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Supplement dated September 26, 2000, to the prospectuses of NWQ Special Equity
Portfolio.
The following information replaces the information in the "Adviser's
Historical Performance" and "Historical Performance of Jon Bosse" sections
of the portfolio's prospectuses in their entirety and adds new
information.
Adviser's Historical Performance
The adviser manages separate accounts that have the same investment
objectives as the portfolio. The adviser manages these accounts using
techniques and strategies substantially similar, though not always
identical, to those used to manage the portfolio. A composite of the
performance of these separate accounts is listed below. To be included in
the composite, the account had to be fully discretionary, tax-free, have
assets of at least $2 million and beginning January 1, 1997, under the
adviser's management for at least 60 days prior to the beginning of a
calendar quarter. The composite does not include any wrap accounts or
other similar accounts managed by the adviser where clients are charged a
single fee in excess of 0.40% by another financial institution for
brokerage, custody, consulting, reporting, performance monitoring and
adviser selection services because of the difficulty in segregating
charges related to transactional costs from charges for custody,
consulting, reporting, performance monitoring and adviser selection
services. Non-wrap accounts included in the composite have transaction
costs less than 0.40%, which the adviser believes is more reflective of
the charges related to the adviser's management of an account. Wrap
accounts may have fees as high as 3.00%, which cover services like
custody, consulting, reporting, performance monitoring, brokerage and
adviser selection services that are provided by the wrap program sponsor
and not the investment adviser. Consequently, the performance below would
be reduced if such wrap fees were reflected.
The performance data for the managed accounts reflects deductions for
investment management fees and transaction costs on an individual account
basis. However, any fees an individual account paid to a custodian were
not deducted. All fees and transaction costs of the separate accounts were
less than the operating expenses of the portfolio. If the performance of
the managed accounts were adjusted to reflect the
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fees and expenses of the portfolio, the composite's performance would have
been lower. The performance data also reflects the reinvestment of
dividends, income and capital appreciation.
The adviser calculated its performance based on a time-weighted and asset-
weighted total rate of return. Time-weighting is a method of calculating
the performance of each account in the composite that is designed to
remove the effect of any cash additions to, or withdrawals from, the
account. Asset-weighting means that larger accounts will have a
proportionately greater rate of impact on the composite's rate of return
than smaller accounts. The SEC standardized average annual total return is
neither time-weighted nor asset-weighted and is determined for specified
periods by computing the annualized percentage change in the value of the
initial amount that is invested in a share class of the portfolio at the
maximum public offering price. Had the adviser calculated its performance
using the SEC's methods for investment companies, its results might have
differed.
The separately managed accounts are not subject to investment limitations,
diversification requirements, and other restrictions imposed by the
Investment Company Act of 1940 and the Internal Revenue Code. If they
were, their returns might have been lower. The performance of these
separate accounts is not intended to predict or suggest the performance of
the portfolio.
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<CAPTION>
NWQ Investment
Management
Company-- Lipper Mid Cap
Special Equity S&P 400 Mid Cap Value Funds
Composite + S&P 500 Index # Index # Index #
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<S> <C> <C> <C> <C>
Calendar Years Ended:
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1997 35.48% 33.36% 32.25% 22.66%
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1998 7.89% 28.58% 19.12% -1.72%
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1999 16.30% 21.04% 14.72% 11.94%
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Average Annual Returns for Periods Ended 12/31/99
1-year 16.30% 21.04% 14.72% 11.94%
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3 Years 19.35% 27.56% 21.81% 10.50%
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Since inception
(10/1/96) 22.45% 28.32% 22.17% 11.81%
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Cumulative Since
Inception
(10/1/96) 93.12% 124.86% 91.67% 43.17%
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+ The adviser's imputed average annual investment management fee from
10/1/96 to 12/31/99 was approximately 0.76% based on the fees paid by
the adviser's special equity accounts included in the composite. Net
returns to investors may vary depending on the investment management
fee, which may be a maximum of 0.85%. The adviser's composite has not
been audited.
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# Lipper Mid Cap Value Funds Index, S&P 500 Index and S&P 400 Mid Cap
Index comparisons begin on 9/30/96.
Historical Performance of Jon Bosse
While at ARCO Investment Management Company, Mr. Bosse managed a separate
account using techniques and strategies substantially similar, though not
always identical, to those used to manage the NWQ Special Equity Portfolio.
Set forth below is certain performance information that the adviser
provided concerning Mr. Bosse's account. The performance data for this
account reflects deduction of the adviser's maximum special equity account
investment management fee and transaction costs. However, custodial fees
were not deducted. Because this account had different fees and expenses
than the portfolio, its investment returns may differ from those of the
portfolio. All fees and transaction costs of the separate account were less
than the operating expenses of the portfolio. If the performance of Mr.
Bosse's account were adjusted to reflect fees and expenses of the
portfolio, its performance would have been lower. The performance of Mr.
Bosse's account also reflects the reinvestment of dividends, income and
capital appreciation. During Mr. Bosse's tenure as portfolio manager for
the separately managed account, he was primarily responsible for the day-
to-day management of the assets, and no other person had a significant role
in achieving the separately managed account's performance.
The adviser calculated Mr. Bosse's performance based on a time-weighted
total rate of return. (See the description of the adviser's performance
above for an explanation of time-weighting.) The SEC standardized average
annual total return is neither time-weighted nor asset-weighted and is
determined for specified periods by computing the annualized percentage
change in the value of the an initial amount that is invested in a share
class of the portfolio at the maximum public offering price. Had the
adviser calculated Mr. Bosse's performance using the SEC's methods for
investment companies, its results might have differed.
The separately managed account is not subject to investment limitations,
diversification requirements, and other restrictions imposed by the
Investment Company Act of 1940 and the Internal Revenue Code. If the
separately managed account were, its returns might have been lower. The
performance of this separate account is not intended to predict or suggest
the performance of the portfolio.
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<CAPTION>
Lipper Mid
ARCO Value S&P 400 Mid Cap Cap Funds
Equity Fund* S&P 500 Index # Index # Index #
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<S> <C> <C> <C> <C>
Calendar Years Ended:
1990 0.74% -3.10% -5.13% -4.49%
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1991 53.57% 30.47% 50.10% 54.02%
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1992 30.25% 7.62% 11.91% 8.61%
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1993 19.71% 10.08% 13.95% 15.36%
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1994 8.59% 1.32% -3.58% -2.02%
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1995 38.54% 37.58% 30.94% 33.08%
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1996* 8.29% 7.45% 7.70% 8.30%
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Annualized Return For Various Periods Ended 8/31/96 (annualized)
1-year 15.46% 18.73% 11.88% 13.65%
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5 Years 22.90% 13.59% 14.18% 14.66%
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Since inception
(1/1/90) 22.80% 12.88% 14.52% 15.43%
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Cumulative Since
Inception (1/1/90) 293.30% 124.31% 146.92% 160.30%
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* Through 8/31/96. This figure is not an annualized return. Mr. Bosse was
a Portfolio Manager and Director of Equity Research at ARCO Investment
Management Company until September 30, 1996. Beginning September 1,
1996, certain securities were sold out of the account at the direction
of Arco Investment Management Company while Mr. Bosse maintained sole
decision-making authority over the remainder of the account.
# Lipper Mid Cap Funds Index, S&P 500 Index and S&P Mid Cap 400 Index
comparisons begin on 12/31/89.
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