTS
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Shareholders' Letter........................................................ 1
Portfolio of Investments
Balanced.................................................................. 10
Equity.................................................................... 15
Small Cap Value........................................................... 18
Statement of Assets and Liabilities......................................... 21
Statement of Operations..................................................... 22
Statement of Changes in Net Assets
Balanced.................................................................. 23
Equity.................................................................... 24
Small Cap Value........................................................... 25
Financial Highlights
Balanced.................................................................. 26
Equity.................................................................... 27
Small Cap Value........................................................... 28
Notes to Financial Statements............................................... 29
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May 21, 1999
To Our Fellow Shareholders:
Capital Markets Review
It is odd that as we look back at the six months ended April 30, 1999 we can
see evidence of mankind's greatest achievements and his most dramatic short-
comings. Reflecting an unprecedented era of prosperity, investors drove the
Dow Jones Industrial Average above the 10,000 mark for the first time in his-
tory. Markets in many other developed economies also experienced continued
strength as technological advancements and employment gains created a uniquely
positive backdrop. Unfortunately, in almost simultaneous fashion, the human
tragedies within Yugoslavia were escalating. These events, which once seemed
very removed from most Americans, are now at the center of a global crisis
that appears likely to be without resolution for a very long time.
Driving the U.S. stock market higher during the period were those same compa-
nies that had such a disproportionate influence in 1998. Specifically, the
largest-capitalization companies accounted for virtually the entire 22.3% gain
registered by the S&P 500. Broader indices reflect this widening disparity as
the Russell 2000 underperformed the S&P 500 by 710 basis points. Several sec-
tors followed through on strong advances generated last year to once again
claim leadership status--consumer services (American Online), software
(Microsoft), and securities brokers. Surprising most observers was the rebound
in many energy related industries. After truly being one of 1998's worst per-
forming sectors, major integrated and service firms have both put in very re-
spectable performances since the beginning of 1999. This turnaround was sup-
ported by the rise in oil prices and expanding consolidation within the sec-
tor. On the flip side, downward pressure was felt by many tobacco, health
care, and construction companies. In the fixed income markets, the hint of
stabilizing world economies combined with low U.S. unemployment put pressure
on bond prices. February witnessed a particularly difficult period for fixed
income instruments as the Lehman Index of Treasury securities posted a loss of
2.6%. Over the last six months, the yield on the benchmark 30-year Treasury
bond had climbed to 5.7% from 5.2% at the beginning of the period.
Up the Down Staircase
There is no question the last twelve-months have been a highly frustrating pe-
riod for both ourselves and importantly our equity clients. Simply put, this
frustration is the result of being a value manager during a period of growth
outperformance. As a value manager we attempt to buy companies whose stock
price is significantly
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below our calculation of intrinsic worth. Conversely, growth managers are pri-
marily focused on the pace of earnings expansion. Additionally, our small cap
expertise seems to offer no benefit when investors are entirely focused on
only the largest companies. Although history clearly demonstrates that in-
vestor sentiment is rotational, historical figures provide only partial com-
fort when in the eye of a storm. Just as important is the fact that some of
the most respected investors of our times have experienced periods when their
investment style seemed dislocated from current fads. Importantly, those in-
vestors whom we now respect all stayed the course and continued to implement a
philosophy and skill set that had been time tested. Such a scenario is de-
scribed in Roger Lowenstein's 1995 biography on Warren Buffett and the market
environment he operated in during the late 1960s.
"At the end of 1967, Buffett felt compelled to advise his partners that some
of the newer mutual funds had better recent returns than his own. Moreover, he
warned that his stream of new ideas was down to a "trickle." Though he was
working night and day to keep them coming his tone was ominous. If his idea
flow "should dry up completely, you will be informed honestly and promptly so
that we may all take alternative action."
It is noteworthy Buffett was sending off these dire alarms in direct propor-
tion to the giddiness on Wall Street. To money men, these were the Go-Go
years. There was a frenzy for electronics stocks, each new issue was held to
be the next Xerox. Had Wall Street suddenly developed an expertise in elec-
tronics? To ask the question was to misunderstand the age. Wall Street be-
lieved in electronics. Even a toad such as American Music Guild could become a
prince by calling itself Space-Tone Electronics Inc.
The buzz for high-tech was followed by a merger wave, propelled by huge con-
glomerates such as International Telephone & Telegraph, Litton Industries, and
Ling-Temco-Vought. The public of that confident time did not distrust bureau-
cracy; it conferred on big organizations (as on technology) a mystique of com-
petence.
Then, there was a burst of "letter stock"--unregistered shares, often of
highly dubious companies, that were marked to absurd valuations. Though each
of these fashions had its ebb and flow, as one bubble burst a new fad took its
place, so that as the sixties ran their course Wall Street gathered an ever
more intoxicating speculative momentum."
Roger Lowenstein, Buffett The Making of An American Capitalist (New York
Random House, 1995, pp 98-99).
It is amazing how seemingly similar today's market environment is to that
which was described in Lowenstein's book. Fortunately, for both his partner-
ship investors
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and later the shareholders of Berkshire Hathaway, Mr. Buffett remained dedi-
cated to the principals of security analysis and long-term investing. Those
who were less than steadfast in their investment approach certainly felt the
wrath of the market correction during the early 1970s and likely failed to re-
ward their investors during the market's subsequent recovery.
Over the last several months we have been asked consistently the why and when
questions, i.e., 1) Why has there been such a dramatic difference in returns
between type and size of companies; and 2) When will this divergence reverse
itself? Although we have the benefit of looking into the rearview mirror to
address the first of these questions, we claim no better skills at market
forecasts than the next prognosticator. Certainly, the stalling of industrial
activity throughout the world has limited the near-term prospects for many ba-
sic industries. These manufacturing companies, because of valuation and cash
flow appeal, tend to be well represented in "value" portfolios. Conversely,
service oriented firms including software and media companies are more likely
to be found in "growth" portfolios as the focus is less on valuation and more
on earnings momentum. With the service side of our economy not having yet ex-
perienced any cyclical slowing, these disparate fortunes are indeed influenc-
ing short-term stock prices. The current benign inflation environment and cor-
respondingly low interest rates have compounded this dichotomy as investors
are emboldened to pay ever higher multiples for a stream of expanding earn-
ings. Additionally, there is growing evidence of "closet indexing" by active
portfolio managers who feel heightened pressure to keep pace with market indi-
ces. With the S&P 500 representing the most widely followed benchmark, portfo-
lio managers have increasingly migrated to this index's largest holdings. The
influence of this trend is to further stoke both growth and large cap equi-
ties. We have been sounding the valuation appeal of small caps for some time
now. Truly, the comparisons are extraordinary both on an absolute and histori-
cal basis. The Russell 2000 index currently trades at approximately 18 times
this year's earnings forecast. This compares with the S&P 500 index whose P/E
multiple now tops 28 times. The comparative appeal of Sterling Partner's Small
Cap Portfolio is even more dramatic as it claims a forward looking multiple of
less than 15 times. Nevertheless, after having been more than broadly dissemi-
nated, we sense the valuation argument has lost its luster (although not va-
lidity). What then are the variables that might eventually combine with valua-
tion to act as a catalyst to broaden market performance? As we indicated ear-
lier, it is likely the answer to this question will become clear to market
strategists only with the benefit of hindsight. However, we took interest in
Sanford Bernstein's most recent crack at this question. In a recently pub-
lished article, the brokerage house volunteered two important events that
would lead to improved small cap performance. The first is an acceleration in
world economic
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growth. On this front the current signals are mixed with some evidence of
Asian improvement while Europe appears to be worsening. Bernstein suggests the
best predictor of this event is the spread between the 30-year bond and T-
bills with a difference of 175 basis points indicating solid acceleration. The
current spread approximates 112 basis points and is well off last fall's
trough levels but still too narrow to provide conclusive evidence of a trend.
The second major event is technology demand. Any falling off in the demand for
technology products would call into question the valuation of the market's
largest sector. Surprisingly, there have been some signs of this from both
hardware and software producers. Seasonal slowing of PC demand has combined
with Y2K spending disruptions to negatively impact early 1999 results for sev-
eral technology firms.
On a regular basis we encourage our clients, and remind ourselves, that in-
vesting is a long-term enterprise. It is unproductive and often misleading to
focus on short-term results. Yet we are going to ignore our own advice and
comment upon the dramatic shift that occurred in the equity markets during the
month of April, 1999.
Mid-year 1998 through the end of this year's first quarter was a difficult
time for value investors like us. We continued to purchase, or hold on to,
stocks in companies we believed the market was overlooking. These were invest-
ments in companies with strong balance sheets, quality management teams and
significant free cash flow. We identified companies whose market stock prices
were well below what we viewed as their intrinsic worth. This is how we define
value investing, and it requires patience. One of the difficult truths of
value investing is that one never knows when, or often why, other investors
will recognize the value we see. Over the past nine months few people did.
Growth stocks, high-tech companies and especially Internet related companies
attracted all the attention and most of the money. It seemed earnings and val-
uation did not matter.
From June 1998 through March 1999 the Russell 1000 Growth Index was up over
20%. The Russell 1000 Value Index was up 4% in the same period. Smaller stocks
were all beaten down with the Russell 2000 Growth Index down 5.6% and the Rus-
sell 2000 Value Index down more than 19%. It was a time many wondered if value
investing no longer made sense.
Events during the month of April give us great encouragement that value in-
vesting is not dead. Value stocks outperformed growth stocks by an 8.8% margin
during the month of April. (The returns for the month on the Wilshire Large
Company Value Index and the Wilshire Large Company Growth Index were 8.7% and
- -0.1%, respectively.) The shift in small cap stocks was also dramatic, with
the Sterling
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Partners' Small Cap Portfolio gaining 14.9% during the month. The Russell 2000
Index returned 8.9% for the month.
It is tempting to find just one or two reasons for the sudden change in in-
vestors' focus. There has been a perception that the economic crisis in the
Pacific Rim and Latin America is at least bottoming. If true, this would be a
positive for most industrial companies that are well represented in both our
large and small cap portfolios. At the same time there have been some earnings
shortfalls among high tech and Internet companies, an ominous occurrence if a
company's stock is trading at 50, 100 or more times earnings.
We believe the best explanation is that fundamentals do matter. They may not
always matter, as we saw last fall, but ultimately they must. It still makes
sense to invest in good companies whose stock prices are undervalued. It is a
tried and true way of making money. While the rally of the last few weeks has
been dramatic, and will probably be followed by market corrections, we think
it is a sign that value investing is on its way back.
Equity Commentary
The Sterling Partners' Equity Portfolio posted a return of 17.8% for the six
months ended April 30, 1999. This return compared well against the Wilshire
Large Cap Value Index at 15.0%. The S&P 500 Index returned 22.3% for the same
time period. Some very recent portfolio purchases contributed handsomely to
the Portfolio's performance including Royal Dutch and Sun Microsystems. Royal
Dutch rose over 18% since our February purchase and helped position the port-
folio well for the commodity led rebound in the energy sector. Sun
Microsystems rose more than 40% from our January purchase price. Certainly,
Sun's ascent was driven largely by the ever growing enthusiasm towards the
internet and e-commerce. Although we remain very positive towards the long-
term business prospects of Sun Microsystems, at a current P/E valuation of 45
times we suspect fundamentals are beginning to give way to speculation. Two
additional purchases were made during the quarter--Fortune Brands and Alcatel.
Fortune Brands is a leading manufacturer of branded products including names
such as Master Lock, Moen Faucets, Jim Beam Bourbon, and Titleist Golf Balls.
The company claims a very strong balance sheet and excellent management team.
The portfolio was able to purchase shares in this company at valuations far
below comparable entities. Likewise, our purchase of Alcatel was done at lev-
els we view to be well below the intrinsic worth of the company. French based
Alcatel is the world's fourth largest telecommunications equipment company.
While historically lagging its competitors in the way of tech-
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nical innovation, we believe several recent acquisitions will soon drive ex-
panding earnings growth at Alcatel.
The Sterling Partners' Small Cap Value Portfolio posted a return of 5.7% for
the six months ended April 30, 1999. While the Russell 2000 Index returned
15.2% for the same time period, the Wilshire Small Cap Value Index lagged with
a return of only 0.9% for the six months. There is no question it was a
broadly difficult period for any small cap manager which is reflected in the
return turned in by the Wilshire Index. Nonetheless, after three consecutive
years of top quartile performance, rest assured we are not taking the period's
results lightly. Specifically, we are working even more diligently to ensure
the portfolio is indeed holding only those companies claiming key variables--
strong management, quality business model, and access to capital. Further,
given the downdraft experienced by almost all small company stock prices, we
are eagerly looking for new investment opportunities. Two purchases made dur-
ing the quarter reflect this continuing effort. Horace Mann is one of the
leading providers of personal lines insurance that claims a dominant Midwest-
ern franchise. Importantly, the company focuses almost exclusively on the edu-
cation market for its client base. This unique customer focus has allowed Hor-
ace Mann to consistently post returns on equity exceeding 15% and utilize its
excess capital to repurchase shares. We believe we were able to purchase
shares in this fine company at more than a 50% discount to its intrinsic val-
ue. Similarly, Jostens is a company that possesses a 45% market share in the
production of recognition based products (class rings, year books, photo-
graphs). Reflecting Jostens positive outlook and strong balance sheet, manage-
ment has authorized a $100 million share repurchase which represents more than
10% of the company's market capitalization. Again, our analysis indicates the
portfolio purchases of Josten were done at levels well below the ultimate
worth of the company.
Obviously, the Small Cap Value Portfolio was not devoid of its challenges. As
a group, probably the largest drag during the period was the portfolio's expo-
sure to an assortment of distributors. This exposure is spread throughout many
industries and product categories with seemingly little correlation. However,
there has been a growing concern that technology and e-commerce will eventu-
ally limit and potentially obsolete the role of the distributor. While it is
clear the internet is allowing consumer and manufacturer to gain more direct
ties, we actually believe savvy distributors will be able to leverage the
internet as a tool rather than a threat. As an example, Owens & Minor, which
distributes medical supplies to thousands of hospitals nationwide, has teamed
up with Perot Systems to create a direct electronic link to its customer base.
Increasingly, Owens & Minor's customers are dependent on the distributor to
assume the entire procurement function--ordering, inventory
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management, and logistics. Adding value and reducing total costs are key ob-
jectives for any distributor in this new communications age. Needless to say,
we are evaluating portfolio holdings such as Anixter, Marshall Industries, and
Cameron Ashley against this tougher standard.
For the six months ended April 30, 1999, the Sterling Partners' Balanced Port-
folio posted a return of 10.0%. The return on the Balanced Benchmark, which
consists of 60% S&P 500 Index and 40% Lehman Government Corporate Bond Index,
was 12.9% for the same time period.
Fixed Income Commentary
The strength in the domestic economy in the last six month period has lead to
a general rise in the level of interest rates. Interest rates from 2 to 30-
year terms rose by approximately 100 basis points. Fourth quarter Gross Domes-
tic Product (GDP) rose at a very strong 6%, and was followed by a still strong
4.5% in the first quarter of 1999, which clearly outpaced the Federal Re-
serve's historic targeted growth rate of 2.5%. This surprisingly strong level
of economic activity has continued in the first quarter and is being paced by
robust consumption at the front end of our economy in the areas of housing,
automobile and department store sales. Jobs are plentiful and with interest
and inflation rates relatively low consumers are expressing their confidence
through high consumption.
Despite the stronger than anticipated level of economic activity, productivity
gains and declining commodity prices have contributed to exceedingly low lev-
els of price increases. Inflation at both the producer and consumer levels has
slowed to an annual inflation rate of less than 1%. Recently we have seen a
considerable rise in oil prices but as of yet this rise has not had a material
impact on the price indices. Also, most market participants do not believe
these recent increases in oil prices will stick long-term.
Another significant positive for the bond market is the anticipated reduction
in the supply of Treasury securities in the marketplace. The strong economy
and spending constraints in Washington to-date are providing solid improvement
on the fiscal budget front. Currently, assuming no major escalation in the Yu-
goslavian conflict, it is estimated our nation will generate a budget surplus
of approximately $125 billion for 1999. With the bulk of tax receipts that
come in during the month of April, the government is expected to have an ap-
proximate paydown of $125 billion in outstanding government debt in the second
quarter. With less available supply of bonds, investors will have to either
pay higher prices or seek alternatives for their funds.
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The markets continue to be concerned about the robust domestic economy. As
time passes, the crisis conditions in the international environment appear to
be moderating. The financial markets have already anticipated a rising rate
environment as interest rates have adjusted higher by 50 basis points over the
last few weeks. Despite the favorable inflationary picture, it is expected
that the Fed Reserve will seek to slow down the strong economy if the pace
does not slow over the next few months. In each of the last three years the
economy has slowed over the second half of the year, and if this occurs again,
then no Fed action will be necessary. Currently, we have a duration neutral
policy in the Sterling Partners' Balanced Portfolio and have chosen not to
shorten our maturities due to the favorable inflationary environment. Should
the strength in the economy not moderate, or if we begin to see a confirmation
of rising prices, we intend to reduce the interest rate risk of the Portfolio.
We are watching market conditions very closely and will continue to
proactively manage the account to optimize the returns for ourshareholders.
We thank you for your continued confidence in Sterling Capital Management.
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. A
Portfolio's performance assumes the reinvestment of all dividends and
distributions.
There are no assurances that a Portfolio will meet its stated objectives.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
A Portfolio's holdings are subject to change because it is actively managed.
Portfolio changes should not be considered recommendations for action by
individual investors.
Definition of the Comparative Indices
-------------------------------------
Dow Jones Industrial Average is a price-weighted average of thirty blue-chip
stocks that are generally the leaders in their industry and are listed on the
New York Stock Exchange. It has been a widely followed indicator of the stock
market since October 1, 1928.
Lehman Government/Corporate Index is an unmanaged fixed income market value-
weighted index that combines the Government and Corporate Bond Indices, in-
cluding U.S. government treasury securities, corporate and yankee bonds. All
issues are investment grade (BBB) or higher, with maturities of at least one
year and outstanding par value of at least $100 million of U.S. government is-
sues 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.
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Lehman Index of Treasury Securities is an unmanaged index of all public obli-
gations of the U.S. Treasury, excluding flower bonds and foreign-targeted is-
sues.
Standard & Poors' 500 Stock Index is an unmanaged index composed of 400 indus-
trial stocks, 40 financial stocks, 40 utilities stocks and 20 transportation
stocks.
Russell 1000 Index is an unmanaged index composed of the 1,000 largest stocks
in the Russell 3000 Index.
Russell 1000 Growth Index contains those Russell 1000 securities with higher
price-to-book ratios and higher forecasted growth values.
Russell 1000 Value Index contains those Russell 1000 securities with a less-
than-average growth orientation. Securities in this index tend to exhibit
lower price-to-book and price-earnings ratios, higher dividend yields and
lower forecasted growth values than the growth universe.
Russell 2000 Index is an unmanaged index composed of the 2,000 smallest stocks
in the Russell 3000 Index.
Russell 2000 Growth Index contains those Russell 2000 securities with higher
price-to-book ratios and higher forecasted growth values.
Russell 2000 Value Index contains those Russell 2000 securities with a less-
than-average growth orientation. Securities in this index tend to exhibit
lower price-to-book and price-earnings ratios, higher dividend yields and
lower forecasted growth values than the growth universe.
The Wilshire Large Company Growth Index is a market capitalization-weighted
index including a selection of equity securities chosen from the largest 750
securities in the Wilshire 5000 exhibiting growth characteristics.
The Wilshire Large Company Value Index is a market capitalization-weighted in-
dex including a selection of equity securities chosen from the largest 750 se-
curities in the Wilshire 5000 exhibiting value characteristics.
The Wilshire Small Cap Value Index is a market capitalization-weighted index
including equity securities chosen from the Wilshire 1750 which exhibit value
characteristics.
The comparative indices assume reinvestment of dividends and, unlike a
Portfolio's returns, do not reflect any fees or expenses. If such fees were
reflected in the comparative indices' returns, the performance would have been
lower.
Please note that one cannot invest directly in an unmanaged index.
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APRIL 30, 1999 (Unaudited)
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PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 61.6%
<TABLE>
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Shares Value+
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<S> <C> <C>
AEROSPACE & DEFENSE - 1.3%
Boeing Co. .............................................. 24,100 $ 979,063
-----------
BANKS - 7.3%
Bank of America Corp. ................................... 22,800 1,641,600
Bank One Corp. .......................................... 37,250 2,197,750
J.P. Morgan & Co. ....................................... 13,795 1,858,876
-----------
5,698,226
-----------
BASIC RESOURCES - 1.5%
Rayonier, Inc. .......................................... 25,550 1,165,719
-----------
BEVERAGES, FOOD & TOBACCO - 5.4%
Diageo Plc ADR........................................... 31,154 1,436,978
Nabisco Holdings Corp. .................................. 43,225 1,634,445
Philip Morris Cos., Inc. ................................ 33,000 1,157,063
-----------
4,228,486
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COMPUTERS & OFFICE EQUIPMENTS - 1.1%
Compaq Computer Corp. ................................... 38,500 859,031
-----------
ELECTRONICS - 1.8%
Philips Electronics N.V. ................................ 16,650 1,421,494
-----------
ENERGY - 9.9%
Chevron Corp. ........................................... 11,990 1,196,003
Entergy Corp. ........................................... 32,325 1,010,156
Exxon Corp. ............................................. 6,868 570,473
Mobil Corp. ............................................. 13,340 1,397,365
Praxair, Inc. ........................................... 23,700 1,226,475
Royal Dutch Petroleum Co. (NY Shares).................... 20,500 1,203,094
USX-Marathon Group....................................... 37,175 1,161,719
-----------
7,765,285
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FINANCIAL SERVICES - 5.0%
Capital One Financial Corp. ............................. 18,000 3,126,375
H&R Block, Inc. ......................................... 15,650 753,156
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3,879,531
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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APRIL 30, 1999 (Unaudited)
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COMMON STOCKS - continued
<TABLE>
<CAPTION>
Shares Value+
--------- -----------
<S> <C> <C>
HEALTH CARE - 3.7%
Mallinckrodt, Inc. ...................................... 50,550 $ 1,772,409
Merck & Co., Inc. ....................................... 16,300 1,145,075
-----------
2,917,484
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HOME FURNISHINGS & APPLIANCES - 1.4%
Black & Decker Corp. .................................... 19,275 1,093,856
-----------
INDUSTRIAL - 1.2%
*Airgas, Inc. ........................................... 80,000 940,000
-----------
INSURANCE - 4.0%
Conseco, Inc. ........................................... 30,450 961,078
UNUM Corp. .............................................. 40,075 2,189,097
-----------
3,150,175
-----------
MANUFACTURING - 2.9%
Fortune Brands, Inc. .................................... 28,500 1,125,750
Snap-On, Inc. ........................................... 34,175 1,112,823
-----------
2,238,573
-----------
PRINTING & PUBLISHING - 1.0%
Hollinger International, Inc., Class A................... 57,775 812,461
-----------
RETAIL - 1.5%
McDonald's Corp. ........................................ 13,400 567,825
*Toys 'R' Us, Inc. ...................................... 28,275 614,981
-----------
1,182,806
-----------
SERVICES - 1.0%
Manpower, Inc. .......................................... 34,300 776,038
-----------
TECHNOLOGY - 5.5%
First Data Corp. ........................................ 70,925 3,009,880
Hewlett-Packard Co. ..................................... 15,750 1,242,281
-----------
4,252,161
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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APRIL 30, 1999 (Unaudited)
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COMMON STOCKS - continued
<TABLE>
<CAPTION>
Shares Value+
----------- -----------
<S> <C> <C>
TELECOMMUNICATIONS - 4.6%
Alcatel Alsthom ADR.................................... 30,225 $ 734,845
AT&T Corp. ............................................ 18,075 912,788
Bell Atlantic Corp. ................................... 17,175 989,709
SBC Communications, Inc. .............................. 17,385 973,560
-----------
3,610,902
-----------
UTILITIES - 1.5%
Unicom Corp. .......................................... 29,325 1,138,177
-----------
TOTAL COMMON STOCKS (Cost $38,798,416)............................. 48,109,468
-----------
CORPORATE BONDS AND NOTES - 16.1%
<CAPTION>
Face Amount
-----------
<S> <C> <C>
FINANCIAL SERVICES - 6.0%
Associates Corp. of North America
6.00%, 6/15/01........................................ $ 1,750,000 1,750,875
Morgan Stanley, Dean Witter, and Co.
6.375%, 8/1/02........................................ 2,000,000 2,025,280
Sears Roebuck Acceptance Corp.
6.54%, 5/6/99......................................... 950,000 950,028
-----------
4,726,183
-----------
INDUSTRIAL - 2.4%
Ford Motor Corp.
7.25%, 10/1/08........................................ 1,300,000 1,379,391
Nike, Inc.
6.375%, 12/1/03....................................... 500,000 508,850
-----------
1,888,241
-----------
TECHNOLOGY - 4.0%
Dell Computer Corp.
6.55%, 4/15/08........................................ 500,000 490,135
International Business Machines Corp.
5.375%, 2/1/09........................................ 1,750,000 1,656,988
Lucent Technologies Inc.
5.50%, 11/15/08....................................... 1,000,000 956,300
-----------
3,103,423
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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APRIL 30, 1999 (Unaudited)
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CORPORATE BONDS AND NOTES - continued
<TABLE>
<CAPTION>
Face
Amount Value+
---------- -----------
<S> <C> <C>
TRANSPORTATION - 2.1%
Southern Railway Corp.
10.00%, 7/15/00........................................ $1,535,000 $ 1,609,785
-----------
UTILITIES - 1.6%
Georgia Power
6.625%, 4/1/03......................................... 1,250,000 1,231,100
-----------
TOTAL CORPORATE BONDS AND NOTES (Cost $12,530,391)................. 12,558,732
-----------
</TABLE>
U.S. GOVERNMENT AND AGENCY SECURITIES - 17.0%
<TABLE>
<S> <C> <C>
MORTGAGE PASS-THROUGHS - 5.5%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 1.5%
Pool #C00255 7.00%, 9/1/23,
Estimated Average Life 04/02............................. 1,119,485 1,136,323
Pool #G50213 6.50%, 11/1/99,
Estimated Average Life 10/99............................. 23,032 23,313
----------
1,159,636
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 4.0%
Pool #346932 6.50%, 12/15/23,
Estimated Average Life 04/05............................. 1,422,058 1,417,167
Pool #780615 6.50%, 8/15/27,
Estimated Average Life 10/06............................. 1,728,394 1,720,288
----------
3,137,455
----------
U.S. TREASURY NOTES - 4.5%
4.75%, 2/15/04........................................... 400,000 392,124
4.75%, 11/15/08.......................................... 2,025,000 1,934,179
5.75%, 9/30/99........................................... 1,200,000 1,204,692
----------
3,530,995
----------
U.S. TREASURY BONDS - 7.0%
5.25%, 11/15/28.......................................... 3,500,000 3,238,585
5.50%, 8/15/28........................................... 1,035,000 986,324
6.125%, 11/15/27......................................... 1,180,000 1,221,488
----------
5,446,397
----------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES (Cost $13,788,490)...... 13,274,483
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
UAM FUNDS STERLING PARTNERS' BALANCED PORTFOLIO
APRIL 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENT - 3.9%
<TABLE>
<CAPTION>
Face
Amount Value+
---------- -----------
<S> <C> <C>
REPURCHASE AGREEMENT - 3.9%
Chase Securities, Inc. 4.87%, dated 4/30/99, due
5/03/99, to be repurchased at $3,010,221,
collateralized by $2,782,701 of various U.S. Treasury
Notes, 5.50%-7.00% due 5/15/06-5/18/08, valued at
$3,010,586 (Cost $3,009,000)......................... $3,009,000 $ 3,009,000
-----------
TOTAL INVESTMENTS - 98.6% (Cost $68,126,297)(a).................. 76,951,683
-----------
OTHER ASSETS AND LIABILITIES (NET) - 1.4%........................ 1,146,016
-----------
NET ASSETS - 100%................................................ $78,097,699
===========
</TABLE>
+ See Note A to Financial Statements
* Non-Income Producing Security
ADR American Depositary Receipt
(a) The cost for federal income tax purpose was $68,126,297. At April 30,
1999, net unrealized appreciation for all securities based on tax cost
was $8,825,386. This consisted of aggregate gross unrealized apprecia-
tion for all securities of $10,864,779 and aggregate gross unrealized
depreciation for all securities of $2,039,393.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
UAM FUNDS STERLING PARTNERS' EQUITY PORTFOLIO
APRIL 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 99.4%
<TABLE>
<CAPTION>
Shares Value+
------ -----------
<S> <C> <C>
AEROSPACE & DEFENSE - 2.0%
Boeing Co. ................................................. 23,850 $ 968,906
-----------
BANKS - 11.4%
Bank of America Corp. ...................................... 22,600 1,627,200
Bank One Corp. ............................................. 37,475 2,211,025
J.P. Morgan & Co. .......................................... 13,200 1,778,700
-----------
5,616,925
-----------
BASIC RESOURCES - 2.3%
Rayonier, Inc. ............................................. 25,350 1,156,594
-----------
BEVERAGES, FOOD & TOBACCO - 8.6%
Diageo Plc ADR.............................................. 30,407 1,402,523
Nabisco Holdings Corp. ..................................... 43,836 1,657,548
Philip Morris Cos., Inc. ................................... 32,798 1,149,980
-----------
4,210,051
-----------
COMPUTERS & OFFICE EQUIPMENTS - 1.7%
Compaq Computer Corp. ...................................... 37,675 840,623
-----------
ELECTRONICS - 2.9%
Philips Electronics N.V. ................................... 16,925 1,444,972
-----------
ENERGY - 15.5%
Chevron Corp. .............................................. 11,743 1,171,364
Entergy Corp. .............................................. 31,575 986,719
Exxon Corp. ................................................ 6,550 544,059
Mobil Corp. ................................................ 13,000 1,361,750
Praxair, Inc. .............................................. 24,100 1,247,175
Royal Dutch Petroleum Co. (NY Shares)....................... 20,300 1,191,356
USX-Marathon Group.......................................... 36,350 1,135,938
-----------
7,638,361
-----------
FINANCIAL SERVICES - 10.2%
AFLAC, Inc. ................................................ 22,425 1,216,556
Capital One Financial Corp. ................................ 17,785 3,089,032
H&R Block, Inc. ............................................ 15,075 725,485
-----------
5,031,073
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
UAM FUNDS STERLING PARTNERS' EQUITY PORTFOLIO
APRIL 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
COMMON STOCKS - continued
<TABLE>
<CAPTION>
Shares Value+
------ -----------
<S> <C> <C>
HEALTH CARE - 2.3%
Merck & Co., Inc. .......................................... 16,200 $ 1,138,050
-----------
HOME FURNISHINGS & APPLIANCES - 2.2%
Black & Decker Corp......................................... 18,800 1,066,900
-----------
INDUSTRIAL - 1.9%
*Airgas, Inc. .............................................. 77,850 914,737
-----------
INSURANCE - 6.4%
Conseco, Inc. .............................................. 31,850 1,005,266
UNUM Corp. ................................................. 39,700 2,168,612
-----------
3,173,878
-----------
MANUFACTURING - 4.6%
Fortune Brands, Inc. ....................................... 28,400 1,121,800
Snap-On, Inc. .............................................. 34,675 1,129,105
-----------
2,250,905
-----------
PHARMACEUTICALS - 3.6%
Mallinckrodt, Inc. ......................................... 50,075 1,755,755
-----------
PRINTING AND PUBLISHING - 1.7%
Hollinger International, Inc., Class A...................... 58,625 824,414
-----------
RETAIL - 2.4%
McDonald's Corp. ........................................... 13,600 576,300
*Toys 'R' Us, Inc. ......................................... 27,400 595,950
-----------
1,172,250
-----------
SERVICES - 1.6%
Manpower, Inc. ............................................. 34,800 787,350
-----------
TECHNOLOGY - 8.6%
First Data Corp. ........................................... 70,175 2,978,052
Hewlett-Packard Co. ........................................ 15,600 1,230,450
-----------
4,208,502
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
UAM FUNDS STERLING PARTNERS' EQUITY PORTFOLIO
APRIL 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
COMMON STOCKS - continued
<TABLE>
<CAPTION>
Shares Value+
-------- -----------
<S> <C> <C>
TELECOMMUNICATIONS - 7.2%
Alcatel Alsthom ADR................................... 28,525 $ 693,514
AT&T Corp. ........................................... 17,887 903,294
Bell Atlantic Corp. .................................. 16,925 975,303
SBC Communications, Inc. ............................. 17,000 952,000
-----------
3,524,111
-----------
UTILITIES - 2.3%
Unicom Corp. ......................................... 29,725 1,153,702
-----------
TOTAL COMMON STOCKS (Cost $38,865,157)......................... 48,878,059
-----------
SHORT-TERM INVESTMENT - 1.7%
<CAPTION>
Face
Amount
--------
<S> <C> <C>
REPURCHASE AGREEMENT - 1.7%
Chase Securities, Inc. 4.87%, dated 4/30/99, due
5/03/99, to be repurchased at $821,333,
collateralized by $759,255 of various U.S. Treasury
Notes, 5.50%-7.00% due 5/15/06-5/15/08, valued at
$821,433 (Cost $821,000)............................. $821,000 821,000
-----------
TOTAL INVESTMENTS - 101.1% (Cost $39,686,157)(a)............... 49,699,059
-----------
OTHER ASSETS AND LIABILITIES (NET) - (1.1)%.................... (506,804)
-----------
NET ASSETS - 100%.............................................. $49,192,255
===========
</TABLE>
+ See Note A to Financial Statements
* Non-income Producing Securities
ADR American Depositary Receipt
(a) The cost for federal income tax purpose was $39,686,157. At April 30,
1999, net unrealized appreciation for all securities based on tax cost was
$10,012,902. This consisted of aggregate gross unrealized appreciation for
all securities of $11,400,594 and aggregate gross unrealized depreciation
for all securities of $1,387,692.
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
UAM FUNDS STERLING PARTNERS'
SMALL CAP VALUE PORTFOLIO
APRIL 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 92.2%
<TABLE>
<CAPTION>
Shares Value+
----------- ------------
<S> <C> <C>
BANKS - 3.3%
Empire Federal Bancorp, Inc. ........................ 27,875 $ 324,047
Ocean Financial Corp. ............................... 66,000 1,039,500
------------
1,363,547
------------
BUILDING MATERIALS - 3.1%
*Cameron Ashley Building Products.................... 36,210 398,310
Texas Industries, Inc. .............................. 28,750 887,656
------------
1,285,966
------------
CHEMICALS - 1.7%
*Cytec Industries, Inc. ............................. 25,300 719,469
------------
COMMUNICATIONS - 2.7%
True North Communications, Inc. ..................... 40,800 1,101,600
------------
COMPUTERS - 3.5%
Wallace Computer Services, Inc. ..................... 62,800 1,448,325
------------
CONSTRUCTION - 0.6%
*Perini Corp. ....................................... 55,025 268,247
------------
CONSUMER DISCRETIONARY - 3.1%
Jostens, Inc. ....................................... 60,200 1,290,538
------------
CONSUMER NON-DURABLES - 2.4%
*Ralcorp Holdings, Inc. ............................. 54,025 992,709
------------
ELECTRONICS - 4.7%
Harman International Industries, Inc. ............... 27,400 1,258,687
*Marshall Industries................................. 41,950 676,444
------------
1,935,131
------------
ENERGY - 2.7%
*Smith International, Inc. .......................... 24,910 1,117,836
------------
ENTERTAINMENT & LEISURE TIME - 3.3%
Gaylord Entertainment Co. ........................... 44,100 1,367,100
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
UAM FUNDS STERLING PARTNERS'
SMALL CAP VALUE PORTFOLIO
APRIL 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
COMMON STOCKS - continued
<TABLE>
<CAPTION>
Shares Value+
----------- ------------
<S> <C> <C>
FINANCIAL SERVICES - 13.2%
Capital Southwest Corp. ............................. 8,425 $ 645,566
Conning Corp. ....................................... 40,780 672,870
Financial Security Assurance Holdings Ltd. .......... 8,275 472,709
Metris Companies, Inc. .............................. 26,740 1,634,482
Waddell & Reed Financial, Inc., Class A.............. 91,475 2,063,905
------------
5,489,532
------------
HEALTH CARE - 11.1%
*Acuson Corp. ....................................... 67,000 1,021,750
Arrow International, Inc. ........................... 28,575 642,938
Diagnostic Products Corp. ........................... 35,800 823,400
*Haemonetics Corp. .................................. 63,800 1,000,862
Owens & Minor, Inc., Holding Company................. 115,000 1,135,625
------------
4,624,575
------------
INDUSTRIAL - 7.2%
*Airgas, Inc. ....................................... 68,075 799,881
Gleason Corp. ....................................... 65,200 1,112,475
U.S. Industries, Inc. ............................... 58,900 1,093,332
------------
3,005,688
------------
INSURANCE - 7.6%
Hilb, Rogal & Hamilton Co. .......................... 69,900 1,301,888
Horace Mann Educators Corp. ......................... 81,810 1,861,177
------------
3,163,065
------------
LODGING & RESTAURANTS - 1.5%
Marcus Corp. ........................................ 50,570 628,964
------------
MANUFACTURING - 5.4%
Brady Corp., Class A................................. 51,580 1,334,633
Milacron, Inc. ...................................... 38,860 893,780
------------
2,228,413
------------
MULTI-INDUSTRY - 3.6%
Clarcor, Inc. ....................................... 79,395 1,488,656
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
UAM FUNDS STERLING PARTNERS'
SMALL CAP VALUE PORTFOLIO
APRIL 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
COMMON STOCKS - continued
<TABLE>
<CAPTION>
Shares Value+
----------- ------------
<S> <C> <C>
REAL ESTATE - 1.6%
*Avatar Holdings, Inc. .............................. 33,350 $ 646,156
------------
SERVICES - 3.1%
*Bell & Howell Co. .................................. 38,100 1,273,969
------------
TELECOMMUNICATIONS - 2.5%
*Anixter International, Inc. ........................ 64,600 1,017,450
------------
TEXTILES & APPAREL - 4.3%
*Nautica Enterprises, Inc. .......................... 51,600 699,825
Wolverine World Wide, Inc. .......................... 90,060 1,080,720
------------
1,780,545
------------
TOTAL COMMON STOCKS (Cost $39,755,963)........................... 38,237,481
------------
SHORT-TERM INVESTMENT - 7.7%
<CAPTION>
Face Amount
-----------
<S> <C> <C>
REPURCHASE AGREEMENT - 7.7%
Chase Securities, Inc. 4.87%, dated 4/30/99, due
5/03/99, to be repurchased at $3,181,291,
collateralized by $2,940,840 of various U.S.
Treasury Notes, 5.50%-7.00% due 5/15/06-5/15/08,
valued at $3,181,676 (Cost $3,180,000).............. $3,180,000 3,180,000
------------
TOTAL INVESTMENTS - 99.9% (Cost $42,935,963)(a).................. 41,417,481
------------
OTHER ASSETS AND LIABILITIES (NET) - 0.1%........................ 45,134
------------
NET ASSETS - 100%................................................ $ 41,462,615
============
</TABLE>
+ See Note A to Financial Statements
* Non-Income Producing Securities
ADR American Depositary Receipt
(a) The cost for federal income tax purpose was $42,935,963. At April 30,
1999, net unrealized depreciation for all securities based on tax cost
was $1,518,482. This consisted of aggregate gross unrealized appreciation
for all securities of $2,947,942 and aggregate gross unrealized
depreciation for all securities of $4,466,424.
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
APRIL 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
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..................... $68,126,297 $39,686,157 $42,935,963
=========== =========== ===========
Investments, at Value - Note A........... $76,951,683 $49,699,059 $41,417,481
Cash..................................... 881 692 628
Receivable for Investments Sold.......... 2,318,166 1,062,650 --
Receivable for Portfolio Shares Sold..... 1,401 99,674 67,096
Dividends Receivable..................... 43,976 43,566 16,443
Interest Receivable...................... 430,576 111 430
Other Assets............................. 548 379 240
----------- ----------- -----------
Total Assets............................ 79,747,231 50,906,131 41,502,318
----------- ----------- -----------
Liabilities
Payable for Investments Purchased........ 1,590,245 1,680,014 --
Payable for Investment Advisory Fees -
Note B................................. 40,083 17,200 20,222
Payable for Administrative Fees - Note
C....................................... 12,370 9,165 9,117
Payable for Custodian Fees - Note D...... 1,913 2,455 1,187
Payable for Directors' Fees - Note G..... 1,498 1,492 1,394
Other Liabilities........................ 3,423 3,550 7,783
----------- ----------- -----------
Total Liabilities....................... 1,649,532 1,713,876 39,703
----------- ----------- -----------
Net Assets............................... $78,097,699 $49,192,255 $41,462,615
=========== =========== ===========
Net Assets Consist Of:
Paid in Capital.......................... $64,625,970 $35,171,822 $42,045,804
Undistributed Net Investment Income...... 200,366 49,198 32,488
Accumulated Net Realized Gain............ 4,445,977 3,958,333 902,805
Unrealized Appreciation (Depreciation)... 8,825,386 10,012,902 (1,518,482)
----------- ----------- -----------
Net Assets............................... $78,097,699 $49,192,255 $41,462,615
=========== =========== ===========
Institutional Class Shares
Shares Issued and Outstanding ($0.001 par
value) (Authorized 25,000,000).......... 6,066,930 2,779,216 3,313,541
Net Asset Value, Offering and Redemption
Price Per Share......................... $12.87 $17.70 $12.51
====== ====== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
FOR THE SIX MONTHS ENDED
APRIL 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
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.................................. $ 425,035 $ 429,590 $ 219,657
Interest................................... 924,800 42,012 48,911
---------- ---------- ----------
Total Income.............................. 1,349,835 471,602 268,568
---------- ---------- ----------
Expenses
Investment Advisory Fees Note - B.......... $ 293,728 $ 182,711 $ 188,825
Administrative Fees Note - C............... 84,648 69,300 59,684
Custodian Fees Note - D.................... 4,612 5,146 3,992
Account Services Fees Note - F............. 4,885 2,349 711
Directors' Fees Note - G................... 2,648 2,377 2,246
Audit Fees................................. 8,036 6,971 6,453
Legal Fees................................. 2,915 2,279 1,727
Printing Fees.............................. 4,966 4,967 5,213
Registration and Filing Fees............... 8,544 6,745 10,450
Shareholder Servicing Fees................. 26,137 4,135 5,186
Other Expenses............................. 5,811 4,583 3,754
Account Services Fees Waived Note - F...... (4,885) (2,349) (711)
Investment Advisory Fees Waived Note - B... (7,099) (47,690) (51,188)
---------- ---------- ----------
Net Expenses Before Expense Offset........ 434,946 241,524 236,342
Expense Offset Note - A.................... (218) (225) (262)
---------- ---------- ----------
Net Expenses After Expense Offset......... 434,728 241,299 236,080
---------- ---------- ----------
Net Investment Income...................... 915,107 230,303 32,488
---------- ---------- ----------
Net Realized Gain on Investments........... 4,450,408 3,969,168 916,764
Net Change in Unrealized
Appreciation/Depreciation on Investments.. 2,148,969 3,697,485 1,098,025
---------- ---------- ----------
Net Gain on Investments.................... 6,599,377 7,666,653 2,014,789
---------- ---------- ----------
Net Increase in Net Assets Resulting from
Operations................................ $7,514,484 $7,896,956 $2,047,277
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
UAM FUNDS STERLING PARTNERS' BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
April 30, 1999 October 31,
(Unaudited) 1998
-------------- ------------
<S> <C> <C>
Increase (Decrease) In Net Assets
Operations:
Net Investment Income............................ $ 915,107 $ 1,997,227
Net Realized Gain................................ 4,450,408 5,990,120
Net Change in Unrealized
Appreciation/Depreciation....................... 2,148,969 (2,887,387)
------------ ------------
Net Increase in Net Assets Resulting from
Operations...................................... 7,514,484 5,099,960
------------ ------------
Distributions:
Net Investment Income............................ (911,060) (2,025,122)
Net Realized Gain................................ (5,953,083) (8,946,009)
------------ ------------
Total Distributions.............................. (6,864,143) (10,971,131)
------------ ------------
Capital Share Transactions: (1)
Issued........................................... 5,006,534 16,438,562
In Lieu of Cash Distributions.................... 6,537,532 10,665,905
Redeemed......................................... (12,640,990) (20,972,225)
------------ ------------
Net Increase from Capital Share Transactions..... (1,096,924) 6,132,242
------------ ------------
Total Increase (Decrease)........................ (446,583) 261,071
Net Assets:
Beginning of Period.............................. 78,544,282 78,283,211
------------ ------------
End of Period (including undistributed net
investment income of $200,366 and $196,319,
respectively)................................... $ 78,097,699 $ 78,544,282
============ ============
(1) Shares Issued and Redeemed:
Shares Issued.................................... 408,604 1,244,650
In Lieu of Cash Distributions.................... 549,272 843,310
Shares Redeemed.................................. (1,023,752) (1,584,086)
------------ ------------
(65,876) 503,874
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
UAM FUNDS STERLING PARTNERS' EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
April 30, 1999 October 31,
(Unaudited) 1998
-------------- ------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income............................ $ 230,303 $ 621,288
Net Realized Gain................................ 3,969,168 5,029,257
Net Change in Unrealized
Appreciation/Depreciation....................... 3,697,485 (3,341,112)
------------ ------------
Net Increase in Net Assets Resulting from
Operations...................................... 7,896,956 2,309,433
------------ ------------
Distributions:
Net Investment Income............................ (223,133) (572,655)
Net Realized Gain................................ (5,019,872) (6,790,276)
------------ ------------
Total Distributions.............................. (5,243,005) (7,362,931)
------------ ------------
Capital Share Transactions: (1)
Issued........................................... 4,215,889 12,339,211
In Lieu of Cash Distributions.................... 4,502,999 7,005,249
Redeemed......................................... (13,329,857) (13,027,623)
------------ ------------
Net Increase from Capital Share Transactions..... (4,610,969) 6,316,837
------------ ------------
Total Increase (Decrease)........................ (1,957,018) 1,263,339
Net Assets:
Beginning of Period.............................. 51,149,273 49,885,934
------------ ------------
End of Period (including undistributed net
investment income of $49,197 and $42,028,
respectively)................................... $ 49,192,255 $ 51,149,273
============ ============
(1) Shares Issued and Redeemed:
Shares Issued.................................... 254,880 690,610
In Lieu of Cash Distributions.................... 296,203 413,578
Shares Redeemed.................................. (815,584) (727,654)
------------ ------------
(264,501) 376,534
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
UAM FUNDS STERLING PARTNERS'
SMALL CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
April 30, 1999 October 31,
(Unaudited) 1998
-------------- -----------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income............................. $ 32,488 $ 4,063
Net Realized Gain................................. 916,764 296,141
Net Change in Unrealized
Appreciation/Depreciation........................ 1,098,025 (4,573,377)
----------- -----------
Net Increase/Decrease in Net Assets Resulting from
Operations....................................... 2,047,277 (4,273,173)
----------- -----------
Distributions:
Net Investment Income............................. -- (7,500)
Net Realized Gain................................. (301,570) (825,084)
----------- -----------
Total Distributions............................... (301,570) (832,584)
----------- -----------
Capital Share Transactions: (1)
Issued............................................ 9,412,306 25,429,789
In Lieu of Cash Distributions..................... 289,315 693,665
Redeemed.......................................... (5,216,058) (5,674,562)
----------- -----------
Net Increase from Capital Share Transactions...... 4,485,563 20,448,892
----------- -----------
Total Increase (Decrease)......................... 6,231,270 15,343,135
Net Assets:
Beginning of Period............................... 35,231,345 19,888,210
----------- -----------
End of Period (including undistributed net
investment income of $32,488 and $0,
respectively).................................... $41,462,615 $35,231,345
=========== ===========
(1) Shares Issued and Redeemed:
Shares Issued..................................... 781,959 1,898,217
In Lieu of Cash Distributions..................... 23,656 53,318
Shares Redeemed................................... (445,374) (447,751)
----------- -----------
360,241 1,503,784
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
UAM FUNDS STERLING PARTNERS' BALANCED PORTFOLIO
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Per Share Data & Ratios
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Six Months
Ended Years Ended October 31,
April 30, 1999 ---------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 12.81 $ 13.91 $ 12.55 $ 11.86 $ 11.13 $ 11.51
------- ------- ------- ------- ------- -------
Income From Investment
Operations
Net Investment Income.. 0.15 0.33 0.32 0.34 0.46 0.32
Net Realized and
Unrealized Gain
(Loss)................ 1.04 0.52 2.32 1.38 1.04 (0.25)
------- ------- ------- ------- ------- -------
Total From Investment
Operations............ 1.19 0.85 2.64 1.72 1.50 0.07
------- ------- ------- ------- ------- -------
Distributions
Net Investment Income.. (0.15) (0.34) (0.31) (0.36) (0.45) (0.32)
Net Realized Gain...... (0.98) (1.61) (0.97) (0.67) (0.32) (0.13)
------- ------- ------- ------- ------- -------
Total Distributions.... (1.13) (1.95) (1.28) (1.03) (0.77) (0.45)
------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 12.87 $ 12.81 $ 13.91 $ 12.55 $ 11.86 $ 11.13
======= ======= ======= ======= ======= =======
Total Return+........... 10.03%** 6.58% 22.58% 15.52% 14.23% 0.66%
======= ======= ======= ======= ======= =======
Ratios and Supplemental
Data
Net Assets, End of
Period (Thousands)..... $78,098 $78,544 $78,283 $58,691 $64,933 $64,673
Ratio of Expenses to
Average Net Assets..... 1.11%* 1.11% 1.07% 1.03% 0.96% 1.01%
Ratio of Net Investment
Income to Average Net
Assets................. 2.34%* 2.46% 2.47% 2.77% 3.96% 3.05%
Portfolio Turnover
Rate................... 36% 82% 133%++ 84% 130% 70%
Ratio of Voluntarily
Waived Fees and
Expenses Assumed by the
Advisor to Average Net
Assets................. .03% N/A N/A N/A N/A N/A
Ratio of Expenses to
Average Net Assets
Including Expense
Offsets................ 1.11%* 1.11% 1.07% 1.02% 0.96% N/A
</TABLE>
* Annualized
** Not Annualized
+ Total return would have been lower had certain fees not been waived and
assumed by Affiliates during the period.
++ 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.
26
<PAGE>
UAM FUNDS STERLING PARTNERS' EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Per Share Data & Ratios
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Six Months
Ended Years Ended October 31,
April 30, 1999 -------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 16.80 $ 18.70 $ 15.72 $ 13.69 $ 12.54 $ 12.39
------- ------- ------- ------- ------- -------
Income From Investment
Operations
Net Investment Income.. 0.08 0.21 0.15 0.15 0.21 0.16
Net Realized and
Unrealized Gain....... 2.61 0.60 4.55 3.01 1.73 0.27
------- ------- ------- ------- ------- -------
Total From Investment
Operations............ 2.69 0.81 4.70 3.16 1.94 0.43
------- ------- ------- ------- ------- -------
Distributions
Net Investment Income.. (0.08) (0.19) (0.16) (0.16) (0.20) (0.15)
Net Realized Gain...... (1.71) (2.52) (1.56) (0.97) (0.59) (0.13)
------- ------- ------- ------- ------- -------
Total Distributions.... (1.79) (2.71) (1.72) (1.13) (0.79) (0.28)
------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 17.70 $ 16.80 $ 18.70 $ 15.72 $ 13.69 $ 12.54
======= ======= ======= ======= ======= =======
Total Return+........... 17.82%** 4.34% 32.46% 24.76% 16.61% 3.50%
======= ======= ======= ======= ======= =======
Ratios and Supplemental
Data
Net Assets, End of
Period (Thousands)..... $49,192 $51,149 $49,886 $32,943 $31,969 $23,352
Ratio of Expenses to
Average Net Assets..... 0.99%* 0.99% 0.99% 0.99% 1.00% 0.99%
Ratio of Net Investment
Income to Average Net
Assets................. 0.94%* 1.13% 0.86% 1.01% 1.64% 1.34%
Portfolio Turnover
Rate................... 34% 51% 57% 78% 135% 73%
Ratio of Voluntarily
Waived Fees and
Expenses Assumed by
Affiliates to Average
Net Assets............. 0.21%* 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% 0.99% N/A
</TABLE>
* Annualized
** Not Annualized
+ 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.
27
<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>
Six Months Year January 2,
Ended Ended 1997*** to
April 30, 1999 October 31, October 31,
(Unaudited) 1998 1997
-------------- ----------- -----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 11.93 $ 13.72 $ 10.00
------- ------- -------
Income From Investment Operations
Net Investment Income................. 0.01 -- 0.01
Net Realized and Unrealized Gain
(Loss)............................... 0.67 (1.35) 3.72
------- ------- -------
Total From Investment Operations...... 0.68 (1.35) 3.73
------- ------- -------
Distributions
Net Investment Income................. -- -- (0.01)
Net Realized Gain..................... (0.10) (0.44) --
------- ------- -------
Total Distributions................... (0.10) (0.44) (0.01)
------- ------- -------
Net Asset Value, End of Period......... $ 12.51 $ 11.93 $ 13.72
======= ======= =======
Total Return+.......................... 5.73%** (10.08)% 37.34%**
======= ======= =======
Ratios and Supplemental Data
Net Assets, End of Period (Thousands).. $41,463 $35,231 $19,888
Ratio of Expenses to Average Net
Assets................................ 1.25%* 1.25% 1.25%*
Ratio of Net Investment Income to
Average Net Assets.................... 0.17%* 0.01% 0.06%*
Portfolio Turnover Rate................ 29% 70% 50%
Ratio of Voluntarily Waived Fees and
Expenses Assumed by Affiliates to
Average Net Assets.................... 0.27%* 0.24% 0.85%*
Ratio of Expenses to Average Net Assets
Including Expense Offsets............. 1.25%* 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.
28
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
UAM Funds Trust and UAM Funds, Inc. (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 April 30, 1999, the UAM Funds were comprised of 44 active port-
folios. The financial statements of the remaining portfolios are presented
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 investing
primarily in common stocks.
The Sterling Partners' Small Cap Value Portfolio seeks to provide maximum
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 Portfolios in the preparation of
their financial statements. Generally accepted accounting principles may re-
quire 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 by using the average be-
tween the last reported bid and last reported offer prices quoted on such
day. 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 dealers, market
transactions in comparable securities and various relationships between
securities in determining value. Short-term investments that have remain-
ing maturities of sixty days or less at time of purchase
29
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
are valued at amortized cost, if it approximates market value. The value
of other assets and securities for which no quotations are readily avail-
able is determined in good faith at fair value following procedures ap-
proved 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
agreements. This joint repurchase agreement is covered by the same collat-
eral requirements as discussed above.
4. Distributions to Shareholders: Each Portfolio will distribute sub-
stantially 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 for the
timing of the recognition of gains or losses on investments and in-kind
transactions.
Permanent book and tax basis differences relating to shareholder distri-
butions may result in reclassifications to undistributed net investment
income (loss), accumulated gain (loss) and paid in capital.
30
<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 is 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 at-
tributed to a particular portfolio. Expenses that cannot be directly at-
tributed 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. Investment Advisory Services: Under the terms of an investment advisory
agreement, Sterling Capital Management Corporation (the "Adviser"), a subsidi-
ary of United Assets Management Corporation ("UAM"), provides investment advi-
sory services to each 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 aver-
age 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 ac-
count services fees, advisory fees and to assume expenses, if necessary, in
order to keep the total annual operating expenses, after the effect of expense
offset arrangements, from exceeding 1.11%, 0.99% and 1.25% of average daily
net assets for the Sterling Partners Balanced Portfolio, the Sterling Part-
ners' Equity Portfolio and the Sterling Partners' Small Cap Value Portfolio,
respectively.
C. Administrative Services: UAM Fund Services, Inc. (the "Administrator"), a
wholly-owned subsidiary of UAM, provides and oversees administrative, fund ac-
counting, dividend disbursing, shareholder servicing and transfer agent serv-
ices to the Portfolio under a Fund Administration Agreement. The Administrator
has entered into a Mutual Funds Service Agreement with Chase Global Funds
Services Company ("CGFSC"), a corporate affiliate of The Chase Manhattan Bank,
under which CGFSC provides certain services including administrative and fund
accounting services. The Administrator has entered into an Agency Agreement
with DST Systems, Inc. ("DST"), under which DST provides transfer agent and
dividend-disbursing services. The Administrator has also entered into an
agreement with UAM Shareholder Service Center, Inc. ("UAMSSC"), an affiliate
of UAM, to serve as the shareholder-servicing agent for the UAM Funds.
31
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
In exchange for administrative services, each Portfolio pays a five-part fee
to the Administrator as follows:
--Effective April 15, 1999, an annual base fee, which is retained by the
Administrator, calculated at an annual rate equal to $14,500 for the
first operational share class.
--A portfolio-specific monthly fee of 0.06%, 0.06%, and 0.04% per annum of
the average net assets of the Sterling Partners' Balanced Portfolio, the
Sterling Partners' Equity Portfolio, and the Sterling Partners' Small
Cap Value Portfolio, respectively, which is retained by the Administra-
tor.
--An annual base fee that the Administrator pays to CGFSC for its adminis-
trative and fund accounting services calculated at the annual rate of no
more than $52,500 for the first operational share class; plus 0.039% of
their pro rata share of the combined average net assets of the UAM
Funds.
--An annual base fee that the Administrator pays to DST for its services
as transfer agent and dividend-disbursing agent equal to $10,500 for
each operational share class.
--An annual base fee that the Administrator pays to UAMSSC for its serv-
ices as shareholder-servicing agent equal to $7,500 for the first opera-
tional share class.
The Portfolios also pay certain account and transaction fees and out-of-
pocket expenses that may be based on the number of open and closed accounts,
the type of account or the services provided to the account.
For the six months ended April 30, 1999, the Administrator earned the fol-
lowing amounts from the Portfolios and paid the following to CGFSC and UAMSSC
for their services:
<TABLE>
<CAPTION>
Portion Portion
Administration paid to paid to
Sterling Partners' Portfolios Fees CGFSC UAMSSC
----------------------------- -------------- ------- -------
<S> <C> <C> <C>
Balanced.................................... $84,648 $44,162 $6,019
Equity...................................... 69,300 38,695 6,141
Small Cap Value............................. 59,684 35,078 7,580
</TABLE>
D. Custodian: The Chase Manhattan Bank is custodian for the Portfolios' as-
sets 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 Portfolios.
32
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
The Distributor does not receive any fee or other compensation with respect to
the Portfolios.
F. Account Services: Through January 1, 1999 the UAM Funds had contracted
with UAM Retirement Plan Services, Inc. (the "Service Provider"), a wholly-
owned subsidiary of UAM to perform certain services for participants in a
self-directed, defined contribution plan, and for whom the Service Provider
provides participant record keeping. Pursuant to the terms of Agreement, the
Service Provider is entitled to receive, after the end of each month, a fee at
the annual rate of 0.15% of the average aggregate daily net asset value of
shares of the UAM Funds in the accounts for which it provided services. The
Service Provider has voluntarily agreed to waive its fees in order to keep the
Portfolio's total annual operating expenses, after the effect of expense off-
set arrangements, from exceeding 1.11%, 0.99% and 1.25% of average daily net
assets for the month for the Sterling Partners' Balanced Portfolio, the Ster-
ling Partners' Equity Portfolio and the Sterling Partners' Small Cap Value
Portfolio, respectively. The agreement was terminated effective January 1,
1999.
G. Directors' Fees: Each Director, who is not an officer or affiliated per-
son, receives $2,000 per meeting attended plus reimbursement of expenses in-
curred in attending Board meetings, which is allocated proportionally among
the active portfolios of UAM Funds, plus a quarterly retainer of $150 for each
active portfolio of the UAM Funds.
H. Purchases and Sales: For the six months ended April 30, 1999, 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.......................................... $12,595,459 $27,210,725
Equity............................................ 16,263,199 23,853,990
Small Cap Value................................... 11,277,191 10,362,519
</TABLE>
Purchases and sales of long-term and short-term U.S. Government and agency
securities were $13,952,124 and $10,285,486, 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
33
<PAGE>
UAM FUNDS STERLING PARTNERS' PORTFOLIOS
- -------------------------------------------------------------------------------
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 calendar quarter, is ac-
crued by each participating Portfolio based on its average daily unused por-
tion of the line of credit. During the six-months ended April 30, 1999, the
Portfolios had no borrowings under the agreement.
J. Other: At April 30, 1999, the percentage of total shares outstanding
were 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.............................................. 3 41.4%
Equity................................................ 1 12.7%
Small Cap Value....................................... 2 25.7%
</TABLE>
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
James P. Pappas Michelle Azrialy
Director Assistant Secretary
Peter M. Whitman, Jr.
Director
- --------------------------------------------------------------------------------
UAM Funds
P.O. Box 419081
Kansas City, MO 64141-6081
(toll free)
1-877-UAM-LINK (826-5465)
www.uam.com
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.
