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UAM(R) Funds
Funds for the Informed Investor/sm/
January , 2001
Dear Shareholder:
I am writing to all shareholders of Sterling Partners' Balanced Portfolio and
Sterling Partners' Small Cap Value Portfolio (each an "SP (UAM) Portfolio," and
collectively, the "SP (UAM) Portfolios" or "SP Portfolios") to inform you of a
special meeting of shareholders to be held ________________, 2001. Before that
special meeting, I would like your vote on the important issues affecting your
fund as described in the attached proxy statement. This is a very important
meeting that has been called to consider two proposals requiring your vote as a
shareholder.
The proxy statement includes proposals relating to the approval of a new
investment advisory agreement for each SP (UAM) Portfolio and the approval of a
reorganization transaction ("Reorganization Transaction") with respect to each
SP (UAM) Portfolio. More specific information about all the proposals is
contained in the proxy statement, which you should consider carefully.
The Board of Directors of your SP (UAM) Portfolio have unanimously approved the
proposals and recommends that you vote FOR all of the proposals described within
this document.
I realize that this proxy statement will take time to review, but your vote is
very important. Please familiarize yourself with the proposals presented and
vote by signing and returning your proxy card(s) in the enclosed postage-paid
envelope. You will receive two proxy cards if you own shares in both SP (UAM)
Portfolios. Please sign and return each card you receive.
If we do not receive your completed proxy card promptly, you may be contacted by
a representative of UAM Funds, Inc. (the "UAM Funds") who will remind you to
vote your shares.
We thank you for taking this matter seriously and participating in this
important process.
Sincerely,
James F. Orr, III
Chairman
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IMPORTANT NEWS FOR SHAREHOLDERS OF THE PORTFOLIOS
While we encourage you to read the full text of the enclosed Proxy Statement,
here is a brief overview of some matters affecting the Sterling Partners'
Balanced Portfolio and Sterling Partners' Small Cap Value Portfolio that
requires a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. What is happening to the SP (UAM) Portfolios?
A. Until recently, all investment decisions regarding the SP (UAM)
Portfolios were made by Sterling Capital Management Company ("Old
Sterling"), a wholly-owned subsidiary of United Asset Management
Corporation or UAM. UAM administers the SP (UAM) Portfolios. Five key
employees of Old Sterling organized Sterling Capital Management, LLC ("New
Sterling"), and on [CLOSING DATE] New Sterling purchased the investment
advisory business of Old Sterling. In connection with this purchase, New
Sterling and the SP (UAM) Portfolios entered into Interim Agreements
("Interim Agreement" or collectively, the "Interim Agreements") under which
New Sterling makes investment decisions for the SP (UAM) Portfolios pending
completion of the business transfer from Old Sterling and UAM to New
Sterling. In connection with the purchase of Old Sterling's business, UAM
and New Sterling agreed, subject to your approval, to a Reorganization
pursuant to which the assets of the SP (UAM) Portfolios will be transferred
to new portfolios, to be called the SP (AIC) Portfolios, which will be two
series of the Advisors' Inner Circle Fund ("AIC Trust") and shareholders of
the SP (UAM) Portfolios will receive shares of equivalent value and number
in SP (AIC) Portfolios. New Sterling will make all investment decisions for
the SP (AIC) Portfolios, SEI Investments Mutual Fund Services, Inc. will
serve as administrator and SEI Distribution Co. will serve as the
distributor to the SP (AIC) Portfolios.
The following pages give you additional information about the sale to New
Sterling and the Reorganization of the SP Portfolios and the proposals on
which you are being asked to vote. The Board of Directors of UAM Funds,
including those who are not affiliated with UAM, Old Sterling, New
Sterling, the UAM Funds or their respective affiliates, unanimously
recommend that you vote FOR these proposals.
Q. Why did you send me this booklet?
A. You are receiving these proxy materials - a booklet that includes the Proxy
Statement and a proxy card - because you have the right to vote on the
important proposals concerning your investment in your SP (UAM) Portfolio.
Q. Why are multiple cards enclosed?
A. If you own shares of both the Sterling Partners' Balanced Portfolio and
Sterling Partners' Small Cap Value Portfolio you will receive a proxy card
for each portfolio.
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Q. Why am I being asked to vote on the new advisory agreement in Proposal No.
1?
A. The purchase by New Sterling of Old Sterling's business constituted an
"assignment," as that term is defined in the 1940 Act, of the SP
Portfolios' investment advisory agreements. As required by the 1940 Act,
the SP Portfolios' investment advisory agreements automatically terminated
as a result of the assignment. Accordingly, in anticipation of the
completion of the sale to New Sterling, the Board of UAM approved the
Interim Agreements and has proposed continuation of the advisory services
under new investment advisory agreements between the SP Portfolios and New
Sterling for approval by shareholders of each of the SP Portfolios.
Compensation earned by New Sterling under the Interim Agreements is held in
an interest-bearing escrow account pending shareholder approval of new
investment advisory agreements for a period of up to 150 days from the
termination of the previous investment advisory agreements. If shareholders
approve the proposed investment advisory agreements, the amount held in the
escrow account, plus interest, will be paid to New Sterling. If
shareholders do not approve the proposed investment advisory agreements,
New Sterling will be paid the lesser of the costs incurred in performing
its services under the Interim Agreements or the total amount in the escrow
account, plus interest earned. The new advisory agreement is substantially
similar in all material respects to the Interim Agreements and the previous
advisory agreements between Old Sterling and each SP Portfolio and each SP
Portfolio's advisory fee rate will remain unchanged.
Q. What happens if a new advisory agreement is not approved?
A. If the shareholders of an SP (UAM) Portfolio do not approve a new
investment advisory agreement, the Interim Agreement will continue in
effect and the Board of UAM will take such further action as it deems to be
in the best interests of the shareholders of such SP (UAM) Portfolio.
Q. Why am I being asked to vote on the proposed Reorganization in Proposal No.
2?
A. A shareholder vote is required to approve a transfer of the assets and
liabilities of one series or portfolio of a mutual fund to a new series or
portfolio of another mutual fund. The proposed Reorganization requires
shareholder approval because the assets of the SP (UAM) Portfolios will be
transferred from the UAM mutual fund to the new SP (AIC) Portfolios under
the AIC mutual fund.
Q. What happens if the proposed Reorganization is not approved?
A. If the shareholders of a SP (UAM) Portfolio do not approve the
Reorganization, the Reorganization will not close and the Board of UAM will
take such further action as it deems to be in the best interests of the
shareholders of such SP (UAM) Portfolio.
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Q. How will the transactions affect me?
A. The SP (AIC) Portfolios' investment objectives, investment restrictions and
fees and expenses are identical to those of the SP (UAM) Portfolios. The SP
(AIC) Portfolios are not, however, part of the UAM Funds. The SP (AIC)
Portfolios are separate series of the AIC Trust and you will become a
shareholder of those funds after the Reorganization Transaction, if the
shareholders approve it. SEI Investments and its affiliates (rather than
UAM) will provide administrative and other services to the SP (AIC)
Portfolios. The Reorganization Transaction will not be a taxable event to
the shareholders of the SP Portfolios.
Q. How does the UAM Board recommend that I vote?
A. After careful consideration, the UAM Board, including those Directors who
are not affiliated with the UAM Funds, UAM or its affiliated companies and
New Sterling and its affiliated companies, recommend that you vote FOR all
of the proposals on the enclosed proxy card(s).
Q. Whom do I call for more information or to place my vote?
A. You may provide the UAM Funds with your vote via mail. If you need more
information on how to vote, or if you have any questions, please call your
fund's information agent at 1-877-826-5465.
Your Vote Is Important And Will Help Avoid The Additional Expense Of Another
Solicitation.
Thank You For Promptly Recording Your Vote.
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UAM Funds
211 Congress Street, 4th Floor
Boston, MA 02110
1-877-826-5465
NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD ON , 2001
NOTICE IS HEREBY GIVEN that a meeting (the "Meeting") of shareholders of
Sterling Partners' Balanced Portfolio and Sterling Partners' Small Cap Value
Portfolio, each a series of UAM Funds, Inc., will be held at the offices of UAM
Fund Services, Inc., 211 Congress Street, Boston, MA 02110 at 10:00 a.m. Eastern
time on _____, 2001 for the following purposes:
1. To approve a new investment advisory agreement for the Sterling Partners'
Balanced Portfolio and the Sterling Partners' Small Cap Value Portfolio.
2. To approve a reorganization transaction with respect to the Sterling
Partners' Balanced Portfolio and the Sterling Partners' Small Cap Value
Portfolio.
3. To transact any other business that may properly come before the Meeting or
any adjournments thereof.
Shareholders of record at the close of business on December 21, 2000, are
entitled to notice of, and to vote at the Meeting or any adjournments thereof.
You are invited to attend the Meeting, but if you cannot do so, please complete
and sign the enclosed proxy and return it in the accompanying envelope as
promptly as possible. Your vote is important no matter how many shares you own.
You can vote easily and quickly by mail, by facsimile or in person. You may
change your vote even though a proxy has already been returned by written notice
to the UAM Funds, by submitting a subsequent proxy using the mail or by voting
in person at the meeting.
By Order of the Board of Directors of the UAM Funds, Inc.
Linda T. Gibson
Secretary
Boston, Massachusetts
, 2001
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UAM Funds
211 Congress Street, 4th Floor
Boston, MA 02110
1-877-826-5465
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
STERLING PARTNERS' BALANCED PORTFOLIO
STERLING PARTNERS' SMALL CAP VALUE PORTFOLIO
TO BE HELD ON ________________, 2001
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of the UAM Funds, Inc. (the "UAM Funds") for the meeting of
shareholders of Sterling Partners' Balanced Portfolio and Sterling Partners'
Small Cap Value Portfolio (each a "SP (UAM) Portfolio," and collectively, the
"SP (UAM) Portfolios" or the "SP Portfolios") to be held at the offices of UAM
Fund Services, Inc., 211 Congress Street, Boston, MA 02110 on __________, 2001
at 10:00 a.m., and all adjournments thereof (the "Meeting"). Shareholders of
record at the close of business on December 21, 2000 (the "Record Date"), are
entitled to notice of, and to vote at, the Meeting. This proxy statement and the
accompanying notice of meeting and proxy card are first being mailed to
shareholders on or about _____, 2001.
As used in this proxy statement, the UAM Funds' board of directors is referred
to as a "Board," and the term "Director" includes each director of the UAM
Funds. A Director who is an interested person of the UAM Funds is referred to in
this proxy statement as an "Interested Director." A Director may be an
interested person of the UAM Funds because he or she is affiliated with one of
the UAM Funds' investment advisers, United Asset Management Corporation or the
UAM Funds' principal underwriter. Directors who are not interested persons of
the UAM Funds are referred to in this proxy statement as "Independent
Directors."
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SUMMARY OF PROPOSALS REQUIRING SHAREHOLDER VOTE
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The Board intends to bring before the Meeting the matters set forth in the
foregoing notice. If you wish to participate in the Meeting you may submit
the proxy card(s) included with this proxy statement or attend in person.
Your vote is important no matter how many shares you own. You can vote
easily and quickly by mail, by facsimile or in person. At any time before
the Meeting, you may change your vote even though a proxy has already been
returned by written notice to the UAM Funds, by mail, submitting a
subsequent proxy, or by voting in person at the meeting. Should
shareholders require additional information regarding the proxy or
replacement proxy cards, they may contact the UAM Funds at 1-877-826-5465.
The SP Portfolios expect that the solicitation of proxies from shareholders
will be made by mail, but solicitation also may be made by telephone
communications from officers or employees of UAM or its affiliates, who
will not receive any compensation therefore from the SP Portfolios. The
costs of the solicitation of proxies and the costs of holding the Meeting
will be borne by New Sterling, not the UAM Funds or the SP (UAM)
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Portfolios.
All proxy cards solicited that are properly executed and received in time
to be voted at the Meeting will be voted at the Meeting or any adjournment
thereof according to the instructions on the proxy card. If no
specification is made on a proxy card, it will be voted FOR the matters
specified on the proxy card. For purposes of determining the presence of a
quorum, abstentions, broker non-votes or withheld votes will be counted as
present; however, they will have the effect of a vote against Proposals 1
and 2. Shareholders should note that, while votes to ABSTAIN will count
toward establishing a quorum, passage of any Proposal being considered at
the Meeting will occur only if a sufficient number of votes are cast FOR
the Proposal. Accordingly, votes to ABSTAIN, broker non-votes or withheld
votes and votes AGAINST will have the same effect in determining whether
the Proposal is approved. Unmarked voting instructions will be voted in
favor of the proposals.
If a quorum is not present at the Meeting, or if a quorum is present at the
Meeting but sufficient votes to approve one or more of the proposed items
are not received, or if other matters arise requiring shareholder
attention, the persons named as proxy agents may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of a majority of those
shares present at the Meeting or represented by proxy. A shareholder vote
may be taken on one or more of the items in this Proxy Statement prior to
such adjournment if sufficient votes have been received and it is otherwise
appropriate. The persons named as proxies will vote those proxies that they
are entitled to vote FOR any such proposal in favor of such an adjournment,
and will vote those proxies required to be voted AGAINST any such proposal,
against any such adjournment.
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Required Vote
The approval of Proposal 1 with respect to a particular SP (UAM) Portfolio
requires the affirmative vote of a "majority of the outstanding voting
securities" of the particular SP (UAM) Portfolio. Each SP (UAM) Portfolio
will be voting as a separate series with respect to each proposal. Under
the Investment Company Act of 1940 (the "1940 Act"), the vote of a
"majority of the outstanding voting securities" means the affirmative vote
of the lesser of (a) 67% or more of the voting securities present at the
meeting or represented by proxy if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy or (b)
more than 50% of the outstanding voting securities. The approval of
Proposal 2 with respect to a particular SP (UAM) Portfolio requires the
affirmative vote of a majority of the shares entitled to vote of such SP
(UAM) Portfolio.
PROPOSAL 1 - APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
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Introduction
Until recently, all investment decisions regarding the SP (UAM) Portfolios
were made by Sterling Capital Management Company ("Old Sterling"), a
wholly-owned subsidiary of UAM. UAM administers the SP Portfolios. Five key
employees of Old Sterling organized Sterling Capital Management, LLC ("New
Sterling"), and on [CLOSING DATE] New Sterling purchased the investment
advisory business of Old Sterling. In connection with this purchase, New
Sterling and the SP (UAM) Portfolios entered into interim agreements
("Interim Agreements") under which New Sterling makes investment decisions
for the SP (UAM) Portfolios pending completion of the business transfer
from Old Sterling and UAM to New Sterling. In connection with the purchase
of Old Sterling's business, UAM and New Sterling agreed, subject to
shareholder approval, to a reorganization (the "Reorganization" or the
"Reorganization Transaction") pursuant to which the assets of the SP (UAM)
Portfolios would be transferred to new portfolios, called the SP (AIC)
Portfolios, which are two series of the Advisors' Inner Circle Fund ("AIC
Trust"). The SP (AIC) Portfolios will be administered by SEI Mutual Fund
Services, Inc. ("SEI"). New Sterling will make all investment decisions for
the SP (AIC) Portfolios and SEI and its affiliates will serve as
administrator, distributor and shareholder servicing agent. DST Systems,
Inc. will serve as transfer agent and First Union will serve as custodian
to the AIC Trust. New Sterling is located at 301 South College Street,
Suite 3200, Charlotte, North Carolina 28202. UAM's address is One
International Place, Boston, Massachusetts 02110. UAM is also the parent
company of each SP (UAM) Portfolio's administrator, distributor and
shareholder servicing agent.
The purchase of the business of Old Sterling by New Sterling constituted an
"assignment," as that term is defined in the 1940 Act, of the SP (UAM)
Portfolios' investment advisory agreements. As required by the 1940 Act,
the SP (UAM) Portfolios' investment advisory agreements automatically
terminated as a result of the assignment. Accordingly, in anticipation of
the completion of the sale to New Sterling and in the event the
Reorganization Transaction (discussed below under Proposal 2) is not
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<PAGE>
approved, the Board approved the Interim Agreements. The Board also has
proposed continuation of the advisory services under new investment
advisory agreements between the SP (UAM) Portfolios and New Sterling
pending completion of the proposed Reorganization for approval by
shareholders of each of the SP (UAM) Portfolios. Compensation earned by New
Sterling under the Interim Agreements is held in an interest-bearing escrow
account pending shareholder approval of new investment advisory agreements
for a period of up to 150 days from the termination of the previous
investment advisory agreements. If shareholders approve the proposed
investment advisory agreements, the amount held in the escrow account, plus
interest, will be paid to New Sterling. If shareholders do not approve the
proposed investment advisory agreements, New Sterling will be paid the
lesser of the costs incurred in performing its services under the Interim
Agreements or the total amount in the escrow account, plus interest earned.
A form of the new investment advisory agreement is attached to this proxy
statement as Exhibit A. The new investment advisory agreements with the AIC
Trust do not require your approval, but they will be substantially similar
in all material respects to each SP (UAM) Portfolio's previous investment
advisory agreement, the Interim Agreements and the form of investment
advisory agreement attached to this proxy statement as Exhibit A. In
addition, the advisory fee rate payable to New Sterling by the SP
Portfolios will remain unchanged. New Sterling will provide services to the
SP (UAM) Portfolios under the new advisory agreements only in the event
that shareholders do not approve the Reorganization Transaction.
Information on Investment Advisory Fees and Annual Expense Limitation
Each SP (UAM) Portfolio currently pays New Sterling annual advisory fees at
the rates of 0.75% and 1.00% of the average daily net assets of the
Balanced Portfolio and Small Cap Value Portfolio, respectively. In
addition, New Sterling has voluntarily agreed to limit the total expenses
of the Balanced Portfolio and Small Cap Value Portfolio to 1.11% and 1.25%,
respectively, of each portfolio's average daily net assets, just as Old
Sterling had agreed prior to the sale to New Sterling. To maintain this
expense limit, the adviser may waive a portion of its management fee and/or
reimburse certain expenses of each SP (UAM) Portfolio. New Sterling intends
to continue its expense limitation until further notice, but may
discontinue it at any time. As of October 31, 2000, the Balanced Portfolio
and Small Cap Value Portfolio paid Old Sterling $414,164 and $544,080,
respectively, excluding fee waivers. After giving effect to Old Sterling's
fee waivers, the Balanced Portfolio and Small Cap Value Portfolio paid
$286,022 and $354,966 in advisory fees during their most recent fiscal
year.
Information on New Sterling
New Sterling is a registered investment adviser formed by five key
employees of Old Sterling, Mark Whalen, Dave Ralston, Ed Brea, Alex
McAlister and Brian Walton, to purchase the investment advisory business of
Old Sterling from UAM, which was completed on [CLOSING DATE]. Old Sterling
was formed in 1970 and became a subsidiary of United Asset Management in
1984. It served as investment adviser of the SP (UAM) Portfolios from their
inception (March 15, 1991 with respect to the Sterling
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Partners' Balanced Portfolio and January 2, 1997 with respect to the
Sterling Partners' Small Cap Value Portfolio) until the sale to New
Sterling.
New Sterling provides investment management services to a diversified group
of clients including public investment pools, corporate, endowment,
foundation and health care clients. New Sterling's products include small
and large capitalization value equity, fixed income, and cash management.
Currently, New Sterling has approximately $3.25 billion under management.
New Sterling currently has twenty-nine employees, including sixteen
investment professionals. These investment professionals are between 34 and
46 years old, and New Sterling anticipates that this team will provide
leadership for New Sterling for the future.
Information on Other Similar Investment Companies Advised by New Sterling
New Sterling acts as investment adviser for the Market Street Fund-All Pro
Small Cap Value Portfolio, which has a similar investment objective as the
Sterling Partners' Small Cap Value Portfolio it currently advises. The
Market Street Fund-All Pro Small Cap Value Portfolio has net assets of
$9,649,587.99 as of October 31, 2000 and New Sterling receives an annual
advisory fee at a rate of .70% of the net assets managed by New Sterling.
The name, address and principal occupation of the principal executive officer
and each director or general partner of New Sterling is as follows:
Principal Executive Officer Title Occupation
--------------------------- ----- ----------
Mark W. Whalen Principal, CEO, Investment Adviser
President
Directors Title Occupation
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Eduardo A. Brea Principal, CFA Investment Adviser
Alexander W. McAlister Principal, Investment Adviser
Client Development
David M. Ralston Principal, CIO Investment Adviser
Brian R. Walton Principal, CFA Investment Adviser
The address for each of the persons listed above is c/o Sterling Capital
Management, LLC, 301 S. College Street-Suite 3200, Charlotte, NC 28202
Section 15(f) of the 1940 Act
Section 15(f) of the 1940 Act provides that a manager or investment adviser
(such as New Sterling) to a registered investment company, and the
affiliates of such adviser (such as UAM), may receive any amount or benefit
in connection with a sale of any interest in such manager or investment
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adviser which results in an assignment of an investment advisory contract
if the following two conditions are satisfied: (1) for a period of three
years after such assignment, at least 75% of the board of directors or
trustees of the investment company cannot be "interested persons" (within
the meaning of Section 2(a)(19) of the 1940 Act) of the new investment
adviser or its predecessor, and (2) no "unfair burden" (as defined in the
1940 Act) may be imposed on the investment company as a result of the
assignment or any express or implied terms, conditions or understandings
applicable thereto.
Consistent with the first condition of Section 15(f), New Sterling and UAM
have agreed that for a period of three (3) years, they will not take or
recommend any action that would cause more than 25% of the trustees to be
interested persons of the entity acting as the SP (UAM) Portfolios'
investment adviser.
With respect to the second condition of Section 15(f), an unfair burden on
an investment company is defined in the 1940 Act to include any arrangement
during the two-year period after any such transaction occurs whereby the
manager or investment adviser or its predecessor or successor, or any
interested person of such adviser, predecessor or successor, receives or is
entitled to receive any compensation of two types, either directly or
indirectly. The first type is compensation from any person in connection
with the purchase or sale of securities or other property to, from or on
behalf of the investment company, other than bona fide ordinary
compensation as principal underwriter for such company. The second type is
compensation from the investment company or its security holders for other
than bona fide investment advisory or other services.
New Sterling and UAM have agreed not to take or recommend any action that
would constitute an unfair burden on the SP (UAM) Portfolios within the
meaning of Section 15(f).
PROPOSAL 2 - APPROVAL OF THE REORGANIZATION
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Summary of the Reorganization
In addition to the approval discussed above, shareholders of the SP (UAM)
Portfolios are being asked to vote on the Reorganization, pursuant to which
each of the SP (UAM) Portfolios will transfer all of its assets and certain
liabilities to one of two newly-organized portfolios, to be called the
"new" Sterling Partners' Balanced Portfolio and "new" Sterling Partners'
Small Cap Value Portfolio (each a "SP (AIC) Portfolio" and collectively the
"SP (AIC) Portfolios"), which will be two series of the Advisors' Inner
Circle Fund ("AIC Trust") to be administered by SEI Investments Mutual Fund
Services, Inc. ("SEI"). As a result of the proposed Reorganization, each SP
(UAM) Portfolio shareholder will become a shareholder of the corresponding
SP (AIC) Portfolio and will hold immediately after the Reorganization
shares of such SP (AIC) Portfolio with a total dollar value and number
equal to the total dollar value and number such shareholder held in the SP
(UAM) Portfolio immediately prior to the Reorganization. New Sterling will
make all investment decisions for the SP (AIC) Portfolios and SEI and its
affiliates will serve as administrator, distributor and shareholder
servicing agent. DST Systems, Inc.
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<PAGE>
will serve as transfer agent and First Union will serve as custodian to the
AIC Trust. The Agreement further provides for the amendment of the UAM
Funds Charter to cancel all of the issued and outstanding shares of the SP
(UAM) Portfolios. It is currently anticipated that the Reorganization will
occur on [Date].
Description Of The Agreement And Plan Of Reorganization And Liquidation
The Agreement by and between UAM Funds, on behalf of each of the SP (UAM)
Portfolios, and the AIC Trust, on behalf of each of the SP (AIC)
Portfolios, provides for: (i) the transfer of all or substantially all of
the assets of the Sterling Partners' Balanced Portfolio solely in exchange
for shares of beneficial interest of the "new" Sterling Partners' Balanced
Portfolio and the assumption by the "new" Sterling Partners' Balanced
Portfolio of certain liabilities of the Sterling Partners' Balanced
Portfolio, followed by the distribution on the closing date of the "new"
Sterling Partners' Balanced Portfolio's shares to the holders of the
Sterling Partners' Balanced Portfolio shares (ii) the transfer of all or
substantially all of the assets of the Sterling Partners' Small Cap Value
Portfolio solely in exchange for shares of beneficial interest of the "new"
Sterling Partners' Small Cap Value Portfolio and the assumption by the
"new" Sterling Partners' Small Cap Value Portfolio of certain liabilities
of the Sterling Partners' Small Cap Value Portfolio, followed by the
distribution on the closing date of the "new" Sterling Partners' Small Cap
Value Portfolio's shares to the holders of the Sterling Partners' Small Cap
Value Portfolio's shares and (iii) the amendment of the UAM Funds Charter
to cancel all of the issued and outstanding shares of each of the SP (UAM)
Portfolios. On the closing date for the Reorganization Transaction,
anticipated to be [Date], if one or both SP (UAM) Portfolios obtain
shareholder approval of the appropriate proposal for the reorganization,
each SP (UAM) Portfolio obtaining such approval shall, assign, deliver, and
otherwise transfer all of its assets and assign certain liabilities to the
corresponding SP (AIC) Portfolio free and clear of all liens and
encumbrances, and such SP (AIC) Portfolio will acquire all the assets and
will assume certain liabilities of the corresponding SP (UAM) Portfolios,
in exchange for shares of such SP (AIC) Portfolio. In addition, the
Agreement provides that the net asset value per share of each SP (UAM)
Portfolio and of each corresponding SP (AIC) Portfolio will be equal and
the number of shares of each SP (AIC) Portfolio issued in exchange for
shares of the corresponding SP (UAM) Portfolio will equal the number of
shares of such SP (UAM) Portfolio issued and outstanding at the time of the
Reorganization. Following the liquidation of each of the SP (UAM)
Portfolios, the outstanding shares of the SP (UAM) Portfolios will be
cancelled on the books of the UAM Funds and become unissued shares.
Articles of Amendment further effecting cancellation will be filed
thereafter with the Maryland State Department of Assessments and Taxation.
The Agreement also provides that in the event the Agreement is approved by
only one SP (UAM) Portfolio, the failure of the other SP (UAM) Portfolio to
consummate the transactions contemplated by the Agreement shall not affect
the consummation or validity of the Reorganization with respect to the
other SP (UAM) Portfolio.
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The Agreement also provides that the AIC Trust will receive, prior to the
closing, an opinion of counsel to the effect that: (i) the UAM Funds are
duly organized and validly existing under the laws of the State of Maryland
and the SP (UAM) Portfolios are validly existing series of the UAM Funds;
(ii) UAM Funds is an open-end management investment company registered
under the Investment Company Act of 1940 (the "1940 Act"); (iii) the
Agreement, the Reorganization Transaction provided for therein and the
execution of the Agreement have been duly authorized and approved by all
requisite action of the UAM Funds and has been duly executed and delivered
by the UAM Funds on behalf of the SP (UAM) Portfolios and is a valid and
binding obligation of the UAM Funds on behalf of the SP (UAM) Portfolios,
subject to applicable bankruptcy, insolvency, fraudulent conveyance, and
similar laws or court decisions regarding enforcement of creditors' rights
generally and such counsel shall express no opinion with respect to the
application of equitable principles on any proceeding, whether at law or in
equity, as to the enforceability of any provision of the Agreement relating
to remedies after default, as to availability of any specific or equitable
relief of any kind or with respect to the provision of this Agreement
intended to limit liability for a particular matter for a particular
Acquired Fund and its assets, including but not limited to Section 21 of
the Agreement; and (iv) to the best of counsel's knowledge, no consent,
approval, order or other authorization of any federal or state court or
administrative or regulatory agency is required for the UAM Funds to enter
into the Agreement or carry out its terms on behalf of the SP (UAM)
Portfolios that has not been obtained other than where the failure to
obtain such consent, approval, order, or authorization would not have a
material adverse affect on the operations of the SP (UAM) Portfolios.
In addition, UAM Funds shall have received, prior to the closing, an
opinion of counsel to the effect that: (i) the AIC Trust and the SP (AIC)
Portfolios are duly organized and validly existing under the laws of the
Commonwealth of Massachusetts; (ii) the AIC Trust is an open-end management
investment company registered under the 1940 Act; (iii) the Agreement, the
Reorganization Transaction provided for therein, and the execution of the
Agreement have been duly authorized and approved by all requisite corporate
action of the AIC Trust and the Agreement has been duly executed and
delivered by the AIC Trust and is a valid and binding obligation of the AIC
Trust, subject to applicable bankruptcy, insolvency, fraudulent conveyance
and similar laws or court decisions regarding enforcement of creditors'
rights generally; (iv) to the best of counsel's knowledge, no consent,
approval, order or other authorization of any federal or state court or
administration or regulatory agency is required for the AIC Trust to enter
into the Agreement or carry out its terms on behalf of the SP (AIC)
Portfolios that has not already been obtained, other than where the failure
to obtain any such consent, approval, order or authorization would not have
a material adverse effect on the operations of the AIC Trust or the SP
(AIC) Portfolios; and (v) the AIC Trust shares to be issued in the
Reorganization have been duly authorized and upon issuance thereof in
accordance with the Agreement, will be validly issued, fully paid and non-
assessable.
-8-
<PAGE>
Tax Consequences Of The Reorganization
At the time of the closing, the UAM Funds and the AIC Trust shall have
received an opinion of counsel substantially to the effect that for federal
income tax purposes: (1) no gain or loss will be recognized by a SP (UAM)
Portfolio upon the transfer of its assets in exchange, solely for the
corresponding shares and the assumption by such SP (AIC) Portfolio of that
SP (UAM) Portfolio's stated liabilities; (2) no gain or loss will be
recognized by such SP (AIC) Portfolio on its receipt of such SP (UAM)
Portfolio's assets in exchange for that SP (AIC) Portfolio's shares and the
assumption by that SP (AIC) Portfolio of such SP (UAM) Portfolio's
liabilities; (3) the basis of such SP (UAM) Portfolio's assets in such SP
(AIC) Portfolio's hands will be the same as the basis of those assets in
that SP (UAM) Portfolio's hands immediately before the conversion; (4) such
SP (AIC) Portfolio's holding period for the assets transferred to the SP
(AIC) Portfolios by such SP (UAM) Portfolio will include the holding period
of those assets in the SP (UAM) Portfolio's hands immediately before the
conversion; (5) no gain or loss will be recognized by such SP (UAM)
Portfolio on the distribution of such SP (AIC) Portfolio's shares to that
SP (UAM) Portfolio's shareholders in exchange for their shares of the SP
(UAM) Portfolio; (6) no gain or loss will be recognized to a shareholder of
such SP (UAM) Portfolio as a result of the SP (UAM) Portfolio's
distribution of such SP (AIC) Portfolio's shares to that SP (UAM)
Portfolio's shareholder in exchange for the SP (UAM) Portfolio's
shareholder's shares of the SP (UAM) Portfolio; (7) the basis of such SP
(AIC) Portfolio's shares received by such SP (UAM) Portfolio's shareholders
will be the same as the adjusted basis of that SP (UAM) Portfolio's
shareholders' shares of the SP (UAM) Portfolio surrendered in exchange
therefor; and (8) the holding period of such SP (AIC) Portfolio's shares
received by such SP (UAM) Portfolio's shareholders will include the SP
(UAM) Portfolio's shareholders' holding period for the SP (UAM) Portfolio's
shareholders' shares of the Portfolio surrendered in exchange therefor,
provided that such SP (UAM) Portfolio's shares were held as capital assets
on the date of the conversion.
The Reorganization Transaction is expected to qualify as a "reorganization"
within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code of
1986, as amended (the "Code"), with each of the SP (AIC) Portfolios and the
SP (UAM) Portfolios being "parties to a reorganization" within the meaning
of Section 368(b) of the Code. As a consequence, the Reorganization will be
tax-free for each of the SP (AIC) Portfolios, the SP (UAM) Portfolios and
their respective Shareholders.
-9-
<PAGE>
Description Of UAM Funds And The SP (UAM) Portfolios
UAM Funds was organized under the name "ICM Fund, Inc." as a Maryland
Corporation on October 11, 1988. On January 18, 1989, the name was changed
to "The Regis Fund, Inc." On October 31, 1995, the name was changed again
to "UAM Funds, Inc." The principal executive office of UAM Funds is located
at 211 Congress Street, Boston, MA 02110. UAM Funds is an open-end
management investment company registered under the 1940 Act. The Articles
of Incorporation, as amended, permit its governing board to issue three
billion shares of common stock, with a $0.001 par value. The governing
board has the power to create and designate one or more series or classes
of shares of common stock and to classify or reclassify any unissued shares
at any time and without shareholder approval. When issued and paid for, the
shares of each series and class are fully paid and non-assessable, and have
no pre-emptive rights or preferences as to conversion, exchange, dividends,
retirement or other features.
The shares of each series and class have non-cumulative voting rights,
which means that the holders of more than 50% of the shares voting for the
election of members of the governing board can elect all of the members if
they choose to do so. On each matter submitted to a vote of the
shareholders, a shareholder is entitled to one vote for each full share
held (and a fractional vote for each fractional share held), then standing
in his or her name on the books. Shares of all classes will vote together
as a single class except when otherwise required by law or as determined by
the members of UAM Funds' Board.
The Board of the UAM Funds has authorized two classes of shares in each
portfolio: Institutional and Institutional Service. The two classes
represent interests in the same assets of a portfolio and, except as
discussed below, are identical in all respects.
Institutional Service Shares bear certain expenses related to shareholder
servicing and the distribution of such shares and have exclusive voting
rights with respect to matters relating to such distribution expenditures.
The net income attributable to Institutional Service Shares and the
dividends payable on Institutional Service Shares will be reduced by the
amount of the shareholder servicing and distribution fees; accordingly, the
net asset value of the Institutional Service Shares will be reduced by such
amount to the extent a portfolio has undistributed net income.
The Sterling Capital Partners' Small Cap Value Portfolio has 25,000,000
Institutional Class shares and 10,000,000 Institutional Service Class
Shares allocated to it; the Sterling Capital Partners' Balanced Portfolio
has 25,000,000 Institutional Class shares and 10,000,000 Institutional
Service Class shares allocated to it. Each of the SP (UAM) Portfolios is a
validly existing series of UAM Funds.
-10-
<PAGE>
The Sterling Capital Partners' Balanced Portfolio seeks to provide maximum
long-term return consistent with reasonable risk to principal. It invests
in a diversified portfolio of equity securities, investment grade debt
securities and cash. Old Sterling selects individual equity securities for
the portfolio by identifying equities priced at a discount from the
estimated value of their underlying businesses. The Sterling Capital
Partners' Small Cap Value Portfolio seeks to provide maximum long-term
return consistent with reasonable risk to principal. It invests primarily
in equity securities of smaller companies, determined in terms of market
capitalization.
New Sterling serves as investment adviser to each SP (UAM) Portfolio
pursuant to Interim Agreements dated December 13, 2000. The SP (UAM)
Portfolios' Interim Agreements with New Sterling provide, in part, that New
Sterling makes investment decisions for the assets of each SP (UAM)
Portfolio and continuously reviews, supervises and administers each SP
(UAM) Portfolio's investment program, subject to the supervision of, and
policies established by, the Board of Directors. For its services, New
Sterling is entitled to a fee, which is calculated by applying an annual
percentage rate of .75% to the average daily net assets of the Sterling
Capital Partners' Balanced Portfolio and a 1.00% rate to the average daily
net assets of those of the Sterling Capital Partners' Small Cap Value
Portfolio. Fees are calculated daily and paid on a monthly basis. New
Sterling has voluntarily agreed to limit the total expenses (excluding
interest, taxes, brokerage commissions and ordinary expenses) of both
portfolios. Due to the expense cap, management fees collected by the
adviser will fluctuate depending the amount of expenses incurred by each
fund. Currently, New Sterling's management fees (including fee waivers and
expense reimbursements) for the Sterling Capital Partners' Balanced and
Sterling Capital Partners' Small Cap Portfolios are approximately 0.66% and
0.75%, respectively. Expenses for each fund will vary over time. As a
result, management fees subject to the voluntary expense cap will fluctuate
accordingly.
Description of the AIC Trust and SP (AIC) Portfolios
The AIC Trust is organized under Massachusetts law as a business trust
pursuant to an Agreement and Declaration of Trust dated July 18, 1991, as
amended on February 18, 1997. The AIC Trust is an open-end management
investment company registered under the 1940 Act which has authorized
capital consisting of an unlimited number of units of beneficial interest,
without par value, of separate series of the AIC Trust. The "new" Sterling
Capital Partners' Balanced Portfolio and the "new" Sterling Capital
Partners' Small Cap Value Portfolio will be duly organized and validly
existing series of the AIC Trust at the time of the Reorganization.
Shareholders of AIC Trust shares are entitled to one vote for each full
share held and fractional votes for fractional shares. On any matter
submitted to a vote of shareholders, all shares of the Trust entitled to
vote shall be voted on by individual series or class, except that (i) when
so required by the 1940 Act, then shares shall be voted in the aggregate
and not by individual series or class, and (ii) when the trustees of the
Trust (the
-11-
<PAGE>
"Trustees") have determined that the matter only affects the interest of
one or more series or class, then only shareholders of such series or
class(es) shall be entitled to vote. The AIC Trust's Declaration of Trust
provides that any action may be taken or authorized upon the concurrence of
a majority of the aggregate number of votes entitled to be cast thereon,
subject to any applicable requirements of the 1940 Act.
The AIC Trust's Declaration of Trust permits any one or more series, either
as the successor, survivor or non-survivor, (i) consolidate or merge with
one or more other trusts, partnerships, associations or corporations,
including any series or class thereof, organized under the laws of the
Commonwealth of Massachusetts or any other state of the United States; or
(ii) transfer a substantial portion of its assets to one or more other
trusts, partnerships, associations or corporations, including any series or
class thereof, organized under the laws of the Commonwealth of
Massachusetts or any other state of the United States, any such
consolidation, merger or transfer to be upon such terms and conditions as
are specified in an agreement and plan or reorganization authorized and
approved by the Trustees and entered into by the relevant series in
connection therewith. Any such consolidation, merger or transfer may be
authorized by vote of a majority of the Trustees then in office without the
approval of shareholders of any series.
The AIC Trust will not hold annual meetings of shareholders, but special
meetings of shareholders may be held under certain circumstances. A special
meeting of the shareholders may be called at any time by the Trustees, by
the president or, if the Trustees and the president shall fail to call any
meeting of shareholders for a period of 30 days after written application
of one or more shareholders who hold at least 10% of all shares issued and
outstanding and entitled to vote at the meeting, then such shareholders may
call the meeting.
The AIC Trust's affairs are supervised by the Trustees under the laws
governing business trusts in the Commonwealth of Massachusetts. Trustees of
the Trust are elected by shareholders holding a majority of shares entitled
to vote. Trustees hold office until their successors are duly elected and
qualified or until their death, removal or resignation. Shareholders may
remove a Trustee by vote of a majority of the votes entitled to vote, with
or without cause. A Trustee elected thereby serves for the balance of the
term of the removed Trustee.
Pursuant to the AIC Trust's Declaration of Trust, the shareholders of the
AIC Trust generally are not personally liable for the acts, omissions or
obligations of the Trustees or the Trust. In addition, the Trustees shall
not be personally liable for any obligation of the Trust. The Trust will
indemnify its Trustees and officers against all liabilities and expenses
except for liabilities arising from such person's willful misfeasance, bad
faith, gross negligence or reckless disregard of that person's duties.
The "new" Sterling Capital Partners' Balanced Portfolio will seek a long-
term total return. It will invest in a diversified portfolio of equity
securities, investment grade debt securities and cash. New Sterling will
select individual equity securities for the portfolio
-12-
<PAGE>
by identifying equities priced at a discount from the estimated value of
their underlying businesses. This portfolio will have an identical
investment objective as the current Sterling Capital Partners' Balanced
Portfolio. The "new" Sterling Capital Partners' Small Cap Value Portfolio
will seek a long-term total return. It will invest primarily in equity
securities of smaller companies, determined in terms of market
capitalization. This portfolio will have an identical investment objective
as the current Sterling Capital Partners' Small Cap Value Portfolio.
The SP (AIC) Portfolios will have substantially similar procedures for
purchasing, redeeming and exchanging shares as the SP (UAM) Portfolios.
Shareholders of the SP (UAM) Portfolios are currently permitted to exchange
their shares for shares of any other portfolio of the UAM Funds at no
charge. Shareholders of the SP (AIC) Portfolios, however, will only be
permitted to exchange their shares at no charge for shares of the other SP
(AIC) Portfolio, not for shares of the other portfolios in the AIC Trust.
Following the conclusion of the Reorganization, New Sterling will serve as
investment adviser to the "new" Sterling Capital Partners' Balanced
Portfolio and the "new" Sterling Capital Partners' Small Cap Value
Portfolio. The investment advisory agreement between New Sterling and the
AIC Trust is substantially similar to the advisory agreement that exists
between Old Sterling and UAM Funds, on behalf of the SP (UAM) Portfolios.
Significantly, both investment advisory agreements provide for the same
fees, duties, and standards of care. For its services, New Sterling is
entitled to a fee, which is calculated at a rate of .75% of the average
daily net assets of the "new" Sterling Capital Partners' Balanced Portfolio
and at a rate of 1.00% of the daily net asset value of the "new" Sterling
Capital Partners' Small Cap Value Portfolio. Fees are calculated daily and
paid on a monthly basis.
-13-
<PAGE>
The tables below set forth comparative fee information (after waivers and
reimbursements) for both the SP (UAM) Portfolios and the SP (AIC)
Portfolios:
<TABLE>
<CAPTION>
Sterling Capital Partners' "new" Sterling Capital Partners'
Balanced Portfolio (1) Balanced Portfolio (2)
===========================================================================================
<S> <C> <C>
Management Fees .66% .66%
(after fee waivers)
-------------------------------------------------------------------------------------------
Other Expenses .45% .45%
-------------------------------------------------------------------------------------------
Total Operating Expenses 1.11% 1.11%
(after fee waivers and
expense reimbursements)
===========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Sterling Capital Partners' "new" Sterling Capital Partners'
Small Cap Portfolio (1) Small Cap Portfolio (2)
==================================================================================================
<S> <C> <C>
Management Fees .75% .75%
(after fee waivers)
--------------------------------------------------------------------------------------------------
Other Expenses .50% .50%
(after expense reimbursements)
--------------------------------------------------------------------------------------------------
Total Operating Expenses 1.25% 1.25%
(after fee waivers and
expense reimbursements)
==================================================================================================
</TABLE>
(1) The "Management Fees" shown reflect current voluntary waivers and/or
reimbursements by Old Sterling. Absent such waivers and/or reimbursements,
"Management Fees" for the Sterling Capital Partners' Balanced Portfolio and
the Sterling Capital Partners' Small Cap Value Portfolio would be .75% and
1.00%, respectively; "Other Expenses" would be .45% and .50%, respectively;
and "Total Operating Expenses" would be 1.20% and 1.50%, respectively.
Expenses for each fund will vary over time. As a result, management fees
subject to the voluntary expense cap will fluctuate accordingly.
(2) New Sterling has agreed, on a voluntary basis, to waive its advisory fee
for the "new" Sterling Capital Partners' Balanced Portfolio and the "new"
Sterling Capital Partners' Small Cap Value Portfolio to the extent
necessary to keep the "Total Operating Expenses" from exceeding 1.11% and
1.25%, respectively. New Sterling reserves the right to terminate its
waiver at any time in its sole discretion. Absent such waivers and/or
reimbursements, "Management Fees" for the "new" Sterling Capital Partners'
Balanced Portfolio and "new" Sterling Capital Partners' Small Cap Value
Portfolio will be .75% and 1.00%, respectively.
-14-
<PAGE>
Information on SEI Investments Mutual Fund Services ("Administrator")
The Administrator, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in the
Administrator. SEI Investments and its subsidiaries and affiliates,
including the Administrator, are leading providers of funds evaluation
services, trust accounting systems, and brokerage and information services
to financial institutions, institutional investors, and money managers.
The Administrator provides the AIC Trust with administrative services,
including regulatory reporting and all necessary office space, equipment,
personnel and facilities.
For these administrative services, the Administrator is entitled to a fee
from each SP (AIC) Portfolio, which is calculated daily and paid monthly
based on the respective SP (AIC) Portfolio's asset level, at an annual rate
of: .15% on the first $250 million of average daily net assets; .125% on
the next $250 million of average daily net assets; and .10% on average
daily net assets over $500 million. However, each Fund pays a minimum
annual administration fee of $250,000, which would be increased by $20,000
per additional class and $100,000 per additional portfolio.
The Administration Agreement provides that the Administrator shall not be
liable for any error of judgment or mistake of law or for any loss suffered
by the Funds in connection with the matters to which the Administration
Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Administrator in the
performance of its duties or from reckless disregard of its duties and
obligations thereunder.
Information on SEI Investments Distribution, Co. ("Distributor")
The Distributor, a wholly-owned subsidiary of SEI Investments, and the AIC
Trust are parties to a distribution agreement (the "Distribution
Agreement"). The Distributor will not receive compensation for distribution
of shares of the SP (AIC) Portfolios.
Information on Other Service Providers
DST Systems, Inc., 330 W 9/th/ Street, Kansas City, MO 64105 serves as the
AIC Trust's transfer agent. First Union National Bank, 125 Broad Street,
Philadelphia, Pennsylvania 19109 acts as custodian (the "Custodian") of the
AIC Trust. The Custodian holds cash, securities and other assets of the AIC
Trust as required by the 1940 Act.
-15-
<PAGE>
RECOMMENDATION OF DIRECTORS
--------------------------------------------------------------------------------
On December 14, 2000, representatives of UAM and New Sterling advised the
Independent Directors that (i) UAM and New Sterling had entered into an
acquisition agreement; and (ii) UAM and New Sterling agreed to the
Reorganization, pursuant to which the assets of the SP (UAM) Portfolios
would be transferred to new portfolios, the SP (AIC) Portfolios, which are
two series of the AIC Trust. At that time, representatives of UAM and New
Sterling described the general terms of the proposed acquisition and
Reorganization and the perceived benefits for the SP Portfolios, New
Sterling and its investment advisory clients. The Independent Directors
discussed the transactions with representatives UAM and Old Sterling. They
were assisted in their review of this information by their independent
legal counsel. UAM and Old Sterling advised the Independent Directors that
they do not expect the acquisition and proposed Reorganization Transaction
to have an adverse effect on the operations of the SP Portfolios or their
shareholders.
On December 14, 2000, the Board, including a majority of the Independent
Directors, voted to (i) approve the new investment advisory agreements and
to recommend their approval to shareholders, and (ii) approve the
Reorganization Transaction and to recommend its approval to shareholders.
In reaching its decision, the Board considered the following factors to be
of greatest importance (1) the SP (AIC) Portfolios will have the same
investment objectives, policies and limitations as those of the SP (UAM)
Portfolios and (2) the same personnel who managed the SP (UAM) Portfolios
at Old Sterling will continue to manage the SP (AIC) Portfolios after the
Reorganization at New Sterling.
The Directors Unanimously Recommend That Shareholders Of The SP Portfolios Vote
To Approve Proposal 1 And Proposal 2
-16-
<PAGE>
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
Administrative Expenses
Effective _____, SEI Investments Mutual Fund Services, Inc. and SEI
Investments Distribution Co., both subsidiaries of SEI Investment Company,
Freedom Valley, Oaks, Pennsylvania 19456, became administrator and
distributor, respectively, of the SP (UAM) Portfolios. Until ___, UAM Fund
Services, Inc. served as the SP (UAM) Portfolio' administrator, UAM
Shareholder Services Center, Inc. is the SP (UAM) Portfolios' sub-
shareholder servicing agent and UAM Fund Distributors, Inc. served as the
SP (UAM) Portfolios' principal underwriter. UAM Fund Services, Inc., UAM
Shareholder Services Center, Inc. and UAM Fund Distributors, Inc. are
affiliates of UAM. UAM Fund Services, Inc. and UAM Fund Distributors, Inc.,
are located at 211 Congress Street, 4/th/ Floor, Boston, Massachusetts
02110 and UAM Shareholder Services, Inc. is located at 825 Duportail Road,
Wayne, Pennsylvania 19087.
. As of October 31, 2000, UAM Funds Services, Inc. was paid $50,687 and
$39,437 for services rendered as administrator by the Balanced
Portfolio and Small Cap Value Portfolio, respectively;
. As of October 31, 2000, UAM Shareholder Services Center, Inc. was paid
$12,614 and $16,226 for services rendered as sub-shareholder servicing
agent by the Balanced Portfolio and Small Cap Value Portfolio,
respectively;
. As of December 21, 2000, the net assets of the Sterling Partners'
Balanced Portfolio and Sterling Partners' Small Cap Value Portfolio
were $47,601,193.17 and $68,251,292.24, respectively.
The SP (UAM) Portfolios do not pay UAM Fund Distributors, Inc. for its
services as principal underwriter to the Portfolios.
Brokerage Commissions
The Interim Agreements authorize New Sterling to select the brokers or
dealers that will execute the purchases and sales of investment securities
for each SP (UAM) Portfolio. The Interim Agreements also direct New
Sterling to use its best efforts to obtain the best execution with respect
to all transactions for the SP (UAM) Portfolio. New Sterling may select
brokers based on research, statistical and pricing services they provide to
New Sterling. Information and research provided by a broker will be in
addition to, and not instead of, the services New Sterling is required to
perform under the Investment Advisory Agreement. In so doing, the SP (UAM)
Portfolios may pay higher commission rates than the lowest rate available
when New Sterling believes it is reasonable to do so in
-17-
<PAGE>
light of the value of the research, statistical, and pricing services
provided by the broker effecting the transaction.
It is not the practice of the SP (UAM) Portfolios to allocate brokerage or
effect principal transactions with dealers based on sales of shares that a
broker-dealer firm makes. However, the SP (UAM) Portfolios may place trades
with qualified broker-dealers who recommend the SP (UAM) Portfolios or who
acts as agents in the purchase of SP (UAM) Portfolios shares for their
clients.
Generally, equity securities are bought and sold through brokerage
transactions for which commissions are payable. Purchases from underwriters
will include the underwriting commission or concession, and purchases from
dealers serving as market makers will include a dealer's mark-up or reflect
a dealer's mark-down.
Debt securities are usually bought and sold directly from the issuer or an
underwriter or market maker for the securities. Generally, a SP (UAM)
Portfolio will not pay brokerage commissions for such purchases. When a
debt security is bought from an underwriter, the purchase price will
usually include an underwriting commission or concession. The purchase
price for securities bought from dealers serving as market makers will
similarly include the dealer's mark-up or reflect a dealer's mark-down.
When a SP (UAM) Portfolio executes transactions in the over-the-counter
market, it will deal with primary market makers unless prices that are more
favorable are otherwise obtainable.
. As of October 31, 2000, the Sterling Partners' Balanced Portfolio paid
$85,441.02 in brokerage commissions.
. As of October 31, 2000, the Sterling Partners' Small Cap Value
Portfolio paid $242,733.80 in brokerage commissions.
Payment of Expenses
New Sterling, and not the UAM Funds, will pay the expenses of the
preparation, printing and mailing of this proxy statement and its
enclosures and of all solicitations,
-18-
<PAGE>
Beneficial Ownership of Shares
The following table contains information about the beneficial ownership by
shareholders of five percent or more of each SP (UAM) Portfolio's
outstanding Shares as December 28, 2000. On that date, the Directors and
officers of each of the SP (UAM) Portfolios, together as a group,
"beneficially owned" less than one percent of each SP (UAM) Portfolio's
outstanding Shares.
<TABLE>
<CAPTION>
Name and Address of Shareholder Percent of Shares Owned Number of Shares Owned Portfolio
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UMBSC & Co. 24% 1,057,613.270 Sterling Partners' Balanced
FBO Interstate Brands Portfolio
Conservative Growth
P.O. Box 419175
Kansas City, MO 64141-6175
-----------------------------------------------------------------------------------------------------------------------------
UMBSC & Co. 11% 490,395.170 Sterling Partners' Balanced
FBO Interstate Brands Portfolio
Conservative Growth
A/C # 34-1002-03-8
P.O. Box 419175
Kansas City, MO 64141-6175
-----------------------------------------------------------------------------------------------------------------------------
Centura Bank 9% 384,528.735 Sterling Partners' Balanced
P.O. Box 1220 Portfolio
Attn: Roxanne Moore
131 N. Church Street
Rocky Mount, NC 27804-5433
-----------------------------------------------------------------------------------------------------------------------------
Charles Schwab & Co., Inc. 7% 324,419.908 Sterling Partners' Balanced
Reinvest Account Portfolio
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
-----------------------------------------------------------------------------------------------------------------------------
Charles Schwab & Co., Inc. 25% 1,269,232.498 Sterling Partners' Small Cap
Reinvest Account Value Portfolio
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
-----------------------------------------------------------------------------------------------------------------------------
Trinity Health 8% 385,991.444 Sterling Partners' Small Cap
FBO Employee Retirement Trust Value Portfolio
Health Plan
P.O. Box 92956
Chicago, IL 60675-2956
-----------------------------------------------------------------------------------------------------------------------------
NFSC FEBO #379-487481 4% 192,678.784 Sterling Partners' Small Cap
Franklin College of Indiana Value Portfolio
Endowment Fund
501 E. Monroe Street
Franklin, IN 46131-2512
-----------------------------------------------------------------------------------------------------------------------------
Horizon Benefits 6% 327,026.965 Sterling Partners' Small Cap
5925 Carnegie Blvd, Suite 104 Value Portfolio
Charlotte, NC 28209-4656
-----------------------------------------------------------------------------------------------------------------------------
Endowment for Health, Inc. 6% 306,026.965 Sterling Partners' Small Cap
Attn: Sherry Young c/o Rath, Young Value Portfolio
One Capital Plaza
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
-19-
<PAGE>
<TABLE>
-----------------------------------------------------------------------------------------------------------------------------
Concord, NH 03302
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Samaritan Retirement Income Plan 5% 229,930.839 Sterling Partners' Small Cap
4310 17/th/ Avenue, S.W. Value Portfolio
Fargo, ND 58103
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of December 21, 2000, the Balanced Portfolio and Small Cap Value Portfolio
had 4,386,796.335 and 5,112,988.449 shares outstanding, respectively.
The term "beneficial ownership" is as defined under Section 13(d) of the
Securities and Exchange Act of 1934. The information as to beneficial ownership
is based on statements furnished to the UAM Funds by its existing Directors
and/or on the records of UAM Funds' transfer agent.
Annual and Semi-Annual Reports to Shareholders
For a free copy of your SP (UAM) Portfolio's most recent annual report (and most
recent semi-annual report succeeding the annual report, if any) shareholders of
the SP (UAM) Portfolios may call 1-877-826-5465 or write to the UAM Funds at PO
Box 219081, Kansas City, MO 64121.
Other Business
The Board does not intend to present any other business at the Meeting. If any
other matter may properly come before the meeting, or any adjournment thereof,
the persons named in the accompanying proxy card(s) intend to vote, act, or
consent thereunder in accordance with their best judgment at that time with
respect to such matters. No annual or other special meeting is currently
scheduled for a fund. Mere submission of a shareholder proposal does not
guarantee the inclusion of the proposal in the proxy statement or presentation
of the proposal at the meeting since inclusion and presentation are subject to
compliance with certain federal regulations and Maryland law.
The Directors, Including the Independent Directors, Recommend Approval of each
Proposal.
Any Unmarked Proxies without Instructions to the Contrary will be Voted in
Favor of Approval of the Proposals
-20-
<PAGE>
UAM FUNDS, INC.
Sterling Partners' Small Cap Value Portfolio
Special Meeting of the Shareholders
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE SPECIAL MEETING OF SHAREHOLDERS, _____________, 2001
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints Gary L. French and Linda T. Gibson as proxies and each
of them, each with full power of substitution, to vote at the Special Meeting of
Shareholders (the "Meeting") of the Sterling Partners' Small Cap Value Portfolio
of UAM Funds, Inc. ("UAM Funds") to be held in the offices of UAM Fund Services,
Inc., 211 Congress Street, Boston, Massachusetts 02110, at ____ p.m., and any
adjournments or postponements thereof all shares of stock of said UAM Funds that
the undersigned would be entitled to vote if personally present at the Meeting
on the proposals set forth below respecting (i) the proposed Investment Advisory
Agreement between Sterling Capital Management, L.L.C. and UAM Funds on behalf of
the Sterling Partners' Small Cap Value Portfolio; and (ii) the proposed
Agreement and Plan of Reorganization and Liquidation between UAM Funds, on
behalf of the Sterling Partners' Small Cap Value Portfolio, and the AIC Trust,
on behalf of the "New" Sterling Partners' Small Cap Value Portfolio and, in
accordance with their own discretion, any other matters properly brought before
the Meeting.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE "FOR" THE PROPOSAL
TO:
PROPOSAL 1. Approve a new Investment Advisory Agreement between Sterling
Capital Management, L.L.C. and UAM Funds, on behalf of the
Sterling Partners' Small Cap Value Portfolio.
____For ____Against ____Abstain
PROPOSAL 2. Approve an Agreement and Plan of Reorganization and Liquidation
(the "Agreement") between UAM Funds, on behalf of the Sterling
Partners' Small Cap Value Portfolio, and the AIC Trust, on behalf
of the "New" Sterling Partners' Small Cap Value Portfolio.
____For ____Against ____Abstain
This proxy will, when properly executed, be voted as directed herein by the
signing Shareholder. If no contrary direction is given when the duly executed
Proxy is returned, this Proxy will be voted FOR the foregoing proposal and will
be voted in the appointed proxies' discretion upon such other business as may
properly come before the Meeting.
<PAGE>
The undersigned acknowledges receipt with this Proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Directors. Your
signature(s) on this Proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: _____________________, 2001 ___________________________________
Signature of Shareholder
___________________________________
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED, POSTAGE-PAID ENVELOPE
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN
PERSON IF YOU DO ATTEND.
<PAGE>
UAM FUNDS, INC.
Sterling Capital Partners' Balanced Portfolio
Special Meeting of the Shareholders
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE SPECIAL MEETING OF SHAREHOLDERS, ____________ , 2001
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints Gary L. French and Linda T. Gibson as proxies and each
of them, each with full power of substitution, to vote at the Special Meeting of
Shareholders (the "Meeting") of the Sterling Partners' Balanced Portfolio of UAM
Funds, Inc. ("UAM Funds") to be held in the offices of UAM Fund Services, Inc.,
211 Congress Street, Boston, Massachusetts 02110 on ______________, 2001 and any
adjournments or postponements thereof all shares of stock of said UAM Funds that
the undersigned would be entitled to vote if personally present at the Meeting
on the proposals set forth below respecting (i) the proposed Investment Advisory
Agreement between Sterling Capital Management, L.L.C. and UAM Funds on behalf
of the Sterling Partners' Balanced Portfolio; and (ii) the proposed Agreement
and Plan of Reorganization and Liquidation between the UAM Funds, on behalf of
the Sterling Partners' Balanced Portfolio, and the AIC Trust, on behalf of the
"New" Sterling Partners' Balanced Portfolio and, in accordance with their own
discretion, any other matters properly brought before the Meeting.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE "FOR" THE
PROPOSAL TO:
PROPOSAL 1. Approve a new Investment Advisory Agreement between Sterling
Capital Management, L.L.C. and UAM Funds, on behalf of the
Sterling Partners' Balanced Portfolio.
____For ____Against ____Abstain
PROPOSAL 2. Approve an Agreement and Plan of Reorganization and Liquidation
(the "Agreement") between UAM Funds, on behalf of the Sterling
Partners' Balanced Portfolio, and the AIC Trust, on behalf of the
"New" Sterling Capital Partners' Balanced Portfolio.
____For ____Against ____Abstain
This proxy will, when properly executed, be voted as directed herein by the
signing Shareholder. If no contrary direction is given when the duly executed
Proxy is returned, this Proxy will be voted FOR the foregoing proposal and will
be voted in the appointed proxies' discretion upon such other business as may
properly come before the Meeting.
<PAGE>
The undersigned acknowledges receipt with this Proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Directors. Your
signature(s) on this Proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: _____________________, 2001 ___________________________________
Signature of Shareholder
___________________________________
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED, POSTAGE-PAID ENVELOPE
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN
PERSON IF YOU DO ATTEND.
