<PAGE>
UAM Funds
Funds for the Informed Investor
FMA Small Company Portfolio
Semi-Annual Report April 30, 1999
UAM
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
APRIL 30, 1999
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Shareholders' Letter........................................................ 1
Portfolio of Investments.................................................... 3
Statement of Assets and Liabilities......................................... 6
Statement of Operations..................................................... 7
Statement of Changes in Net Assets.......................................... 8
Financial Highlights........................................................ 9
Notes to Financial Statements............................................... 11
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
- -------------------------------------------------------------------------------
May 1999
Dear Shareholder:
The small cap market, as measured by the Russell 2000 Index, posted a 15.1%
advance for the six-month period ended April 30, 1999. However, the returns
among industry sectors were quite disparate with the technology sector roaring
ahead 26.6% leaving the consumer staples sector behind with a negative 8.7%
return. In fact, for the six-month period, only three sectors--technology,
telecommunications and consumer discretionary--outperformed the small cap
benchmark. This phenomenon is also apparent when examining the returns of the
Russell 2000 Growth Index, which jumped 25.7% in the period compared with the
Russell 2000 Value Index, which advanced just 4.4% in the period. Needless to
say, small cap value investors recorded the lowest returns when compared to
their growth and large cap peers for the period. Given this challenging in-
vestment environment, UAM FMA Small Company Portfolio's Institutional Class
Shares returned negative 5.14% for the six-month period ended April 30, 1999,
and the Institutional Service Class Shares returned negative 5.16% during the
same period.
With that being said, we believe April marks the beginning of a shift in mar-
ket leadership across market capitalization, investment style and market sec-
tors. For the month of April, small cap equities outperformed their large cap
peers with the Russell 2000 Index advancing 9%, the S&P MidCap Index climbing
8% and the S&P 500 Index adding 4% for the month. A confluence of events in-
cluding a resurgence of economic strength in the United States, an expected
rebound in the economies of the Far East and the likelihood of an increase in
inflation driven by higher commodity prices has caused investors to re-examine
their investment focus. As such, investors have shifted their attention toward
economically sensitive industries which benefit from the factors described
above. At the same time, valuation measures are being more closely scrutinized
given a recent change in expectations that interest rates will likely rise in
the future. The economic backdrop outlined above suggests that current market
valuations may be suspect and if so, the likelihood that a small cap, value-
based investment style will outperform is increasing.
We have repositioned the UAM FMA Small Company Portfolio based on this invest-
ment outlook. The Portfolio is overweighted in the basic industries, energy
and capital goods sectors and moving toward an overweighted position in con-
sumer cyclicals as well. Finally, the Portfolio's financial overweighting will
be maintained despite our expectation for a modest increase in interest rates
given the sector's attractive valuation, the prospects for solid loan growth
and the likelihood of increased consolidation within the sector as Year 2000
issues subside. The Portfolio's
1
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
- -------------------------------------------------------------------------------
underweighted positions in the technology, utilities and transportation sec-
tors will be maintained.
We believe the small cap value investor is well positioned to capitalize on
the trends taking place in the market. Relative valuation remains attractive
and fundamental earnings power is forecast to accelerate for small cap compa-
nies. We remain committed to achieving a superior performance record for the
UAM FMA Small Company Portfolio and remain confident our process and strategy
will bring continued success.
Yours truly,
Kathryn A. Vorisek
Senior Vice President and Portfolio Manager
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 Comparative Indices
Russell 2000 Growth Index contains those Russell 2000 Index securities with
higher price-to-book ratios and higher forecasted growth values.
Russell 2000 Index is an unmanaged index composed of the 2,000 smallest stocks
in the Russell 3000 Index.
Russell 2000 Value Index contains those Russell 2000 Index 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.
S&P Midcap 400 Index consists of 400 domestic stocks chosen for market size
(medium market capitalization of approximately $700 million), liquidity, and
industry group representation. It is a market-value weighted index with each
stock affecting the index in proportion to its market value.
S&P 500 Index is an unmanaged index composed of 400 industrial stocks, 40
financial stocks, 40 utility stocks and 20 transportation stocks.
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.
2
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
APRIL 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 94.3%
<TABLE>
<CAPTION>
Shares Value+
------- -----------
<S> <C> <C>
AUTOS & TRANSPORTATION - 4.9%
*Atlantic Coast Airlines Holdings, Inc. .................. 58,600 $ 1,809,275
Borg-Warner Automotive, Inc. ............................. 80,300 4,557,025
Werner Enterprises, Inc. ................................. 120,612 2,291,628
-----------
8,657,928
-----------
CONSUMER PRODUCTS - 23.8%
Applebee's International, Inc. ........................... 73,600 1,899,800
*Aurora Foods, Inc. ...................................... 231,200 3,439,100
*Aviation Sales Co. ...................................... 40,700 1,628,000
Bob Evans Farm, Inc. ..................................... 160,710 2,943,002
*Brinker International, Inc. ............................. 112,711 3,113,641
*Canandaigua Brands, Inc., Class A........................ 51,450 2,649,675
Claire's Stores, Inc. .................................... 82,700 2,739,438
*Cox Radio, Inc., Class A................................. 70,300 3,427,125
Earthgrains Co. .......................................... 198,700 4,209,956
Great Atlantic & Pacific Tea Co., Inc. ................... 111,000 3,413,250
Lance, Inc. .............................................. 181,460 2,517,758
McClatchy Co., Class A.................................... 7,000 251,125
Meredith Corp. ........................................... 26,374 967,596
*Performance Food Group Co. .............................. 131,400 3,482,100
*ShopKo Stores, Inc. ..................................... 124,900 4,285,631
Smucker (J.M.) Co., Class B............................... 57,036 998,130
-----------
41,965,327
-----------
ENERGY - 3.7%
*BJ Services Co. ......................................... 54,600 1,460,550
ENSCO International, Inc. ................................ 46,500 863,156
*Santa Fe Energy Resources, Inc. ......................... 460,073 4,140,657
-----------
6,464,363
-----------
FINANCE - 23.6%
Century South Banks, Inc. ................................ 76,500 1,989,000
Community First Bankshares, Inc. ......................... 156,700 3,202,556
Fidelity National Corp. .................................. 141,700 1,257,588
First Financial Holdings, Inc. ........................... 112,800 2,248,950
First Midwest Bancorp, Inc. .............................. 37,600 1,501,650
HCC Insurance Holdings, Inc. ............................. 85,600 1,808,300
*HealthCare Financial Partners, Inc. ..................... 60,700 2,048,625
InterWest Bancorp, Inc. .................................. 123,600 2,827,350
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
APRIL 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
COMMON STOCKS - continued
<TABLE>
<CAPTION>
Shares Value+
------- -----------
<S> <C> <C>
FINANCE - continued
Investors Financial Services Corp. ....................... 123,348 $ 4,486,783
Legg Mason, Inc. ......................................... 69,500 2,423,813
Premier Bancshares, Inc. ................................. 207,250 4,067,281
UMB Financial Corp. ...................................... 73,215 3,065,878
United Bankshares, Inc. .................................. 145,400 3,853,100
U.S. Trust Corp. ......................................... 32,600 2,978,825
Webster Financial Corp. .................................. 128,800 3,960,600
-----------
41,720,299
-----------
HEALTH CARE - 6.9%
*IDEXX Laboratories, Inc. ................................ 148,900 3,368,862
*NCS HealthCare, Inc., Class A............................ 140,500 1,808,937
Owens & Minor, Inc., Holding Company...................... 272,750 2,693,406
*Universal Health Services, Inc., Class B................. 83,590 4,331,007
-----------
12,202,212
-----------
INDUSTRIAL - 15.2%
AK Steel Holding Corp. ................................... 65,100 1,692,600
ANTEC Corp. .............................................. 16,900 458,412
Applied Power, Inc., Class A.............................. 104,940 3,312,169
Chesapeake Corp. ......................................... 60,900 1,979,250
Granite Construction, Inc. ............................... 155,000 4,427,188
Lone Star Industries, Inc. ............................... 129,200 4,610,825
*Nortek, Inc. ............................................ 104,456 3,022,696
Rayonier, Inc. ........................................... 48,200 2,199,125
*Terex Corp. ............................................. 161,800 5,116,925
-----------
26,819,190
-----------
REAL ESTATE INVESTMENT TRUST - 3.2%
CBL & Associates Properties, Inc. ........................ 78,900 1,937,981
Nationwide Health Properties, Inc. ....................... 184,070 3,738,922
-----------
5,676,903
-----------
TECHNOLOGY - 6.4%
*CSG Systems International, Inc. ......................... 42,400 1,637,700
National Computer Systems, Inc. .......................... 127,600 3,572,800
*Progress Software Corp. ................................. 53,500 1,217,125
*RadiSys Corp. ........................................... 95,300 2,978,125
*Vishay Intertechnology, Inc. ............................ 106,700 1,860,581
-----------
11,266,331
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
APRIL 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
COMMON STOCKS - continued
<TABLE>
<CAPTION>
Shares Value+
------- -----------
<S> <C> <C>
UTILITIES - 6.6%
CILCORP, Inc. ............................................ 65,300 $ 3,950,650
MDU Resources Group, Inc. ................................ 155,750 3,319,422
NorthWestern Corp. ....................................... 172,100 4,453,088
-----------
11,723,160
-----------
TOTAL COMMON STOCKS (Cost $172,530,210)........................... 166,495,713
-----------
</TABLE>
SHORT-TERM INVESTMENT - 5.5%
<TABLE>
<S> <C> <C>
Face
REPURCHASE AGREEMENT - 5.5% Amount
----------
Chase Securities, Inc. 4.87%, dated 4/30/99, due
5/3/99, to be repurchased at 9,667,922,
collateralized by $8,937,195 of various U.S.
Treasury Notes, 5.50%-7.00% due 5/15/06-05/15/08,
valued at $9,669,093 (Cost $9,664,000)............. $9,664,000 9,664,000
-------------
TOTAL INVESTMENTS - 99.8% (Cost $182,194,210) (a).............. 176,159,713
-------------
OTHER ASSETS AND LIABILITIES (NET) - 0.2%...................... 392,028
-------------
NET ASSETS - 100%.............................................. $ 176,551,741
=============
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security
(a) The cost for federal income tax purposes was $182,194,210. At April 30,
1999, net unrealized depreciation for all securities based on tax cost was
$6,034,497. This consisted of aggregate gross unrealized appreciation for
all securities of $9,537,955 and aggregate gross unrealized depreciation
for all securities of $15,572,452.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
APRIL 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<S> <C>
Assets
Investments, at Cost............................................. $182,194,210
============
Investments, at Value -- Note A...................... ........... $176,159,713
Cash............................................................. 862
Receivable for Investments Sold.................................. 3,142,892
Receivable for Portfolio Shares Sold............................. 26,183
Dividends Receivable............................................. 110,622
Interest Receivable.............................................. 1,307
Other Assets..................................................... 10,300
------------
Total Assets.................................................... 179,451,879
------------
Liabilities
Payable for Investments Purchased................................ 2,691,371
Payable for Portfolio Shares Redeemed............................ 139,686
Payable for Investment Advisory Fees -- Note B................... 42,090
Payable for Administrative Fees -- Note C........................ 22,788
Payable for Custodian Fees -- Note D............................. 1,918
Payable for Distribution and Service Fees -- Note E.............. 690
Payable for Directors' Fees -- Note G............................ 1,595
------------
Total Liabilities............................................... 2,900,138
------------
Net Assets....................................................... $176,551,741
============
Net Assets Consist of:
Paid in Capital.................................................. $199,762,155
Undistributed Net Investment Income.............................. 170,145
Accumulated Net Realized Loss.................................... (17,346,062)
Unrealized Depreciation.......................................... (6,034,497)
------------
Net Assets....................................................... $176,551,741
============
Institutional Class Shares:
Net Assets....................................................... $175,876,088
Shares Issued and Outstanding ($0.001 par value) (Authorized
25,000,000)..................................................... 12,798,621
Net Asset Value, Offering and Redemption Price Per Share......... $ 13.74
============
Institutional Service Class Shares:
Net Assets....................................................... $ 675,653
Shares Issued and Outstanding ($0.001 par value) (Authorized
10,000,000)..................................................... 49,146
Net Asset Value, Offering and Redemption Price Per Share......... $ 13.75
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
FOR THE SIX MONTHS ENDED
APRIL 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<S> <C>
Investment Income
Dividends........................................................ $ 1,232,978
Interest......................................................... 286,809
------------
Total Income.................................................... 1,519,787
------------
Expenses
Investment Advisory Fees -- Note B............................... 747,834
Administrative Fees -- Note C.................................... 200,902
Shareholder Servicing Fees....................................... 111,527
Registration and Filing Fees..................................... 27,958
Printing Fees.................................................... 11,779
Custodian Fees -- Note D......................................... 11,215
Directors' Fees -- Note G........................................ 3,890
Distribution and Service Plan Fees -- Note E:
Institutional Service Class..................................... 1,338
Account Services Fees -- Note F.................................. 1,207
Other Expenses................................................... 32,760
Account Services Fees Waived -- Note F........................... (1,207)
Investment Advisory Fees Waived -- Note B........................ (120,380)
------------
Net Expenses.................................................... 1,028,823
------------
Net Investment Income............................................ 490,964
------------
Net Realized Loss on Investments................................. (15,914,326)
Net Change in Unrealized Appreciation/Depreciation on
Investments..................................................... 3,419,653
------------
Net Loss on Investments.......................................... (12,494,673)
------------
Net Decrease in Net Assets Resulting from Operations............. $(12,003,709)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
April 30, 1999 October 31,
(Unaudited) 1998
-------------- ------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income............................ $ 490,964 $ 882,421
Net Realized Loss................................ (15,914,326) (1,429,412)
Net Change in Unrealized
Appreciation/Depreciation....................... 3,419,653 (16,941,108)
------------ ------------
Net Decrease in Net Assets Resulting from
Operations...................................... (12,003,709) (17,488,099)
------------ ------------
Distributions:
Net Investment Income:
Institutional Class.............................. (488,655) (734,739)
Institutional Service Class...................... (580) (3,012)
Net Realized Gain:
Institutional Class.............................. -- (5,194,461)
Institutional Service Class...................... -- (458,826)
------------ ------------
Total Distributions.............................. (489,235) (6,391,038)
------------ ------------
Capital Share Transactions -- Note K:
Institutional Class:
Issued........................................... 70,426,914 307,875,138
In Lieu of Cash Distributions.................... 462,066 5,676,436
Redeemed......................................... (96,053,535) (121,405,023)
------------ ------------
Net Increase (Decrease) from Institutional Class
Shares.......................................... (25,164,555) 192,146,551
------------ ------------
Institutional Service Class:
Issued........................................... 503,033 540,187
In Lieu of Cash Distributions.................... 579 461,838
Redeemed......................................... (248,216) (4,689,699)
------------ ------------
Net Increase (Decrease) from Institutional
Service Class Shares............................ 255,396 (3,687,674)
------------ ------------
Net Increase (Decrease) from Capital Share
Transactions.................................... (24,909,159) 188,458,877
------------ ------------
Total Increase (Decrease)........................ (37,402,103) 164,579,740
Net Assets:
Beginning of Period.............................. 213,953,844 49,374,104
------------ ------------
End of Period (including undistributed net
investment income of $170,145 and $168,416,
respectively)................................... $176,551,741 $213,953,844
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Per Share Data & Ratios
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Institutional Class Shares
-------------------------------------------------------------
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.... $ 14.52 $ 16.60 $ 14.11 $ 13.19 $ 12.13 $ 14.24
-------- -------- ------- ------- ------- -------
Income From Investment
Operations
Net Investment Income.. 0.04 0.07 0.06 0.09 0.08 0.01
Net Realized and
Unrealized Gain
(Loss)................ (0.78) (0.31) 4.97 2.46 1.47 0.50
-------- -------- ------- ------- ------- -------
Total From Investment
Operations............ (0.74) (0.24) 5.03 2.55 1.55 0.51
-------- -------- ------- ------- ------- -------
Distributions:
Net Investment Income.. (0.04) (0.07) (0.13) (0.09) (0.08) --
Net Realized Gain...... -- (1.77) (2.41) (1.60) (0.41) (2.62)
-------- -------- ------- ------- ------- -------
Total Distributions.... (0.04) (1.84) (2.54) (1.69) (0.49) (2.62)
-------- -------- ------- ------- ------- -------
Capital Contribution.... -- -- -- 0.06 -- --
-------- -------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 13.74 $ 14.52 $ 16.60 $ 14.11 $ 13.19 $ 12.13
======== ======== ======= ======= ======= =======
Total Return+........... (5.14)%** (2.10)% 42.33% 22.51% 13.57% 4.54%
======== ======== ======= ======= ======= =======
Ratios and Supplemental
Data
Net Assets, End of
Period (Thousands)..... $175,876 $213,491 $45,060 $20,953 $20,847 $19,561
Ratio of Expenses to
Average Net Assets..... 1.03%* 1.03% 1.03% 1.03% 1.03% 1.03%
Ratio of Net Investment
Income to Average Net
Assets................. 0.49%* 0.62% 0.50% 0.75% 0.66% 0.06%
Portfolio Turnover
Rate................... 54% 39% 86% 106% 170% 121%
Ratio of Voluntarily
Waived Fees and
Expenses Assumed by
Affiliates to Average
Net Assets............. 0.12%* 0.08% 0.29% 0.48% 0.32% 0.29%
Ratio of Expenses to
Average Net Assets
Including Expense
Offsets................ 1.03%* 1.03% 1.03% 1.03% 1.03% N/A
</TABLE>
* Annualized
** Not Annualized
+ Total return would have been lower had certain fees not been waived and ex-
penses assumed by Affiliates.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Per Share Data & Ratios
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Institutional Service Class Shares
--------------------------------------
Six Months August 1,
Ended Year Ended 1997*** to
April 30, 1999 October 31, October 31,
(Unaudited) 1998 1997
-------------- ----------- -----------
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period.................. $14.51 $16.59 $14.95
------ ------ ------
Income From Investment
Operations
Net Investment Income...... (0.05) 0.16 0.01
Net Realized and Unrealized
Gain (Loss)............... (0.70) (0.46) 1.64
------ ------ ------
Total From Investment
Operations................ (0.75) (0.30) 1.65
------ ------ ------
Distributions:
Net Investment Income...... (0.01) (0.01) (0.01)
Net Realized Gain.......... -- (1.77) --
------ ------ ------
Total Distributions........ (0.01) (1.78) (0.01)
------ ------ ------
Net Asset Value, End of
Period..................... $13.75 $14.51 $16.59
====== ====== ======
Total Return+............... (5.16)%** (2.49)% 11.04%**
====== ====== ======
Ratios and Supplemental Data
Net Assets, End of Period
(Thousands)................ $ 676 $ 463 $4,314
Ratio of Expenses to Average
Net Assets................. 1.43%* 1.43% 1.43%*
Ratio of Net Investment
Income to Average Net
Assets..................... 0.07%* 0.23% 0.24%*
Portfolio Turnover Rate..... 54% 39% 100%
Ratio of Voluntarily Waived
Fees and Expenses Assumed
by Affiliates to Average
Net Assets................. 0.12%* 0.08% 0.21%*
Ratio of Expenses to Average
Net Assets Including
Expense Offsets............ 1.43%* 1.43% 1.43%*
</TABLE>
* Annualized
** Not Annualized
*** Initial offering of Institutional Service Class Shares
+ Total return would have been lower had certain fees not been waived and
expenses assumed by Affiliates.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (Unaudited)
UAM Funds, Inc. and UAM Funds Trust (collectively the "UAM Funds") are reg-
istered under the Investment Company Act of 1940, as amended. The FMA Small
Company Portfolio (the "Portfolio"), a portfolio of UAM Funds, Inc., is a di-
versified, open-end management investment company. At April 30, 1999, the UAM
Funds were comprised of 44 active portfolios. The information presented in the
financial statements pertains only to the Portfolio. The Portfolio currently
offers two separate classes of shares--Institutional Class Shares and Institu-
tional Service Class Shares ("Service Class Shares"). Both classes of shares
have identical voting rights (except Service Class shareholders have exclusive
voting rights with respect to matters relating to distribution and shareholder
servicing of such shares), dividend, liquidation and other rights. The objec-
tive of the Portfolio is to provide maximum, long-term total return consistent
with reasonable risk to principal by investing primarily in common stocks of
smaller companies in terms of revenues and/or 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 by using the average be-
tween the last reported bid and last reported offer prices quoted on such
day. Short-term investments that have remaining maturities of sixty days
or less at time of purchase are valued at amortized cost, if it approxi-
mates market value. The value of other assets and securities for which no
quotations are readily available is determined in good faith at fair value
following procedures approved by the Board of Directors.
2. Federal Income Taxes: It is the Portfolio's intention to qualify as a
regulated investment company under Subchapter M of the Internal Revenue
Code and to distribute all of its taxable income. Accordingly, no provi-
sion for Federal income taxes is required in the financial statements.
3. Repurchase Agreements: In connection with transactions involving re-
purchase agreements, the Portfolio's custodian bank takes possession of
11
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
- -------------------------------------------------------------------------------
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, the Portfolio has the right to liquidate the collat-
eral 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: The Portfolio will distribute substan-
tially all of its net investment income quarterly. Any realized net capi-
tal gains will be distributed at least annually. All distributions are re-
corded on ex-dividend date. The Portfolio's distributions to shareholders
may include a return of capital received from the REITs as well as returns
of capital attributed to distributions of other income for financial re-
porting purposes which was not subject to taxation.
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.
Permanent book and tax basis differences relating to shareholder distri-
butions may result in reclassifications to undistributed net investment
income (loss), accumulated net realized gain (loss) and paid in capital.
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 or
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 an accrual basis. Discounts and
premiums on securities purchased are amortized using the effective yield
basis over their respective lives.
12
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
- -------------------------------------------------------------------------------
Most expenses of the UAM Funds can be directly attributed to a particular
portfolio. Expenses that cannot be directly attributed to a portfolio or
share class are apportioned among the portfolios of the UAM Funds based on
their relative net assets. Income, expenses (other than class specific ex-
penses) and realized and unrealized gains or losses are allocated to each
class of shares based upon their relative net assets. Custodian fees for
the Portfolio are shown gross of expense offsets, if any, for custodian
balance credits.
B. Investment Advisory Services: Under the terms of an investment advisory
agreement, Fiduciary Management Associates, Inc. (the "Adviser"), a subsidiary
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. The Adviser has voluntarily agreed to waive a por-
tion of its advisory fees and to assume expenses, if necessary, in order to
keep the Portfolio's total annual operating expenses, after the effect of ex-
pense offset arrangements, from exceeding 1.03% of average daily net assets of
the Portfolio's Institutional Class Shares and 1.43% of the average daily net
assets of the Portfolio's Institutional Service Class Shares.
C. Administrative Services: UAM Fund Services, Inc. (the "Administrator"), a
wholly-owned subsidiary of UAM, provides and oversees administrative, fund ac-
counting, dividend disbursing and transfer agent services to the Portfolio un-
der a Fund Administration Agreement. The Administrator has entered into a Mu-
tual 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 Sys-
tems, Inc. ("DST"), under which DST provides transfer agent and dividend-dis-
bursing 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.
In exchange for administrative services, the 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 and $3,000 for each additional class.
--A portfolio-specific monthly fee of 0.04% per annum of the average daily
net assets of the Portfolio, which is retained by the Administrator.
13
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
- -------------------------------------------------------------------------------
--An annual base fee that the Administrator pays to CGFSC for its adminis-
trative and fund accounting services calculated at an annual rate of no
more than $52,500 for the first operational share class: $7,500 for each
additional 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 and $2,500 for each additional class.
The Portfolio also pays 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 $200,902
from the Portfolio of which $71,533 and $49,069 was paid to CGFSC and UAMSSC,
respectively, for their services.
D. Custodian: The Chase Manhattan Bank is custodian for the Portfolio's 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 Portfolio. The
Distributor does not receive any fee or other compensation with respect to the
Portfolio.
The Portfolio has adopted a Distribution and Service Plan (the "Plan") on
behalf of the Service Class Shares pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Under the Plan, the Service Class Shares may not incur
distribution and service fees which exceed an annual rate of 0.75% of the net
assets of that class of shares, however, the Board has currently limited ag-
gregate payments under the Plan to 0.50% per annum of the Service Class
Share's net assets. The Portfolio's Service Class Shares are currently making
payments for distribution fees at 0.15% of average daily net assets.
In addition, the Portfolio pays service fees at an annual rate of 0.25% of
the average daily net asset value of Service Class Shares owned by clients of
the Service Agents.
F. Account Services: Through January 1, 1999, the UAM Funds had contracted
with UAM Retirement Plan Services, Inc. (the "Service Provider"), a
14
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
- -------------------------------------------------------------------------------
wholly-owned subsidiary of UAM, to perform certain services for participants
in a self-directed, defined contribution plan, and for whom the Service Pro-
vider provided participant recordkeeping. Pursuant to the terms of the agree-
ment, the Service Provider was 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 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, the Portfo-
lio made purchases of $100,729,420 and sales of $110,918,745 of investment se-
curities other than long-term U.S. Government and short-term securities. There
were no purchases or sales of long-term U.S. Government securities.
I. Line of Credit: The Portfolio, along with certain other portfolios of UAM
Funds, collectively entered into an agreement which enables them to partici-
pate in a $100 million unsecured line of credit with several banks. Borrowings
will be made solely to temporarily finance the repurchase of capital 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 calendar quar-
ter, is accrued by each participating portfolio based on its average daily un-
used portion of the line of credit. During the six months ended April 30,
1999, the Portfolio had no borrowings under the agreement.
J. Other: At April 30, 1999, 44% and 98% of total shares outstanding were
held by 2 and 3 shareholders of Institutional Class Shares and Institutional
Service Class Shares, respectively, owning 10% or greater of the aggregate to-
tal shares outstanding.
At October 31, 1998, the Portfolio had available a capital loss carryover
for Federal income tax purposes of approximately $1,429,412 which will expire
on October 31, 2006.
15
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
K. Capital Share Transactions: Transactions in capital shares for the Portfo-
lio, by class, were as follows:
<TABLE>
<CAPTION>
Institutional Class Institutional Service
Shares Class Shares
------------------------- --------------------------
Six Months Year Six Months
Ended Ended Ended Year Ended
April 30, 1999 October April 30, 1999 October 31,
(Unaudited) 31, 1998 (Unaudited) 1998
-------------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Shares Issued............ 4,845,561 19,559,739 34,433 37,114
In Lieu of Cash
Distributions........... 32,701 368,405 40 29,875
Shares Redeemed.......... (6,784,522) (7,937,299) (17,202) (295,072)
---------- ---------- ------- --------
Net Increase (Decrease)
from Capital Share
Transactions............ (1,906,260) 11,990,845 17,271 (228,083)
========== ========== ======= ========
</TABLE>
16
<PAGE>
UAM FUNDS FMA SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
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
Fiduciary Management Associates, Inc.
55 West Monroe Street, Suite 2550
Chicago, IL 60603-5093
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.
<PAGE>
[LOGO OF UAM APPEARS HERE]
Supplement dated June 22, 1999, to the FMA Small Company Portfolio
Institutional and Institutional Service Class Prospectuses dated February 16,
1999
Except as the officers of the portfolio may permit, to invest in the portfolio
you must satisfy the following minimum investment requirements:
<TABLE>
<CAPTION>
To open an account To buy more shares
- -----------------------------------------------------------------------------------
<S> <C> <C>
Minimum Investments $2,500 -- regular account $100
$500 -- IRAs
$250 -- spousal IRAs
</TABLE>
[LOGO OF UAM APPEARS HERE]
(R)
