<PAGE>
MARKED TO INDICATE CHANGES FROM POST-EFFECTIVE
AMENDMENT NO. 15
As filed with the Securities and Exchange Commission on July 10, 1997
Securities Act File No. 33-79858
Investment Company Act of 1940 File No. 811-8544
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 16 /X/
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 17 /X/
--------------
UAM FUNDS TRUST
(Exact Name of Registrant)
c/o United Asset Management Corporation
One International Place
Boston, Massachusetts 02110
(Address of Principal Executive Office)
Registrant's Telephone Number (617) 330-8900
Karl O. Hartmann, Assistant Secretary
c/o Chase Global Funds Services Company
73 Tremont Street, Boston, MA 02108
(Name and Address of Agent for Service)
--------------
COPY TO:
Audrey C. Talley, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
IT IS PROPOSED THAT THIS FILING BECOME EFFECTIVE
(CHECK APPROPRIATE BOX):
[X] Immediately upon filing pursuant to Paragraph (b)
[_] on (date) pursuant to Paragraph (b)
[_] 60 days after filing pursuant to paragraph (a) (1)
[_] on (date) pursuant to paragraph (a) (1)
[_] 75 days after filing pursuant to Paragraph (a) (2)
[_] on (date) pursuant to Paragraph (a) (2) of Rule 485.
REGISTRANT HAS PREVIOUSLY ELECTED TO AND HEREBY CONTINUES ITS ELECTION TO
REGISTER AN INDEFINITE NUMBER OF SHARES PURSUANT TO RULE 24f-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED. REGISTRANT FILED (i) A RULE 24f-2
NOTICE FOR THE FPA CRESCENT PORTFOLIO FOR THE FISCAL YEAR ENDED MARCH 31, 1997
ON MAY 28, 1997 AND (ii) A RULE 24f-2 NOTICE FOR THE REMAINDER OF THE
REGISTRANT'S PORTFOLIOS FOR THE FISCAL YEAR ENDED APRIL 30, 1997 ON JUNE 26,
1997.
<PAGE>
UAM FUNDS TRUST
FORM N-1A CROSS REFERENCE
<TABLE>
<CAPTION>
FORM N-1A ITEM NUMBER LOCATION IN PROSPECTUS
- --------------------- ----------------------
<S> <C> <C>
Item 1. Cover Page............................ Cover Page
Item 2. Synopsis.............................. Fund Expenses; Prospectus Summary; Risk Factors
Item 3. Condensed Financial Information....... Financial Highlights
Item 4. General Description of Registrant..... Prospectus Summary; Risk Factors; Investment
Objective; Investment Policies; Other
Investment Policies; Investment Limitations; General
Information
Item 5. Management of the Fund................ Prospectus Summary; Investment Adviser;
Administrative Services; Distributor
Item 5A. Management's Discussion of
Fund Performance...................... Included in Registrant's March 31, 1997 and
April 30, 1997 Annual Reports to Shareholders
Item 6. Capital Stock and Other Securities.... Purchase of Shares; Redemption of Shares;
Shareholder Services; Valuation of Shares;
Dividends, Capital Gains Distributions and Taxes
Item 7. Purchase of Securities Being Offered.. Purchase of Shares; Shareholder Services
Item 8. Redemption or Repurchase.............. Redemption of Shares; Shareholder Services
Item 9. Pending Legal Proceedings............. Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION IN STATEMENT
FORM N-1A ITEM NUMBER OF ADDITIONAL INFORMATION
- --------------------- -------------------------
<S> <C> <C>
Item 10. Cover Page........................... Cover Page
Item 11. Table of Contents.................... Table of Contents
Item 12. General Information and History...... Investment Adviser; General Information
Item 13. Investment Objectives and Policies... Investment Adviser; Investment Limitations
Item 14. Management of the Fund............... Management of the Fund
Item 15. Control Persons and Principal
Holders of Securities................ Management of the Fund
Item 16. Investment Advisory and
Other Services....................... Investment Adviser
Item 17. Brokerage Allocation and
Other Practices...................... Portfolio Transactions
Item 18. Capital Stock and Other Securities... General Information
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered............. Purchase and Redemption of Shares
Item 20. Tax Status........................... General Information
Item 21. Underwriters......................... Management of the Fund
Item 22. Calculation of Performance Data...... Performance Calculations
Item 23. Financial Statements................. Financial Statements
</TABLE>
PART C
- ------
Information required to be included in Part C is set forth under the appropriate
item so numbered in Part C to this Registration Statement.
<PAGE>
UAM FUNDS TRUST
POST-EFFECTIVE AMENDMENT NO. 16
PART A
The following Prospectuses are included in this Post-Effective
Amendment No. 16:
. BHM&S Total Return Bond Portfolio Institutional Class Shares
. BHM&S Total Return Bond Portfolio Institutional Service Class Shares
. Chicago Asset Management Intermediate Bond Portfolio Institutional Class
Shares
. Chicago Asset Management Value/Contrarian Portfolio Institutional Class
Shares
. FPA Crescent Portfolio Institutional Class Shares
. FPA Crescent Portfolio Institutional Service Class Shares
. Hanson Equity Portfolio Institutional Class Shares
. IRC Enhanced Index Portfolio Institutional Class Shares
. Jacobs International Octagon Portfolio Institutional Class Shares
. MJI International Equity Portfolio Institutional Class Shares
. MJI International Equity Portfolio Institutional Service Class Shares
. Newbold's Equity Portfolio Institutional Class Shares
. Newbold's Equity Portfolio Institutional Service Class Shares
. TJ Core Equity Portfolio Institutional Service Class Shares
The following Prospectus is incorporated by reference to Post-Effective
Amendment No. 2 filed on November 25, 1994:
. Dwight Principal Preservation Portfolio Institutional Class Shares
<PAGE>
[LOGO] UAM Funds
BHM&S Total Return
Bond Portfolio
Institutional
Class Shares
July 10, 1997
P R O S P E C T U S
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Fund Expenses............................................................... 1
Prospectus Summary.......................................................... 3
Risk Factors................................................................ 4
Financial Highlights........................................................ 5
Investment Objective........................................................ 6
Investment Policies......................................................... 6
Other Investment Policies................................................... 7
Investment Limitations...................................................... 12
Purchase of Shares.......................................................... 13
Redemption of Shares........................................................ 16
Shareholder Services........................................................ 18
Valuation of Shares......................................................... 18
Performance Calculations.................................................... 19
Dividends, Capital Gains Distributions and Taxes............................ 20
Investment Adviser.......................................................... 21
Adviser's Historical Performance............................................ 23
Administrative Services..................................................... 24
Distributor................................................................. 25
General Information......................................................... 25
UAM Funds -- Institutional Class Shares..................................... 28
</TABLE>
<PAGE>
[LOGO] UAM Funds
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
BHM&S TOTAL RETURN BOND PORTFOLIO
INSTITUTIONAL CLASS SHARES
INVESTMENT ADVISER: BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
- -------------------------------------------------------------------------------
PROSPECTUS -- JULY 10, 1997
UAM Funds Trust (the "Fund") is an open-end investment company known as a
"mutual fund." The Fund consists of multiple series (known as "Portfolios"),
each of which has different investment objectives and policies. The BHM&S To-
tal Return Bond Portfolio currently offers two separate classes of shares: In-
stitutional Class Shares and Institutional Service Class Shares ("Service
Class Shares"). Shares of each class represent equal, pro-rata interests in a
Portfolio and accrue dividends in the same manner except that Service Class
Shares bear fees payable by the class to financial institutions for services
they provide to the owners of such shares. The securities offered in this Pro-
spectus are Institutional Class Shares of one diversified, no-load Portfolio
of the Fund managed by Barrow, Hanley, Mewhinney & Strauss, Inc.
BHM&S TOTAL RETURN BOND PORTFOLIO. BHM&S Total Return Bond Portfolio (the
"Portfolio") seeks to provide maximum long-term total return consistent with
reasonable risk to principal by investing in investment grade fixed income se-
curities of varying maturities. Income return is expected to be a predominant
portion of the Portfolio's total return. Any capital return on the Portfolio
is dependent upon, among other factors, interest rate changes as well as the
average maturity and duration of the Portfolio. The Adviser believes that by
investing in undervalued securities with above average effective yields and
capital appreciation potential, the Portfolio will generate superior returns
over the long term while minimizing volatility and, therefore, downside risk.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A "Statement of Additional Information" ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECU-
RITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CON-
TRARY IS A CRIMINAL OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Institutional Class Shares would incur. Transaction fees may be
charged if a broker-dealer or other financial intermediary deals with the Fund
on your behalf. (See "PURCHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL
CLASS SHARES
-------------
<S> <C>
Sales Load Imposed on Purchases................................ NONE
Sales Load Imposed on Reinvested Dividends..................... NONE
Deferred Sales Load............................................ NONE
Redemption Fees................................................ NONE
Exchange Fees.................................................. NONE
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Investment Advisory Fees............................................. 0.35%
Administrative Fees.................................................. 0.65%
12b-1 Fees........................................................... NONE
Other Expenses....................................................... 0.68%
Advisory Fees Waived and Expenses Assumed............................ (1.13)%
-----
Total Operating Expenses (After Fee Waiver and Expenses Assumed)..... 0.55%*
=====
</TABLE>
- -----------
* The Adviser has voluntarily agreed to waive all or a portion of its advisory
fees and to assume operating expenses to keep the Portfolio's Institutional
Class Shares' total annual operating expenses (excluding interest, taxes and
extraordinary expenses), after the effect of expense offsets, from exceeding
0.55% of average daily net assets through December 31, 1997. The figures
above include the effect of expense offsets. If expense offsets were exclud-
ed, Total Operating Expenses for the fiscal year ended April 30, 1997 would
be 0.57%. (See "FINANCIAL HIGHLIGHTS.") Absent the Adviser's waiver of fees
and assumption of expenses, the total annual operating expenses of the Port-
folio's Institutional Class Shares would have been 1.68% of average daily
net assets. The Fund will not reimburse the Adviser for any advisory fees
that are waived or Portfolio expenses that the Adviser may bear on behalf of
the Portfolio for a given fiscal year.
The table above shows various fees and expenses an investor may bear di-
rectly or indirectly. The expenses and fees set forth above are based on the
Portfolio's Institutional Class Shares' operations during the fiscal year
ended April 30, 1997.
1
<PAGE>
For purposes of calculating the estimated fees and expenses set forth above,
it is assumed that the Portfolio's average daily net assets will be $10 mil-
lion.
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. The Portfolio
charges no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Institutional Class Shares................... $ 6 $18 $31 $69
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN ABOVE.
2
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Barrow, Hanley, Mewhinney & Strauss, Inc. (the "Adviser") is a registered
investment adviser specializing in the active management of stock, bond and
balanced portfolios for institutional, tax-exempt clients. Founded in 1979,
the firm is a wholly-owned subsidiary of United Asset Management Corporation.
The Adviser currently has $20 billion in assets under management. (See "IN-
VESTMENT ADVISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion, to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment is $2,500. The minimum for subsequent investments is $100.
The minimum initial investment for IRA accounts is $500. The minimum initial
investment for spousal IRA accounts is $250. Certain exceptions to the initial
or minimum investment amounts may be made by the officers of the Fund (See
"PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in quarterly dividends. The Portfolio will distribute any realized
net capital gains annually. Distributions will be reinvested in the Portfo-
lio's shares automatically unless an investor elects to receive cash distribu-
tions. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See "REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of United As-
set Management Corporation, is responsible for performing and overseeing ad-
ministration, fund accounting, dividend disbursing and transfer agency serv-
ices provided to the Fund and its Portfolios by third-party service providers.
(See "ADMINISTRATIVE SERVICES.")
3
<PAGE>
RISK FACTORS
Prospective investors should consider the following: (1) The fixed income
securities held by the Portfolio will be affected by general changes in inter-
est rates resulting in increases or decreases in the value of the securities.
The value of fixed income securities can be expected to vary inversely to the
changes in prevailing interest rates, i.e., as interest rates decline, the
market value of fixed income securities tends to increase and vice versa; (2)
The Portfolio may purchase securities on a when-issued basis which do not earn
interest until issued and may decline or appreciate in market value prior to
their delivery to the Portfolio; (3) The Portfolio will invest in investment
grade debt securities, but reserves the right to hold securities that have
been downgraded. Adverse economic and corporate changes and changes in inter-
est rates may have a greater impact on issuers of lower rated debt securities
which the Portfolio may hold, which may lead to greater price volatility. Al-
so, lower rated securities may be more difficult to value accurately or sell
in the secondary market; (4) The Portfolio may invest in repurchase agreements
which entail a risk of loss should the seller default on its transaction; (5)
The Portfolio may lend its investment securities, which entails a risk of loss
should a borrower fail financially. (See "OTHER INVESTMENT POLICIES.")
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides selected per share information for a share out-
standing throughout the periods presented for the Portfolio's Institutional
Class Shares. This table is part of the Portfolio's Financial Statements in-
cluded in the Portfolio's 1997 Annual Report to Shareholders. The Report is
incorporated into the Portfolio's SAI. The Portfolio's Financial Statements
for the year ended April 30, 1997 have been audited by Price Waterhouse LLP
whose unqualified opinion on the Financial Statements for the year ended April
30, 1997 is also incorporated into the SAI. Please read the following informa-
tion in conjunction with the Portfolio's 1996 Annual Report to Shareholders.
<TABLE>
<CAPTION>
NOVEMBER 1, 1995***
TO YEAR ENDED
APRIL 30, 1996++ APRIL 30, 1997++
------------------- ----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $10.00 $ 9.85
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................... 0.28 0.60
Net Realized and Unrealized Gain (Loss)
on Investments........................ (0.27) 0.05
------ -------
0.01 0.65
------ -------
DISTRIBUTIONS
Net Investment Income................... (0.16) (0.54)
------ -------
NET ASSET VALUE, END OF PERIOD............ $ 9.85 $ 9.96
====== =======
TOTAL RETURN+............................. 0.08%** 6.75%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)... $2,445 $13,062
Ratio of Expenses to Average Net As-
sets.................................. 0.61%* 0.57%*
Ratio of Net Investment Income to Aver-
age Net Assets........................ 5.53%* 6.01%*
Portfolio Turnover Rate................. 55% 151%
Voluntary Waived Fees and Expenses
Assumed by the Adviser Per Share...... $ 0.23 $ 0.12
Ratio of Expenses to Average Net Assets
Including Expense Offsets............. 0.55%* 0.55%*
</TABLE>
- -----------
* Annualized.
** Not Annualized.
*** Commencement of Operations.
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser during the period.
++ Per share amounts are based on average outstanding shares.
5
<PAGE>
INVESTMENT OBJECTIVE
The objective of the Portfolio is to provide maximum long-term total return
consistent with reasonable risk to principal by investing in investment grade
fixed income securities of varying maturities. Income return is expected to be
a predominant portion of the Portfolio's total return. Any capital return on
the Portfolio is dependent upon, among other factors, interest rate changes as
well as the average maturity and duration of the Portfolio. The Adviser be-
lieves that by investing in undervalued securities with above average effec-
tive yields and capital appreciation potential, the Portfolio will generate
superior returns over the long term while minimizing volatility and, there-
fore, downside risk.
INVESTMENT POLICIES
The Portfolio seeks to achieve its objective by investing at least 90% of
its total assets in a diversified portfolio of the following dollar-denomi-
nated investment grade issues of varying maturities: U.S. Treasuries and Agen-
cies; zero coupon obligations; mortgage-backed securities; asset-backed secu-
rities; corporate bonds; municipal bonds; and domestic, Yankee dollar and Eu-
rodollar bonds (See "OTHER INVESTMENT POLICIES"). These issues may have fixed,
variable or floating rates of interest. As a matter of policy, the Adviser
does not intend to invest in or utilize futures, options or other complex de-
rivative instruments or securities.
The Adviser expects to actively manage the Portfolio in order to meet the
investment objective. To produce favorable returns, the Adviser will invest in
securities that it believes to be undervalued, generating an effective yield
advantage versus the market. To control the volatility of returns, the Portfo-
lio will exhibit a high current yield, a high quality and a conservative matu-
rity structure.
The Adviser's decision process will focus on security selection, sector con-
centration and yield curve positioning. The Adviser will not engage in eco-
nomic forecasts in an attempt to "time the market" since it believes that
there are too many economic and political variables on a domestic and interna-
tional basis to do so successfully on a consistent basis. Therefore, the Port-
folio will maintain a conservative maturity structure, with securities being
diversified along the yield curve. The Portfolio's average weighted maturity
will generally be ten years or less, with the average weighted duration compa-
rable to that of the Salomon Brothers' Broad Investment Grade Index which is
approximately five years. Duration compares interest rate risk between securi-
ties with different coupons and different maturities, summarizing in a single
number the price sensitivity of a bond--how a bond's maturity and coupon rate
affect its exposure to interest rate risk. Duration involves the application
of several principles: as the maturity of a bond increases, duration increas-
es; as the coupon of a bond increases, duration decreases; generally, the
lower the coupon payment, the higher the duration; and duration decreases as
the
6
<PAGE>
frequency of the coupon payment increases. Generally, 10% or less of the Port-
folio's assets will be invested in various short-term investments. (See
"SHORT-TERM INVESTMENTS.")
The Adviser's security selection process begins by analyzing a bond's yield
to maturity premium (or spread) versus the most recently issued U.S. Treasury
of similar maturity. Having identified bonds with an above-average premium,
the Adviser will then evaluate factors that could influence the bond's future
premium (i.e., credit quality, security structure, supply/demand relation-
ships, etc.). The objective of this process is to identify those issues whose
yield premium will compress or narrow over a wide range of potential interest
rate change, supporting superior long term performance. Furthermore, the Ad-
viser will concentrate the Portfolio's holdings in industry sectors and matu-
rity ranges that it believes are undervalued while seeking a prudent level of
diversification.
The Portfolio will invest in investment grade bonds which have one of the
four highest rating categories (i.e. Aaa, Aa, A or Baa by Moody's Investors
Service, Inc. ("Moody's") or AAA, AA, A or BBB by Standard & Poor's Corpora-
tion ("S&P")) at the time of purchase. Bonds rated Baa or BBB have speculative
characteristics and may be more sensitive to changes in the economy and the
financial condition of issuers than higher rated bonds. The Adviser also re-
serves the right to retain securities which are downgraded by one or both of
the rating agencies if, in the Adviser's judgment, retention of the securities
is warranted. The Portfolio's SAI contains a more detailed description of bond
ratings.
OTHER INVESTMENT POLICIES
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated redemp-
tions, or for temporary defensive purposes, the Portfolio may invest a portion
of its assets in domestic and foreign money market instruments including cer-
tificates of deposit, bankers' acceptances, time deposits, U.S. Government ob-
ligations, U.S. Government agency securities, short-term corporate debt secu-
rities, and commercial paper rated A-1 or A-2 by S&P or Prime-1 or Prime-2 by
Moody's Investors Service, Inc. or if unrated, determined by the Adviser to be
of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in
other currencies, (ii) in the case of U.S. banks, it is a member of the Fed-
eral Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an invest-
ment quality comparable with other debt securities which may be purchased by
the Portfolio.
7
<PAGE>
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's Port-
folios, as well as cash for investment purposes, into one or more joint ac-
counts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable rate demand notes and tax-exempt money instruments. By en-
tering into these investments on a joint basis, it is expected that a Portfo-
lio may earn a higher rate of return on investments relative to what it could
earn individually.
The Fund has received permission from the SEC for each of its Portfolios to
invest, for cash management purposes, the greater of 5% of its total assets or
$2.5 million in the Fund's DSI Money Market Portfolio. (See "INVESTMENT COMPA-
NIES.")
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities, certificates of deposit, and certain bankers' accept-
ances and other securities outlined above under "Short-Term Investments." In a
repurchase agreement, the Portfolio buys a security and simultaneously commits
to sell that security back at an agreed upon price plus an agreed upon market
rate of interest. Under a repurchase agreement, the seller is also required to
maintain the value of securities subject to the agreement at not less than
100% of the repurchase price. The value of the securities purchased will be
evaluated daily, and the Adviser will, if necessary, require the seller to
maintain additional securities to ensure that the value is in compliance with
the previous sentence. The use of repurchase agreements involves certain
risks. For example, a default by the seller of the agreement may cause the
Portfolio to experience a loss or delay in the liquidation of the collateral
securing the repurchase agreement. The Portfolio might also incur disposition
costs in liquidating the collateral. While the Fund's management acknowledges
these risks, it is expected that they can be controlled through stringent
counter-party selection criteria and careful monitoring procedures. The Fund
has received permission from the SEC to pool daily uninvested cash balances of
the Fund's Portfolios in order to invest in repurchase agreements on a joint
basis. By entering into joint repurchase agreements, the Portfolio may incur
lower transaction costs and earn higher rates of interest on joint repurchase
agreements. The Portfolio's contribution would determine its return from a
joint repurchase agreement. (See "SHORT-TERM INVESTMENTS.")
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. The Portfolio will not loan securities
to the extent that greater than one-third of its assets at fair market value
would be committed to loans. During the term of a loan, the Portfolio is sub-
ject to a gain or loss
8
<PAGE>
depending on any increase or decrease in the market price of the securities
loaned. Lending of securities is subject to review by the Fund's Board of
Trustees. All relevant facts and circumstances, including the creditworthiness
of the broker, dealer or institution, will be considered in making decisions
about securities lending.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Trustees. The Portfolio will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on loan, the loan must be called and the securities
voted.
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES
The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement," or "forward delivery" basis. "When-issued" or "forward delivery"
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more be-
fore delivery is due. Delayed settlement is a term used to describe settlement
of a securities transaction in the secondary market which will occur sometime
in the future. No payment or delivery is made by the Portfolio until it re-
ceives delivery or payment from the other party to any of the above transac-
tions. It is possible that the market price of the securities at the time of
delivery may be higher or lower than the purchase price. The Portfolio will
maintain a separate account of cash or liquid securities at least equal to the
value of purchase commitments until payment is made. Typically, no income ac-
crues on securities purchased on a delayed delivery basis prior to the time
delivery is made although the Portfolio may earn income on securities it has
deposited in a segregated account.
The Portfolio may engage in these types of purchases in order to buy securi-
ties that fit with its investment objectives at attractive prices -- not to
increase its investment leverage.
PORTFOLIO TURNOVER
Portfolio turnover is not anticipated to exceed 150%. In addition to Portfo-
lio trading costs, higher rates of portfolio turnover may result in the reali-
zation of capital gains. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX-
ES" for more information on taxation). The Portfolio will not normally engage
in short-term trading, but reserves the right to do so. The table set forth in
"Financial Highlights" presents the Portfolio's historical portfolio turnover
rates.
INVESTMENT COMPANIES
The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets
9
<PAGE>
may be invested in the securities of any one investment company, nor may it
acquire more than 3% of the voting securities of any investment company. The
Portfolio will indirectly bear its proportionate share of any management fees
paid by an investment company in which it invests in addition to the advisory
fee paid by the Portfolio.
The Fund has received permission from the SEC, to allow each of its Portfo-
lios to invest, for cash management purposes, the greater of 5% of its total
assets or $2.5 million in the Fund's DSI Money Market Portfolio provided that
the investment is consistent with the Portfolio's investment policies and re-
strictions. Based upon the Portfolio's assets invested in the DSI Money Market
Portfolio, the investing Portfolio's adviser will waive its investment advi-
sory fee and any other fees earned as a result of the Portfolio's investment
in the DSI Money Market Portfolio. The investing Portfolio will bear expenses
of the DSI Money Market Portfolio on the same basis as all of its other share-
holders.
RESTRICTED AND ILLIQUID SECURITIES
The Portfolio may purchase restricted securities that are not registered for
sale to the general public but which are eligible for resale to qualified in-
stitutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Trustees, the Adviser determines the li-
quidity of such investments by considering all relevant factors. Provided that
a dealer or institutional trading market in such securities exists, these re-
stricted securities are not treated as illiquid securities for purposes of the
Portfolio's investment limitations. The Portfolio may invest up to 15% of its
net assets in illiquid securities. Prices realized from the sales of these se-
curities could be more or less than those originally paid by the Portfolio or
less than what may be considered the fair value of such securities.
MORTGAGE-BACKED SECURITIES
Mortgage-backed securities are collateralized by pools of mortgages assem-
bled for subsequent sale to investors by various governmental agencies and
sponsored organizations as well as by private issuers. The underlying assets
collateralizing the mortgage-backed securities may include single-family, mul-
tifamily and commercial properties. The two fundamental forms of mortgage-
backed securities are pass-throughs and collateralized mortgage obligations
("CMOs"). Pass-throughs produce monthly payments of principal and interest
from the underlying mortgages. CMOs divide the cash flows generated from the
underlying mortgages or mortgage pass-through securities into different seg-
ments known as "tranches" which are then retired sequentially over time in or-
der of priority. The market value and yield of mortgage-backed securities will
fluctuate due to market interest rate change and early prepayments of the un-
derlying mortgages. As prepayment rates on mortgages vary widely, it is diffi-
cult to accurately predict the average maturity of a particular pool of mort-
gages or tranches of CMOs. Although mortgage-backed securities may offer
higher yields than those available from other
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<PAGE>
types of securities, mortgage-backed securities may be less effective than
other types of securities as a means of "locking in" an attractive rate for an
extended period because of the prepayment feature. The majority of the mort-
gage-backed securities held by the Portfolio will carry a guarantee from an
agency of the U.S. Government of the eventual payment of principal and inter-
est.
ASSET-BACKED SECURITIES
Asset-backed securities are collateralized by short maturity loans such as
automobile receivables, credit card receivables, other types of receivables or
assets. Credit support for asset-backed securities may be based on the under-
lying assets and/or provided through credit enhancements by a third party.
Credit enhancement techniques include letters of credit, insurance bonds, lim-
ited guarantees (which are generally provided by the issuer), senior-subordi-
nated structures and over-collateralization.
MUNICIPAL OBLIGATIONS
Municipal obligations include notes, bonds and other securities issued by or
on behalf of states, territories and possessions of the U.S. and the District
of Columbia and their political subdivisions, agencies and instrumentalities.
The interest on such municipal obligations will normally be exempt from fed-
eral income tax. These bonds may be general obligation bonds secured by the
issuer's pledge of its full faith, credit and taxing power for the payment of
principal and interest, or they may be revenue bonds payable from specific
revenue sources, but are not generally backed by the issuers' taxing power.
These obligations may include private activity bonds where payment is the re-
sponsibility of the private industrial user of the facility financed by the
bonds. Municipal notes are issued to meet short-term funding requirements of
the issuer and include construction loan notes, short-term discount notes,
tax-exempt commercial paper, demand notes and similar instruments. Municipal
bonds will be rated investment grade by Moody's and S&P, as described above.
Investment grade municipal notes will be rated MIG1, MIG2 or MIG3 by Moody's,
or SP-1 or SP-2 by S&P or, if unrated, determined by the Adviser to be of com-
parable quality. Please refer to the Portfolio's SAI for a detailed descrip-
tion of municipal note ratings.
YANKEE DOLLAR AND EURODOLLAR SECURITIES
Yankee dollar securities are U.S. dollar-based obligations issued inside the
United States by foreign entities. Eurodollar securities are U.S. dollar-based
obligations issued outside the United States by domestic or foreign entities.
Investment in these securities involve certain risks which are not typically
associated with investing in domestic securities. For example, non U.S.-based
issuers are not subject to the same accounting, auditing and financial report-
ing standards as are domestic issuers. There may be less publicly-available
information about non-U.S.-based issuers which may make it difficult to make
investment decisions. Political factors may have an impact in the form of con-
fiscatory taxation, expropriation or political instability in international
markets. Some foreign governments also levy
11
<PAGE>
withholding taxes against dividend and interest income. Although in some coun-
tries a portion of the taxes is recoverable, the non-recovered portion of for-
eign withholding taxes will reduce the income the Portfolio receives from the
companies comprising its investments.
ZERO COUPON SECURITIES
A portion of the Portfolio may be invested in zero coupon securities which
are fixed income securities that do not make regular interest payments. Zero
coupon securities are sold at substantial discounts from their face value. The
difference between a zero coupon security's issue or purchase price and its
face value represents the imputed interest an investor will earn if the obli-
gation is held until maturity. Zero coupon securities may offer the Portfolio
the opportunity to earn higher yields than those available on ordinary inter-
est paying obligations of similar credit quality and maturity. However, the
prices of zero coupon securities may also exhibit greater price volatility
than ordinary fixed income securities because of the manner in which their
principal and interest are returned to the investor. The Portfolio will accrue
income on such investments for tax and accounting purposes which is distribut-
able to shareholders. Since no cash is received at the time of accrual, the
Portfolio may be required to liquidate portfolio securities to satisfy its
distribution obligations.
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and in-
terest by the U.S. Government or any of its agencies or instrumentali-
ties);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding voting securities of any issuer;
(c) invest more than 5% of its assets at the time of purchase in the secu-
rities of companies that have (with predecessors) a continuous operat-
ing history of less than 3 years;
(d) invest more than 25% of its assets in companies within a single indus-
try; however, there are no limitations on investments made in instru-
ments issued or guaranteed by the U.S. Government and its agencies;
(e) make loans except by purchasing debt securities in accordance with its
investment objective and policies or entering into repurchase agree-
ments or by lending its portfolio securities to banks, brokers, deal-
ers and other financial institutions so long as the loans are made in
compliance with the 1940 Act, as amended, or the Rules and Regulations
or interpretations of the SEC;
(f) (i) borrow, except from banks and as a temporary measure for extraor-
dinary or emergency purposes and then, in no event, in excess of 33
1/3% of
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<PAGE>
the Portfolio's gross assets valued at the lower of market or cost,
and (ii) the Portfolio may not purchase additional securities when
borrowings exceed 5% of total assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent greater
than 33 1/3% of its total assets at fair market value.
The investment objectives of the Portfolio are fundamental and may be
changed only with the approval of the holders of a majority of the outstanding
shares of such Portfolio. Except for limitations (a), (b), (d), (e) and
(f)(i), the Portfolio's investment limitations and policies described in this
Prospectus and in the SAI are not fundamental and may be changed by the Fund's
Board of Trustees upon reasonable notice to investors. All other investment
limitations described here and in the SAI are fundamental policies and may be
changed only with the approval of the holders of a majority of the outstanding
shares of the Portfolio. If a percentage limitation on investment or utiliza-
tion of assets as set forth above is adhered to at the time an investment is
made, a later change in percentage resulting from changes in the value or to-
tal cost of the Portfolio's assets will not be considered a violation of the
restriction.
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), without a sales commission at the net asset value next deter-
mined after an order is received by the Custodian (See "VALUATION OF SHARES.")
The minimum initial investment required is $2,500. The minimum initial invest-
ment for IRA accounts is $500. The minimum initial investment for spousal IRA
accounts is $250. Certain exceptions may be made by the officers of the Fund.
Shares of the Portfolio may be purchased by customers of brokers-dealers or
other financial intermediaries ("Service Agents") which have established a
shareholder servicing relationship with the Fund on behalf of their customers.
Service Agents may impose additional or different conditions on purchases or
redemptions of Portfolio shares and may charge transaction or other account
fees. Each Service Agent is responsible for transmitting to its customers a
schedule of any such fees and information regarding additional or different
purchase or redemption conditions. Shareholders who are customers of Service
Agents should consult their Service Agent for information regarding these fees
and conditions. Amounts paid to Service Agents may include transaction fees
and/or service fees paid by the Fund from the Fund assets attributable to the
Service Agent, which would not be imposed if shares of the Portfolio were pur-
chased directly from the Fund or the Distributor. Service Agents may provide
shareholder services to their customers that are not available to a share-
holder dealing directly with the Fund. A salesperson and any other person en-
titled to receive compensation for selling or servicing Portfolio shares may
receive different compensation with respect to one particular class of shares
over another in the Fund.
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<PAGE>
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of the Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer
Agent prior to 4 p.m. to receive that day's share price. Proper payment for
the order must be received by the Sub-Transfer Agent no later than the time
when the Portfolio is priced on the following business day. Service Agents are
responsible to their customers and the Fund for timely transmission of all
subscription and redemption requests, investment information, documentation
and money.
INITIAL INVESTMENT
BY MAIL
. Complete and sign an Application, and mail it together with a check pay-
able to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment.
BY WIRE
. As soon as possible, telephone the UAM Funds Service Center and provide
the account name, address, telephone number, social security or taxpayer
identification number, Portfolio selected, amount being wired, and the
name of the bank wiring the funds. An account number and a wire control
number will be provided to you. Next,
. instruct your bank to wire the specified amount to the Fund's Custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
Credit DDA #9102772952
BHM&S Total Return Bond Fund
Your Account Registration
Your Account Number
Wire Control Number
. Forward a completed Application to the UAM Funds Service Center at the
address shown on the Form. Federal Funds purchases will be accepted only
on days when the NYSE and the Custodian Bank are open for business.
14
<PAGE>
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check made payable to "UAM Funds" to the above address or by wiring money to
the Custodian Bank using the instructions outlined above. When making addi-
tional investments, be sure that the account number, account name and the
Portfolio to be purchased is identified on the check or wire. Prior to wiring
additional investments, notify the UAM Funds Service Center by calling the
number on the cover of this Prospectus. Mail orders should include, when pos-
sible, the "Invest by Mail" stub which accompanies any Fund confirmation
statement.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to suspend the offering of shares or reject purchase orders of the
Portfolio when, in the judgment of management, such suspension or rejection is
in the best interests of the Fund.
Purchases of shares will be made in full and fractional shares calculated to
three decimal places. Certificates for whole shares will be issued upon writ-
ten request by the shareholder. Certificates for fractional shares will not be
issued.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by the Port-
folio in exchange for securities will be issued at net asset value determined
as of the same time. All dividends, interest, subscription, or other rights
pertaining to such securities shall become the property of the Portfolio and
must be delivered to the Fund by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for invest-
ment and not for immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be in-
cluded in the Portfolio (current market quotations must be readily
available for such securities);
. the investor represents and agrees that all securities offered to
be exchanged are liquid securities and not subject to any restric-
tions upon their sale by the Portfolio under the Securities Act of
1933, or otherwise; and
15
<PAGE>
. the value of any such securities (except U.S. Government securi-
ties) being exchanged together with other securities of the same
issuer owned by the Portfolio will not exceed 5% of the net assets
of the Portfolio immediately after the transaction.
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of secu-
rities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone, at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. No charge is made for redemptions. Any re-
demption may be more or less than the purchase price of your shares depending
on the market value of the investment securities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of
shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which they are regis-
tered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pen-
sion and profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the
wire redemption privilege) by completing appropriate sections of
the Application; and
. call the Fund and instruct that the redemption proceeds be mailed
to you or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated
to receive redemption proceeds (this can be accomplished only by a
written request signed by each shareholder, with each signature
guaranteed);
16
<PAGE>
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the investor to provide certain personal identification at the time an
account is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded
and investors may be required to provide additional telecopied written in-
structions of such transaction requests. The Fund or Sub-Transfer Agent may be
liable for any losses due to unauthorized or fraudulent telephone instructions
if the Fund or the Sub-Transfer Agent does not employ the procedures described
above. Neither the Fund nor the Sub-Transfer Agent will be responsible for any
loss, liability, cost or expense for following instructions received by tele-
phone that it reasonably believes to be genuine.
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than
the registered shareowner(s);
. redemptions where the proceeds are to be sent to someplace other
than the registered address, or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securi-
ties exchanges, registered securities associations, clearing agencies and sav-
ings associations. Broker-dealers guaranteeing signatures must be a member of
a clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after the
receipt of the request, or earlier if required under applicable law. The Fund
may suspend the right of redemption or postpone the date at times when both
the NYSE and Custodian Bank are closed, or under any emergency circumstances
determined by the SEC.
If the Board of Trustees determines that it would be detrimental to the best
interests of remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay redemption proceeds in whole or in part by a
distribution in-kind of liquid securities held by the Portfolio in lieu of
cash in conformity with
17
<PAGE>
applicable rules of the SEC. Investors may incur brokerage charges on the sale
of portfolio securities received in payment of redemptions.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for Institu-
tional Class Shares of any other UAM Funds Portfolio. (See the list of Portfo-
lios of the UAM Funds at the end of this Prospectus.) Exchange requests should
be made by contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you are interested. Exchanges can only be made with Portfolios that
are qualified for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES BY TELEPHONE". An exchange
into another UAM Funds Portfolio is a sale of shares and may result in a gain
or loss for income tax purposes. The Fund may modify or terminate the exchange
privilege at any time.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets attributable to the class, less any liabilities attrib-
utable to the class, by the number of shares outstanding attributable to the
class. The net asset value per share of the Portfolio is determined as of the
close of the NYSE on each day that the NYSE is open for business.
Bonds and other fixed income securities are valued according to the broadest
and most representative market, which will ordinarily be the over-the-counter
market. Bonds and other fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities. Securities purchased with remaining
maturities of
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<PAGE>
60 days or less are valued at amortized cost when the Board of Trustees deter-
mines that amortized cost reflects fair value.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating yield and total return.
Both yield and total return figures are based on historical earnings and are
not intended to indicate future performance.
Yield refers to the income generated by an investment in the Portfolio over
a given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all funds. As this
differs from other accounting methods, the quoted yield may not equal the in-
come actually paid to shareholders.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of time. An average annual total return is a hypothetical rate of re-
turn that, if achieved annually, would have produced the same cumulative total
return if performance had been constant over the entire period.
Performance will be calculated separately for Institutional Class and Serv-
ice Class Shares. Dividends paid by the Portfolio with respect to Institu-
tional Class and Service Class Shares, to the extent any dividends are paid,
will be calculated in the same manner at the same time on the same day and
will be in the same amount, except that service fees, distribution charges and
any additional transfer agency costs relating to Service Class Shares will be
borne exclusively by that class.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices as further de-
scribed in the Portfolio's SAI. This information may also be included in sales
literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or telephone number on the
cover of this Prospectus.
19
<PAGE>
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders in quarterly dividends. If any
net capital gains are realized, the Portfolio will normally distribute them
annually. All dividends and capital gains distributions will be automatically
reinvested in additional shares of the Portfolio unless the Fund is notified
in writing that the shareholder elects to receive distributions in cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal in-
come tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends. To do this, the Portfolio must,
among other things, distribute substantially all of its ordinary income and
net capital gains on an annual basis and maintain a portfolio of investments
which satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income.
Short-term capital gains will be taxed as ordinary income. Long-term capital
gains distributions are taxed as long-term capital gains. Shareholders will be
notified annually of dividend income earned for tax purposes.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid in January of the following year.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number provided is correct and that either you are
not currently subject to backup withholding or you are exempt from backup
withholding. This certification must be made on the Application or on a sepa-
rate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you. Consult a tax adviser for more information regarding deduc-
tions and credits for foreign taxes.
20
<PAGE>
INVESTMENT ADVISER
The Adviser is a registered investment adviser formed in 1979. Its business
offices are located at One McKinney Plaza, 3232 McKinney Avenue, 15th Floor,
Dallas, Texas 75204. It is a wholly-owned subsidiary of United Asset Manage-
ment Corporation ("UAM") and provides and offers investment management serv-
ices to corporate, public and Taft-Hartley employee benefit plans, founda-
tions, endowments, health care and other institutions and investors. The Ad-
viser currently has $20 billion in assets under management.
The Portfolio pays an annual fee in monthly installments to the Adviser for
advisory services. This fee is accrued daily and paid every month as a per-
centage of the average net assets in the Portfolio for that month. The per-
centage fee on an annual basis is 0.35%. The Adviser has agreed to waive a
portion of its advisory fees and to assume operating expenses, if necessary,
to keep operating expenses from exceeding 0.55% of average daily net assets
through December 31, 1997. The Adviser will not be reimbursed by the Fund for
any advisory fees which are waived or expenses which the Adviser may bear on
behalf of the Fund for a given fiscal year.
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Distributor, UAM, the Adviser, or any of their affili-
ates, may, at its own expense, compensate a Service Agent or other person for
marketing, shareholder servicing, record-keeping and/or other services per-
formed with respect to the Fund, the Portfolio or any Class of Shares of the
Portfolio. Payments made for any of these purposes may be made from the paying
entity's revenues, its profits or any other source available to it. When such
service arrangements are, in effect, they are made generally available to all
qualified service providers.
The Distributor, the Adviser and certain of their affiliates also partici-
pate, at the date of this Prospectus, in an arrangement with Smith Barney Inc.
("Smith Barney") under which Smith Barney provides certain defined contribu-
tion plan marketing and other shareholder services and receives from such en-
tities 0.15 of 1% of the daily net asset value of Institutional Class Shares
held by Smith Barney's eligible customer accounts in addition to amounts pay-
able to all selling dealers. The Fund also compensates Smith Barney for serv-
ices it provides to certain defined contribution plan shareholders that are
not otherwise provided by UAMFSI.
The investment professionals at the Adviser responsible for the day-to-day
management of the Portfolio and their qualifications are as follows:
JOHN S. WILLIAMS -- Fixed Income Principal and the first fixed income port-
folio manager at the Adviser in 1983. Mr. Williams has also managed balanced
and municipal portfolios during his 20 year investment career. Prior to join-
ing the Adviser, he was responsible for the management of all fixed income as-
sets at Southland Trust, Dallas, Texas, and prior to that was a portfolio man-
ager and securities analyst at InterFirst Bank Dallas Trust Department. Mr.
Williams has
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<PAGE>
served on the Advisory Committee for the Texas Teachers Retirement System and
is an active member in the Dallas Investment Analysts Society. He currently is
a Director of United Asset Management Corporation. Mr. Williams is a Chartered
Financial Analyst, earning his MBA in 1976 and BBA in 1975 from Texas Chris-
tian University.
DAVID R. HARDIN -- Fixed Income Principal and portfolio manager. Prior to
joining the Adviser in 1987, Mr. Hardin was the Vice President and Director of
the Fixed Income Group of RepublicBank Dallas Trust Department. In that posi-
tion, he was responsible for the management of all taxable and tax-exempt
fixed income assets of the Trust Division, including all separately managed
accounts, collective investment fund products, and the creation of and manage-
ment of an SEC-registered mutual fund. Prior to attaining the Director's posi-
tion, Mr. Hardin was a taxable portfolio manager and also served as the credit
analyst for the Trust Division. He started his investment career as a private
placement credit analyst while employed by American General Insurance Co. in
Houston in 1976. Mr. Hardin received an M.Sc. from The London School of Eco-
nomics in 1975 and a BBA from Texas Christian University in 1973.
STEPHEN M. MILANO -- Fixed Income Principal and portfolio manager. Prior to
joining the Adviser in 1990, Mr. Milano was employed at Salomon Brothers, Inc.
in New York as a Vice President of the Fixed Income Strategy Group. In that
role he was a specialist in developing portfolio structure and strategies for
active management of taxable assets. While at Salomon he also served as Prod-
uct Sales Manager for International Fixed Income Securities and as a Mortgage
and Government Specialist. Prior to joining Salomon, Mr. Milano was employed
as a portfolio manager and trader at Equitable Life Assurance Society. He re-
ceived his BS in Economics with a concentration in Finance from the Wharton
School of the University of Pennsylvania in 1980.
J. SCOTT MCDONALD -- Fixed Income Portfolio Analyst/Trader. Mr. McDonald
joined the Adviser in 1995 to serve as a security and portfolio specialist for
the Fixed Income Group. In addition to security and portfolio analyst, he is
responsible for systems analytics used in the evaluation of effective/option
adjusted yield measurements for all securities and portfolios. He also serves
as compliance monitor of all fixed income portfolios to ensure commonality of
structure and diversification. Mr. McDonald previously served as the Senior
Vice President and Portfolio Manager at Life Partners Group, Inc. in Dallas.
While with Life Partners, he was responsible for implementing investment
strategy for $3 billion in assets. Additionally, he has been employed by Texas
Commerce Bank Houston as a Credit Supervisor and Lending Officer. He received
his MBA in 1991 from the University of Texas at Austin and his BBA from South-
ern Methodist University in 1986.
DEBORAH J. ANDERSON -- Senior Portfolio Assistant. Ms. Anderson is responsi-
ble for all administrative staff and their duties associated with the fixed
22
<PAGE>
income product management, including communication/liaison with all clients,
custodial banks, and brokerage relationships. She supervises all operational
aspects of fixed income security trading and works extensively with reporting
requirements for all clients and regulatory agencies. Prior to joining the Ad-
viser in 1988, Ms. Anderson served as a Trust Officer with Trust Company of
Texas and its predecessor, Southland Trust Co. She received a BBA in Account-
ing from the University of Texas at Arlington in 1974.
ADVISER'S HISTORICAL PERFORMANCE
Below are certain performance data provided by the Adviser pertaining to the
composite of separately managed accounts of the Adviser that are managed with
substantially similar (although not necessarily identical) objectives, poli-
cies and strategies as those of the Portfolio. The performance data for the
managed accounts is net of all fees and expenses. The investment returns of
the Portfolio may differ from those of the separately managed accounts because
such separately managed accounts may have fees and expenses that differ from
those of the Portfolio. Further, the separately managed accounts are not sub-
ject to investment limitations, diversification requirements and other re-
strictions imposed by the Investment Company Act of 1940 and Internal Revenue
Code; such conditions, if applicable, may have lowered the returns for sepa-
rately managed accounts. The results presented are not intended to predict or
suggest the return to be experienced by the Portfolio or the return an in-
vestor might achieve by investing in the Portfolio.
BARROW, HANLEY, MEWHINNEY, & STRAUSS, INC.--BOND ACCOUNT
(Percentage Returns Net of Management Fees)
<TABLE>
<CAPTION>
LEHMAN BROTHERS
BARROW, HENLEY, MEWHINNEY & AGGREGATE
CALENDAR YEARS STRAUSS, INC. BOND INDEX
-------------- --------------------------- ---------------
<S> <C> <C>
1987.............................. 3.15% 2.76%
1988.............................. 7.30% 7.89%
1989.............................. 15.01% 14.53%
1990.............................. 9.18% 8.96%
1991.............................. 16.54% 16.00%
1992.............................. 7.56% 7.40%
1993.............................. 10.56% 9.75%
1994.............................. (3.44)% (2.92)%
1995.............................. 17.64% 18.46%
1996.............................. 3.63% 3.63%
3 Months ended 3/31/97............ (0.46)% (0.56)%
Annualized........................ 8.27% 8.20%
Cumulative........................ 225.78% 224.21%
Ten-Year Mean
(1/1/87-12/31/96)............... 8.71% 8.65%
Value of $1 invested during
(1/1/87-3/31/97)................ $3.26 $3.24
</TABLE>
23
<PAGE>
Notes:
1. The annualized return is calculated from monthly data, allowing for com-
pounding. The formula used is in accordance with the acceptable methods
set forth by the Association for Investment Management Research, the Bank
Administration Institute, and the Investment Counsel Association of Ameri-
ca. Market Value of the account was the sum of the account's total assets,
including cash, cash equivalents, short-term investments, and securities
valued at current market prices.
2. The cumulative return means that $1 invested in that account on January 1,
1979 had grown to $3.26 by March 31, 1997.
3. The 10-year mean is the arithmetic average of the annual returns for the
calendar years listed.
4. The Lehman Brothers Aggregate Bond Index is an unmanaged index which as-
sumes reinvestment of dividends and is generally considered representative
of securities similar to those invested in by the Adviser for the purpose
of the composite performance numbers set forth above.
5. The Adviser's average annual management fee over the period shown (1/1/87-
3/31/97) was 0.33% or 33 basis points. During the period, fees on the Ad-
viser's individual accounts ranged from 0.25% to 0.45% (25 basis points to
45 basis points). Net returns to investors vary depending on the manage-
ment fee.
ADMINISTRATIVE SERVICES
UAMFSI, a wholly-owned subsidiary of United Asset Management Corporation, is
responsible for performing and overseeing administrative, fund accounting,
dividend disbursing and transfer agent services provided to the Fund and its
Portfolios. UAMFSI's principal office is located at 211 Congress Street, Bos-
ton, MA 02110. UAMFSI has subcontracted some of these services to Chase Global
Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan Bank, by
a Mutual Funds Service Agreement dated June 30, 1997. CGFSC is located at 73
Tremont Street, Boston, MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
BHM&S Total Return Bond Portfolio...................................... 0.04%
</TABLE>
24
<PAGE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
0.11 of 1% of the next $800 million of combined UAM Funds assets;
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Funds' fees are allocated among the Portfolios on the basis of their
relative assets and are subject to a graduated minimum fee schedule per Port-
folio, which starts at $2,000 per month and increases to $70,000 annually af-
ter two years. If a separate class of shares is added to a Portfolio, its min-
imum annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM, with its principal office
located at 211 Congress Street, Boston, Massachusetts 02110, distributes the
shares of the Fund. Under the Fund's Distribution Agreement (the "Agreement"),
the Distributor, as agent of the Fund, agrees to use its best efforts as sole
distributor of the Fund's shares. The Distributor does not receive any fee or
other compensation under the Agreement with respect to the Portfolio's Insti-
tutional Class Shares offered in this Prospectus. The Agreement continues in
effect as long as it is approved at least annually by the Fund's Board of
Trustees. Those approving the Agreement include a majority of Trustees who are
neither parties to the Agreement nor interested persons of any such party.
This Agreement provides that the Fund will bear the costs of the registration
of its shares with the SEC and various states and the printing of its prospec-
tuses, SAIs and reports to shareholders.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II." On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and
25
<PAGE>
have no preference as to conversion, exchange, dividends, retirement or other
features and no pre-emptive rights. They have noncumulative voting rights,
which means that holders of more than 50% of shares voting for the election of
Trustees can elect 100% of the Trustees. 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 of the Fund.
As of June 16, 1997, Hartnat & Co., Hoag Memorial Conservative Collective
held of record 26.1% and Sarah Campbell Blaffer Foundation held 25.9% of the
outstanding shares of the Portfolio's Institutional Class for which beneficial
ownership is disclaimed or presumed disclaimed. The persons or organizations
owning 25% or more of the outstanding shares of the Portfolio may be presumed
to "control" (as that term is defined in the 1940 Act) the Portfolio. As a re-
sult, these persons or organizations could have the ability to vote a majority
of the shares of the Portfolio on any matter requiring the approval of share-
holders of the Portfolio.
Both Institutional Class and Service Class Shares represent an interest in
the same assets of a Portfolio. Service Class Shares bear certain expenses re-
lated to shareholder servicing and, may bear expenses related to distribution.
Service Class Shares have exclusive voting rights with respect to matters re-
lating to such distribution expenditures. Information about the Service Class
Shares of the Portfolio is available upon request by contacting the UAM Funds
Service Center.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the hold-
ers of not less than 10% of the outstanding shares of the Fund. The Fund will
assist shareholder communications in such matters.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the address or telephone number listed on the cover of this Prospectus.
26
<PAGE>
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT OF AD-
DITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR ITS REPRESENTATIONS MUST NOT BE RE-
LIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CON-
STITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY
NOT LAWFULLY BE MADE.
27
<PAGE>
UAM FUNDS -- INSTITUTIONAL CLASS SHARES
Acadian Emerging Markets Portfolio
Acadian International Equity Portfolio
BHM&S Total Return Bond Portfolio
Chicago Asset Management Intermediate Bond Portfolio
Chicago Asset Management Value/Contrarian Portfolio
C&B Balanced Portfolio
C&B Equity Portfolio
C&B Equity Portfolio for Taxable Investors
C&B Mid Cap Equity Portfolio
DSI Balanced Portfolio
DSI Disciplined Value Portfolio
DSI Limited Maturity Bond Portfolio
DSI Money Market Portfolio
FMA Small Company Portfolio
FPA Crescent Portfolio
Hanson Equity Portfolio
ICM Equity Portfolio
ICM Fixed Income Portfolio
ICM Small Company Portfolio
IRC Enhanced Index Portfolio
Jacobs International Octagon Portfolio
McKee Domestic Equity Portfolio
McKee International Equity Portfolio
McKee U.S. Government Portfolio
McKee Small Cap Equity Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Rice, Hall James Small Cap Portfolio
Rice, Hall James Small/Mid Cap Portfolio
Sirach Equity Portfolio
Sirach Fixed Income Portfolio
Sirach Growth Portfolio
Sirach Short-Term Reserves Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
SAMI Preferred Stock Income Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Short-Term Fixed Income Portfolio
Sterling Partners' Small Cap Value Portfolio
TS&W Equity Portfolio
TS&W Fixed Income Portfolio
TS&W International Equity Portfolio
TS&W Balanced Portfolio
28
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Barrow, Hanley, Mewhinney & Strauss, Inc.
One McKinney Plaza,
3232 McKinney Avenue,
15th Floor, Dallas, Texas 75204
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
BHM&S Total Return
Bond Portfolio
Institutional Service
Class Shares
P R O S P E C T U S
July 10, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses.............................................................. 1
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Financial Highlights....................................................... 5
Investment Objective....................................................... 6
Investment Policies........................................................ 6
Other Investment Policies.................................................. 7
Investment Limitations..................................................... 12
Purchase of Shares......................................................... 13
Redemption of Shares....................................................... 16
Shareholder Services....................................................... 18
Service and Distribution Plans............................................. 19
Valuation of Shares........................................................ 21
Performance Calculations................................................... 21
Dividends, Capital Gains Distributions and Taxes........................... 22
Investment Adviser......................................................... 23
Adviser's Historical Performance........................................... 25
Administrative Services.................................................... 27
Distributor................................................................ 27
General Information........................................................ 28
UAM Funds -- Service Class Shares.......................................... 30
</TABLE>
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
BHM&S TOTAL RETURN BOND PORTFOLIO
INSTITUTIONAL SERVICE CLASS SHARES
INVESTMENT ADVISER: BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
- -------------------------------------------------------------------------------
PROSPECTUS -- JULY 10, 1997
UAM Funds Trust (the "Fund") is an open-end investment company known as a
"mutual fund." The Fund consists of multiple series (known as "Portfolios"),
each of which has different investment objectives and policies. The BHM&S To-
tal Return Bond Portfolio offers two separate classes of shares: Institutional
Class Shares and Institutional Service Class Shares ("Service Class Shares").
Shares of each class represent equal, pro rata interests in a Portfolio and
accrue dividends in the same manner except that the Service Class Shares bear
fees payable by the class (at the maximum rate of .25% per annum) to financial
institutions for services they provide to the owners of such shares. The secu-
rities offered in this Prospectus are Service Class Shares of one diversified,
no-load Portfolio of the Fund managed by Barrow, Hanley, Mewhinney & Strauss,
Inc.
BHM&S TOTAL RETURN BOND PORTFOLIO. BHM&S Total Return Bond Portfolio (the
"Portfolio") seeks to provide maximum long term total return consistent with
reasonable risk to principal by investing in investment grade fixed income se-
curities of varying maturities. Income return is expected to be a predominant
portion of the Portfolio's total return. Any capital return on the Portfolio
is dependent upon, among other factors, interest rate changes as well as the
average maturity and duration of the Portfolio. The Adviser believes that by
investing in undervalued securities with above average effective yields and
capital appreciation potential, the Portfolio will generate superior returns
over the long term while minimizing volatility and, therefore, downside risk.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A "Statement of Additional Information" ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECU-RITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolios' Service Class Shares would incur. Transaction fees may be charged
if a broker-dealer or other financial intermediary deals with the Fund on your
behalf. (See "PURCHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
SERVICE CLASS SHARES
--------------------
<S> <C>
Sales Load Imposed on Purchases......................... NONE
Sales Load Imposed on Reinvested Dividends.............. NONE
Deferred Sales Load..................................... NONE
Redemption Fees......................................... NONE
Exchange Fees........................................... NONE
</TABLE>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(As A Percentage of Average Net Assets)
<TABLE>
<CAPTION>
SERVICE CLASS SHARES
--------------------
<S> <C>
Investment Advisory Fees.............................. 0.35 %
Administrative Fees................................... 0.65 %
12b-1 Fees (Including Shareholder Servicing Fees)+.... 0.25 %
Other Expenses........................................ 0.68 %
Advisory Fees Waived and Expenses Assumed............. (1.13)%
-----
Total Operating Expenses (After Fee Waiver and
Expenses Assumed)................................... 0.80 %*
=====
</TABLE>
- -----------
+ See "SERVICE AND DISTRIBUTION PLANS." Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charges permit-
ted by rules of the National Association of Securities Dealers, Inc.
* The Adviser has voluntarily agreed to waive all or a portion of its advisory
fees and to assume operating expenses to keep the Portfolio's Service Class
Shares' total annual operating expenses (excluding interest, taxes and ex-
traordinary expenses), after the effect of expense offsets, from exceeding
0.80% of average daily net assets through December 31, 1997. The figures
above include the effect of expense offsets. If expense offsets were exclud-
ed, Total Operating Expenses for the fiscal year ended April 30, 1997 would
be 0.82%. (See "FINANCIAL HIGHLIGHTS.") Absent the Adviser's waiver of fees
and assumption of expenses, the total annual operating expenses of the Port-
folio's Service Class Shares would have been 1.96% of average daily net as-
sets. The Fund will not reimburse the Adviser for any advisory fees that are
waived or Portfolio expenses that the Adviser may bear on behalf of the
Portfolio for a given fiscal year.
1
<PAGE>
The table above shows various fees and expenses an investor would bear di-
rectly or indirectly.
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. The Portfolio
charges no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Service Class Shares......................... $ 8 $26 $44 $99
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN ABOVE.
2
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Barrow, Hanley, Mewhinney & Strauss, Inc. (the "Adviser") is a registered
investment adviser specializing in the active management of stock, bond and
balanced portfolios for institutional, tax-exempt clients. Founded in 1979,
the firm is a wholly-owned subsidiary of United Asset Management Corporation.
The Adviser currently has $20 billion in assets under management. (See "IN-
VESTMENT ADVISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment is $2,500. The minimum for subsequent investments is $100.
The minimum initial investment for IRA accounts is $500. The minimum initial
investment for spousal IRA accounts is $250. Certain exceptions to the initial
or minimum investment amounts may be made by the officers of the Fund (See
"PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in quarterly dividends. The Portfolio will distribute any realized
net capital gains annually. Distributions will be reinvested in the Portfo-
lio's shares automatically unless an investor elects to receive cash distribu-
tions. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See "REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of United As-
set Management Corporation, is responsible for performing and overseeing ad-
ministration, fund accounting, dividend disbursing and transfer agency serv-
ices provided to the Fund and its Portfolios by third-party service providers.
(See "ADMINISTRATIVE SERVICES.")
3
<PAGE>
RISK FACTORS
Prospective investors should consider the following: (1) The fixed income
securities held by the Portfolio will be affected by general changes in inter-
est rates resulting in increases or decreases in the value of the securities.
The value of fixed income securities can be expected to vary inversely to the
changes in prevailing interest rates, i.e., as interest rates decline, the
market value of fixed income securities tends to increase and vice versa; (2)
The Portfolio may purchase securities on a when-issued basis which do not earn
interest until issued and may decline or appreciate in market value prior to
their delivery to the Portfolio; (3) The Portfolio will invest in investment
grade debt securities, but reserves the right to hold securities that have
been downgraded. Adverse economic and corporate changes and changes in inter-
est rates may have a greater impact on issuers of lower rated debt securities
that the Portfolio may hold, which may lead to greater price volatility. Also,
lower rated securities may be more difficult to value accurately or sell in
the secondary market; (4) The Portfolio may invest in repurchase agreements
which entail a risk of loss should the seller default on its transaction; (5)
The Portfolio may lend its investment securities, which entails a risk of loss
should a borrower fail financially. (See "OTHER INVESTMENT POLICIES.")
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides selected per share information for a share out-
standing throughout the periods presented for the Portfolio's Service Class
Shares. This table is part of the Portfolio's Financial Statements included in
the Portfolio's 1997 Annual Report to Shareholders. The Report is incorporated
into the Portfolio's SAI. The Portfolio's Annual Financial Statements for the
year ended April 30, 1997 have been audited by Price Waterhouse LLP whose un-
qualified opinion thereon is also incorporated into the SAI. Please read the
following information in conjunction with the Portfolio's 1997 Annual Report
to Shareholders.
<TABLE>
<CAPTION>
NOVEMBER 1, 1995*** YEAR ENDED
TO APRIL 30, 1996++ APRIL 30, 1997
------------------- --------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........ $10.00 $ 9.84
====== ======
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income..................... 0.27 0.57
Net Realized and Unrealized Gain (Loss) on
Investments............................. (0.27) 0.05
------ ------
Total from Investment Operations........ -- 0.62
------ ------
DISTRIBUTIONS
Net Investment Income..................... (0.16) (0.51)
------ ------
NET ASSET VALUE, END OF PERIOD.............. $ 9.84 $ 9.95
====== ======
TOTAL RETURN+............................... (0.07)%** 6.47%
====== ======
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)..... $2,871 $4,045
Ratio of Expenses to Average Net Assets... 0.83%* 0.82%
Ratio of Net Investment Income to Average
Net Assets.............................. 5.44%* 5.78%
Portfolio Turnover Rate................... 55% 151%
Voluntary Waived Fees and Expenses Assumed
by the Adviser Per Share................ $ 0.20 $ 0.14
Ratio of Expenses to Average Net Assets
Including Expense Offsets............... 0.80%* 0.80%
</TABLE>
- -----------
* Annualized.
** Not Annualized.
*** Commencement of Operations.
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser during the period.
++ Per share amounts for the period ended April 30, 1996 are based on average
outstanding shares.
5
<PAGE>
INVESTMENT OBJECTIVE
The objective of the Portfolio is to provide maximum long-term total return
consistent with reasonable risk to principal by investing in investment grade
fixed income securities of varying maturities. Income return is expected to be
a predominant portion of the Portfolio's total return. Any capital return on
the Portfolio is dependent upon, among other factors, interest rate changes as
well as the average maturity and duration of the Portfolio. The Adviser be-
lieves that by investing in undervalued securities with above average effec-
tive yields and capital appreciation potential, the Portfolio will generate
superior returns over the long term while minimizing volatility and, there-
fore, downside risk.
INVESTMENT POLICIES
The Portfolio seeks to achieve its objective by investing at least 90% of
its total assets in a diversified portfolio of the following dollar-denomi-
nated investment grade issues of varying maturities: U.S. Treasuries and Agen-
cies; zero coupon obligations; mortgage-backed securities; asset-backed secu-
rities; corporate bonds; municipal bonds; and domestic, Yankee dollar and Eu-
rodollar bonds (See "OTHER INVESTMENT POLICIES."). These issues may have
fixed, variable or floating rates of interest. As a matter of policy, the Ad-
viser does not intend to invest in or utilize futures, options or other com-
plex derivative instruments or securities.
The Adviser expects to actively manage the Portfolio in order to meet the
investment objective. To produce favorable returns, the Adviser will invest in
securities that it believes to be undervalued, generating an effective yield
advantage versus the market. To control the volatility of returns, the Portfo-
lio will exhibit a high current yield, a high quality and a conservative matu-
rity structure.
The Adviser's decision process will focus on security selection, sector con-
centration and yield curve positioning. The Adviser will not engage in eco-
nomic forecasts in an attempt to "time the market" since it believes that
there are too many economic and political variables on a domestic and interna-
tional basis to do so successfully on a consistent basis. Therefore, the Port-
folio will maintain a conservative maturity structure, with securities being
diversified along the yield curve. The Portfolio's average weighted maturity
will generally be ten years or less, with the average weighted duration compa-
rable to that of the Salomon Brothers' Broad Investment Grade Index which is
approximately five years. Duration compares interest rate risk between securi-
ties with different coupons and different maturities, summarizing in a single
number the price sensitivity of a bond -- how a bond's maturity and coupon
rate affect its exposure to interest rate risk. Duration involves the applica-
tion of several principles: as the maturity of a bond increases, duration in-
creases; as the coupon of a bond increases, duration decreases; generally, the
lower the coupon payment, the higher the duration; and duration decreases as
the
6
<PAGE>
frequency of the coupon payment increases. Generally, 10% or less of the Port-
folio's assets will be invested in various short-term investments. Please see
"SHORT-TERM INVESTMENTS" for a list of the short-term instruments in which the
Portfolio may invest.
The Adviser's security selection process begins by analyzing a bond's yield
to maturity premium (or spread) versus the most recently issued U.S. Treasury
of similar maturity. Having identified bonds with an above-average premium,
the Adviser will then evaluate those factors that will influence the bond's
future premium (i.e., credit quality, security structure, supply/demand rela-
tionships, etc.). The objective of this process is to identify those issues
whose yield premium will compress or narrow over a wide range of potential in-
terest rate change, supporting superior long term performance. Furthermore,
the Adviser will concentrate the Portfolio's holdings in industry sectors and
maturity ranges that it believes are undervalued while seeking a prudent level
of diversification.
The Portfolio will invest in investment grade bonds which have one of the
four highest rating categories (i.e. Aaa, Aa, A or Baa by Moody's Investors
Service, Inc. ("Moody's) or AAA, AA, A or BBB by Standard & Poor's Corporation
("S&P")) at the time of purchase. Bonds rated Baa or BBB have speculative
characteristics and may be more sensitive to changes in the economy and the
financial condition of issuers than higher rated bonds. The Adviser also re-
serves the right to retain securities which are downgraded by one or both of
the rating agencies if, in the Adviser's judgment, retention of the securities
is warranted. The Portfolio's SAI contains a more detailed description of bond
ratings.
OTHER INVESTMENT POLICIES
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated redemp-
tions, or for temporary defensive purposes, the Portfolio may invest a portion
of its assets in domestic and foreign money market instruments including cer-
tificates of deposit, bankers' acceptances, time deposits, U.S. Government ob-
ligations, U.S. Government agency securities, short-term corporate debt secu-
rities, and commercial paper rated A-1 or A-2 by S&P or Prime-1 or Prime-2 by
Moody's or if unrated, determined by the Adviser to be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in
other currencies, (ii) in the case of U.S. banks, it is a member of the Fed-
eral Deposit Insurance Corporation, and
7
<PAGE>
(iii) in the case of foreign branches of U.S. banks, the security is, in the
opinion of the Adviser, of an investment quality comparable with other debt
securities which may be purchased by the Portfolio.
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's Port-
folios, as well as cash for investment purposes, into one or more joint ac-
counts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable rate demand notes and tax-exempt money instruments. By en-
tering into these investments on a joint basis, it is expected that a Portfo-
lio may earn a higher rate of return on investments relative to what it could
earn individually.
The Fund has received permission from the SEC for each of its Portfolios to
invest, for cash management purposes, the greater of 5% of its total assets or
$2.5 million in the Fund's DSI Money Market Portfolio. (See "INVESTMENT COMPA-
NIES.")
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities, certificates of deposit, and certain bankers' accept-
ances and other securities outlined above under "SHORT-TERM INVESTMENTS." In a
repurchase agreement, the Portfolio buys a security and simultaneously commits
to sell that security back at an agreed upon price plus an agreed upon market
rate of interest. Under a repurchase agreement, the seller is also required to
maintain the value of securities subject to the agreement at not less than
100% of the repurchase price. The value of the securities purchased will be
evaluated daily, and the Adviser will, if necessary, require the seller to
maintain additional securities to ensure that the value is in compliance with
the previous sentence. The use of repurchase agreements involves certain
risks. For example, a default by the seller of the agreement may cause the
Portfolio to experience a loss or delay in the liquidation of the collateral
securing the repurchase agreement. The Portfolio might also incur disposition
costs in liquidating the collateral. While the Fund's management acknowledges
these risks, it is expected that they can be controlled through stringent
counter-party selection criteria and careful monitoring procedures. The Fund
has received permission from the SEC to pool daily uninvested cash balances of
the Fund's Portfolios in order to invest in repurchase agreements on a joint
basis. By entering into joint repurchase agreements, the Portfolio may incur
lower transaction costs and earn higher rates of interest on joint repurchase
agreements. The Portfolio's contribution would determine its return from a
joint repurchase agreement. (See "SHORT-TERM INVESTMENTS.")
8
<PAGE>
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. The Portfolio will not loan securities
to the extent that greater than one-third of its assets at fair market value
would be committed to loans. During the term of a loan, the Portfolio is sub-
ject to a gain or loss depending on any increase or decrease in the market
price of the securities loaned. Lending of securities is subject to review by
the Fund's Board of Trustees. All relevant facts and circumstances, including
the creditworthiness of the broker, dealer or institution, will be considered
in making decisions about securities lending.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Trustees. The Portfolio will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on loan, the loan must be called and the securities
voted.
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES
The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement," or "forward delivery" basis. "When-issued" or "forward delivery"
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more be-
fore delivery is due. Delayed settlement is a term used to describe settlement
of a securities transaction in the secondary market which will occur sometime
in the future. No payment or delivery is made by the Portfolio until it re-
ceives delivery or payment from the other party to any of the above transac-
tions. It is possible that the market price of the securities at the time of
delivery may be higher or lower than the purchase price. The Portfolio will
maintain a separate account of cash or liquid securities at least equal to the
value of purchase commitments until payment is made. Typically, no income ac-
crues on securities purchased on a delayed delivery basis prior to the time
delivery is made although the Portfolio may earn income on securities it has
deposited in a segregated account.
The Portfolio may engage in these types of purchases in order to buy securi-
ties that fit with its investment objectives at attractive prices -- not to
increase its investment leverage.
PORTFOLIO TURNOVER
Portfolio turnover is not anticipated to exceed 150%. In addition to Portfo-
lio trading costs, higher rates of portfolio turnover may result in the reali-
zation of capital gains. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX-
ES" for more information on taxation). The Portfolio will not normally en-
9
<PAGE>
gage in short-term trading, but reserves the right to do so. The table set
forth in "Financial Highlights" presents the Portfolio's historical portfolio
turnover rates.
INVESTMENT COMPANIES
The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets may be invested in the securities of any one investment company
nor may it acquire more than 3% of the voting securities of any investment
company. The Portfolio will indirectly bear its proportionate share of any
management fees paid by an investment company in which it invests in addition
to the advisory fee paid by the Portfolio.
The Fund has received permission from the SEC to allow each of its Portfo-
lios to invest, for cash management purposes, the greater of 5% of its total
assets or $2.5 million in the Fund's DSI Money Market Portfolio provided that
the investment is consistent with the Portfolio's investment policies and re-
strictions. Based upon the Portfolio's assets invested in the DSI Money Market
Portfolio, the investing Portfolio's adviser will waive its investment advi-
sory fee and any other fees earned as a result of the Portfolio's investment
in the DSI Money Market Portfolio. The investing Portfolio will bear expenses
of the DSI Money Market Portfolio on the same basis as all of its other share-
holders.
RESTRICTED AND ILLIQUID SECURITIES
The Portfolio may purchase restricted securities that are not registered for
sale to the general public but which are eligible for resale to qualified in-
stitutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Trustees, the Adviser determines the li-
quidity of such investments by considering all relevant factors. Provided that
a dealer or institutional trading market in such securities exists, these re-
stricted securities are not treated as illiquid securities for purposes of the
Portfolio's investment limitations. The Portfolio may invest up to 15% of its
net assets in illiquid securities. Prices realized from the sales of these se-
curities could be more or less than those originally paid by the Portfolio or
less than what may be considered the fair value of such securities.
MORTGAGE-BACKED SECURITIES
Mortgage-backed securities are collateralized by pools of mortgages assem-
bled for subsequent sale to investors by various governmental agencies and
sponsored organizations as well as by private issuers. The underlying assets
collateralizing the mortgage-backed securities may include single-family, mul-
tifamily and commercial properties. The two fundamental forms of mortgage-
backed securities are pass-throughs and collateralized mortgage obligations
("CMOs"). Pass-throughs produce monthly payments of principal and interest
from the underlying mortgages. CMOs divide the cash flows generated from the
underlying mort-
10
<PAGE>
gages or mortgage pass-through securities into different segments known as
"tranches" which are then retired sequentially over time in order of priority.
The market value and yield of mortgage-backed securities will fluctuate due to
market interest rate change and early prepayments of the underlying mortgages.
As prepayment rates on mortgages vary widely, it is difficult to accurately
predict the average maturity of a particular pool of mortgages or tranches of
CMOs. Although mortgage-backed securities may offer higher yields than those
available from other types of securities, mortgage-backed securities may be
less effective than other types of securities as a means of "locking in" an
attractive rate for an extended period because of the prepayment feature. The
majority of the mortgage-backed securities held by the Portfolio will carry a
guarantee from an agency of the U.S. Government of the eventual payment of
principal and interest.
ASSET-BACKED SECURITIES
Asset-backed securities are collateralized by short maturity loans such as
automobile receivables, credit card receivables, other types of receivables or
assets. Credit support for asset-backed securities may be based on the under-
lying assets and/or provided through credit enhancements by a third party.
Credit enhancement techniques include letters of credit, insurance bonds, lim-
ited guarantees (which are generally provided by the issuer), senior-subordi-
nated structures and over-collateralization.
MUNICIPAL OBLIGATIONS
Municipal obligations include notes, bonds and other securities issued by or
on behalf of states, territories and possessions of the U.S. and the District
of Columbia and their political subdivisions, agencies and instrumentalities.
The interest on such municipal obligations will normally be exempt from fed-
eral income tax. These bonds may be general obligation bonds secured by the
issuer's pledge of its full faith, credit and taxing power for the payment of
principal and interest, or they may be revenue bonds payable from specific
revenue sources, but are not generally backed by the issuer's taxing power.
These obligations may include private activity bonds where payment is the re-
sponsibility of the private industrial user of the facility financed by the
bonds. Municipal notes are issued to meet short-term funding requirements of
the issuer and include construction loan notes, short-term discount notes,
tax-exempt commercial paper, demand notes and similar instruments. Municipal
bonds will be rated investment grade by Moody's and S&P, as described above.
Investment grade municipal notes will be rated MIG1, MIG2 or MIG3 by Moody's,
or SP-1 or SP-2 by S&P or, if unrated, determined by the Adviser to be of com-
parable quality. Please refer to the Portfolio's SAI for a detailed descrip-
tion of municipal note ratings.
YANKEE DOLLAR AND EURODOLLAR SECURITIES
Yankee dollar securities are U.S. dollar-based obligations issued inside the
United States by foreign entities. Eurodollar securities are U.S. dollar-based
obli-
11
<PAGE>
gations issued outside the United States by domestic or foreign entities. In-
vestment in these securities involve certain risks which are not typically as-
sociated with investing in domestic securities. For example, non U.S.-based
issuers are not subject to the same accounting, auditing and financial report-
ing standards as are domestic issuers. There may be less publicly-available
information about non-U.S.-based issuers which may make it difficult to make
investment decisions. Political factors may have an impact in the form of con-
fiscatory taxation, expropriation or political instability in international
markets. Some foreign governments also levy withholding taxes against dividend
and interest income. Although in some countries a portion of the taxes is re-
coverable, the non-recovered portion of foreign withholding taxes will reduce
the income the Portfolio receives from the companies comprising its invest-
ments.
ZERO COUPON SECURITIES
A portion of the Portfolio may be invested in zero coupon securities which
are fixed income securities that do not make regular interest payments. Zero
coupon securities are sold at substantial discounts from their face value. The
difference between a zero coupon security's issue or purchase price and its
face value represents the imputed interest an investor will earn if the obli-
gation is held until maturity. Zero coupon securities may offer the Portfolio
the opportunity to earn higher yields than those available on ordinary inter-
est paying obligations of similar credit quality and maturity. However, the
prices of zero coupon securities may also exhibit greater price volatility
than ordinary fixed income securities because of the manner in which their
principal and interest are returned to the investor. The Portfolio will accrue
income on such investments for tax and accounting purposes which is distribut-
able to shareholders. Since no cash is received at the time of accrual, the
Portfolio may be required to liquidate portfolio securities to satisfy its
distribution obligations.
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and in-
terest by the U.S. Government or any of its agencies or instrumentali-
ties);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding voting securities of any issuer;
(c) invest more than 5% of its assets at the time of purchase in the secu-
rities of companies that have (with predecessors) a continuous operat-
ing history of less than 3 years;
12
<PAGE>
(d) invest more than 25% of its assets in companies within a single indus-
try; however, there are no limitations on investments made in instru-
ments issued or guaranteed by the U.S. Government and its agencies.
(e) make loans except by purchasing debt securities in accordance with its
investment objective and policies or entering into repurchase agree-
ments or by lending its portfolio securities to banks, brokers, deal-
ers and other financial institutions so long as the loans are made in
compliance with the 1940 Act, as amended, or the Rules and Regulations
or interpretations of the SEC;
(f) (i) borrow, except from banks and as a temporary measure for extraor-
dinary or emergency purposes and then, in no event, in excess of 33
1/3% of the Portfolio's gross assets valued at the lower of market or
cost, and (ii) the Portfolio may not purchase additional securities
when borrowings exceed 5% of total assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent greater
than 33 1/3% of its total assets at fair market value.
The investment objectives of the Portfolio are fundamental and may be
changed only with the approval of the holders of a majority of the outstanding
shares of the Portfolio. Except for limitations (a), (b), (d), (e) and (f)(i),
the Portfolio's investment limitations and policies described in this Prospec-
tus and in the SAI are not fundamental and may be changed by the Fund's Board
of Trustees upon reasonable notice to investors. All other investment limita-
tions described here and in the SAI are fundamental policies and may be
changed only with the approval of the holders of a majority of the outstanding
shares of the Portfolio. If a percentage limitation on investment or utiliza-
tion of assets as set forth above is adhered to at the time an investment is
made, a later change in percentage resulting from changes in the value or to-
tal cost of the Portfolio's assets will not be considered a violation of the
restriction.
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), without a sales commission at the net asset value next deter-
mined after an order is received by the Custodian (See "VALUATION OF SHARES.")
The minimum initial investment required is $2,500. The minimum initial invest-
ment for IRA accounts is $500. The minimum initial investment for spousal IRA
accounts is $250. Certain exceptions may be made by the officers of the Fund.
The Portfolio issues two classes of shares: Institutional Class and Institu-
tional Service Class. The two classes of shares each represent interests in
the same portfolio of investments, have the same rights and are identical in
all respects, except that the Service Class Shares offered by this Prospectus
bear shareholder servicing
13
<PAGE>
expenses, and have exclusive voting rights with respect to the Rule 12b-1 Dis-
tribution Plan pursuant to which the distribution fee may be paid. The two
classes have different exchange privileges. (See "EXCHANGE PRIVILEGE") The net
income attributable to Service Class Shares and the dividends payable on Serv-
ice Class Shares will be reduced by the amount of the shareholder servicing
and distribution fees; accordingly, the net asset value of the Service Class
Shares will be reduced by such amounts.
Some Service Agents may also impose additional or different conditions or
other account fees on the purchase and redemption of Portfolio shares, which
are not subject to the Rule 12b-1 Service and Distribution Plans. Amounts paid
to Service Agents may include transaction fees and/or service fees paid by the
Fund from the Fund assets attributable to the Service Agent and, would not be
imposed if shares of the Portfolio were purchased directly from the Fund or
the Distributor. The Service Agents may provide shareholder services to their
customers that are not available to a shareholder dealing directly with the
Fund. Each Service Agent is responsible for transmitting to its customers a
schedule of any such fees and information regarding any additional or differ-
ent conditions regarding purchases and redemptions. Shareholders who are cus-
tomers of Service Agents should consult their Service Agent for information
regarding these fees and conditions. A salesperson and any other person enti-
tled to receive compensation for selling or servicing Portfolio shares may re-
ceive different compensation with respect to one particular class of shares
over another in the Fund.
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of the Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer
Agent prior to 4 p.m. to receive that day's share price. Proper payment for
the order must be received by the Sub-Transfer Agent no later than the time
when the Portfolio is priced on the following business day. Service Agents are
responsible to their customers and the Fund for timely transmission of all
subscription and redemption requests, investment information, documentation
and money.
INITIAL INVESTMENT
BY MAIL
. Complete and sign an Application, and mail it together with a check pay-
able to UAM Funds, to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
14
<PAGE>
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment.
BY WIRE
. As soon as possible, telephone the UAM Funds Service Center and provide
the account name, address, telephone number, social security or taxpayer
identification number, Portfolio selected, amount being wired, and the
name of the bank wiring the funds. An account number and a wire control
number will be provided to you. Next,
. instruct your bank to wire the specified amount to the Fund's Custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
BHM&S Total Return Bond Fund
Credit DDA #9102772952
(Your Account Registration)__________
(Your Account Number)___________
(Wire Control Number)___________
. Forward a completed Application to the UAM Funds Service Center at the
address shown on the Form. Federal Funds purchases will be accepted only
on days when the NYSE and the Custodian Bank are open for business.
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check made payable to "UAM Funds" to the above address or by wiring money to
the Custodian Bank using the instructions outlined above. When making addi-
tional investments, be sure that the account number, account name and the
Portfolio to be purchased is identified on the check or wire. Prior to wiring
additional investments, notify the UAM Funds Service Center by calling the
number on the cover of this Prospectus. Mail orders should include, when pos-
sible, the "Invest by Mail" stub which accompanies any Fund confirmation
statement.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to suspend the offering of shares or reject purchase orders of the
Portfolio when, in
15
<PAGE>
the judgment of management, such suspension or rejection is in the best inter-
ests of the Fund. Purchases of shares will be made in full and fractional
shares calculated to three decimal places. Certificates for whole shares will
be issued upon written request by the shareholder. Certificates for fractional
shares will not be issued.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by the Port-
folio in exchange for securities will be issued at net asset value determined
as of the same time. All dividends, interest, subscription, or other rights
pertaining to such securities shall become the property of the Portfolio and
must be delivered to the Fund by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for invest-
ment and not for immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be in-
cluded in the Portfolio (current market quotations must be readily
available for such securities);
. the investor represents and agrees that all securities offered to
be exchanged are liquid securities and not subject to any restric-
tions upon their sale by the Portfolio under the Securities Act of
1933, or otherwise; and
. the value of any such securities (except U.S. Government
securities) being exchanged together with other securities of the
same issuer owned by the Portfolio will not exceed 5% of the net
assets of the Portfolio immediately after the transaction.
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of secu-
rities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone, at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. No charge is made for redemptions. Any re-
demption may be more or less than the purchase price of your shares depending
on the market value of the investment securities held by the Portfolio.
16
<PAGE>
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of
shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which they are regis-
tered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pen-
sion and profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the
wire redemption privilege) by completing appropriate sections of
the Application; and
. call the Fund and instruct that the redemption proceeds be mailed
to you or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated
to receive redemption proceeds (this can be accomplished only by a
written request signed by each shareholder, with each signature
guaranteed);
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the investor to provide certain personal identification at the time an
account is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded
and investors may be required to provide additional telecopied written in-
structions of such transaction requests. The Fund or Sub-Transfer Agent may be
liable for any losses due to unauthorized or fraudulent telephone instructions
if the Fund or the Sub-Transfer Agent does not employ the procedures described
above. Neither the Fund nor the Sub-Transfer Agent will be responsible for any
loss, liability, cost or expense for following instructions received by tele-
phone that it reasonably believes to be genuine.
17
<PAGE>
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than
the registered shareowner(s);
. redemptions where the proceeds are to be sent to someplace other
than the registered address, or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securi-
ties exchanges, registered securities associations, clearing agencies and sav-
ings associations. Broker-dealers guaranteeing signatures must be a member of
a clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after the
receipt of the request, or earlier if required under applicable law. The Fund
may suspend the right of redemption or postpone the date at times when both
the NYSE and Custodian Bank are closed, or under any emergency circumstances
determined by the SEC.
If the Board of Trustees determines that it would be detrimental to the best
interests of remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay redemption proceeds in whole or in part by a
distribution in-kind of liquid securities held by the Portfolio in lieu of
cash in conformity with applicable rules of the SEC. Investors may incur bro-
kerage charges on the sale of portfolio securities received in payment of re-
demptions.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Service Class Shares of the Portfolio may be exchanged for Service Class
Shares of any other UAM Funds Portfolio. (See the list of Portfolios of the
UAM Funds at the end of this Prospectus.) Exchange requests should be made by
contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you
18
<PAGE>
are interested. Exchanges can only be made with Portfolios that are qualified
for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES -- BY TELEPHONE". An ex-
change into another UAM Funds Portfolio is a sale of shares and may result in
a gain or loss for income tax purposes. The Fund may modify or terminate the
exchange privilege at any time.
SERVICE AND DISTRIBUTION PLANS
Under the Service Plan for Service Class Shares, adopted pursuant to Rule
12b-1 under the 1940 Act, the Fund may enter into service agreements with
Service Agents (broker-dealers or other financial institutions) who receive
fees with respect to the Fund's Service Class Shares owned by shareholders for
whom the Service Agent is the dealer or holder of record, or for whom the
Service Agent performs Servicing, as defined below. These fees are paid out of
the assets allocable to Service Class Shares to the Distributor or to the
Service Agents directly or through the Distributor. The Fund reimburses the
Distributor or the Service Agent for payments made at an annual rate of up to
0.25 of 1% of the average daily value of Service Class Shares owned by clients
of the Service Agent during the period payments for Servicing are being made
to it. Such payments are borne exclusively by the Service Class Shares. Each
item for which a payment may be made under the Service Plan constitutes per-
sonal service and/or shareholder account maintenance and may constitute an ex-
pense of distributing Fund shares as the SEC construes such term under Rule
12b-1. The fees payable for servicing reflect actual expenses incurred up to
the limits described herein.
Servicing may include assisting clients in changing dividend options, ac-
count designations and addresses; performing subaccounting; establishing and
maintaining shareholder accounts and records; processing purchase and redemp-
tion transactions; investing client cash account balances automatically in
Service Class Shares; providing periodic statements showing a client's account
balance and integrating such statements with those of other transactions and
balances in the client's other accounts serviced by the Service Agent; arrang-
ing for bank wires; and such other services as the Fund may request, to the
extent the Service Agent is permitted by applicable statute, rule or regula-
tion.
19
<PAGE>
The Glass-Steagall Act and other applicable laws prohibit federally chart-
ered or supervised banks from engaging in certain aspects of the business of
issuing, underwriting, selling and/or distributing securities. Accordingly,
banks are engaged to act as Service Agent only to perform administrative and
shareholder servicing functions, including transaction-related agency services
for their customers. If a bank is prohibited from acting as a service agent,
alternative means for continuing the servicing of its shareholders would be
sought and the shareholder clients of the bank will remain Fund shareholders.
The Distributor promotes the distribution of the Service Class Shares in ac-
cordance with the terms of a Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act. The Distribution Plan provides for the use of Fund assets
allocable to Service Class Shares to pay expenses of distributing such shares.
The Distribution Plan and Service Plan (the "Plans") were approved by the
Board, including a majority of the Trustees who are not "interested persons"
of the Fund as defined in the 1940 Act (and each of whom has no direct or in-
direct financial interest in the Plans or any agreement related thereto, re-
ferred to herein as the "12b-1 Trustees"). The Plans may be terminated at any
time by the vote of the Board or the 12b-1 Trustees, or by the vote of a ma-
jority of the outstanding Service Class Shares of the Portfolio involved.
While the Plans continue in effect, the selection of the 12b-1 Trustees is
committed to the discretion of such persons then in office. The Plans provide
generally that the Portfolio may incur distribution and service costs under
the Plans which may not exceed in the aggregate 0.75% per annum of the Portfo-
lio's net assets. The Board has currently limited aggregate payments under the
Plans up to 0.50% per annum of the Portfolio's net assets. The Service Class
Shares offered by this Prospectus currently are not making payments under the
Distribution Plan. Upon implementation, the Distribution Plan would permit
payments to the Distributor, broker-dealers, other financial institutions,
sales representatives or other third parties who render promotional and dis-
tribution services, for items such as advertising expenses, selling expenses,
commissions or travel reasonably intended to result in sales of Service Class
Shares and for the printing of prospectuses sent to prospective purchasers of
Service Class Shares of the Portfolio.
Although the Plans may be amended by the Board of Trustees, any changes in
the Plans which would materially increase the amounts authorized to be paid
under the Plans must be approved by shareholders of the Class involved. The
total amounts paid under the foregoing arrangements may not exceed the maximum
limits specified above, and the amounts and purposes of expenditures under the
Plans must be reported to the 12b-1 Trustees quarterly. The amounts allowable
under the Plans for each Class of Shares of the Portfolio are also limited un-
der certain rules of the National Association of Securities Dealers, Inc.
20
<PAGE>
In addition to payments by the Fund under the Plans, the Distributor, United
Asset Management Corporation, the parent company of UAMFSI, and of the Adviser
or any of their affiliates, may, at its own expense, compensate a Service
Agent or other person for marketing, shareholder servicing, record-keeping
and/or other services performed with respect to the Fund, a Portfolio or any
Class of Shares of a Portfolio. The person making such payments may do so out
of its revenues, its profits or any other source available to it. Such serv-
ices arrangements, when in effect, are made generally available to all quali-
fied service providers. The Adviser may compensate its affiliated companies
for referring investors to the Portfolio.
The Distributor, the Adviser and certain of their other affiliates also par-
ticipate, at the date of this Prospectus, in an arrangement with Smith Barney
Inc. ("Smith Barney") under which Smith Barney provides certain defined con-
tribution plan marketing and shareholder services and receives from such enti-
ties an amount equal to up to 33.3% of the portion of the investment advisory
fees attributable to the invested assets of Smith Barney's eligible customer
accounts without regard to any expense limitation in addition to amounts pay-
able to all selling dealers. The Fund also compensates Smith Barney for serv-
ices it provides to certain defined contribution plan shareholders that are
not otherwise provided by UAMFSI.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets attributable to the class, less any liabilities attrib-
utable to the class, by the number of shares outstanding attributable to the
class. The net asset value per share of the Portfolio is determined as of the
close of the NYSE on each day that the NYSE is open for business.
Bonds and other fixed income securities are valued according to the broadest
and most representative market, which will ordinarily be the over-the-counter
market. Bonds and other fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities.
Securities purchased with remaining maturities of 60 days or less are valued
at amortized cost when the Board of Trustees determines that amortized cost
reflects fair value.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Fund's Board of Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating yield and total return.
Both yield and total return figures are based on historical earnings and are
not intended to indicate future performance.
21
<PAGE>
Yield refers to the income generated by an investment in the Portfolio over
a given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all bond funds. As
this differs from other accounting methods, the quoted yield may not equal the
income actually paid to shareholders.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of time. An average annual total return is a hypothetical rate of re-
turn that, if achieved annually, would have produced the same cumulative total
return if performance had been constant over the entire period.
Performance will be calculated separately for Institutional Class and Serv-
ice Class Shares. Dividends paid by the Portfolio with respect to Institu-
tional Class and Service Class Shares, to the extent any dividends are paid,
will be calculated in the same manner at the same time on the same day and
will be in the same amount, except that service fees, distribution charges and
any incremental transfer agency costs relating to Service Class Shares will be
borne exclusively by that class.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices as further de-
scribed in the Portfolio's SAI. This information may also be included in sales
literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or telephone number on the
cover of this Prospectus.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders in quarterly dividends. If any
net capital gains are realized, the Portfolio will normally distribute them
annually. All dividends and capital gains distributions will be automatically
reinvested in additional shares of the Portfolio unless the Fund is notified
in writing that the shareholder elects to receive distributions in cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal
22
<PAGE>
income tax purposes and to meet all other requirements that are necessary for
it (but not its shareholders) to be exempt from federal taxes on income and
gains paid to shareholders in the form of dividends. To do this, the Portfolio
must, among other things, distribute substantially all of its ordinary income
and net capital gains on an annual basis and maintain a portfolio of invest-
ments which satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income.
Short-term capital gains will be taxed as ordinary income. Long-term capital
gains distributions are taxed as long-term capital gains. Shareholders will be
notified annually of dividend income earned for tax purposes.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid in January of the following year.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you. Consult a tax adviser for more information regarding deduc-
tions and credits for foreign taxes.
INVESTMENT ADVISER
The Adviser is a registered investment adviser formed in 1979. Its business
offices are located at One McKinney Plaza, 3232 McKinney Avenue, 15th Floor,
Dallas, Texas 75204. It is a wholly-owned subsidiary of United Asset Manage-
ment Corporation ("UAM") and provides and offers investment management serv-
ices to corporate, public and Taft-Hartley employee benefit plans, founda-
tions, endowments, health care and other institutions and investors. The Ad-
viser currently has $20 billion in assets under management.
The Portfolio pays an annual fee in monthly installments to the Adviser for
advisory services. This fee is accrued daily and paid every month as a per-
centage of the average net assets in the Portfolio for that month. The per-
centage fee on an
23
<PAGE>
annual basis is 0.35%. The Adviser has agreed to waive a portion of its advi-
sory fees and to assume certain operating expenses in order to keep the Port-
folio's Service Class Shares total operating expenses from exceeding 0.80% of
average daily net assets through December 31, 1997. The Adviser will not be
reimbursed by the Fund for any advisory fees which are waived or expenses
which the Adviser may bear on behalf of the Fund for a given fiscal year.
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Adviser and its parent company may also make payments to
unaffiliated brokers who perform distribution, marketing, shareholder and
other services with respect to the Portfolio.
The investment professionals at the Adviser responsible for the day-to-day
management of the Portfolio and their qualifications are as follows:
JOHN S. WILLIAMS -- Fixed Income Principal and the first fixed income port-
folio manager at the Adviser in 1983. Mr. Williams has also managed balanced
and municipal portfolios during his 20 year investment career. Prior to join-
ing the Adviser, he was responsible for the management of all fixed income as-
sets at Southland Trust, Dallas, Texas, and prior to that was a portfolio man-
ager and securities analyst at InterFirst Bank Dallas Trust Department. Mr.
Williams has served on the Advisory Committee for the Texas Teachers Retire-
ment System and is an active member in the Dallas Investment Analysts Society.
He currently is a Director of United Asset Management Corporation. Mr. Wil-
liams is a Chartered Financial Analyst, earning his MBA in 1976 and BBA in
1975 from Texas Christian University.
DAVID R. HARDIN -- Fixed Income Principal and portfolio manager. Prior to
joining the Adviser in 1987, Mr. Hardin was the Vice President and Director of
the Fixed Income Group of RepublicBank Dallas Trust Department. In that posi-
tion, he was responsible for the management of all taxable and tax-exempt
fixed income assets of the Trust Division, including all separately managed
accounts, collective investment fund products, and the creation of and manage-
ment of an SEC-registered mutual fund. Prior to attaining the Director's posi-
tion, Mr. Hardin was a taxable portfolio manager and also served as the credit
analyst for the Trust Division. He started his investment career as a private
placement credit analyst while employed by American General Insurance Co. in
Houston in 1976. Mr. Hardin received an M.Sc. from The London School of Eco-
nomics in 1975 and a BBA from Texas Christian University in 1973.
STEPHEN M. MILANO -- Fixed Income Principal and portfolio manager. Prior to
joining the Adviser in 1990, Mr. Milano was employed at Salomon Brothers, Inc.
in New York as a Vice President of the Fixed Income Strategy Group. In that
role he was a specialist in developing portfolio structure and strategies for
24
<PAGE>
active management of taxable assets. While at Salomon he also served as Prod-
uct Sales Manager for International Fixed Income Securities and as a Mortgage
and Government Specialist. Prior to joining Salomon, Mr. Milano was employed
as a portfolio manager and trader at Equitable Life Assurance Society. He re-
ceived his BS in Economics with a concentration in Finance from the Wharton
School of the University of Pennsylvania in 1980.
J. SCOTT MCDONALD -- Fixed Income Portfolio Analyst/Trader. Mr. McDonald
joined the Adviser in 1995 to serve as a security and portfolio specialist for
the Fixed Income Group. In addition to security and portfolio analyst, he is
responsible for systems analytics used in the evaluation of effective/option
adjusted yield measurements for all securities and portfolios. He also serves
as compliance monitor of all fixed income portfolios to ensure commonality of
structure and diversification. Mr. McDonald previously served as the Senior
Vice President and Portfolio Manager at Life Partners Group, Inc. in Dallas.
While with Life Partners, he was responsible for implementing investment
strategy for $3 billion in assets. Additionally, he has been employed by Texas
Commerce Bank Houston as a Credit Supervisor and Lending Officer. He received
his MBA in 1991 from the University of Texas at Austin and his BBA from South-
ern Methodist University in 1986.
DEBORAH J. ANDERSON -- Senior Portfolio Assistant. Ms. Anderson is responsi-
ble for all administrative staff and their duties associated with the fixed
income product management, including communication/liaison with all clients,
custodial banks, and brokerage relationships. She supervises all operational
aspects of fixed income security trading and works extensively with reporting
requirements for all clients and regulatory agencies. Prior to joining the Ad-
viser in 1988, Ms. Anderson served as a Trust Officer with Trust Company of
Texas and its predecessor, Southland Trust Co. She received a BBA in Account-
ing from the University of Texas at Arlington in 1974.
ADVISER'S HISTORICAL PERFORMANCE
Below are certain performance data provided by the Adviser pertaining to the
composite of separately managed accounts of the Adviser that are managed with
substantially similar (although not necessarily identical) objectives, poli-
cies and strategies as those of the Portfolio. The performance data for the
managed accounts is net of all fees and expenses. The investment returns of
the Portfolio may differ from those of the separately managed accounts because
such separately managed accounts may have fees and expenses that differ from
those of the Portfolio. Further, the separately managed accounts are not sub-
ject to investment limitations, diversification requirements and other re-
strictions imposed by the 1940 Act and Internal Revenue Code; such conditions,
if applicable may have lowered the returns for the separately managed ac-
counts. The results presented are not intended to predict or suggest the re-
turn to be experienced by the Portfolio or the return an investor might
achieve by investing in the Portfolio.
25
<PAGE>
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC. -- BOND ACCOUNT
(PERCENTAGE RETURNS NET OF MANAGEMENT FEES)
<TABLE>
<CAPTION>
BARROW, HANLEY, MEWHINNEY & LEHMAN BROTHERS AGGREGATE
CALENDAR YEARS STRAUSS, INC. BOND INDEX
-------------- --------------------------- -------------------------
<S> <C> <C>
1987.................... 3.15% 2.76%
1988.................... 7.30% 7.89%
1989.................... 15.01% 14.53%
1990.................... 9.18% 8.96%
1991.................... 16.54% 16.00%
1992.................... 7.56% 7.40%
1993.................... 10.56% 9.75%
1994.................... (3.44)% (2.92)%
1995.................... 17.64% 18.46%
1996.................... 3.63% 3.63%
3 Months ended 3/31/97.. (0.46)% (0.56)%
Annualized.............. 8.27% 8.20%
Cumulative.............. 225.78% 224.21%
Ten-Year Mean (1/1/87-
12/31/96)............. 8.71% 8.65%
Value of $1 invested
during (1/1/87-
3/31/97).............. $ 3.26 $ 3.24
</TABLE>
Notes:
1. The annualized return is calculated from monthly data, allowing for com-
pounding. The formula used is in accordance with the acceptable methods
set forth by the Association for Investment Management Research, the Bank
Administration Institute, and the Investment Counsel Association of Ameri-
ca. Market Value of the account was the sum of the account's total assets,
including cash, cash equivalents, short-term investments, and securities
valued at current market prices.
2. The cumulative return means that $1 invested in the account on January 1,
1987 had grown to $3.26 by March 31, 1997.
3. The 10-year mean is the arithmetic average of the annual returns for the
calendar years listed.
4. The Lehman Brothers Aggregate Bond Index is an unmanaged index, which as-
sumes reinvestment of dividends and is generally considered representative
of securities similar to those invested in by the Adviser for the purpose
of the composite performance numbers set forth above.
5. The Adviser's average annual management fee over the period shown (1/1/87-
3/31/97) was 0.33% or 33 basis points. During the period, fees on the Ad-
viser's individual accounts ranged from 0.25% to 0.45% (25 basis points to
45 basis points). Net returns to investors vary depending on the manage-
ment fee.
26
<PAGE>
ADMINISTRATIVE SERVICES
UAMFSI, a wholly-owned subsidiary of United Asset Management Corporation, is
responsible for performing and overseeing administrative, fund accounting,
dividend disbursing and transfer agent services provided to the Fund and its
Portfolios. UAMFSI's principal office is located at 211 Congress Street, Bos-
ton, MA 02110. UAMFSI has subcontracted some of these services to Chase Global
Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan Bank, by
a Mutual Funds Service Agreement dated June 30, 1997. CGFSC is located at 73
Tremont Street, Boston, MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
BHM&S Total Return Bond Portfolio...................................... 0.04%
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
0.11 of 1% of the next $800 million of combined UAM Funds assets;
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Funds' fees are allocated among the Portfolios on the basis of their
relative assets and are subject to a graduated minimum fee schedule per Port-
folio, which starts at $2,000 per month and increases to $70,000 annually af-
ter two years. If a separate class of shares is added to a Portfolio, its min-
imum annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM, with its principal office
located at 211 Congress Street, Boston, Massachusetts 02110, distributes the
shares of the Fund. Under the Fund's Distribution Agreement (the "Agreement"),
the Distributor, as agent of the Fund, agrees to use its best efforts as sole
distributor of the Fund's shares. The Distributor does not receive any fee or
other compensation under the Agreement with respect to this Portfolio (except
as described under "Service and Distribution Plans" above). The Agreement con-
tinues in effect as long as it is approved at least annually by the Fund's
Board of Trustees. Those approving the Agreement include a majority of Trust-
ees who are neither parties to the Agreement nor interested persons of any
such party. This Agreement provides that the Fund will bear the costs of the
registration of its shares with the SEC and various states and the printing of
its prospectuses, SAIs and reports to shareholders.
27
<PAGE>
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II." On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and have no preference as to conversion, exchange, dividends, re-
tirement or other features and no pre-emptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees can elect 100% of the Trustees. A shareholder is en-
titled 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 of the
Fund.
As of June 16, 1997, Hartnat & Co., Hoag Memorial Conservative Collective
held of record 26.1% and Sarah Campbell Blaffer Foundation held 25.9% of the
outstanding shares of the Portfolio's Institutional Class for which beneficial
ownership is disclaimed or presumed disclaimed. The persons or organizations
owning 25% or more of the outstanding shares of the Portfolio may be presumed
to "control" (as that term is defined in the 1940 Act) the Portfolio. As a re-
sult, these persons or organizations could have the ability to vote a majority
of the shares of the Portfolio on any matter requiring the approval of share-
holders of such Portfolio.
Both Institutional Class and Service Class Shares represent an interest in
the same assets of a Portfolio. Service Class Shares bear certain expenses re-
lated to shareholder servicing and may bear expenses related to distribution.
Service Class Shares have exclusive voting rights with respect to matters re-
lating to such distribution expenditures. Information about the Institutional
Class Shares of the Portfolio is available upon request by contacting the UAM
Funds Service Center.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the hold-
ers of not less than 10% of the outstanding shares of the Fund. The Fund will
assist shareholder communications in such matters.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
28
<PAGE>
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the address or telephone number listed on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE PORTFOLIO'S STATEMENT
OF ADDITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR ITS REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH OF-
FERING MAY NOT BE LAWFULLY MADE.
29
<PAGE>
UAM FUNDS -- SERVICE CLASS SHARES
BHM&S Total Return Bond Portfolio
FPA Crescent Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Sirach Growth Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
Sirach Equity Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Short-Term Fixed Income Portfolio
Sterling Partners' Small Cap Value Portfolio
TJ Core Equity Portfolio
30
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Barrow, Hanley, Mewhinney & Strauss, Inc.
One McKinney Plaza,
3232 McKinney Avenue,
15th Floor, Dallas, Texas 75204
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
<PAGE>
[LOGO OF UAM FUNDS APPEAR HERE]
Chicago Asset Management
Intermediate Bond Portfolio
Institutional
Class Shares
P R O S P E C T U S
July 10, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses.............................................................. 1
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Financial Highlights....................................................... 5
Investment Objective....................................................... 6
Investment Policies........................................................ 6
Other Investment Policies.................................................. 8
Investment Limitations..................................................... 15
Purchase of Shares......................................................... 16
Redemption of Shares....................................................... 19
Shareholder Services....................................................... 21
Valuation of Shares........................................................ 21
Performance Calculations................................................... 22
Dividends, Capital Gains Distributions and Taxes........................... 23
Investment Adviser......................................................... 24
Adviser's Historical Performance........................................... 25
Administrative Services.................................................... 27
Distributor................................................................ 27
General Information........................................................ 28
UAM Funds -- Institutional Class Shares.................................... 30
</TABLE>
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
CHICAGO ASSET MANAGEMENT INTERMEDIATE BOND PORTFOLIO
INSTITUTIONAL CLASS SHARES
INVESTMENT ADVISER: CHICAGO ASSET MANAGEMENT COMPANY
- -------------------------------------------------------------------------------
PROSPECTUS -- JULY 10, 1997
UAM Funds Trust (the "Fund") is an open-end investment company known as a
"mutual fund." The Fund consists of multiple series (known as "Portfolios"),
each of which has different investment objectives and policies. The Chicago
Asset Management Intermediate Bond Portfolio currently offers only one class
of shares. The securities offered in this Prospectus are Institutional Class
Shares of one diversified, no-load Portfolio of the Fund managed by Chicago
Asset Management Company.
CHICAGO ASSET MANAGEMENT INTERMEDIATE BOND PORTFOLIO. Chicago Asset Manage-
ment Intermediate Bond Portfolio (the "Portfolio") seeks a high level of cur-
rent income consistent with moderate interest rate exposure by investing pri-
marily in investment grade bonds with an average weighted maturity between 3
and 10 years.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A "Statement of Additional Information" ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURI-TIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CON-TRARY IS A CRIMINAL
OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Institutional Class Shares would incur. Transaction fees may be
charged if a broker-dealer or other financial intermediary deals with the Fund
on your behalf. (See "PURCHASE OF SHARES").
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases......................................... NONE
Sales Load Imposed on Reinvested Dividends.............................. NONE
Deferred Sales Load..................................................... NONE
Redemption Fees......................................................... NONE
Exchange Fees........................................................... NONE
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(As a Percentage of Average Net Assets)
<TABLE>
<S> <C>
Investment Advisory Fees............................................ 0.48 %
Administrative Fees................................................. 0.93 %
12b-1 Fees.......................................................... NONE
Other Expenses...................................................... 0.77 %
Advisory Fees Waived and Expenses Assumed........................... (1.38)%
-----
Total Operating Expenses (After Fee Waiver and Expenses Assumed).... 0.80 %*
=====
</TABLE>
- -----------
* Absent the fees waived and expenses assumed by the Adviser, total operating
expenses for the Portfolio would have been 2.18%. The Total Operating Ex-
penses includes the effect of expense offsets. If expense offsets were ex-
cluded, total operating expenses of the Portfolio would not be affected. Un-
til further notice, the Adviser has agreed to waive its advisory fee and to
assume certain operating expenses to keep the Portfolio's total annual oper-
ating expenses (excluding interest, taxes and extraordinary expenses), after
the effect of expense offsets, from exceeding 0.80% of average daily net as-
sets. The Portfolio will not reimburse the Adviser for any advisory fees
which are waived or Portfolio expenses which the Adviser may bear on behalf
of the Portfolio for a given fiscal year.
The table above shows various fees and expenses an investor would bear di-
rectly or indirectly. The expenses and fees set forth above are based on the
Portfolio's operations during the fiscal year ended April 30, 1997.
1
<PAGE>
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of the time period indicated. The Portfo-
lio charges no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Expenses..................................... $ 8 $26 $44 $99
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
2
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Chicago Asset Management Company (the "Adviser") is a registered investment
adviser specializing in the active management of stocks, bonds and balanced
portfolios for institutional, tax-exempt clients. Founded in 1983, the firm is
a wholly-owned subsidiary of United Asset Management Corporation. The Adviser
currently has over $2 billion in assets under management. (See "INVESTMENT AD-
VISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion, to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment is $2,000. The minimum for subsequent investments is $100.
The minimum initial investment for IRA accounts is $500. The minimum initial
investment for spousal IRA accounts is $250. Certain exceptions to the initial
or minimum investment amounts may be made by the officers of the Fund. (See
"PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in quarterly dividends. The Portfolio will distribute any realized
net capital gains annually. Distributions will be reinvested in Portfolio
shares automatically unless an investor elects to receive cash distributions.
(See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTIONS AND EXCHANGES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See "REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services Inc. ("UAMFSI"), a wholly-owned subsidiary of United Asset
Management Corporation, is responsible for performing and overseeing adminis-
tration, fund accounting, dividend disbursing and transfer agency services
provided to the Fund and its Portfolios by third-party service providers. (See
"ADMINISTRATIVE SERVICES.")
3
<PAGE>
RISK FACTORS
The value of the Portfolio's shares will fluctuate in response to changes in
market and economic conditions as well as the financial conditions and pros-
pects of the issuers in which the Portfolio invests. Prospective investors
should consider the following: (1) The Portfolio may engage in various strate-
gies to seek to hedge its investments against movements in security prices,
interest rates, and currency exchange rates by the use of derivatives includ-
ing options and futures as well as options on futures. Such strategies are
commonly referred to as "derivatives" and involve the risk of imperfect corre-
lation in movements in the price of options and futures and movements in the
price of securities, interest rates or currencies which are the subject of the
hedge. To the extent these transactions involve foreign securities or curren-
cies, they are also subject to the risk factors associated with foreign in-
vestments generally. There can be no assurance that a liquid secondary market
for options and futures contracts will exist at any specific time; (2) The
Portfolio may invest up to 10% of its assets in securities rated lower than
Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's
Corporation ("S&P"). These securities carry a high degree of credit risk, and
are considered speculative by the major credit rating agencies and are some-
times referred to as "junk bonds" and "high risk/high yield" securities;
(3) The Portfolio may invest up to 10% of its assets in foreign issuers, which
may involve greater risks than investments in domestic securities, such as
foreign currency risk; (4) The Portfolio may invest in repurchase agreements
which entail a risk of loss should the seller default on its transaction.
(5) The Portfolio may lend its investment securities which entails a risk of
loss should a borrower fail financially; (6) The Portfolio may purchase secu-
rities on a when-issued basis which does not earn interest until issued and
may decline or appreciate in market value prior to their delivery to the Port-
folio. See "OTHER INVESTMENT POLICIES."
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides selected information for a share outstanding
throughout the periods presented for the Portfolio. This table is part of the
Portfolio's Financial Statements, which are included in the Portfolio's 1997
Annual Report to Shareholders. The Report is incorporated into the Portfolio's
SAI. The Portfolio's Financial Statements have been audited by Price
Waterhouse LLP whose unqualified opinion on the Annual Financial Statements
for the year ended April 30, 1997 is also incorporated into the Portfolio's
SAI. Please read the following information in conjunction with the Portfolio's
1997 Annual Report to Shareholders.
<TABLE>
<CAPTION>
JANUARY 24,
1995*** TO YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30, APRIL 30,
1995 1996 1997
----------- ---------- ----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....... $10.00 $10.33 $ 10.39
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................... 0.17 0.64 0.61
Net Realized and Unrealized Gain on
Investments............................ 0.26 0.14++ (0.05)
------ ------ -------
Total from Investment Operations....... 0.43 0.78 0.56
------ ------ -------
DISTRIBUTIONS
Net Investment Income.................... (0.10) (0.64) (0.62)
Net Realized Gain........................ -- (0.08) (0.03)
------ ------ -------
Total Distributions.................... (0.10) (0.72) (0.65)
------ ------ -------
NET ASSET VALUE, END OF PERIOD............. $10.33 $10.39 $ 10.30
====== ====== =======
TOTAL RETURN+.............................. 4.31%** 7.62% 5.53%
====== ====== =======
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)...... $5,267 $7,981 $10,044
Ratio of Net Expenses to Average Net
Assets................................... 0.80%* 0.84% 0.80%
Ratio of Net Investment Income to Average
Net Assets............................... 6.20%* 6.17% 5.88%
Portfolio Turnover Rate.................... 0% 24% 31%
Voluntary Waived Fees and Expenses Assumed
by the Adviser Per Share................. $ 0.08 $ 0.12 $ 0.14
Ratio of Expenses to Average Net Assets
Including Expense Offsets................ 0.80%* 0.80% 0.80%
</TABLE>
- -----------
* Annualized.
** Not annualized.
*** Commencement of Operations.
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser during the periods indicated.
++ The amount shown for a share outstanding throughout the year does not ac-
cord with the aggregate net losses on investments for that year because of
the timing of sales and repurchases of the Portfolio shares in relation to
fluctuating market value of the investments of the Portfolio.
5
<PAGE>
INVESTMENT OBJECTIVE
The Portfolio seeks a high level of current income consistent with moderate
interest rate exposure by investing primarily in investment grade notes or
bonds with an average weighted maturity between 3 and 10 years. The Adviser
seeks to reduce the risk that is inherent in the fast-changing bond market
while adding to the return available from a bond market index.
INVESTMENT POLICIES
The Portfolio seeks to achieve its objective by investing at least 65% of
its total assets under normal circumstances in intermediate-term investment
grade notes or bonds with an average weighted maturity between 3 and 10 years.
Investment grade bonds are generally considered to be those bonds having one
of the four highest grades assigned by Moody's (Aaa, Aa, A or Baa) or S&P
("S&P") (AAA, AA, A or BBB), or, if unrated, of equivalent quality in the Ad-
viser's judgment. Bonds rated Baa or BBB have speculative characteristics and
may be more sensitive to changes in the economy and the financial condition of
issuers than higher rated bonds. The Portfolio may invest no more than 10% of
its assets in debt securities that at the time of purchase are rated lower
than investment grade. These are commonly referred to as "junk bonds". See the
discussion of high yield securities in "OTHER INVESTMENT POLICIES" below. The
Adviser also reserves the right to retain securities which are downgraded by
one or both of the rating agencies, if in the Adviser's judgment, the reten-
tion of securities is warranted. The Portfolio's SAI contains a more detailed
description of corporate bond ratings.
The Adviser will seek to achieve the Portfolio's objective by investing in
the following securities: corporate notes and bonds, mortgage-backed securi-
ties including collateralized mortgage obligations and asset-backed securities
which are deemed by the Adviser and the rating agencies cited above to be of
investment grade quality; variable rate and fixed rate debt securities which
at the time of purchase are rated as investment grade; short-term securities
deemed by the Adviser to have comparable ratings; and securities of, or guar-
anteed by, the U.S. government, its agencies or instrumentalities.
While the Adviser anticipates that the majority of the assets in the Portfo-
lio will be U.S. dollar denominated securities, it reserves the right to pur-
chase obligations of foreign governments, agencies, or corporations denomi-
nated either in U.S. dollars or foreign currencies. The credit quality stan-
dards applied to foreign obligations are the same as those applied to the se-
lection of U.S. based securities.
For temporary defensive purposes, the Portfolio may reduce its holdings of
fixed income securities and increase, up to 100%, its holdings in short-term
investments. The Adviser may employ a defensive investment posture during ad-
verse market conditions. See "SHORT-TERM INVESTMENTS" below for a descrip-
6
<PAGE>
tion of the types of short-term instruments in which the Portfolio may invest
for temporary defensive purposes. When the Portfolio is in a temporary defen-
sive position, it may not necessarily be pursuing its stated investment objec-
tive.
The Portfolio is managed to control the risk of investing in the bond mar-
ket. The Adviser's investment approach offers some protection from fluctuation
in bond prices or volatility. Bond prices fluctuate dramatically due, most
visibly, to changes in interest rates. Other factors impact the value of bonds
held in the Portfolio, as well, including changes in:
. Investors' perception of the value of certain broad classes of
bonds, such as corporate, government or mortgage-backed securities
(sector positioning);
. The relationship between long-term and short-term interest rates
(the yield curve);
. The correlation between yields offered on different types of bonds
(spreads);
. The likelihood that bonds will be redeemed before maturity (option-
adjusted spreads); and
. The fact that the credit outlook for a specific security can change
over time.
Since so many different factors affect bond prices, it has been difficult,
historically, for bond fund managers to outperform a bond market index. The
Adviser believes this is particularly true of bond managers who try to predict
interest rate movements. It has observed that these managers often change in-
vestment strategy at the top or bottom of the market, adding to long-term bond
holdings when interest rates are low and shoring up short-term positions when
interest rates are high. This tendency naturally causes portfolio performance
to vary widely. Therefore, the Adviser does not depend on the use of interest
rate forecasting in managing the Portfolio.
At market tops and bottoms, market psychology tends to drive bond prices to
extremes, overshooting their long-term equilibrium levels. As a result, "con-
ventional wisdom" about a given security or sector's price movement or rela-
tive value, is often wrong. The Adviser believes it will be possible to add to
the Portfolio's return by taking a contrarian approach and also focusing its
efforts on the more traditional aspects of portfolio management. In particu-
lar, the Adviser scrutinizes sector valuations, coupons, call features and the
shape of the yield curve in making its investment decisions.
7
<PAGE>
OTHER INVESTMENT POLICIES
The Portfolio may also, under normal circumstances, invest up to 35% of its
assets, unless restricted by additional limitations described below or in the
Portfolio's SAI, in the following securities, investments or investment tech-
niques.
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated redemp-
tions, or for temporary defensive purposes, the Portfolio may invest a portion
of its assets in domestic and foreign money market instruments including cer-
tificates of deposit, bankers' acceptances, time deposits, U.S. government ob-
ligations, U.S. government agency securities, short-term corporate debt secu-
rities, and commercial paper rated A-1 or A-2 by S&P or Prime-1 or Prime-2 by
Moody's, or if unrated, determined by the Adviser to be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in
other currencies, (ii) in the case of U.S. banks, it is a member of the Fed-
eral Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an invest-
ment quality comparable with other debt securities which may be purchased by
the Portfolio.
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's Port-
folios, as well as cash for investment purposes, into one or more joint ac-
counts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable rate demand notes and tax-exempt money instruments. By en-
tering into these investments on a joint basis, it is expected that the Port-
folio may earn a higher rate of return on investments relative to what it
could earn individually.
The Fund has received permission from the SEC for each of its Portfolios to
invest, for cash management purposes, the greater of 5% of its total assets or
$2.5 million in the Fund's DSI Money Market Portfolio. (See "INVESTMENT
COMPANIES.")
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities, certificates of deposit, and certain bankers' accept-
ances and other securities outlined above under "SHORT-TERM INVESTMENTS." In a
8
<PAGE>
repurchase agreement, the Portfolio buys a security and simultaneously commits
to sell that security back at an agreed upon price plus an agreed upon market
rate of interest. Under a repurchase agreement, the seller is also required to
maintain the value of securities subject to the agreement at not less than
100% of the repurchase price. The value of the securities purchased will be
evaluated daily, and the Adviser will, if necessary, require the seller to
maintain additional securities to ensure that the value is in compliance with
the previous sentence. The use of repurchase agreements involves certain
risks. For example, a default by the seller of the agreement may cause the
Portfolio to experience a loss or delay in the liquidation of the collateral
securing the repurchase agreement. The Portfolio might also incur disposition
costs in liquidating the collateral. While the Fund's management acknowledges
these risks, it is expected that they can be controlled through stringent
counter-party selection criteria and careful monitoring procedures. The Fund
has received permission from the SEC to pool daily uninvested cash balances of
the Fund's Portfolios in order to invest in repurchase agreements on a joint
basis. By entering into joint repurchase agreements, the Portfolio may incur
lower transaction costs and earn higher rates of interest on joint repurchase
agreements. The Portfolio's contribution would determine its return from a
joint repurchase agreement (See "SHORT-TERM INVESTMENTS.")
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. The Portfolio will not loan securities
to the extent that greater than one-third of its assets at fair market value
would be committed to loans. During the term of a loan, the Portfolio is sub-
ject to a gain or loss depending on any increase or decrease in the market
price of the securities loaned. Lending of securities is subject to review by
the Fund's Board of Trustees. All relevant facts and circumstances, including
the creditworthiness of the broker, dealer or institution, will be considered
in making decisions about securities lending.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Trustees. The Portfolio will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on loan, the loan must be called and the securities
voted.
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES
The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement," or "forward delivery" basis. "When-issued" or "forward delivery"
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more be-
fore
9
<PAGE>
delivery is due. Delayed settlement is a term used to describe settlement of a
securities transaction in the secondary market which will occur sometime in
the future. No payment or delivery is made by the Portfolio until it receives
delivery or payment from the other party to any of the above transactions. It
is possible that the market price of the securities at the time of delivery
may be higher or lower than the purchase price. The Portfolio will maintain a
separate account of cash or liquid securities at least equal to the value of
purchase commitments until payment is made. Typically, no income accrues on
securities purchased on a delayed delivery basis prior to the time delivery is
made although the Portfolio may earn income on securities it has deposited in
a segregated account.
The Portfolio may engage in these types of purchases in order to buy securi-
ties that fit with its investment objectives at attractive prices -- not to
increase its investment leverage.
PORTFOLIO TURNOVER
Portfolio turnover is not anticipated to exceed 150%. In addition to Portfo-
lio trading costs, higher rates of portfolio turnover may result in the reali-
zation of capital gains. See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX-
ES" for more information on taxation. The Portfolio will not normally engage
in short-term trading, but reserves the right to do so. The table set forth in
"Financial Highlights" presents the Portfolio's historical portfolio turnover
rates.
INVESTMENT COMPANIES
The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets may be invested in the securities of any one investment company,
nor may it acquire more than 3% of the voting securities of any other invest-
ment company. The Portfolio will indirectly bear its proportionate share of
any management fees paid by an investment company in which it invests in addi-
tion to the advisory fee paid by the Portfolio.
The Fund has received permission from the SEC to allow each of its Portfo-
lios to invest, for cash management purposes, the greater of 5% of its total
assets or $2.5 million in the Fund's DSI Money Market Portfolio, provided that
the investment is consistent with the Portfolio's investment policies and re-
strictions. Based upon the Portfolio's assets invested in the DSI Money Market
Portfolio, the investing Portfolio's adviser will waive its investment advi-
sory fee and any other fees earned as a result of the Portfolio's investment
in the DSI Money Market Portfolio. The investing Portfolio will bear expenses
of the DSI Money Market Portfolio on the same basis as all of its other share-
holders.
10
<PAGE>
FOREIGN INVESTMENTS
Investing in foreign companies may involve additional risks and considera-
tions which are not typically associated with investing in U.S. companies.
Since stocks of foreign companies are normally denominated in foreign curren-
cies, the Portfolio may be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations, and may incur costs in
connection with conversions between various currencies.
As non-U.S. companies are not generally subject to uniform accounting, au-
diting and financial reporting standards and practices comparable to those ap-
plicable to U.S. companies, comparable information may not be readily avail-
able about certain foreign companies. Securities of some non-U.S. companies
may be less liquid and more volatile than securities of comparable U.S. compa-
nies. In addition, in certain foreign countries, there is the possibility of
expropriation or confiscatory taxation, political or social instability, or
diplomatic developments which could affect U.S. investments in those coun-
tries.
RESTRICTED AND ILLIQUID SECURITIES
The Portfolio may purchase restricted securities that are not registered for
sale to the general public but which are eligible for resale to qualified in-
stitutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Trustees, the Adviser determines the li-
quidity of such investments by considering all relevant factors. Provided that
a dealer or institutional trading market in such securities exists, these re-
stricted securities are not treated as illiquid securities for purposes of the
Portfolio's investment limitations. The Portfolio may also invest up to 15% of
its net assets in securities that are illiquid. Prices realized from the sales
of these securities could be more or less than those originally paid by the
Portfolio or less than what may be considered the fair value of such securi-
ties.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES
The Portfolio may invest in pools of consumer loans or mortgages such as
collateralized mortgage obligations. Asset-backed securities may consist of
securities collateralized by shorter term loans such as automobile loans, home
equity loans or credit card receivables, the payments from which are passed
through to the security holder. The value of these securities may be signifi-
cantly affected by changes in interest rates, the market's perceptions of the
issuers, and the creditworthiness of the parties involved. Mortgage-backed se-
curities in which the Portfolio may invest will either carry a guarantee from
an agency of the U.S. government or a private issuer of the timely payment of
principal and interest or are sufficiently seasoned to be considered by the
Adviser to be of investment grade quality.
Mortgage-backed and asset-backed securities are also subject to prepayment
risks. Prepayment risk is the possibility that, during periods of declining
interest rates, mortgage prepayments will accelerate on mortgage-backed secu-
rities, espe-
11
<PAGE>
cially on those with high stated interest rates. Prepayment risk has two im-
portant effects. First, like bonds in general, mortgage-backed securities will
generally decline in price when interest rates rise. Second, when interest
rates fall and additional mortgage prepayments must be reinvested at lower in-
terest rates, the Portfolio's rate of dividend income may be reduced. Mort-
gage-backed and asset-backed securities held by the Portfolio will be rated
investment grade by Moody's or S&P at the time of purchase, or if unrated, de-
termined to be of equivalent quality by the Adviser.
HIGH YIELD/HIGH RISK SECURITIES
The Portfolio may invest up to 10% of its assets in high yield securities
which are rated below investment grade or are unrated. Lower rated or unrated
securities are more likely to react to developments affecting market and
credit risk than are more highly rated securities, which react primarily to
movements in the general level of interest rates. The market values of fixed-
income securities tend to vary inversely with the level of interest rates.
Yields and market values of high yield securities will fluctuate over time,
reflecting not only changing interest rates, but also the market's perception
of credit quality and the outlook for economic growth. When economic condi-
tions appear to be deteriorating, medium to lower rated securities may decline
in value due to heightened concern over credit quality, regardless of prevail-
ing interest rates. The Adviser will consider both credit risk and market risk
in selecting fixed income securities for the Portfolio.
The high yield securities market is still relatively new and its recent
growth paralleled a long period of economic expansion and an increase in merg-
er, acquisition and leveraged buyout activity. Adverse economic developments
may disrupt the market for high yield securities, and severely affect the
ability of issuers, especially highly leveraged issuers, to service their debt
obligations or to repay their obligations upon maturity. In addition, the sec-
ondary market for high yield securities, which is concentrated in relatively
few market makers, may not be as liquid as the secondary market for more
highly rated securities. As a result, the Adviser could find it more difficult
to sell these securities or may be able to sell the securities only at prices
lower than if such securities were widely traded. Prices realized upon the
sale of such lower rated or unrated securities, under these circumstances, may
be less than the prices used in calculating the Portfolio's net asset value.
Prices for high yield securities may be affected by legislative and regula-
tory developments. These laws could adversely affect the Portfolio's net asset
value and investment practices, the secondary market for high yield securi-
ties, the financial condition of issuers of these securities and the value of
outstanding high yield securities. For example, federal legislation requiring
the divestiture by federally insured savings and loan associations of their
investments in high yield bonds and limiting the deductibility of interest by
certain corporate issuers of high yield bonds adversely affected the market in
recent years.
12
<PAGE>
Lower rated or unrated debt obligations also present risks based on payment
expectations. If an issuer calls the obligations for redemption, the Fund may
have to replace the security with a lower yielding security, resulting in a
decreased return for investors. If the Portfolio experiences unexpected net
redemptions, it may be forced to sell its higher rated securities, resulting
in a decline in the overall credit quality of the Portfolio's investment port-
folio and increasing the exposure of the Portfolio to the risks of high yield
securities.
HEDGING AND RELATED STRATEGIES AND RISK CONSIDERATIONS
The Portfolio may use options (both exchange-traded and over-the-counter) to
attempt to enhance income. To reduce the overall risk of its investments
(hedge), the Portfolio may use options, futures contracts, options on futures
contracts, and forward currency contracts. These instruments are commonly re-
ferred to as derivatives. Hedging strategies may also be used in an attempt to
manage the Portfolio's exposure to changing interest rates, security prices
and currency exchange rates. The Portfolio may buy or sell futures contracts,
write covered call options and buy put and call options on any security, index
or currency including options and futures traded on foreign exchanges and op-
tions not traded on exchanges. The Portfolio's ability to use these strategies
may be limited by market conditions, regulatory limits and tax considerations.
The Portfolio's obligation under such hedging strategies will be covered by
the maintenance of a segregated account consisting of cash or liquid securi-
ties equal to at least 100% of the Portfolio's commitment. The SAI contains
further information on all of these strategies and the risks associated with
them.
The Portfolio may write or purchase options in privately negotiated transac-
tions ("OTC Options") as well as listed options. OTC Options can be closed out
only by agreement with the other party to the transaction. Any OTC Option pur-
chased by the Portfolio is considered an illiquid security. Any OTC Option
written by the Portfolio will be with a qualified dealer pursuant to an agree-
ment under which the Portfolio may repurchase the option at a formula price.
Such options are considered illiquid to the extent that the formula price ex-
ceeds the intrinsic value of the option. The Portfolio may not purchase or
sell futures contracts or related options for which the aggregate initial mar-
gin and premiums exceed 5% of the fair market value of the Portfolio's assets.
In order to prevent leverage in connection with the purchase of futures con-
tracts or call options thereon by the Portfolio, an amount of cash, cash
equivalents or liquid securities equal to the market value of the obligation
under the futures contracts or options (less any related market deposits) will
be maintained in a segregated account with the Fund's Custodian Bank. The
Portfolio may not invest more than 15% of its net assets in illiquid securi-
ties and repurchase agreements which have a maturity of longer than seven
days. A more complete discussion of the potential risks involved in transac-
tions in options or futures contracts and related options is contained in the
SAI.
13
<PAGE>
The Portfolio may enter into forward currency contracts for the purchase or
sale of a specified currency at a specified future date either with respect to
specific transactions or with respect to portfolio positions. The Portfolio
also may enter into a forward contract to sell an amount of a foreign currency
approximating the value of some or all of the Portfolio's securities denomi-
nated in such currency.
The Portfolio may use forward contracts in one currency or a basket of cur-
rencies to hedge against fluctuations in the value of another currency when
the Adviser anticipates there will be a correlation between the two and may
use forward currency contracts to shift the Portfolio's exposure to foreign
currency fluctuations from one country to another. The purpose of entering
into these contracts is to minimize the risk to the Portfolio from adverse
changes in the relationship between the U.S. dollar and foreign currencies.
The Portfolio may enter into interest rate protection transactions, which
consist of interest rate swaps and interest rate caps, collars and floors, for
hedging purposes. These transactions are commonly referred to as derivatives.
A swap is an agreement to exchange the return generated by one instrument for
the return generated by another instrument. The swaps in which the Portfolio
may also engage include interest rate caps, floors and collars under which one
party pays a single or periodic fixed amount (or premium), and the other party
pays periodic amounts on movement of a specified index.
The Portfolio may enter into interest rate protection transactions to pre-
serve a return or spread on a particular investment or portion of its portfo-
lio or to protect against any increase in the price of securities it antici-
pates purchasing at a later date. The Portfolio will enter into interest rate
protection transactions only with banks and recognized securities dealers be-
lieved by the Adviser to present minimal credit risks in accordance with
guidelines established by the Fund's Board of Trustees. Interest rate swaps,
caps, floors and collars will be treated as illiquid securities and will
therefore, be subject to the Portfolio's investment restriction limiting in-
vestment in illiquid securities to no greater than 15% of its net assets.
RISK CONSIDERATIONS. The Portfolio might not employ any of the hedging
strategies described above, and there can be no assurance that any strategy
used will succeed. If the Adviser incorrectly forecasts interest rates, market
values or other economic factors in utilizing a hedging strategy for the Port-
folio, the Portfolio would be in a better position if it had not hedged at
all. In addition, the Portfolio will pay commissions and other costs in con-
nection with such hedging strategies, which may increase the Portfolio's ex-
penses and reduce its return.
The use of these strategies involves certain risks, including (1) the fact
that skills needed to use hedging instruments are different from those needed
to select the Portfolio's securities, (2) possible imperfect correlation, or
even no correlation, between price movements of hedging instruments and price
movements of the investments being hedged, (3) the fact that, while hedging
strategies can reduce the
14
<PAGE>
risk of loss, they can also reduce the opportunity for gain, or even result in
losses, by offsetting favorable price movements in hedged investments and (4)
the possible inability of the Portfolio to purchase or sell a portfolio secu-
rity at a time that otherwise would be favorable for it to do so, or the pos-
sible need for the Portfolio to sell a portfolio security at a disadvantageous
time, due to the need for it to maintain "cover" or to segregate securities in
connection with hedging transactions and the possible inability of the Portfo-
lio to close out or to liquidate its hedged position.
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and in-
terest by the U.S. Government or any of its agencies or instrumentali-
ties);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding voting securities of any issuer;
(c) invest more than 5% of its assets at the time of purchase in the secu-
rities of companies that have (with predecessors) a continuous operat-
ing history of less than 3 years;
(d) invest more than 25% of its assets in companies within a single indus-
try; however, there are no limitations on investments made in instru-
ments issued or guaranteed by the U.S. Government and its agencies.
(e) make loans except by purchasing debt securities in accordance with its
investment objective and policies or entering into repurchase agree-
ments or by lending its portfolio securities to banks, brokers, deal-
ers and other financial institutions so long as the loans are made in
compliance with the 1940 Act, as amended, or the Rules and Regulations
or interpretations of the SEC;
(f) (i) borrow, except from banks and as a temporary measure for extraor-
dinary or emergency purposes and then, in no event, in excess of 33
1/3% of the Portfolio's gross assets valued at the lower of market or
cost, and (ii) the Portfolio may not purchase additional securities
when borrowings exceed 5% of total assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent greater
than 33 1/3% of its total assets at fair market value.
The investment objective of the Portfolio is fundamental and may be changed
only with the approval of the holders of a majority of the outstanding shares
of the Portfolio. Except for limitations (a), (b), (d), (e) and (f)(i), the
Portfolio's investment limitations and policies described in this Prospectus
and in the SAI are not
15
<PAGE>
fundamental and may be changed by the Fund's Board of Trustees upon reasonable
notice to investors. All other investment limitations described here and in
the SAI are fundamental policies and may be changed only with the approval of
the holders of a majority of the outstanding shares of the Portfolio. If a
percentage limitation on investment or utilization of assets as set forth
above is adhered to at the time an investment is made, a later change in per-
centage resulting from changes in the value or total cost of the Portfolio's
assets will not be considered a violation of the restriction.
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), without a sales commission at the net asset value next deter-
mined after an order is received by the Custodian (See "VALUATION OF SHARES.")
The minimum initial investment required is $2,000. The minimum initial invest-
ment for IRA accounts is $500. The minimum initial investment for spousal IRA
accounts is $250. Certain exceptions may be made by the officers of the Fund.
Shares of the Portfolio may be purchased by customers of broker-dealers or
other financial intermediaries ("Service Agents") which have established a
shareholder servicing relationship with the Fund on behalf of their customers.
Service Agents may impose additional or different conditions or other account
fees on the purchase and redemption of Portfolio shares by their customers.
Each Service Agent is responsible for transmitting to its customers a schedule
of any such fees and information regarding any additional or different pur-
chase and redemption conditions. Shareholders who are customers of Service
Agents should consult their Service Agent for information regarding these fees
and conditions. Amounts paid to Service Agents may include transaction fees
and/or service fees paid by the Fund from the Fund assets attributable to the
Service Agent, and would not be imposed if shares of the Portfolio were pur-
chased directly from the Fund or the Distributor. The Service Agents may pro-
vide shareholder services to their customers that are not available to a
shareholder dealing directly with the Fund. A salesperson and any other person
entitled to receive compensation for selling or servicing Portfolio shares may
receive different compensation with respect to one particular class of shares
over another in the Fund.
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of the Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer
Agent prior to 4 p.m., to receive that day's share price. Proper payment for
the order must be received by the Sub-Transfer Agent no later than the time
when the Portfolio is priced on the following business day. Service Agents are
responsible to their customers and the Fund for timely transmission of all
subscription and redemption requests, investment information, documentation
and money.
16
<PAGE>
INITIAL INVESTMENT
BY MAIL
.Complete and sign an Application, and mail it together with a check
payable to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment.
BY WIRE
. Telephone the UAM Funds Service Center and provide the account name, ad-
dress, telephone number, social security or taxpayer identification num-
ber, Portfolio selected, amount being wired and the name of the bank
wiring the funds. An account number will then be provided to you. Next,
. instruct your bank to wire the specified amount to the Fund's Custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
DDA Acct. #9102772952
Ref: Portfolio Name____________
Your Account Number____________
Your Account Name_____________
Wire Control Number___________
. Forward a completed Application to the Fund at the address shown on the
form. Federal Funds purchases will be accepted only on a day on which
both the NYSE and the Custodian Bank are open for business.
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check made payable to "UAM Funds" to the address above or by wiring money to
the Custodian Bank using the instructions outlined above. When making addi-
tional investments, be sure that the account name and number is identified on
the check or wire and the Portfolio to be purchased is specified.
17
<PAGE>
Prior to wiring additional investments, notify the Fund by calling the num-
ber on the cover of this prospectus. Mail orders should include, when possi-
ble, the "Invest by Mail" stub which accompanies any Fund confirmation state-
ment.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to suspend the offering of shares of each Portfolio or to reject pur-
chase orders when, in the judgment of management, such suspension or rejection
is in the best interests of the Fund. Purchases of the Portfolio's shares will
be made in full and fractional shares of the Portfolio calculated to three
decimal places. Certificates for fractional shares will not be issued. Certif-
icates for whole shares will not be issued except at the written request of
the shareholder.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by the Port-
folio in exchange for securities will be issued at net asset value determined
as of the same time. All dividends, interest, subscription, or other rights
pertaining to such securities shall become the property of the Portfolio and
must be delivered to the Fund by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for invest-
ment and not for immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be in-
cluded in the Portfolio (current market quotations must be readily
available for such securities);
. the investor represents and agrees that all securities offered to
be exchanged are liquid securities and not subject to any restric-
tions upon their sale by the Portfolio under the Securities Act of
1933, or otherwise; and
. the value of any such securities (except U.S. Government securi-
ties) being exchanged together with other securities of the same
issuer owned by the Portfolio will not exceed 5% of the net assets
of the Portfolio immediately after the transaction.
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of secu-
rities
18
<PAGE>
or local currency exchanged. Investors interested in such exchanges should
contact the Adviser.
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone, at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. No charge is made for redemptions. Any re-
demption may be more or less than the purchase price of your shares depending
on the market value of the investment securities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of
shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which they are regis-
tered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pen-
sion and profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the
wire redemption privilege) by completing appropriate sections of
the Application; and
. call the Fund and instruct that the redemption proceeds be mailed
to you or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated
to receive redemption proceeds (this can be accomplished only by
a written request signed by each shareholder, with each signature
guaranteed);
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the
19
<PAGE>
investor to provide certain personal identification at the time an account is
opened, as well as prior to effecting each transaction requested by telephone.
In addition, all telephone transaction requests will be recorded and investors
may be required to provide additional telecopied written instructions of such
transaction requests. The Fund or Sub-Transfer Agent may be liable for any
losses due to unauthorized or fraudulent telephone instructions if the Fund or
the Sub-Transfer Agent does not employ the procedures described above. Neither
the Fund nor the Sub-Transfer Agent will be responsible for any loss, liabili-
ty, cost or expense for following instructions received by telephone that it
reasonably believes to be genuine.
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than
the registered shareholder(s)
. redemptions where the proceeds are to be sent to an address which
is not the registered address; or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible guarantor
institutions include banks, as well as through most brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. Broker-dealers guaranteeing signa-
tures must be a member of a clearing corporation or maintain net capital of at
least $100,000. Credit unions must be authorized to issue signature guaran-
tees. A notary public can not provide a signature guarantee.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after re-
ceipt of the request, or earlier if required under applicable law. The Fund
may suspend the right of redemption or postpone the date at times when both
the NYSE and Custodian Bank are closed, or under any emergency circumstances
as determined by the SEC.
If the Fund's Board of Trustees determines that it would be detrimental to
the best interests of the remaining shareholders of the Fund to make payments
wholly or partly in cash, the Fund may pay the redemption proceeds in whole or
in part by a distribution in-kind of liquid securities held by the Portfolio
in lieu of cash in conformity with applicable rules of the SEC. Investors may
incur brokerage charges when they sell portfolio securities received in pay-
ment of redemptions.
20
<PAGE>
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of each Portfolio may be exchanged for Institu-
tional Class Shares of any other UAM Funds Portfolio. (See the list of Portfo-
lios of the UAM Funds at the end of this Prospectus.) Exchange requests should
be made by contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you are interested. Exchanges can only be made with Portfolios that
are qualified for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES -- BY TELEPHONE." An ex-
change into another UAM Funds Portfolio is a sale of shares and may result in
a gain or loss for income tax purposes. The Fund may modify or terminate the
exchange privilege at any time.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets, less any liabilities, by the number of shares out-
standing. The net asset value per share of the Portfolio is determined as of
the close of the NYSE on each day that the NYSE is open for business.
Equity securities listed on a securities exchange for which market quota-
tions are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where
the security is primarily traded. Unlisted equity securities and listed secu-
rities not traded on the valuation date for which market quotations are read-
ily available are valued neither exceeding the current ask prices nor less
than the current bid prices. Quotations of foreign securities in a foreign
currency are converted to U.S. dollar equivalents. The converted value is
based upon the bid price of the foreign currency against U.S. dollars quoted
by any major bank or by a broker.
21
<PAGE>
Bonds and other fixed income securities are valued according to the broadest
and most representative market, which will ordinarily be the over-the-counter
market. Bonds and other fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities. Securities purchased with remaining
maturities of 60 days or less are valued at amortized cost when the Board of
Trustees determines that amortized cost reflects fair value.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating yield and total return.
Both yield and total return figures are based on historical earnings and are
not intended to indicate future performance.
Yield refers to the income generated by an investment in the Portfolio over
a given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all funds. As this
differs from other accounting methods, the quoted yield may not equal the in-
come actually paid to shareholders.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of time. An average annual total return is a hypothetical rate of re-
turn that, if achieved annually, would have produced the same cumulative total
return if performance had been constant over the entire period.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices as further de-
scribed in the Portfolio's SAI. This information may also be included in sales
literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or phone number on the cover
of this Prospectus.
22
<PAGE>
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders in quarterly dividends. If any
net capital gains are realized, the Portfolio will normally distribute such
gains annually. All dividends and capital gains distributions will be automat-
ically reinvested in additional shares of the Portfolio unless the Fund is no-
tified in writing that the shareholder elects to receive distributions in
cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal in-
come tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends. To do this, the Portfolio must,
among other things, distribute substantially all of its ordinary income and
net capital gains on an annual basis and maintain a portfolio of investments
which satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income.
Short-term capital gains will be taxed as ordinary income. Long-term capital
gains distributions are taxed as long-term capital gains. Shareholders will be
notified annually of dividend income earned for tax purposes.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid in January of the following year.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you. Consult a tax adviser for more information regarding deduc-
tions and credits for foreign taxes.
23
<PAGE>
INVESTMENT ADVISER
The Adviser is a registered investment adviser formed in 1983. Its business
offices are located at 70 West Madison Street, 56th Floor, Chicago, IL 60602.
It is a wholly-owned subsidiary of United Asset Management Corporation ("UAM")
and provides and offers investment management and advisory services to corpo-
rations, unions, pensions and profit-sharing plans, trusts, estates and other
institutions and investors. The Adviser currently has over $2 billion in as-
sets under management.
The Portfolio pays an annual fee in monthly installments to the adviser for
advisory services. This fee is accrued daily and paid monthly as a percentage
of the average daily net assets in the Portfolio for that month. The percent-
age fee on an annual basis is 0.48%.
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Distributor, UAM, the Adviser, or any of their affili-
ates, may, at its own expense, compensate a Service Agent or other person for
marketing, shareholder servicing, record-keeping and/or other services per-
formed with respect to the Fund, a Portfolio or any Class of Shares of a Port-
folio. Payments made for any of these purposes may be made from the paying
entity's profits or any other source available to it. When such service ar-
rangements are in effect, they are made generally available to all qualified
service providers.
The investment professionals at the Adviser responsible for the day-to-day
management of the Portfolio and their qualifications are as follows:
<TABLE>
<C> <S>
Jon F. Holsteen, President, CEO and Chief Investment Officer
Education: Lake Forest College, BA
Experience: Founded Chicago Asset Management Company in 1983.
William W. Zimmer, Executive Vice President and Chief Fixed Income
Portfolio Manager
Education: Cornell College (Iowa), BA
Cornell University (New York), MBA
Experience: Joined Chicago Asset Management Company in 1988.
Gary R. Dhein, CFA, Vice President and Senior Portfolio Manager
Education: Loyola University, BA
University of Chicago, MBA
Experience: Bank of America (1978 to 1997)
Joined Chicago Asset Management Company in 1997.
Frank F. Holsteen, Vice President
Education: Lake Forest College, BA
Experience: Joined Chicago Asset Management Company in 1993.
</TABLE>
24
<PAGE>
ADVISER'S HISTORICAL PERFORMANCE
Below are certain performance data provided by the Adviser pertaining to the
composite of separately managed accounts of the Adviser that are managed with
substantially similar (although not necessarily identical) objectives, poli-
cies and strategies as those of the Portfolio. The performance data for the
managed accounts is net of all fees and expenses The investment returns of the
Portfolio may differ from those of the separately managed accounts because
such separately managed accounts may have fees and expenses that differ from
those of the Portfolio. Further, the separately managed accounts are not sub-
ject to investment limitations, diversification requirements and other re-
strictions imposed by the Investment Company Act of 1940 and Internal Revenue
Code; such conditions, if applicable, may have lowered the returns for sepa-
rately managed accounts. The results presented are not intended to predict or
suggest the return to be experienced by the Portfolio or the return an in-
vestor might achieve by investing in the Portfolio.
CHICAGO ASSET MANAGEMENT COMPANY-- INTERMEDIATE BOND + CASH COMPOSITE RETURNS
(PERCENTAGE RETURNS NET OF MANAGEMENT FEES)
<TABLE>
<CAPTION>
CHICAGO LEHMAN BROTHERS
ASSET INTERMEDIATE
MANAGEMENT GOVERNMENT/CORPORATE
CALENDAR YEARS COMPANY INDEX
-------------- ---------- --------------------
<S> <C> <C>
1985......................................... 22.0% 18.1%
1986......................................... 15.2% 13.1%
1987......................................... 0.7% 3.7%
1988......................................... 7.0% 6.7%
1989......................................... 13.0% 12.8%
1990......................................... 8.8% 9.2%
1991......................................... 17.1% 14.7%
1992......................................... 8.6% 7.2%
1993......................................... 10.2% 8.8%
1994......................................... (2.4)% (1.9)%
1995......................................... 15.8% 15.3%
1996......................................... 3.9% 4.1%
Year to Date (1/1/97-3/31/97)................ (0.1)% (0.11)%
Annualized through 3/31/97................... 9.6% 9.0%
Cumulative through 3/31/97................... 205.9% 185.8%
Twelve-Year Mean............................. 10.0% 9.3%
Value of $1 invested
(1/1/85-3/31/97)........................... $3.06 $2.86
</TABLE>
25
<PAGE>
CHICAGO ASSET MANAGEMENT COMPANY--
INTERMEDIATE BOND + CASH RETURNS FOR VARIOUS PERIODS ENDED 3/31/97
(PERCENTAGE RETURNS NET OF MANAGEMENT FEES)
(UNAUDITED)
<TABLE>
<CAPTION>
LEHMAN BROTHERS
INTERMEDIATE
GOVERNMENT/CORPORATE
PERIODS ENDED 3/31/97 ADVISER INDEX
- --------------------- ------- --------------------
<S> <C> <C>
One-year period.................................... 4.5 4.8
Three-year period (average annual)................. 6.3 6.3
Five-year period (average annual).................. 7.0 6.7
Ten-year period (average annual)................... 8.0 7.8
</TABLE>
- -----------
Notes:
1. The annualized return is calculated from monthly data, allowing for com-
pounding. Market Value of the account was the sum of the account's total
assets, including cash, cash equivalents, short-term investments, and se-
curities valued at current market prices.
2. The cumulative return means that $1 invested in the composite account on
January 1, 1985 had grown to $3.06 by March 31, 1997.
3. The twelve-year mean is the arithmetic average of the annual returns for
the years listed.
4. The Lehman Brothers Intermediate Government/Corporate Index is an unman-
aged index which assumes reinvestment of dividends and is generally con-
sidered representative of securities similar to those invested in by the
Adviser for the purpose of the composite performance numbers set forth
above.
5. The Adviser's average annual management fee over the period shown was
0.30% or 30 basis points. During the period, fees on the Adviser's indi-
vidual accounts ranged from 0.26% to 0.625% (26 basis points to 62.5 basis
points). Net returns to investors vary depending on the management fee.
6. The intermediate fixed income + cash composite includes every separate
discretionary intermediate fixed income account as of 3/31/97. No accounts
were excluded. As of 3/31/97, this composite included all 12 intermediate
fixed income portfolios, including the intermediate fixed income + cash
portions of balanced accounts, totaling $271 million. Leverage has not
been used in any portfolios included in this composite. A list of all com-
posites of the firm is available upon request.
26
<PAGE>
ADMINISTRATIVE SERVICES
UAMFSI, a wholly-owned subsidiary of United Asset Management Corporation, is
responsible for performing and overseeing administrative, fund accounting,
dividend disbursing and transfer agent services provided to the Fund and its
Portfolios. UAMFSI's principal office is located at 211 Congress Street, Bos-
ton, MA 02110. UAMFSI has subcontracted some of these services to Chase Global
Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan Bank, by
a Mutual Funds Service Agreement dated June 30, 1997. CGFSC is located at 73
Tremont Street, Boston, MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
Chicago Asset Management Intermediate Bond Portfolio................... 0.04%
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
0.11 of 1% of the next $800 million of combined UAM Funds assets;
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but
less than $3 billion;
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Funds' fees are allocated among the Portfolios on the basis of their
relative assets and are subject to a graduated minimum fee schedule per Port-
folio, which starts at $2,000 per month and increases to $70,000 annually af-
ter two years. If a separate class of shares is added to a Portfolio, its min-
imum annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM with its principal office
located at 211 Congress Street, Boston, Massachusetts 02110, distributes the
shares of the Fund. Under the Fund's Distribution Agreement (the "Distribution
Agreement"), the Distributor, as agent of the Fund, agrees to use its best ef-
forts as sole distributor of the Fund's shares. The Distributor does not re-
ceive any fee or other compensation under the Distribution Agreement with re-
spect to this Portfolio. The Distribution Agreement continues in effect as
long as the Fund's Board of Trustees, including a majority of the Trustees who
are not parties to the Distribution Agreement or interested persons of any
such party, approve it on an annual basis. The Distribution Agreement provides
that the Fund will bear the costs of the registration of its shares with the
SEC and various states and the printing of its prospectuses, SAIs and reports
to shareholders.
27
<PAGE>
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II." On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and have no preference as to conversion, exchange, dividends, re-
tirement or other features and no pre-emptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees can elect 100% of the Trustees. A shareholder is en-
titled 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 of the
Fund.
As of June 16, 1997, Edward Usher and Francis McCartin, Trustees, Pipefit-
ters Pension Fund Local 597, held of record 90.4% of the outstanding shares of
the CAM Intermediate Bond Portfolio Institutional Class for which beneficial
ownership is disclaimed or presumed disclaimed. The persons or organizations
owning 25% or more of the outstanding shares of a Portfolio may be presumed to
"control" (as that term is defined in the 1940 Act) such Portfolio. As a re-
sult, those persons or organizations could have the ability to vote a majority
of the shares of the Portfolio on any matter requiring the approval of share-
holders of such Portfolio.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the hold-
ers of not less than 10% of the outstanding shares of the Fund. The Fund will
assist shareholder communications in such matters.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
28
<PAGE>
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the address or telephone number listed on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE PORTFOLIO'S STATEMENT
OF ADDITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR ITS REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH OF-
FERING MAY NOT BE LAWFULLY MADE.
29
<PAGE>
UAM FUNDS -- INSTITUTIONAL CLASS SHARES
Acadian Emerging Markets Portfolio
Acadian International Equity Portfolio
BHM&S Total Return Bond Portfolio
Chicago Asset Management Intermediate Bond Portfolio
Chicago Asset Management Value/Contrarian Portfolio
C&B Balanced Portfolio
C&B Equity Portfolio
C&B Equity Portfolio for Taxable Investors
C&B Mid Cap Equity Portfolio
DSI Balanced Portfolio
DSI Disciplined Value Portfolio
DSI Limited Maturity Bond Portfolio
DSI Money Market Portfolio
FMA Small Company Portfolio
FPA Crescent Portfolio
Hanson Equity Portfolio
ICM Equity Portfolio
ICM Fixed Income Portfolio
ICM Small Company Portfolio
IRC Enhanced Index Portfolio
Jacobs International Octagon Portfolio
McKee Domestic Equity Portfolio
McKee International Equity Portfolio
McKee U.S. Government Portfolio
McKee Small Cap Equity Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Rice, Hall James Small Cap Portfolio
Rice, Hall James Small/Mid Cap Portfolio
Sirach Equity Portfolio
Sirach Fixed Income Portfolio
Sirach Growth Portfolio
Sirach Short-Term Reserves Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
SAMI Preferred Stock Income Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Small Cap Portfolio
Sterling Partners' Short-Term Fixed Income Portfolio
Sterling Partners' Small Cap Value Portfolio
TS&W Balanced Portfolio
TS&W Equity Portfolio
TS&W Fixed Income Portfolio
TS&W International Equity Portfolio
30
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Chicago Asset Management Company
70 West Madison Street 56th Floor
Chicago, IL 60602
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
[UNION LOGO APPEARS HERE]
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
Chicago Asset Management
Value/Contrarian Portfolio
Institutional
Class Shares
P R O S P E C T U S
July 10, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses............................................................ 1
Prospectus Summary....................................................... 3
Risk Factors............................................................. 4
Financial Highlights..................................................... 5
Investment Objective..................................................... 6
Investment Policies...................................................... 6
Other Investment Policies................................................ 8
Investment Limitations................................................... 14
Purchase of Shares....................................................... 15
Redemption of Shares..................................................... 18
Shareholder Services..................................................... 20
Valuation of Shares...................................................... 20
Performance Calculations................................................. 21
Dividends, Capital Gains Distributions and Taxes......................... 21
Investment Adviser....................................................... 22
Adviser's Historical Performance......................................... 24
Administrative Services.................................................. 25
Distributor.............................................................. 26
General Information...................................................... 26
UAM Funds -- Institutional Class Shares.................................. 28
</TABLE>
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
CHICAGO ASSET MANAGEMENT
VALUE/CONTRARIAN PORTFOLIO
INSTITUTIONAL CLASS SHARES
INVESTMENT ADVISER: CHICAGO ASSET MANAGEMENT COMPANY
- -------------------------------------------------------------------------------
PROSPECTUS -- JULY 10, 1997
UAM Funds Trust (the "Fund") is, an open-end investment company known as a
"mutual fund." The Fund consists of multiple series (known as "Portfolios"),
each of which has different investment objectives and policies. The Chicago
Asset Management Value/Contrarian Portfolio currently offers only one class of
shares. The securities offered in this Prospectus are Institutional Class
Shares of one diversified, no-load Portfolio of the Fund managed by Chicago
Asset Management Company.
CHICAGO ASSET MANAGEMENT VALUE/CONTRARIAN PORTFOLIO. Chicago Asset Manage-
ment Value/Contrarian Portfolio (the "Portfolio") seeks capital appreciation
by investing primarily in the common stock of large companies. The common
stocks in which the Portfolio invests are generally ones which have performed
poorly over the recent past but which may have the potential for better-than-
average performance in the future.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A "Statement of Additional Information" ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Institutional Class Shares would incur. Transaction fees may be
charged if a broker-dealer or other financial intermediary deals with the Fund
on your behalf. (See "PURCHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases................................... NONE
Sales Load Imposed on Reinvested Dividends........................ NONE
Deferred Sales Load............................................... NONE
Redemption Fees................................................... NONE
Exchange Fees..................................................... NONE
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Investment Advisory Fees.......................................... 0.625 %
Administrative Fees............................................... 3.440 %
12b-1 Fees........................................................ NONE
Other Expenses.................................................... 3.180 %
Advisory Fees Waived and Expenses Assumed......................... (6.300)%
------
Total Operating Expenses (After Fee Waiver and Expenses
Assumed)........................................................ 0.950 %*
======
</TABLE>
- -----------
* Absent the fees waived and expenses assumed by the Adviser, total operating
expenses for the Portfolio would have been 7.26%. The Total Operating Ex-
penses includes the effect of expense offsets. If expense offsets were ex-
cluded, Total Operating Expenses of the Portfolio would not be affected. Un-
til further notice, the Adviser has voluntarily agreed to waive its advisory
fee and to assume certain operating expenses to keep the Portfolio's total
annual operating expenses (excluding interest, taxes and extraordinary ex-
penses), after the effect of expense offsets, from exceeding 0.95% of aver-
age daily net assets. The Portfolio will not reimburse the Adviser for any
advisory fees which are waived or Portfolio expenses which the Adviser may
bear on behalf of the Portfolio for a given fiscal year.
The table above shows various fees and expenses an investor would bear di-
rectly or indirectly. The expenses and fees set forth above are based on the
Portfolio's operations during the fiscal year ended April 30, 1997.
1
<PAGE>
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Expenses..................................... $ 10 $ 30 $ 53 $ 117
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
2
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Chicago Asset Management Company (the "Adviser") is a registered investment
adviser specializing in the active management of stocks, bonds and balanced
portfolios for institutional, tax-exempt clients. Founded in 1983, the firm is
a wholly-owned subsidiary of United Asset Management Corporation. The Adviser
currently has over $2 billion in assets under management. (See "INVESTMENT AD-
VISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion, to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment is $2,000. The minimum for subsequent investments is $100.
The minimum initial investment for IRA accounts is $500. The minimum initial
investment for spousal IRA accounts is $250. Certain exceptions to the initial
or minimum investment amounts may be made by the officers of the Fund. (See
"PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in quarterly dividends. The Portfolio will distribute any realized
net capital gains annually. Distributions will be reinvested in Portfolio
shares automatically unless an investor elects to receive cash distributions.
(See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTIONS AND EXCHANGES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See "REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services Inc. ("UAMFSI"), a wholly-owned subsidiary of United Asset
Management Corporation, is responsible for performing and overseeing adminis-
tration, fund accounting, dividend disbursing and transfer agency services
provided to the Fund and its Portfolios by third-party service providers. (See
"ADMINISTRATIVE SERVICES.")
3
<PAGE>
RISK FACTORS
The value of the Portfolio's shares will fluctuate in response to changes in
market and economic conditions as well as the financial conditions and pros-
pects of the issuers in which the Portfolio invests. Prospective investors
should consider the following: (1) The Portfolio may engage in various strate-
gies to seek to hedge its investments against movements in security prices,
interest rates and currency exchange rates by the use of derivatives including
options and futures as well as options on futures. Such strategies are com-
monly referred to as "derivatives" and involve the risk of imperfect correla-
tion in movements in the price of options and futures and movements in the
price of securities, interest rates or currencies which are the subject of the
hedge. To the extent these transactions involve foreign securities or curren-
cies, they are also subject to the risk factors associated with foreign in-
vestments generally. There can be no assurance that a liquid secondary market
for options and futures contracts will exist at any specific time; (2) The
Portfolio may invest up to 10% of its assets in foreign issuers, which may in-
volve greater risks than investments in domestic securities, such as foreign
currency risk; (3) The Portfolio may invest in repurchase agreements which en-
tail a risk of loss should the seller default on its transaction; (4) The
Portfolio may lend its investment securities which entails a risk of loss
should a borrower fail financially; (5) The Portfolio may purchase securities
on a when-issued basis which do not earn interest until issued and may decline
or appreciate in market value prior to their delivery to the Portfolio. (See
"OTHER INVESTMENT POLICIES.")
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides selected per share information for a share out-
standing throughout the periods presented for the Portfolio. This table is
part of the Portfolio's Financial Statements included in the Portfolio's 1997
Annual Report to Shareholders. The Report is incorporated into the Portfolio's
SAI. The Portfolio's Financial Statements for the year ended April 30, 1997
have been audited by Price Waterhouse LLP whose unqualified opinion on those
Financial Statements is also incorporated into the Portfolio's SAI. Please
read the following information in conjunction with the Portfolio's 1997 Annual
Report to Shareholders.
<TABLE>
<CAPTION>
DECEMBER 16,
1994***
TO YEAR ENDED YEAR ENDED
APRIL 30, 1995 APRIL 30, 1996 APRIL 30, 1997
-------------- -------------- --------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD......................... $ 10.00 $ 11.14 $ 13.67
------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.......... 0.05 0.19 0.18
Net Realized and Unrealized
Gain (Loss) on Investments... 1.13 2.86 0.30
------- -------- -------
Total from Investment
Operations................. 1.18 3.05 0.48
------- -------- -------
DISTRIBUTIONS
Net Investment Income.......... (0.04) (0.23) (0.24)
Net Realized Gain.............. -- (0.29) (0.84)
------- -------- -------
Total Distributions.......... (0.04) (0.52) (1.08)
------- -------- -------
NET ASSET VALUE, END OF PERIOD... $ 11.14 $ 13.67 $ 13.07
======= ======== =======
TOTAL RETURN+.................... 11.81%** 28.00% 3.72%
======= ======== =======
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period
(thousands).................... $ 696 $ 892 $13,804
Ratio of Expenses to Average Net
Assets......................... 0.95%* 1.06% 0.95%
Ratio of Net Investment Income to
Average Net Assets............. 1.54%* 1.51% 1.89%
Portfolio Turnover Rate.......... 4% 33% 21%
Average Commission Rate#......... N/A $ 0.0600 $0.0574
Voluntarily Waived Fees and
Expenses Assumed by the Adviser
Per Share...................... $ 0.58 $ 1.50 $ 0.60
Ratio of Expenses to Average Net
Assets Including Expense
Offsets........................ 0.95%* 0.95% 0.95%
</TABLE>
- -----------
* Annualized.
** Not annualized.
*** Commencement of Operations
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser during the periods indicated.
# Beginning with fiscal year 1996, the Portfolio is required to disclose the
average commission rate per share it paid for portfolio trades, on which
commissions were charged, during the period.
5
<PAGE>
INVESTMENT OBJECTIVE
The Portfolio seeks capital appreciation by investing primarily in the com-
mon stock of large companies. The common stocks in which the Portfolio invests
are generally ones which have performed poorly over the recent past but which
may have the potential for better than average performance in the future.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
INVESTMENT POLICIES
The Adviser focuses mainly on choosing individual stocks rather than trying
to forecast the overall strength of the stock market. In particular, the Ad-
viser seeks to invest in large, established quality companies whose stocks can
be bought at attractive prices because of the market's misperceptions about
the companies' value.
As a contrarian, the Adviser seeks to invest by going against the consensus
opinion on individual stocks. To discover the appropriate contrarian position,
the Adviser stays in contact with stock market research analysts and takes
their assumptions into account in determining whether stocks are undervalued
or overvalued.
The Portfolio will invest primarily in the common stock of large capitaliza-
tion companies which are defined as those with equity capitalizations greater
than $1 billion at the time of purchase. The Portfolio may also invest in se-
curities convertible into common stock. There is no particular percentage of
the Portfolio's assets to be invested in any one type of security, and it has
the ability to purchase other securities that may produce capital appreciation
such as non-convertible preferred stocks, rights and warrants to purchase com-
mon stocks, and bonds. However, under normal circumstances, the Adviser antic-
ipates no more than 5% of the Portfolio's total assets will be invested in in-
vestment grade bonds which are generally considered to be those bonds having
one of the four highest grades assigned by Moody's Investors Service, Inc.
("Moody's") (Aaa, Aa, A or Baa) or Standard & Poor's Corporation ("S&P") (AAA,
AA, A or BBB), or if unrated, of equivalent quality in the Adviser's judgment.
The Adviser also reserves the right to retain securities which are downgraded
by one or both of the rating agencies, if in the Adviser's judgment, the re-
tention of securities is warranted. The Portfolio's SAI contains a detailed
description of corporate bond ratings.
The Portfolio seeks to outperform the market during most time periods, not
by taking advantages of shifts in the overall direction of the market, but by
identifying attractive stocks. The Portfolio will invest primarily in estab-
lished, high-quality companies whose stock is selling at attractive prices due
to short-term market misperceptions. Consistent with avoiding market timing is
maintaining most individual common stock holdings in a somewhat equally
weighted position in the
6
<PAGE>
Portfolio. This is sometimes accomplished by rebalancing current holdings in
response to a change in the market value of individual holdings over time. A
portion of a holding which has become larger due to market value change may be
sold. Conversely an additional purchase of shares of a current holding may be
made if market value change has reduced the holding size in the total portfo-
lio.
The Adviser's investment style is categorized as large cap, bottom-up, val-
ue-oriented and contrarian. Its investment philosophy and process is qualita-
tive rather than quantitative, and its investment approach has four distin-
guishing characteristics. First, it emphasizes large company stocks. Second,
it employs a bottom-up approach which means that it will construct the Portfo-
lio by focusing on individual stocks rather than industry groups or sectors.
(Top-down investors would first decide which industries or sectors they wanted
to emphasize and then would look for stocks that fit those requirements.)
Third, it is value-oriented. This means that it invests in stocks which are
perceived to be priced below their true value because the market does not rec-
ognize their potential. And fourth, it is contrarian in that it goes against
the common consensus when it invests. To maintain an effective contrarian pos-
ture, it closely monitors market opinion-makers, such as research analysts and
commentators, and then evaluates the impact of their opinions on stock prices,
in identifying securities which are perceived to be undervalued or overvalued.
This results in active contrarian rebalancing of current holdings.
The Adviser selects individual issues which offer a combination of some of
the following characteristics:
. they are out-of-favor among market analysts;
. they are priced below the mid-point of their trading range over the
past year;
. the issuing companies have maintained sound financial credit qual-
ity as measured by their balance sheets or they are expected to
significantly improve;
. they are large companies with market values over $1 billion;
. they have reasonable (based on normalized expected earnings) price-
to-earnings ratios; and
. they pay or may become able to pay a dividend.
When the Adviser believes that market conditions warrant a defensive posi-
tion, up to 100% of the Portfolio's assets may be held in cash and short-term
investments. See "SHORT-TERM INVESTMENTS AND REPURCHASE AGREEMENTS" below for
a description of the types of short-term instruments in which the Portfolio
may invest for temporary defensive purposes. When the Portfolio is in a defen-
sive position, it may not necessarily be pursuing its stated investment objec-
tive.
7
<PAGE>
OTHER INVESTMENT POLICIES
The Portfolio may also, under normal circumstances, invest up to 35% of its
assets, unless restricted by additional limitations described below or in the
Portfolio's SAI, in the following securities, investments or investment tech-
niques.
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated redemp-
tions, or for temporary defensive purposes, the Portfolio may invest a portion
of its assets in domestic and foreign money market instruments including cer-
tificates of deposit, bankers' acceptances, time deposits, U.S. government ob-
ligations, U.S. government agency securities, short-term corporate debt secu-
rities, and commercial paper rated A-1 or A-2 by S&P or Prime-1 or Prime-2 by
Moody's or, if unrated, determined by the Adviser to be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in
other currencies, (ii) in the case of U.S. banks, it is a member of the Fed-
eral Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an invest-
ment quality comparable with other debt securities which may be purchased by
the Portfolio.
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's Port-
folios, as well as cash for investment purposes, into one or more joint ac-
counts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable rate demand notes and tax-exempt money instruments. By en-
tering into these investments on a joint basis, it is expected that the Port-
folio may earn a higher rate of return on investments relative to what it
could earn individually.
The Fund has received permission from the SEC for each of its Portfolios to
invest, for cash management purposes, the greater of 5% of its total assets or
$2.5 million in the Fund's DSI Money Market Portfolio. (See "INVESTMENT
COMPANIES.")
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities, certificates of deposit, and certain bankers' accept-
ances and other securities outlined above under "Short-Term Investments." In a
repurchase
8
<PAGE>
agreement, the Portfolio buys a security and simultaneously commits to sell
that security back at an agreed upon price plus an agreed upon market rate of
interest. Under a repurchase agreement, the seller is also required to main-
tain the value of securities subject to the agreement at not less than 100% of
the repurchase price. The value of the securities purchased will be evaluated
daily, and the Adviser will, if necessary, require the seller to maintain ad-
ditional securities to ensure that the value is in compliance with the previ-
ous sentence. The use of repurchase agreements involves certain risks. For ex-
ample, a default by the seller of the agreement may cause the Portfolio to ex-
perience a loss or delay in the liquidation of the collateral securing the re-
purchase agreement. The Portfolio might also incur disposition costs in liqui-
dating the collateral. While the Fund's management acknowledges these risks,
it is expected that they can be controlled through stringent counter-party se-
lection criteria and careful monitoring procedures. The Fund has received per-
mission from the SEC to pool daily uninvested cash balances of the Fund's
Portfolios in order to invest in repurchase agreements on a joint basis. By
entering into joint repurchase agreements, the Portfolio may incur lower
transaction costs and earn higher rates of interest on joint repurchase agree-
ments. The Portfolio's contribution would determine its return from a joint
repurchase agreement (See "SHORT-TERM INVESTMENTS.")
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. The Portfolio will not loan securities
to the extent that greater than one-third of its assets at fair market value
would be committed to loans. During the term of a loan, the Portfolio is sub-
ject to a gain or loss depending on any increase or decrease in the market
price of the securities loaned. Lending of securities is subject to review by
the Fund's Board of Trustees. All relevant facts and circumstances, including
the creditworthiness of the broker, dealer or institution, will be considered
in making decisions about securities lending.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Trustees. The Portfolio will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on a loan, the loan must be called and the securities
voted.
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES
The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement," or "forward delivery" basis. "When-issued" or "forward delivery"
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more be-
fore
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delivery is due. Delayed settlement is a term used to describe settlement of a
securities transaction in the secondary market which will occur sometime in
the future. No payment or delivery is made by the Portfolio until it receives
delivery or payment from the other party to any of the above transactions. It
is possible that the market price of the securities at the time of delivery
may be higher or lower than the purchase price. The Portfolio will maintain a
separate account of cash or liquid securities at least equal to the value of
purchase commitments until payment is made. Typically, no income accrues on
securities purchased on a delayed delivery basis prior to the time delivery is
made although the Portfolio may earn income on securities it has deposited in
a segregated account.
The Portfolio may engage in these types of purchases in order to buy securi-
ties that fit with its investment objectives at attractive prices -- not to
increase its investment leverage.
PORTFOLIO TURNOVER
Portfolio turnover is not anticipated to exceed 60%. In addition to Portfo-
lio trading costs, higher rates of portfolio turnover may result in the reali-
zation of capital gains. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX-
ES" for more information on taxation.) The Portfolio will not normally engage
in short-term trading, but reserves the right to do so. The table set forth in
"Financial Highlights" presents the Portfolio's historical portfolio turnover
rates.
INVESTMENT COMPANIES
The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets may be invested in the securities of any one investment company,
nor may it acquire more than 3% of the voting securities of any other invest-
ment company. The Portfolio will indirectly bear its proportionate share of
any management fees paid by an investment company in which it invests in addi-
tion to the advisory fee paid by the Portfolio.
The Fund has received permission from the SEC to allow each of its Portfo-
lios to invest the greater of 5% of its total assets or $2.5 million in the
Fund's DSI Money Market Portfolio for cash management purposes provided that
the investment is consistent with the Portfolio's investment policies and re-
strictions. Based upon the Portfolio's assets invested in the DSI Money Market
Portfolio, the investing Portfolio's adviser will waive its investment advi-
sory fee and any other fees earned as a result of the Portfolio's investment
in the DSI Money Market Portfolio. The investing Portfolio will bear expenses
of the DSI Money Market Portfolio on the same basis as all of its other share-
holders.
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<PAGE>
FOREIGN INVESTMENTS
Investing in foreign companies may involve additional risks and considera-
tions which are not typically associated with investing in U.S. companies.
Since stocks of foreign companies are normally denominated in foreign curren-
cies, the Portfolio may be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations, and may incur costs in
connection with conversions between various currencies.
As non-U.S. companies are not generally subject to uniform accounting, au-
diting and financial reporting standards and practices comparable to those ap-
plicable to U.S. companies, comparable information may not be readily avail-
able about certain foreign companies. Securities of some non-U.S. companies
may be less liquid and more volatile than securities of comparable U.S. compa-
nies. In addition,
in certain foreign countries, there is the possibility of expropriation or
confiscatory taxation, political or social instability, or diplomatic develop-
ments which could affect U.S. investments in those countries.
RESTRICTED AND ILLIQUID SECURITIES
The Portfolio may purchase restricted securities that are not registered for
sale to the general public but which are eligible for resale to qualified in-
stitutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Trustees, the Adviser determines the li-
quidity of such investments by considering all relevant factors. Provided that
a dealer or institutional trading market in such securities exists, these re-
stricted securities are not treated as illiquid securities for purposes of the
Portfolio's investment limitations. The Portfolio may also invest up to 15% of
its net assets in securities that are illiquid. Prices realized from the sales
of these securities could be more or less than those originally paid by the
Portfolio or less than what may be considered the fair value of such securi-
ties.
HEDGING AND RELATED STRATEGIES AND RISK CONSIDERATIONS
To reduce the overall risk of its investments (hedge), the Portfolio may use
options, futures contracts, options on futures contracts, and forward currency
contracts. These instruments are commonly referred to as derivatives. Hedging
strategies may also be used in an attempt to manage the Portfolio's exposure
to changing interest rates, security prices and currency exchange rates. The
Portfolio's ability to use these strategies may be limited by market condi-
tions, regulatory limits and tax considerations. The Portfolio's obligation
under such hedging strategies will be covered by the maintenance of a segre-
gated account consisting of cash or liquid securities equal to at least 100%
of the Portfolio's commitment. The Portfolio may buy or sell futures con-
tracts, write covered call options and buy put and call options on any securi-
ty, index or currency including options and futures traded on foreign
11
<PAGE>
exchanges and options not traded on exchanges. The Portfolio's SAI contains
further information on all of these strategies and the risks associated with
them.
The Portfolio may write or purchase options in privately negotiated transac-
tions ("OTC Options") as well as listed options. OTC Options can be closed out
only by agreement with the other party to the transaction. Any OTC Option pur-
chased by the Portfolio is considered an illiquid security. Any OTC Option
written by the Portfolio will be with a qualified dealer pursuant to an agree-
ment under which the Portfolio may repurchase the option at a formula price.
Such options are considered illiquid to the extent that the formula price ex-
ceeds the intrinsic value of the option. The Portfolio may not purchase or
sell futures contracts or related options for which the aggregate initial mar-
gin and premiums exceed 5% of the fair market value of the Portfolio's assets.
In order to prevent leverage in connection with the purchase of futures con-
tracts or call options thereon by the Portfolio, an amount of cash, cash
equivalents or liquid securities equal to the market value of the obligation
under the futures contracts or options (less any related market deposits) will
be maintained in a segregated account with the Fund's Custodian Bank. The
Portfolio may not invest more than 15% of its net assets in illiquid securi-
ties and repurchase agreements which have a maturity of longer than seven
days. A more complete discussion of the potential risks involved in transac-
tions in options or futures contracts and related options is contained in the
Portfolio's SAI.
The Portfolio may enter into forward currency contracts for the purchase or
sale of a specified currency at a specified future date either with respect to
specific transactions or with respect to portfolio positions. The Portfolio
also may enter into a forward contract to sell an amount of a foreign currency
approximating the value of some or all of the Portfolio's securities denomi-
nated in such currency.
The Portfolio may use forward contracts in one currency or a basket of cur-
rencies to hedge against fluctuations in the value of another currency when
the Adviser anticipates there will be a correlation between the two and may
use forward currency contracts to shift the Portfolio's exposure to foreign
currency fluctuations from one country to another. The purpose of entering
into these contracts is to minimize the risk to the Portfolio from adverse
changes in the relationship between the U.S. dollar and foreign currencies.
The Portfolio may enter into interest rate protection transactions, which
consist of interest rate swaps and interest rate caps, collars and floors, for
hedging purposes. These transactions are commonly referred to as derivatives.
A swap is an agreement to exchange the return generated by one instrument for
the return generated by another instrument. The swaps in which the Portfolio
may also engage include interest rate caps, floors and collars under which one
party pays a single or periodic fixed amount (or premium), and the other party
pays periodic amounts on movement of a specified index.
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<PAGE>
The Portfolio may enter into interest rate protection transactions to pre-
serve a return or spread on a particular investment or portion of its portfo-
lio or to protect against any increase in the price of securities it antici-
pates purchasing at a later date. The Portfolio will enter into interest rate
protection transactions only with banks and recognized securities dealers be-
lieved by the Adviser to present minimal credit risks in accordance with
guidelines established by the Fund's Board of Trustees. Interest rate swaps,
caps, floors and collars will be treated as illiquid securities and will
therefore, be subject to the Portfolio's investment restriction limiting in-
vestment in illiquid securities to no greater than 15% of its net assets.
RISK CONSIDERATIONS. The Portfolio might not employ any of the hedging
strategies described above, and there can be no assurance that any strategy
used will succeed. If the Adviser incorrectly forecasts interest rates, market
values or other economic factors in utilizing a hedging strategy for the Port-
folio, the Portfolio would be in a better position if it had not hedged at
all. In addition, the Portfolio will pay commissions and other costs in con-
nection with such hedging strategies which may increase the Portfolio's ex-
penses and reduce its return.
The use of these strategies involves certain risks, including (1) the fact
that skills needed to use hedging instruments are different from those needed
to select the Portfolio's securities, (2) possible imperfect correlation, or
even no correlation, between price movements of hedging instruments and price
movements of the investments being hedged, (3) the fact that, while hedging
strategies can reduce the risk of loss, they can also reduce the opportunity
for gain, or even result in losses, by offsetting favorable price movements in
hedged investments and (4) the possible inability of the Portfolio to purchase
or sell a security at a time that otherwise would be favorable for it to do
so, or the possible need for the Portfolio to sell a security at a disadvanta-
geous time due to the need for it to maintain "cover" or to segregate securi-
ties in connection with hedging transactions and the possible inability of the
Portfolio to close out or to liquidate its hedged position.
AMERICAN DEPOSITARY RECEIPTS
The Portfolio intends to invest primarily in U.S.-based companies. In addi-
tion, the Portfolio may purchase shares of foreign based companies in the form
of American Depositary Receipts (ADRs). Investments in ADRs, which are domes-
tic securities representing ownership rights in foreign companies, will not
exceed 25% of the Portfolio's assets. ADRs may be sponsored or unsponsored.
Sponsored ADRs are established jointly by a depositary and the underlying is-
suer, whereas unsponsored ADR's may be established without participation by
the underlying issuer. Holders of an unsponsored ADR generally bear all the
costs associated with establishing the unsponsored ADR. The depositary of an
unsponsored ADR is under no obligation to distribute shareholder communica-
tions received from the underlying issuer or to pass through voting rights to
the holders of the unsponsored ADR with respect to the deposited securities or
pool of securities.
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<PAGE>
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and in-
terest by the U.S. Government or any of its agencies or instrumentali-
ties);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding voting securities of any issuer;
(c) invest more than 5% of its assets at the time of purchase in the secu-
rities of companies that have (with predecessors) a continuous operat-
ing history of less than 3 years;
(d) invest more than 25% of its assets in companies within a single indus-
try; however, there are no limitations on investments made in instru-
ments issued or guaranteed by the U.S. Government and its agencies.
(e) make loans except by purchasing debt securities in accordance with its
investment objective and policies or entering into repurchase agree-
ments or by lending its portfolio securities to banks, brokers, deal-
ers and other financial institutions so long as the loans are made in
compliance with the 1940 Act, as amended, or the Rules and Regulations
or interpretations of the SEC;
(f) (i) borrow, except from banks and as a temporary measure for extraor-
dinary or emergency purposes and then, in no event, in excess of 33
1/3% of the Portfolio's gross assets valued at the lower of market or
cost, and (ii) the Portfolio may not purchase additional securities
when borrowings exceed 5% of total assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent greater
than 33 1/3% of its total assets at fair market value.
The investment objective of the Portfolio is fundamental and may be changed
only with the approval of the holders of a majority of the outstanding shares
of such Portfolio. Except for limitations (a), (b), (d), (e) and (f)(i), the
Portfolio's investment limitations and policies described in this Prospectus
and in the SAI are not fundamental and may be changed by the Fund's Board of
Trustees upon reasonable notice to investors. All other investment limitations
described here and in the SAI are fundamental policies and may be changed only
with the approval of the holders of a majority of the outstanding shares of
the Portfolio. If a percentage limitation on investment or utilization of as-
sets as set forth above is adhered to at the time an investment is made, a
later change in percentage resulting from changes in the value or total cost
of the Portfolio's assets will not be considered a violation of the restric-
tion.
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<PAGE>
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), without a sales commission at the net asset value next deter-
mined after an order is received by the Custodian (See "VALUATION OF SHARES.")
The minimum initial investment required is $2,000. The minimum initial invest-
ment for IRA accounts is $500. The minimum initial investment for spousal IRA
accounts is $250. Certain exceptions may be made by the officers of the Fund.
Shares of the Portfolio may be purchased by customers of broker-dealers or
other financial intermediaries ("Service Agents") which have established a
shareholder servicing relationship with the Fund on behalf of their customers.
Service Agents may impose additional or different conditions or other account
fees on the purchase and redemption of Portfolio shares by their customers.
Each Service Agent is responsible for transmitting to its customers a schedule
of any such fees and information regarding any additional or different pur-
chase and redemption conditions. Shareholders who are customers of Service
Agents should consult their Service Agent for information regarding these fees
and conditions. Amounts paid to Service Agents may include transaction fees
and/or service fees paid by the Fund from the Fund assets attributable to the
Service Agent, and would not be imposed if shares of the Portfolio were pur-
chased directly from the Fund or the Distributor. The Service Agents may pro-
vide shareholder services to their customers that are not available to a
shareholder dealing directly with the Fund. A salesperson and any other person
entitled to receive compensation for selling or servicing Portfolio shares may
receive different compensation with respect to one particular class of shares
over another in the Fund.
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of the Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer
Agent prior to 4 p.m. to receive that day's share price. Proper payment for
the order must be received by the Sub-Transfer Agent no later than the time
when the Portfolio is priced on the following business day. Service Agents are
responsible to their customers and the Fund for timely transmission of all
subscription and redemption requests, investment information, documentation
and money.
15
<PAGE>
INITIAL INVESTMENT
BY MAIL
. Complete and sign an Application, and mail it along with a check payable
to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an
account at the next share price calculated for the Portfolio after receipt.
Payment does not need to be converted into Federal Funds (monies credited to
the Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will ac-
cept it for investment.
BY WIRE
. Telephone the UAM Funds Service Center and provide the name, address,
telephone number, social security or taxpayer identification number,
Portfolio selected, amount being wired, and the name of the bank wiring
the funds. An account number and a wire control number will be provided
to you. Next,
. instruct your bank to wire the specified amount to the Fund's custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
Credit DDA #9102772952
Ref: Portfolio Name__________
Your Account Name___________
Your Account Number___________
Wire Control Number___________
. Forward a completed Application to the UAM Funds Service Center. Federal
Funds purchases will be accepted only on days when the NYSE and the Cus-
todian Bank are open for business.
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check made payable to "UAM Funds" to the address above or by wiring money to
the Custodian Bank using the instructions outlined above. When making addi-
tional investments, be sure that the account name and number is identified on
the check or wire and the Portfolio to be purchased is specified.
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<PAGE>
Prior to wiring additional investments, notify the Fund by calling the num-
ber on the cover of this Prospectus. Mail orders should include, when possi-
ble, the "Invest by Mail" stub which accompanies any Fund confirmation state-
ment.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to suspend the offering of shares of each Portfolio or to reject pur-
chase orders when, in the judgment of management, such suspension or rejection
is in the best interests of the Fund. Purchases of a Portfolio's shares will
be made in full and fractional shares of the Portfolio calculated to three
decimal places. Certificates for fractional shares will not be issued. Certif-
icates for whole shares will not be issued except at the written request of
the shareholder.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by a Portfo-
lio in exchange for securities will be issued at net asset value determined as
of the same time. All dividends, interest, subscription, or other rights per-
taining to such securities shall become the property of the Portfolio and must
be delivered to the Fund by the investor upon receipt from the issuer. Securi-
ties acquired through an in-kind purchase will be acquired for investment and
not for immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be in-
cluded in the Portfolio (current market quotations must be readily
available for such securities);
. the investor represents and agrees that all securities offered to
be exchanged are liquid securities and not subject to any restric-
tions upon their sale by the Portfolio under the Securities Act of
1933, or otherwise; and
. the value of any such securities (except U.S. Government securi-
ties) being exchanged together with other securities of the same
issuer owned by the Portfolio will not exceed 5% of the net assets
of the Portfolio immediately after the transaction.
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of secu-
rities
17
<PAGE>
or local currency exchanged. Investors interested in such exchanges should
contact the Adviser.
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone, at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. No charge is made for redemptions. Any re-
demption may be more or less than the purchase price of your shares depending
on the market value of the investment securities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or stock assignment specifying the number
of shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which they are regis-
tered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required in the case of es-
tates, trusts, guardianships, custodianships, corporations, pension
and profit-sharing plans and other organizations.
BY TELEPHONE
In order to make a redemption request by telephone, you must:
. establish the telephone redemption privilege (and if desired, the
wire redemption privilege) by completing appropriate sections of
the Application; and
. call the Fund and instruct that the redemption proceeds be mailed
to you or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated
to receive redemption proceeds (this can be accomplished only by a
written request signed by each shareholder, with each signature
guaranteed);
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the
18
<PAGE>
investor to provide certain personal identification at the time an account is
opened, as well as prior to effecting each transaction requested by telephone.
In addition, all telephone transaction requests will be recorded and investors
may be required to provide additional telecopied written instructions of such
transaction requests. The Fund or Sub-Transfer Agent may be liable for any
losses due to unauthorized or fraudulent telephone instructions if the Fund or
the Sub-Transfer Agent does not employ the procedures described above. Neither
the Fund nor the Sub-Transfer Agent will be responsible for any loss, liabili-
ty, cost or expense for following instructions received by telephone that it
reasonably believes to be genuine.
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than
the registered shareholder(s)
. redemption where the proceeds are to be sent to an address which is
not the registered address; or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securi-
ties exchanges, registered securities associations, clearing agencies and sav-
ings associations. Broker-dealers guaranteeing signatures must be a member of
a clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after re-
ceipt of a request, or earlier if required under applicable law. The Fund may
suspend the right of redemption or postpone the date at times when both the
NYSE and Custodian Bank are closed, or under any emergency circumstances as
determined by the SEC.
If the Fund's Board of Trustees determines that it would be detrimental to
the best interests of the remaining shareholders of the Fund to make payments
wholly or partly in cash, the Fund may pay the redemption proceeds in whole or
in part by a distribution in-kind of liquid securities held by the Portfolio
in lieu of cash in conformity with applicable rules of the SEC. Investors may
incur brokerage charges when they sell portfolio securities received in pay-
ment of redemptions.
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<PAGE>
SHAREHOLDER SERVICES
EXCHANGE OF SHARES
Institutional Class Shares of the Portfolio may be exchanged for Institu-
tional Class Shares of any other Portfolio of the UAM Funds. (See the list of
Portfolios of the UAM Funds at the end of this Prospectus.) Exchange requests
should be made by contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you are interested. Exchanges can only be made with Portfolios that
are qualified for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES -- BY TELEPHONE". An ex-
change into another UAM Funds Portfolio is a sale of shares and may result in
a gain or loss for income tax purposes. The Fund may modify or terminate the
exchange privilege at any time.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets, less any liabilities, by the number of shares out-
standing. The net asset value per share of the Portfolio is determined as of
the close of the NYSE on each day that the NYSE is open for business.
Equity securities listed on a securities exchange for which market quota-
tions are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where
the security is primarily traded. Unlisted equity securities and listed secu-
rities not traded on the valuation date for which market quotations are read-
ily available are valued neither exceeding the current ask prices nor less
than the current bid prices. Quotations of foreign securities in a foreign
currency are converted to U.S. dollar equivalents. The converted value is
based upon the bid price of the foreign currency against U.S. dollars quoted
by any major bank or by a broker.
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<PAGE>
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating total return. Total return
figures are based on historical earnings and are not intended to indicate fu-
ture performance.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of time. An average annual total return is a hypothetical rate of re-
turn that, if achieved annually, would have produced the same cumulative total
return if performance had been constant over the entire period.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices as further de-
scribed in the Portfolio's SAI. This information may also be included in sales
literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or telephone number on the
cover of this Prospectus.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders in quarterly dividends. If any
net capital gains are realized, the Portfolio will normally distribute such
gains annually. All dividends and capital gains distributions will be automat-
ically reinvested in additional shares of the Portfolio unless the Fund is no-
tified in writing that the shareholder elects to receive distributions in
cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal in-
come tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends. To do this, the Portfolio must,
among
21
<PAGE>
other things, distribute substantially all of its ordinary income and net cap-
ital gains on an annual basis and maintain a portfolio of investments which
satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income.
Short-term capital gains will be taxed as ordinary income. Long-term capital
gains distributions are taxed as long-term capital gains. Shareholders will be
notified annually of dividend income earned for tax purposes.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid in January of the following year.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number you have provided is correct and that you
are not currently subject to backup withholding or that you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you. Consult a tax adviser for more information regarding deduc-
tions and credits for foreign taxes.
INVESTMENT ADVISER
Chicago Asset Management Company (the "Adviser") is a registered investment
adviser formed in 1983. Its business offices are located at 70 West Madison
Street, 56th Floor, Chicago, IL 60602. The Adviser is a wholly-owned subsidi-
ary of United Asset Management Corporation ("UAM") and provides and offers in-
vestment management and advisory services to corporations, unions, pensions
and profit-sharing plans, trusts, estates and other institutions and invest-
ors. The Adviser currently has over $2 billion in assets under management.
The Portfolio pays an annual fee in monthly installments to the adviser for
advisory services. This fee is accrued daily and paid monthly as a percentage
of the average daily net assets in the Portfolio for that month. The percent-
age fee on an annual basis is 0.625%.
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Distributor, UAM, the Adviser, or any of their affili-
ates, may,
22
<PAGE>
at its own expense, compensate a Service Agent or other person for marketing,
shareholder servicing, record-keeping and/or other services performed with re-
spect to the Fund, the Portfolio or any Class of Shares of the Portfolio. Pay-
ments for such services may be made out of the paying entities revenues, its
profits or any other source available to it. When such services arrangements
are in effect, they are made generally available to all qualified service
providers.
The investment professionals at the Adviser responsible for the day-to-day
management of the Portfolio and their qualifications are as follows:
<TABLE>
<C> <S>
Jon F. Holsteen, President, CEO and Chief Investment Officer
Education: Lake Forest College, BA
Experience: Founded Chicago Asset Management Company in 1983.
Kevin J. McGrath, Senior Vice President and Senior Portfolio Manager --
Equities
Education: Regis College, BA
St. Thomas College, MBA
Experience: Joined Chicago Asset Management Company in 1991. Vice
President, Smith Barney, Harris Upham, Inc. 1985-1991.
Donald G. Adams, Vice-President
Education: College of DuPage, AD
Experience: Joined Chicago Asset Management Company in 1996. Vice
President, Zurich Insurance 1986-1996.
</TABLE>
23
<PAGE>
ADVISER'S HISTORICAL PERFORMANCE
Below are certain performance data provided by the Adviser pertaining to the
composite of separately managed accounts of the Adviser that are managed with
substantially similar (although not necessarily identical) objectives, poli-
cies and strategies as those of the Portfolio. The performance data for the
managed accounts is net of all fees and expenses. The investment returns of
the Portfolio may differ from those of the separately managed accounts because
such separately managed accounts may have fees and expenses that differ from
those of the Portfolio. Further, the separately managed accounts are not sub-
ject to investment limitations, diversification requirements and other re-
strictions imposed by the Investment Company Act of 1940 and Internal Revenue
Code; such conditions, if applicable, may have lowered the returns for sepa-
rately managed accounts. The results presented are not intended to predict or
suggest the return to be experienced by the Portfolio or the return an in-
vestor might achieve by investing in the Portfolio.
CHICAGO ASSET MANAGEMENT COMPANY -- EQUITY + CASH COMPOSITE RETURNS
(Percentage Returns Net of Management Fees)
<TABLE>
<CAPTION>
CHICAGO
ASSET
MANAGEMENT
CALENDAR YEARS COMPANY S & P 500
-------------- ---------- ---------
<S> <C> <C>
1985....................................................... 36.1% 32.0%
1986....................................................... 21.9% 18.4%
1987....................................................... 4.7% 5.2%
1988....................................................... 26.4% 16.8%
1989....................................................... 21.5% 31.6%
1990....................................................... (8.1)% (3.2)%
1991....................................................... 29.3% 30.6%
1992....................................................... 14.4% 7.6%
1993....................................................... 13.4% 10.1%
1994....................................................... 7.6% 1.3%
1995....................................................... 30.3% 37.6%
1996....................................................... 15.0% 23.0%
3 Months ended 3/31/97..................................... (2.4)% 2.7%
Annualized through 3/31/97................................. 16.5% 16.7%
Cumulative through 3/31/97................................. 546.9% 566.1%
Twelve-Year Mean........................................... 17.7% 17.6%
Value of $1 invested during (1/1/85-3/31/97)............... $ 6.47 $ 6.66
</TABLE>
24
<PAGE>
CHICAGO ASSET MANAGEMENT COMPANY
EQUITY + CASH RETURNS FOR VARIOUS PERIODS ENDED 3/31/97
(Percentage Returns Net of Management Fees)
<TABLE>
<CAPTION>
PERIODS ENDED 3/31/97 ADVISER S&P 500
--------------------- ------- -------
<S> <C> <C>
One-year period................................................. 3.7% 19.8%
Three-year period (average annual).............................. 17.0% 22.3%
Five-year period (average annual)............................... 14.0% 16.4%
Ten-year period (average annual)................................ 12.5% 13.4%
</TABLE>
- -----------
Notes:
1. The ANNUALIZED return is calculated from monthly data, allowing for com-
pounding Market Value of the account was the sum of the account's total
assets, including cash, cash equivalents, short-term investments, and se-
curities valued at current market prices.
2. The CUMULATIVE RETURN means that $1 invested in the account on January 1,
1985 had grown to $6.47 by March 31, 1997
3. The 12-YEAR MEAN is the arithmetic average of the annual returns for the
calendar years listed.
4. The S&P 500 is an unmanaged index which assumes reinvestment of dividends
and is generally considered representative of securities similar to those
invested in by the Adviser for the purpose of the composite performance
numbers set forth above.
5. The Adviser's average annual management fee over the period shown (1/1/85-
3/31/97) was 0.40% or 40 basis points. During the period, fees on the Ad-
viser's individual accounts ranged from 0.25% to 1.00% (25 basis points to
100 basis points). Net returns to investors vary depending on the manage-
ment fee.
6. The equity + cash composite includes every separate discretionary equity
account as of 3/31/97. As of 3/31/97, this composite included all 39 eq-
uity portfolios, including the equity + cash portions of balanced ac-
counts, totaling $1.3 billion. Leverage has not been used in any portfo-
lios included in this composite. A list of all composites of the Adviser
is available upon request.
ADMINISTRATIVE SERVICES
UAMFSI, a wholly-owned subsidiary of United Asset Management Corporation, is
responsible for performing and overseeing administrative, fund accounting,
dividend disbursing and transfer agent services provided to the Fund and its
Portfolios. UAMFSI's principal office is located at 211 Congress Street, Bos-
ton, MA 02110. UAMFSI has subcontracted some of these services to Chase Global
Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan Bank, by
a Mutual Funds Service Agreement dated June 30, 1997. CGFSC is located at 73
Tremont Street, Boston, MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
25
<PAGE>
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
-----
<S> <C>
Chicago Asset Management Value/Contrarian Portfolio.................... 0.06%
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds' assets;
0.11 of 1% of the next $800 million of combined UAM Funds' assets;
0.07 of 1% of combined UAM Funds' assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Funds' assets in excess of $3 billion.
The UAM Funds' fees are allocated among the Portfolios on the basis of their
relative assets and are subject to a graduated minimum fee schedule per Port-
folio, which starts at $2,000 per month and increases to $70,000 annually af-
ter two years. If a separate class of shares is added to a Portfolio, its min-
imum annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM with its principal office
located at 211 Congress Street, Boston, Massachusetts 02110, distributes the
shares of the Fund. Under the Fund's Distribution Agreement, the Distributor,
as agent of the Fund, agrees to use its best efforts as sole distributor of
the Fund's shares. The Distributor does not receive any fee or other compensa-
tion under the Distribution Agreement with respect to this Portfolio. The
Agreement continues in effect as long as it is approved at least annually by
the Fund's Board of Trustees. Those approving the Agreement include a majority
of Trustees who are neither parties to the Agreement nor interested persons of
any such party. The Distribution Agreement provides that the Fund will bear
the costs of the registration of its shares with the SEC and various states
and the printing of its prospectuses, SAIs and reports to shareholders.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II." On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
26
<PAGE>
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and have no preference as to conversion, exchange, dividends, re-
tirement or other features and no pre-emptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees can elect 100% of the Trustees. A shareholder is en-
titled 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 of the
Fund.
As of June 16, 1997, UMBSC & Co. Interstate Brands Conservative Growth held
of record 55.6% of the outstanding shares of the Portfolio's Institutional
Class for which beneficial ownership is disclaimed or presumed disclaimed. The
persons or organizations owning 25% or more of the outstanding shares of the
Portfolio may be presumed to "control" (as that term is defined in the 1940
Act) the Portfolio. As a result, these persons or organizations could have the
ability to vote a majority of the shares of the Portfolio on any matter re-
quiring the approval of shareholders of the Portfolio.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the
holders of not less than 10% of the outstanding shares of the Fund. The Fund
will assist shareholder communications in such matters.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the address or telephone number listed on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE PORTFOLIO'S STATEMENT
OF ADDITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR ITS REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH OF-
FERING MAY NOT BE LAWFULLY MADE.
27
<PAGE>
UAM FUNDS -- INSTITUTIONAL CLASS SHARES
Acadian Emerging Markets Portfolio
Acadian International Equity Portfolio
BHM&S Total Return Bond Portfolio
Chicago Asset Management Intermediate Bond Portfolio
Chicago Asset Management Value/Contrarian Portfolio
C&B Balanced Portfolio
C&B Equity Portfolio
C&B Equity Portfolio for Taxable Investors
C&B Mid Cap Equity Portfolio
DSI Balanced Portfolio
DSI Disciplined Value Portfolio
DSI Limited Maturity Bond Portfolio
DSI Money Market Portfolio
FMA Small Company Portfolio
FPA Crescent Portfolio
Hanson Equity Portfolio
ICM Equity Portfolio
ICM Fixed Income Portfolio
ICM Small Company Portfolio
IRC Enhanced Index Portfolio
Jacobs International Octagon Portfolio
McKee Domestic Equity Portfolio
McKee International Equity Portfolio
McKee U.S. Government Portfolio
McKee Small Cap Equity Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Rice, Hall James Small Cap Portfolio
Rice, Hall James Small/Mid Cap Portfolio
Sirach Equity Portfolio
Sirach Fixed Income Portfolio
Sirach Growth Portfolio
Sirach Short-Term Reserves Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
SAMI Preferred Stock Income Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Short-Term Fixed Income Portfolio
Sterling Partners' Small Cap Portfolio
Sterling Partners' Small Cap Value Portfolio
TS&W Balanced Portfolio
TS&W Equity Portfolio
TS&W Fixed Income Portfolio
TS&W International Equity Portfolio
28
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Chicago Asset Management Company
70 West Madison Street 56th Floor
Chicago, IL 60602
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
FPA Crescent Portfolio
Institutional
Class Shares
July 10, 1997
P R O S P E C T U S
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses.............................................................. 1
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Financial Highlights....................................................... 5
Investment Objective....................................................... 6
Investment Policies........................................................ 6
Other Investment Policies.................................................. 8
Purchase of Shares......................................................... 15
Redemption of Shares....................................................... 18
Shareholder Services....................................................... 20
Valuation of Shares........................................................ 20
Performance Calculations................................................... 21
Dividends, Capital Gains Distributions and Taxes........................... 22
Investment Adviser......................................................... 23
Administrative Services.................................................... 24
Distributor................................................................ 25
General Information........................................................ 25
UAM Funds -- Institutional Class Shares.................................... 27
</TABLE>
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
FPA CRESCENT PORTFOLIO
INSTITUTIONAL CLASS SHARES
INVESTMENT ADVISER: FIRST PACIFIC ADVISORS, INC.
- -------------------------------------------------------------------------------
PROSPECTUS -- JULY 10, 1997
UAM Funds Trust (the "Fund") is an open-end investment company known as a
"mutual fund." The Fund consists of multiple series (known as Portfolios) each
of which has different investment objectives and policies. The FPA Crescent
Portfolio (the "Portfolio") offers two separate classes of shares: Institu-
tional Class Shares and Institutional Service Class Shares ("Service Class
Shares"). Shares of each class represent equal, pro rata interests in a Port-
folio and accrue dividends in the same manner except that Service Class Shares
bear fees payable by the class to financial institutions for services they
provide to the owners of such shares. The securities offered in this Prospec-
tus are Institutional Class Shares of one diversified, no-load Portfolio of
the Fund managed by First Pacific Advisors, Inc.
FPA CRESCENT PORTFOLIO. The FPA Crescent Portfolio's investment objective is
to provide, through a combination of income and capital appreciation, a total
return consistent with reasonable risk. The Portfolio seeks to achieve its ob-
jective by investing primarily in equity securities (common and preferred
stocks) and fixed income obligations.
There can be no assurance that the Portfolio will achieve its objective.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A Statement of Additional Information ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Institutional Class Shares would incur. Transaction fees may be
charged if a broker-dealer or other financial intermediary deals with the Fund
on your behalf. (See "PURCHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases....................................... NONE
Sales Load Imposed on Reinvested Dividends............................ NONE
Deferred Sales Load................................................... NONE
Redemption Fees....................................................... NONE
Exchange Fees......................................................... NONE
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Investment Advisory Fees:............................................. 1.00%
Administrative Fees:.................................................. 0.15%
12b-1 Fees: (Including Shareholder Servicing Fees).................... NONE
Other Expenses:....................................................... 0.39%
----
Total Operating Expenses:............................................. 1.54%*
====
</TABLE>
- -----------
* The Adviser has voluntarily agreed to waive all or a portion of its advisory
fees and to assume operating expenses to keep the Portfolio's Institutional
Class Shares' total annual operating expenses (excluding interest, taxes and
extraordinary expenses), after the effect of expense offsets, from exceeding
1.85% of average daily net assets until further notice.
The table above shows various fees and expenses an investor would bear di-
rectly or indirectly. The fees and expenses set forth above are based upon the
Portfolio's operations during the fiscal year ended March 31, 1997, except
that they have been restated to reflect current administrative fees.
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. The Portfolio
charges no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Expenses..................................... $16 $49 $84 $183
</TABLE>
1
<PAGE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN ABOVE.
The information set forth in the above table and example relates only to In-
stitutional Class Shares of the Portfolio, which shares are subject to differ-
ent total fees and expenses than Service Class Shares. Broker-dealers or other
financial intermediaries ("Service Agents") may charge fees to their customers
who are beneficial owners of Institutional Class Shares in connection with
their customer accounts. (See "OTHER PURCHASE INFORMATION.")
2
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
First Pacific Advisors, Inc. (the "Adviser") acts as the Portfolio's Adviser
and has its origins dating back to 1954. It currently has over $4.0 billion in
assets under management. The Adviser is an indirect wholly-owned subsidiary of
United Asset Management Corporation ("UAM"). (See "INVESTMENT ADVISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion, to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment is $2,500. The minimum for subsequent investments is $100.
The minimum initial investment for IRA accounts is $1,000. Certain exceptions
to the initial or minimum investment amounts may be made by the officers of
the Fund. (See "PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in the form of dividends in June and December. Any realized net
capital gains will also be distributed annually or more often. Distributions
will be reinvested in the Portfolio's shares automatically unless an investor
elects to receive cash distributions. (See "DIVIDENDS, CAPITAL GAINS DISTRIBU-
TIONS AND TAXES.")
REDEMPTIONS AND EXCHANGES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See "REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of United As-
set Management Corporation, is responsible for performing and overseeing ad-
ministration, fund accounting, dividend disbursing and transfer agency serv-
ices provided to the Fund and its Portfolios by third-party service providers.
(See "ADMINISTRATIVE SERVICES.")
3
<PAGE>
RISK FACTORS
Prospective investors should understand that the Portfolio's performance
will be affected by a variety of factors since it invests in both stocks and
fixed-income securities. The value of the Portfolio's investments will vary
from day to day, generally reflecting global market, economic and political
developments; conditions in global and national markets; changes in currency
exchange rates; factors affecting individual stocks in the Portfolio; and
shifts in interest rates.
. The Portfolio may invest significantly in lower rated fixed-income secu-
rities, which typically offer higher coupon interest rates than invest-
ment grade securities, but also involve greater risks of default and
market volatility. Such securities are sometimes referred to as "junk
bonds" and are considered speculative by rating agencies.
. The Portfolio may engage in short sales of securities, which involve the
risk of loss if the securities increase in price between when the Port-
folio sells them short and repurchases them.
. The Portfolio may invest in repurchase agreements which entail a risk of
loss should the seller default on its transaction.
. The Portfolio may lend its investment securities which entails a risk of
loss should a borrower fail financially.
. The Portfolio may purchase securities on a when-issued basis which do
not earn interest until issued and may decline or appreciate in market
value prior to their delivery to the Portfolio.
. The Portfolio may engage in various hedging, currency and related strat-
egies to seek to hedge its investments against movements in security
prices, interest rates, and exchange rates by the use of derivatives,
including forward contracts, options and futures as well as options on
futures. These strategies involve the risk of imperfect correlation in
movements in the price of options and futures and movements in the price
of securities, interest rates or currencies which are the subject of the
hedge. These transactions are also subject to the risk factors associ-
ated with foreign investments generally. There can be no assurance that
a liquid secondary market for these hedging techniques will exist at any
specific time.
. The Portfolio may enter into interest rate hedging strategies commonly
referred to as derivatives which, if employed incorrectly, may adversely
affect the Portfolio.
Further information about each of the above risk factors and others is con-
tained in the "INVESTMENT POLICIES" section of this Prospectus.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following information has been audited by Tait, Weller & Baker, indepen-
dent accountants, for the fiscal years ended 1994, 1995 and 1996, and by Price
Waterhouse LLP for the fiscal year ended March 31, 1997. The unqualified re-
port covering the year ended March 31, 1997 is incorporated herein and appears
in the 1997 Annual Report to Shareholders. This information should be read in
conjunction with the financial statements and accompanying notes which appear
in the 1997 Annual Report. The Report is incorporated into the SAI. Further
information about the Portfolio's performance is contained in its Annual Re-
port, which may be obtained without charge by writing or calling the address
or telephone number on the Prospectus cover page.
<TABLE>
<CAPTION>
JUNE 2, 1993+
TO YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1994 1995 1996 1997
------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD......................... $10.00 $10.96 $11.23 $ 12.67
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income.......... .13 .21 .40 .31
Net Realized and Unrealized
Gain on Investments........... .99 .77 2.29 2.16
------ ------ ------ -------
Total From Investment
Operations.................... 1.12 .98 2.69 2.47
------ ------ ------ -------
LESS DISTRIBUTIONS
Dividends from net investment
income........................ (.10) (.18) (.37) (.34)
Distributions from net capital
gains......................... (.06) (.53) (.88) (1.34)
------ ------ ------ -------
Total distributions............ (.16) (.71) (1.25) (1.68)
------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD.. $10.96 $11.23 $12.67 $ 13.46
====== ====== ====== =======
TOTAL RETURN.................... 11.40%** 9.35% 24.71% 20.61%
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD
(MILLIONS)..................... $ 10.2 $ 16.0 $ 22.0 $ 65.6
RATIO OF EXPENSES TO AVERAGE NET
ASSETS:
Before expense reimbursements.. 1.86%* 1.65% 1.59% 1.60%
After expense reimbursements... 1.85%* 1.65% 1.59% 1.57%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS:
Before expense reductions...... 1.60%* 2.16% 3.35% 2.77%
After expense reductions....... 1.61%* 2.16% 3.35% 2.80%
Portfolio Turnover Rate......... 89% 101% 100% 45%
Average Commission Rate#........ N/A N/A N/A $0.0521
</TABLE>
- -----------
* Annualized.
** Not Annualized.
+ Commencement of Operations.
# For fiscal years ending on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
5
<PAGE>
INVESTMENT OBJECTIVE
The investment objective of the Portfolio is to provide, through a combina-
tion of income and capital appreciation, a total return consistent with rea-
sonable investment risk. The Portfolio seeks to achieve its objective by in-
vesting in a combination of equity securities and fixed income obligations.
There is, of course, no assurance that the Portfolio's objective will be
achieved. Because prices of common stocks and fixed-income securities fluctu-
ate, the value of an investment in the Portfolio will vary, as the market
value of its investment portfolio changes.
The Portfolio actively seeks value in all parts of a company's capital
structure, including common and preferred stocks, as well as corporate and
convertible bonds. The Portfolio will typically have between 50% and 70% of
its total assets invested in equity securities with the balance comprised of
fixed-income securities and cash and equivalents.
INVESTMENT POLICIES
EQUITY SECURITIES. The Adviser utilizes a contrarian investment style, which
often leads the Adviser to invest in "what other people do not wish to own."
The Adviser searches for common stocks, preferred stocks, warrants and con-
vertible securities that reflect low price/earnings ratios (P/Es) and trade at
discounts to private market value.
The Adviser selects equity securities for the Portfolio which it believes
offer superior investment value. The Adviser deems the following important in
its stock selection process:
.High return on capital
.Solid balance sheet
.Meaningful cash flow
.Active share repurchase program
.Insider buying
.Superior management seeking to maximize shareholder value
.Projected earnings growth exceeding the stock market average
In the Adviser's view, the stock market prices securities efficiently in the
long term, rewarding companies which successfully grow their earnings and pe-
nalizing those which do not. The Adviser's investment philosophy is based on
the conviction that the market valuation of securities is often inefficient in
the short-term. When reacting to current economic or company information, in-
vestors frequently make purchase or sale decisions hastily. These decisions
could cause a particular security, industry group or the entire market to be-
come underpriced or overpriced in the short-term thereby creating an excellent
opportunity to either buy or sell.
6
<PAGE>
This contrarian style leads to those investments that offer absolute value,
rather than relative value. Absolute value is an investment that trades at
substantial discount to private market value, rather than one that might ap-
pear inexpensive based on a discount to its peer group or the market average.
Attention is directed toward those companies offering the best combination of
such quality criteria as strong market share, good management and high normal-
ized return on capital. A company purchased might not look inexpensive, con-
sidering current earnings and return on capital; however, this may reflect
such conditions as a weak economy, an increase in their raw material costs,
poor management, or any number of other temporary considerations. The price
drops caused by such developments can and often do provide buying opportuni-
ties.
Intensive research identifies these opportunities. The process includes
looking for ideas by reviewing stock price or industry group under-perfor-
mance, insider purchases, management changes and corporate spin-offs. Funda-
mental analysis is the foundation of the Adviser's investment approach. Re-
searching a prospective investment involves communicating directly with com-
pany management, suppliers, and customers, better defining future potential,
financial strength and the company's competitive position. Fundamental analy-
sis provides a thorough view of financial and business characteristics, al-
lowing for the determination of absolute value.
In addition to common stocks, equity securities purchased for the Portfolio
may include preferred stocks, convertible preferred stocks and warrants.
FIXED-INCOME OBLIGATIONS. Through fixed-income investments, the Adviser
seeks a reliable and recurring stream of income for the Portfolio, while pre-
serving its capital. The Adviser attempts to identify the current interest
rate trends and invests funds accordingly. Usually, a defensive interest rate
strategy is employed, with investments made at different points along the
yield curve in an attempt to keep the average maturity of fixed-income invest-
ments less than or equal to ten years.
The Adviser's approach is to invest in U.S. Treasury obligations, U.S. Gov-
ernment Agency and mortgage-backed securities, and corporate and convertible
bonds. The Adviser considers yield spread relationships and their underlying
factors such as credit quality, investor perception and liquidity on a contin-
uous basis to determine which sector offers the best investment value. When
combined with equity securities, the ownership of fixed-income securities not
only broadens the universe of opportunities, but offers additional diversifi-
cation and can help lower portfolio volatility.
The Adviser may invest in corporate bonds with yields substantially higher
than those of government securities. Opportunities frequently present them-
selves in parts of the capital structure of a company beyond common and pre-
ferred stock,
7
<PAGE>
including convertible and high yield bonds. Generally, these investments pro-
vide a return in excess of government securities and can provide potential for
capital appreciation. Historic returns for high yield bonds have been greater
than government securities. The Adviser's analysis includes studying interest
expense coverage, business value/debt coverage and current business trends.
The Portfolio may purchase investment grade corporate debt securities. Secu-
rities rated BBB by Standard & Poor's Corporation ("S&P") or Moody's Investor
Service ("Moody's") are investment grade, but Moody's considers securities
rated Baa to have speculative characteristics. Changes in economic conditions
or other circumstances are more likely to lead to a weakened capacity for such
securities to make principal and interest payments than is the case for high-
er-rated debt securities.
OTHER INVESTMENT POLICIES
LOWER RATED SECURITIES. The Portfolio may invest in debt securities that are
rated below investment grade, but will limit that investment to no more than
30% of its total assets. Such securities, sometimes referred to as "junk
bonds," typically carry higher coupon rates than investment grade securities
but also involve higher risks and are described as speculative by both Moody's
and S&P. They may be subject to greater market price fluctuations, less li-
quidity, and greater risk of income or principal, including a greater possi-
bility of default or bankruptcy of the issuer of such securities, than are
more highly rated debt securities. Lower rated fixed income securities also
are likely to be more sensitive to adverse economic or company developments
and more subject to price fluctuations in response to changes in interest
rates. The market for lower-rated debt issues generally is thinner and less
active than that for higher quality securities, which may limit the Portfo-
lio's ability to sell such securities at fair value in response to changes in
the economy or financial markets.
The Adviser seeks to reduce the risk associated with investing in such secu-
rities by limiting the Portfolio's holdings in such securities and by the
depth of its own credit analysis. In selecting below investment grade securi-
ties, the Adviser seeks securities in companies with improving cash flows and
balance sheet prospects, whose credit ratings the Adviser views as likely to
be upgraded. The Adviser believes that such securities can produce returns
similar to equities, but with less risk. See the SAI for further discussion of
lower rated securities.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements in
order to earn additional income on available cash, or as a defensive invest-
ment in periods when the Fund is primarily in short-term maturities. A repur-
chase agreement is a short-term investment in which the purchaser (i.e., the
Portfolio) acquires ownership of a security (which may be of any maturity) and
the seller agrees to repurchase that obligation at a future time at a set
price, thereby
8
<PAGE>
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in
which the Portfolio engages will require full collateralization of the sell-
er's obligation during the entire term of the repurchase agreement. In the
event of a bankruptcy or other default of the seller, the Portfolio could ex-
perience both delays in liquidating the underlying security and losses in val-
ue. However, the Portfolio intends to enter into repurchase agreements only
with banks with assets of $500 million or more that are insured by the Federal
Deposit Insurance Corporation and the most creditworthy registered securities
dealers pursuant to procedures adopted and regularly reviewed by the Fund's
Board of Trustees. The Adviser monitors the creditworthiness of the banks and
securities dealers with whom the Portfolio engages in repurchase transactions.
The Fund has received permission from the SEC to pool daily uninvested cash
balances of the Fund's Portfolios in order to invest in repurchase agreements
on a joint basis. By entering into joint repurchase agreements, the Portfolio
may incur lower transaction costs and earn higher rates of interest on joint
repurchase agreements. The Portfolio's contribution would determine its return
from a joint repurchase agreement.
ILLIQUID AND RESTRICTED SECURITIES. The Portfolio may not invest more than
15% of its net assets in illiquid securities, including (i) securities for
which there is no readily available market; (ii) securities the disposition of
which would be subject to legal restrictions (so-called "restricted securi-
ties"); and (iii) repurchase agreements having more than seven days to maturi-
ty. A considerable period of time may elapse between the Portfolio's decision
to dispose of such securities and the time when the Portfolio is able to dis-
pose of them, during which time the value of the securities could decline. Re-
stricted securities do not include those which meet the requirements of Secu-
rities Act Rule 144A and which the Trustees have determined to be liquid based
on the applicable trading markets.
FOREIGN SECURITIES. The Portfolio may invest up to 20% of its total assets
in securities of foreign issuers. The Adviser usually buys securities of
larger foreign companies that have well recognized franchises and are selling
at a discount to the securities of similar domestic businesses.
There may be less publicly available information about these issuers than is
available about companies in the U.S. and foreign auditing requirements may
not be comparable to those in the U.S. In addition, the value of the foreign
securities may be adversely affected by movements in the exchange rates be-
tween foreign currencies and the U.S. dollar, as well as other political and
economic developments, including the possibility of expropriation, confisca-
tory taxation, exchange controls or other foreign governmental restrictions.
The Portfolio may also invest without limit in securities of foreign issuers
which are listed on a domestic national securities exchange.
9
<PAGE>
SHORT SALES. The Portfolio may engage in short sales of securities. In a
short sale, the Portfolio sells stock which it does not own, making delivery
with securities "borrowed" from a broker. The Portfolio is then obligated to
replace the security borrowed by purchasing it at the market price at the time
of replacement. This price may or may not be less than the price at which the
security was sold by the Portfolio. Until the security is replaced, the Port-
folio is required to pay to the lender any dividends or interest which accrue
during the period of the loan. In order to borrow the security, the Portfolio
may also have to pay a fee which would increase the cost of the security sold.
The proceeds of the short sale will be retained by the broker, to the extent
necessary to meet margin requirements, until the short position is closed out.
The Portfolio also must deposit in a segregated account an amount of cash or
liquid assets equal to the difference between (a) the market value of the se-
curities sold short at the time they were sold short and (b) the value of the
collateral deposited with the broker in connection with the short sale (not
including the proceeds from the short sale). While the short position is open,
the Portfolio must maintain daily the segregated account at such a level that
(1) the amount deposited in it plus the amount deposited with the broker as
collateral equals the current market value of the securities sold short and
(2) the amount deposited in it plus the amount deposited with the broker as
collateral is not less than the market value of the securities at the time
they were sold short.
The Portfolio will incur a loss as a result of the short sale if the price
of the security increases between the date of the short sale and date on which
the Portfolio replaces the borrowed security. The Portfolio will realize a
gain if the security declines in price between those dates. The amount of any
gain will be decreased and the amount of any loss will be increased by any in-
terest the Portfolio may be required to pay in connection with the short sale.
The dollar amount of short sales at any one time (not including short sales
against the box) may not exceed 25% of the net assets of the Portfolio.
A short sale is "against-the-box" if at all times when the short position is
open the Portfolio owns an equal amount of the securities or securities con-
vertible into, or exchangeable without further consideration for, securities
of the same issue as the securities sold short. Such a transaction serves to
defer a gain or loss for Federal income tax purposes.
OPTIONS AND FUTURES. The Portfolio may purchase and write call and put op-
tions on securities, securities indexes and on foreign currencies, and enter
into futures contracts and use options on futures contracts. The Portfolio may
use these techniques to hedge against changes in interest rates, foreign cur-
rency exchange rates or securities prices or as part of its overall investment
strategies. The Portfolio is subject to regulatory limitations on the use of
such techniques and is required to maintain segregated accounts consisting of
cash or liquid securities (or, as permit-
10
<PAGE>
ted by applicable regulation, enter into certain offsetting positions) to
cover its obligations under options and futures contracts to avoid leveraging
of the Portfolio.
The Portfolio may buy or sell interest rate futures contracts, options on
interest rate futures contracts and options on debt securities for the purpose
of hedging against changes in the value of securities which the Fund owns or
anticipates purchasing due to anticipated changes in interest rates. The Port-
folio also may engage in currency exchange transactions by means of buying or
selling foreign currency on a spot basis, entering into foreign currency for-
ward contracts, and buying and selling foreign currency options, futures and
options on futures. Foreign currency exchange transactions may be entered into
for the purpose of hedging against foreign currency exchange risk arising from
the Portfolio's investment or anticipated investment in securities denominated
in foreign currencies.
See the SAI for further information regarding characteristics of and risks
involved in the use of these instruments.
U.S. GOVERNMENT SECURITIES. The Portfolio may invest in U.S. Government se-
curities. U.S. Government securities include direct obligations issued by the
U.S. Treasury, such as Treasury bills, certificates of indebtedness, notes and
bonds. U.S. Government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal National Mortgage As-
sociation ("FNMA"), Government National Mortgage Association ("GNMA"), Federal
Home Loan Bank, Federal Financing Bank, and Student Loan Marketing Associa-
tion.
All Treasury securities are backed by the full faith and credit of the
United States. Obligations of U.S. Government agencies and instrumentalities
may or may not be supported by the full faith and credit of the United States.
Some, such as the Federal Home Loan Bank, are backed by the right of the
agency or instrumentality to borrow from the Treasury. Others, such as securi-
ties issued by the Federal National Mortgage Association, are supported only
by the credit of the instrumentality and not by the Treasury. If the securi-
ties are not backed by the full faith and credit of the United States, the
owner of the securities must look principally to the agency issuing the obli-
gation for repayment and may not be able to assert a claim against the United
States in the event that the agency or instrumentality does not meet its com-
mitment.
MORTGAGE-RELATED SECURITIES. Mortgage pass-through securities are securities
representing interests in pools of mortgages in which payments of both inter-
est and principal on the securities are generally made monthly, in effect
"passing through" monthly payments made by the individual borrowers on the
residential mortgage loans which underlie the securities (net of fees paid to
the issuer or guarantor of the securities). Early repayment of principal on
mortgage pass-through securities (arising from prepayments of principal due to
the sale of underlying
11
<PAGE>
property, refinancing, or foreclosure, net of fees and costs which may be in-
curred) may expose a Portfolio to a lower rate of return upon reinvestment of
principal. Also, if a security subject to repayment has been purchased at a
premium, in the event of prepayment the value of the premium would be lost.
As noted above, payment of principal and interest on some mortgage related
securities (but not the market value of the securities themselves) may be
guaranteed by the full faith and credit of the U.S. Government (in the case of
securities guaranteed by GNMA), by agencies or instrumentalities of the U.S.
Government (in the case of securities guaranteed by FNMA or the Federal Home
Loan Mortgage Corporation ("FHLMC"), which are supported only by the discre-
tionary authority of the U.S. Government to purchase the agency's obliga-
tions). Mortgage pass-through securities created by non-governmental issuers
(such as commercial banks, savings and loan institutions, private mortgage in-
surance companies, mortgage bankers and other secondary market issuers) may be
supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance, and letters of credit, which may be
issued by governmental entities, private insurers or the mortgage poolers.
Collateralized mortgage obligations ("CMOs") are hybrid instruments with
characteristics of both mortgage-backed bonds and mortgage pass-through secu-
rities. Similar to a bond, interest and prepaid principal on a CMO are paid,
in most cases, semi-annually. CMOs may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of mortgage pass-
through securities guaranteed by GNMA, FHLMC, or FNMA. CMOs are structured
into multiple classes, with each class bearing a different stated maturity.
Monthly payments of principal, including prepayments, are first returned to
investors holding the shortest maturity class. Investors holding the longer
maturity classes receive principal only after the first class has been re-
tired. Other mortgage-related securities include those that directly or indi-
rectly represent a participation in or are secured by and payable from mort-
gage loans on real property, such as CMO residuals or stripped mortgage-backed
securities, and may be structured in classes with rights to receive varying
proportions of principal and interest.
PORTFOLIO TURNOVER. Generally, the annual portfolio turnover rate is not ex-
pected to exceed 100%. In general, the Adviser will not consider the rate of
portfolio turnover to be a limiting factor in determining when or whether to
purchase or sell securities in order to achieve the Portfolio's objective. The
table set forth in "Financial Highlights" presents the Portfolio's historical
turnover rates. High rates of portfolio turnover necessarily result in corre-
spondingly heavier brokerage and portfolio trading costs which are paid by the
Portfolio. In addition to portfolio trading costs, higher rates of portfolio
turnover may result in the realization of capital gains. To the extent net
short-term capital gains are realized, any distributions resulting from such
gains are considered ordinary income for federal income
12
<PAGE>
tax purposes. See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES" for more
information on taxation.
SHORT-TERM INVESTMENTS. In order to earn a return on uninvested assets, meet
anticipated redemptions, or for temporary defensive purposes, the Portfolio
may invest a portion of its assets in domestic and foreign money market in-
struments including certificates of deposit, bankers' acceptances, time depos-
its, U.S. Government obligations, U.S. Government agency securities, short-
term corporate debt securities, and commercial paper rated A-1 or A-2 by S&P
or Prime-1 or Prime-2 by Moody's or if unrated, determined by the Adviser to
be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in
other currencies, (ii) in the case of U.S. banks, it is a member of the Fed-
eral Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an invest-
ment quality comparable with other debt securities which may be purchased by
the Portfolio.
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's
Portfolios, as well as cash for investment purposes, into one or more joint
accounts and to invest the daily balance of the joint accounts in the
following short-term investments: fully collateralized repurchase agreements,
interest-bearing or discounted commercial paper including dollar-denominated
commercial paper of foreign issuers, and any other short-term money market
instruments including variable rate demand notes and other tax-exempt money
instruments. By entering into these investments on a joint basis, it is
expected that a Portfolio may earn a higher rate of return on investments
relative to what it could earn individually.
The Fund has received an Order from the SEC, which permits each of its Port-
folios to invest the greater of 5% of its total assets or $2.5 million in the
UAM Funds' DSI Money Market Portfolio for cash management purposes. (See "IN-
VESTMENT COMPANIES.")
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES. The Portfo-
lio may purchase and sell securities on a "when-issued," "delayed settlement,"
or "forward delivery" basis. "When-issued" or "forward delivery" refers to se-
curities whose terms and indenture are available, and for which a market ex-
ists, but which are not available for immediate delivery. When-issued and for-
ward delivery transactions may be expected to occur a month or more before de-
livery is due. "Delayed settlement" is a term used to describe settlement of a
13
<PAGE>
securities transaction in the secondary market which will occur sometime in
the future. No payment or delivery is made by the Portfolio until it receives
delivery or payment from the other party to any of the above transactions. It
is possible that the market price of the securities at the time of delivery
may be higher or lower than the purchase price. The Portfolio will maintain a
separate account of cash or liquid securities at least equal to the value of
the purchase commitments until payment is made. Typically, no income accrues
on securities purchased on a delayed delivery basis prior to the time delivery
of the securities is made although the Portfolio may earn income on securities
it has deposited in a segregated account.
The Portfolio engages in these types of purchases in order to buy securities
that fit with its investment objectives at attractive prices--not to increase
its investment leverage.
Securities purchased on a when-issued basis may decline or appreciate in
market value prior to their actual delivery to the Portfolio.
LENDING OF PORTFOLIO SECURITIES. The Portfolio may lend its investment secu-
rities to qualified institutional investors as a means of earning income. The
Portfolio will not loan portfolio securities to the extent that greater than
one-third of its assets at fair market value, would be committed to loans. By
lending its investment securities, the Portfolio attempts to increase its in-
come through the receipt of interest on the loan. Any gain or loss in the mar-
ket price of the securities loaned that might occur during the term of the
loan would be for the account of the Portfolio. All relevant facts and circum-
stances, including the creditworthiness of the broker, dealer or institution,
will be considered in making decisions with respect to the lending of securi-
ties, subject to review by the Fund's Board of Trustees.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by the investment company's Board of Trustees. The Portfolio will
continue to retain any voting rights with respect to the loaned securities. If
a material event occurs affecting an investment on loan, the loan must be
called and the securities voted.
INVESTMENT COMPANIES. As permitted by the 1940 Act, the Portfolio reserves
the right to invest up to 10% of its total assets, calculated at the time of
investment, in the securities of other open-end or closed-end investment com-
panies. No more than 5% of the investing Portfolio's total assets may be in-
vested in the securities of any one investment company nor may it acquire more
than 3% of the voting securities of any other investment company. The Portfo-
lio will indirectly bear its proportionate share of any management fees paid
by an investment company in which it invests in addition to the advisory fee
paid by the Portfolio.
14
<PAGE>
The Fund has received an Order from the SEC, which permits each of its Port-
folios to invest the greater of 5% of its total assets or $2.5 million in the
UAM Funds' DSI Money Market Portfolio for cash management purposes provided
that the investment is consistent with the Portfolio's investment policies and
restrictions. Based upon the Portfolio's assets invested in the DSI Money Mar-
ket Portfolio, the investing Portfolio's adviser will waive its investment ad-
visory fee and any other fees earned as a result of the Portfolio's investment
in the DSI Money Market Portfolio. The investing Portfolio will bear expenses
of the DSI Money Market Portfolio on the same basis as all of its other share-
holders.
The Portfolio has adopted certain investment restrictions, which are de-
scribed fully in the SAI. Like the Portfolio's investment objective, several
of these restrictions are fundamental and may be changed only by a majority
vote of the Portfolio's outstanding shares.
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), without a sales commission at the net asset value per share
next determined after an order is received by the Fund and payment is received
by the Custodian. (See "VALUATION OF SHARES.") The minimum initial investment
required is $2,500. The minimum initial investment for IRA accounts is $1,000.
Certain exceptions may be made by the officers of the Fund.
Shares of the Portfolio may be purchased by customers of broker-dealers or
other financial intermediaries ("Service Agents") which have established a
shareholder servicing relationship with the Fund on behalf of their customers.
Service Agents may impose additional or different conditions on purchases or
redemptions of Portfolio shares and may charge transaction or other account
fees. Each Service Agent is responsible for transmitting to its customers a
schedule of any such fees and information regarding additional or different
purchase or redemption conditions. Shareholders who are customers of Service
Agents should consult their Service Agent for information regarding these fees
and conditions. Amounts paid to Service Agents may include transaction fees
and/or service fees paid by the Fund from the Fund assets attributable to the
Service Agent, which would not be imposed if shares of the Portfolio were pur-
chased directly from the Fund or the Distributor. Service Agents may provide
shareholder services to their customers that are not available to a share-
holder dealing directly with the Fund. A salesperson and any other person en-
titled to receive compensation for selling or servicing Portfolio shares may
receive different compensation with respect to one particular class of shares
over another in the Fund.
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of a Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York
15
<PAGE>
Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer Agent
prior to 4 p.m. to receive that day's share price. Proper payment for the or-
der must be received by the Sub-Transfer Agent no later than the time when the
Portfolio is priced on the following business day. Service Agents are respon-
sible to their customers and the Fund for timely transmission of all subscrip-
tion and redemption requests, investment information, documentation and money.
INITIAL INVESTMENTS
BY MAIL
. Complete and sign an Application and mail it together with a check made
payable to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment.
BY WIRE
. Telephone the UAM Funds Service Center and provide the account name, ad-
dress, telephone number, social security or taxpayer identification num-
ber, Portfolio selected, amount being wired and the name of the bank
wiring the funds. An account number will then be provided to you. Next,
. instruct your bank to wire the specified amount to the Fund's Custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
DDA Acct. #9102772952
Ref: Portfolio Name ____________________
Your Account Number _____________________
Your Account Name _____________________
Wire Control Number _____________________
. Forward a completed Application to the Fund at the address shown on the
form. Federal Funds purchases will be accepted only on a day on which
both the NYSE and the Custodian Bank are open for business.
16
<PAGE>
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check made payable to "UAM Funds" to the above address or by wiring money to
the Custodian Bank using the instructions outlined above. When making addi-
tional investments, be sure that the account number, account name and the
Portfolio to be purchased are identified on the check or wire. Prior to wiring
additional investments, notify the UAM Funds Service Center by calling the
number on the cover of this Prospectus. Mail orders should include, when pos-
sible, the "Invest by Mail" stub which accompanies any Fund confirmation
statement.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to suspend the offering of shares of the Portfolio or to reject pur-
chase orders when, in the judgment of management, such suspension or rejection
is in the best interests of the Fund. Purchases of the Portfolio's shares will
be made in full and fractional shares of the Portfolio calculated to three
decimal places. Certificates for fractional shares will not be issued. Certif-
icates for whole shares will not be issued except at the written request of
the shareholder.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by the Port-
folio in exchange for securities will be issued at net asset value determined
as of the same time. All dividends, interest, subscription, or other rights
pertaining to such securities shall become the property of the Portfolio and
must be delivered to the Fund by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for invest-
ment and not for immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be included in
the Portfolio (current market quotations must be readily available for
such securities);
. the investor represents and agrees that all securities offered to be ex-
changed are liquid securities and not subject to any restrictions upon
their sale by the Portfolio under the Securities Act of 1933, or other-
wise; and
17
<PAGE>
. the value of any such securities (except U.S. Government securities) be-
ing exchanged together with other securities of the same issuer owned by
the Portfolio will not exceed 5% of the net assets of the Portfolio im-
mediately after the transaction.
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of secu-
rities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. Any redemption may be more or less than the
purchase price of the shares depending on the market value of investment secu-
rities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of shares
or dollar amount to be redeemed, signed by all registered owners of the
shares in the exact names in which they are registered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of es-
tates, trusts, guardianships, custodianships, corporations, pension and
profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the wire
redemption privilege) by completing appropriate sections of the Applica-
tion; and
. call the Fund and instruct that the redemption proceeds be mailed to you
or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated to
receive redemption proceeds (this can be accomplished only by a written
request signed by each shareholder, with each signature guaranteed); and
18
<PAGE>
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the investor to provide certain personal identification at the time an
account is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded
and investors may be required to provide additional telecopied written in-
structions of such transaction requests. The Fund or Sub-Transfer Agent may be
liable for any losses due to unauthorized or fraudulent telephone instructions
if the Fund or the Sub-Transfer Agent do not employ the procedures described
above. Neither the Fund nor the Sub-Transfer Agent will be responsible for any
loss, liability, cost or expense for following instructions received by tele-
phone that it reasonably believes to be genuine.
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than the
registered shareowner(s);
. redemptions where the proceeds are to be sent to someplace other than
the registered address; or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securi-
ties exchanges, registered securities associations, clearing agencies and sav-
ings associations. Broker-dealers guaranteeing signatures must be a member of
a clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after the
receipt of the request, or earlier if required under applicable law. The Fund
may suspend the right of redemption or postpone the date at times when both
the NYSE and Custodian Bank are closed, or under any emergency circumstances
determined by the SEC.
If the Board of Trustees determines that it would be detrimental to the best
interests of remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay redemption proceeds in whole or in part by a
distribution in-kind of liquid securities held by the Portfolio in lieu of
cash in conformity with
19
<PAGE>
applicable rules of the SEC. Investors may incur brokerage charges on the sale
of portfolio securities received in payment of redemptions.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for Institu-
tional Class Shares of any other UAM Funds Portfolio. (See the list of Portfo-
lios of the UAM Funds at the end of this Prospectus.) Exchange requests should
be made by contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you are interested. Exchanges can only be made with Portfolios that
are qualified for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES -- BY TELEPHONE." An ex-
change into another UAM Funds Portfolio is a sale of shares and may result in
a gain or loss for income tax purposes. The Fund may modify or terminate the
exchange privilege at any time.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets attributable to the class, less any liabilities attrib-
utable to the class, by the number of shares outstanding attributable to the
class. The net asset value per share of the Portfolio is determined as of the
close of the NYSE on each day that the NYSE is open for business.
Equity securities listed on a securities exchange for which market quota-
tions are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where
the security is primarily traded. Unlisted equity securities and listed secu-
rities not traded on the valuation date are valued neither exceeding the cur-
rent ask prices nor less than the current bid prices. The prices for securi-
ties denominated in a foreign currency are
20
<PAGE>
converted to U.S. dollars based upon the bid price of the foreign currency
against U.S. dollars quoted by any major bank or by a broker.
Bonds and other fixed income securities are valued according to the broadest
and most representative market, which will ordinarily be the over-the-counter
market. Bonds and other fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities.
Securities purchased with remaining maturities of 60 days or less are valued
at amortized cost.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Board of Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating total return. Total return
figures are based on historical earnings and are not intended to indicate fu-
ture performance.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of time. An average annual total return is a hypothetical rate of re-
turn that, if achieved annually, would have produced the same cumulative total
return if performance had been constant over the entire period.
Performance will be calculated separately for Institutional Class and Serv-
ice Class Shares. Dividends paid by the Portfolio with respect to Institu-
tional Class and Service Class Shares, to the extent any dividends are paid,
will be calculated in the same manner at the same time on the same day and
will be in the same amount, except that service and distribution fees and any
incremental transfer agency costs relating to Service Class Shares will be
borne exclusively by that class.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices as further de-
scribed in the Portfolio's SAI. This information may also be included in sales
literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or telephone number on the
cover of this Prospectus.
21
<PAGE>
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders in dividends in June and Decem-
ber. If any net capital gains are realized, the Portfolio will normally dis-
tribute them in June, with a supplemental distribution in December of any un-
distributed capital gains earned during the 12 month period ended each Octo-
ber. All dividends and capital gains distributions will be automatically rein-
vested in additional shares of the Portfolio unless the Fund is notified in
writing that the shareholder elects to receive the distributions in cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal in-
come tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends. To do this, the Portfolio must,
among other things, distribute substantially all of its ordinary income and
net capital gains on an annual basis and maintain a portfolio of investments
which satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income.
Short-term capital gains will be taxed as ordinary income. Long-term capital
gains distributions are taxed as long-term capital gains. Shareholders will be
notified annually of the tax status of dividends and capital gain distribu-
tions received.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid in January of the following year.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that the Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you.
22
<PAGE>
Consult a tax adviser for more information regarding deductions and credits
for foreign taxes.
INVESTMENT ADVISER
First Pacific Advisors, Inc., located at 11400 West Olympic Blvd., Suite
1200, Los Angeles, CA 90064, acts as the Portfolio's Adviser; Mr. Steven
Romick is responsible for management of the Portfolio. Mr. Romick has 12 years
of experience in the investment management business. He is currently a Senior
Vice President of the Adviser. From 1990-1996, Mr. Romick was chairman of
Crescent Management, an investment advisory firm he founded. Crescent Manage-
ment served as the Portfolio's advisor until the firm was merged with the cur-
rent Adviser.
Under an Investment Advisory Agreement dated as of September 30, 1996, the
Adviser provides the Portfolio with advice on buying and selling securities,
manages the investments of the Portfolio, furnishes the Portfolio with office
space and certain administrative services, and provides most of the personnel
needed by the Portfolio. As compensation, the Portfolio pays the Adviser a
monthly management fee (accrued daily) based upon the average daily net assets
of the Portfolio at the rate of 1.00% annually.
The Adviser, together with its predecessors, has been in the investment ad-
visory business since 1954. Presently, the Adviser manages assets of approxi-
mately $4.0 billion for six investment companies, including one closed-end in-
vestment company, and more than 30 institutional accounts. The Adviser is an
indirect wholly-owned subsidiary of UAM, a NYSE-listed holding company princi-
pally engaged, through affiliated firms, in providing institutional investment
management and acquiring institutional investment management firms.
The Portfolio is responsible for its own operating expenses. The Adviser has
voluntarily agreed to waive all or a portion of its advisory fees and to as-
sume operating expenses to keep the Portfolio's Institutional Class Shares'
total annual operating expenses (excluding interest, taxes and extraordinary
expenses), after the effect of expense offsets, from exceeding 1.85% of aver-
age daily net assets until further notice. To the extent the Adviser performs
a service for which the Portfolio is obligated to pay, the Portfolio shall re-
imburse the Adviser for its costs incurred in rendering such service.
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Distributor, UAM, the Adviser, or any of their affili-
ates, may, at their own expense, compensate a Service Agent or other person
for marketing, shareholder servicing, record-keeping and/or other services
performed with respect to the Fund, the Portfolio or any Class of Shares of
the Portfolio. The person making such payments may do so out of its revenues,
its profits or any other source
23
<PAGE>
available to it. Such service arrangements, when in effect, are made generally
available to all qualified service providers.
The Distributor, the Adviser and certain of their other affiliates also par-
ticipate, at the date of this Prospectus, in an arrangement with Smith Barney
Inc. under which Smith Barney provides certain defined contribution plan mar-
keting and other shareholder services and receives from such entities .15 of
1% of the daily net asset value of Institutional Class Shares held by Smith
Barney's eligible customer accounts in addition to amounts payable to all
selling dealers. The Fund also compensates Smith Barney for services it pro-
vides to certain defined contribution plan shareholders that are not otherwise
provided by the Administrator.
The Adviser considers a number of factors in determining which brokers or
dealers to use for the Fund's portfolio transactions. While these are more
fully discussed in the SAI, the factors include, but are not limited to, the
reasonableness of commissions, quality of services and execution, and the
availability of research which the Adviser may lawfully and appropriately use
in its investment management and advisory capacities. Provided the Portfolio
receives prompt execution at competitive prices, the Adviser may also consider
the sale of Portfolio shares as a factor in selecting broker-dealers for the
Fund's portfolio transactions.
ADMINISTRATIVE SERVICES
UAMFSI, a wholly-owned subsidiary of UAM, is responsible for performing and
overseeing administrative, fund accounting, dividend disbursing and transfer
agent services provided to the Fund and its Portfolios. UAMFSI's principal of-
fice is located at 211 Congress Street, Boston, MA 02110. UAMFSI has subcon-
tracted some of these services to Chase Global Funds Services Company
("CGFSC"), an affiliate of The Chase Manhattan Bank, by a Mutual Funds Service
Agreement dated June 30, 1997. CGFSC is located at 73 Tremont Street, Boston,
MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
FPA Crescent Portfolio............................................... 0.06%
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
0.11 of 1% of the next $800 million of combined UAM Funds assets;
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but less
than $3 billion;
24
<PAGE>
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Funds' fees are allocated among the Portfolios on the basis of their
relative assets and are subject to a graduated minimum fee schedule per Port-
folio, which starts at $2,000 per month and increases to $70,000 annually af-
ter two years. If a separate class of shares is added to a Portfolio, its min-
imum annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM, with its principal office
located at 211 Congress Street, Boston, MA 02110, distributes shares of the
Fund. Under the Distribution Agreement (the "Agreement"), the Distributor, as
agent of the Fund, agrees to use its best efforts as sole distributor of Fund
shares. The Distributor does not receive any fee or other compensation under
the Agreement with respect to the Portfolio's Institutional Class Shares of-
fered in this Prospectus. The Agreement continues in effect as long as it is
approved at least annually by the Fund's Board of Trustees. Those approving
the Agreement must include a majority of Trustees who are neither parties to
the Agreement nor interested persons of any such party. The Agreement provides
that the Fund will bear costs of registration of its shares with the SEC and
various states as well as the printing of its prospectuses, its SAIs and its
reports to shareholders.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II". On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and have no preference as to conversion, exchange, dividends, re-
tirement or other features and no pre-emptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees can elect 100% of the Trustees. A shareholder is en-
titled 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 of the
Fund.
25
<PAGE>
As of June 16, 1997, Charles Schwab & Co., Inc. held of record 39.8% of the
outstanding shares of the FPA Crescent Portfolio Institutional Class for which
beneficial ownership is disclaimed or presumed disclaimed. The persons or or-
ganizations owning 25% or more of the outstanding shares of a Portfolio may be
presumed to "control" (as that term is defined in the 1940 Act) such Portfo-
lio. As a result, those persons or organizations could have the ability to
vote a majority of the shares of the Portfolio on any matter requiring the ap-
proval of shareholders of such Portfolio.
Both Institutional Class and Institutional Service Class Shares represent an
interest in the same assets of a Portfolio. Service Class Shares bear certain
expenses related to shareholder servicing, and may bear expenses related to
distribution. Service Class shares have exclusive voting rights for matters
relating to such distribution expenditures. Information about the Service
Class Shares of the Portfolios is available upon request by contacting the UAM
Funds Service Center.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the hold-
ers of not less than 10% of the outstanding shares of the Fund. The Fund will
assist shareholder communications in such matters to the extent required by
the undertaking.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting UAMFSI at the telephone num-
ber or address listed on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN THE PORTFOLIO'S
STATEMENT OF ADDITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR ITS REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT BE LAWFULLY MADE.
26
<PAGE>
UAM FUNDS -- INSTITUTIONAL CLASS SHARES
Acadian Emerging Markets Portfolio
Acadian International Equity Portfolio
BHM&S Total Return Bond Portfolio
Chicago Asset Management Intermediate Bond Portfolio
Chicago Asset Management Value/Contrarian Portfolio
C&B Balanced Portfolio
C&B Equity Portfolio
C&B Equity Portfolio for Taxable Investors
C&B Mid Cap Equity Portfolio
DSI Balanced Portfolio
DSI Disciplined Value Portfolio
DSI Limited Maturity Bond Portfolio
DSI Money Market Portfolio
FMA Small Company Portfolio
FPA Crescent Portfolio
Hanson Equity Portfolio
ICM Equity Portfolio
ICM Fixed Income Portfolio
ICM Small Company Portfolio
IRC Enhanced Index Portfolio
Jacobs International Octagon Portfolio
McKee Domestic Equity Portfolio
McKee International Equity Portfolio
McKee U.S. Government Portfolio
McKee Small Cap Equity Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Rice, Hall James Small Cap Portfolio
Rice, Hall James Small/Mid Cap Portfolio
Sirach Equity Portfolio
Sirach Fixed Income Portfolio
Sirach Growth Portfolio
Sirach Short-Term Reserves Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
SAMI Preferred Stock Income Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Short-Term Fixed Income Portfolio
Sterling Partners' Small Cap Value Portfolio
TS&W Equity Portfolio
TS&W Fixed Income Portfolio
TS&W International Equity Portfolio
TS&W Balanced Portfolio
27
<PAGE>
UAM FUNDS SERVICE CENTER
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
INVESTMENT ADVISER
First Pacific Advisors, Inc.
11400 West Olympic Boulevard
Suite 1200
Los Angeles, CA 90064
DISTRIBUTOR
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
JULY 10, 1997
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
FPA Crescent
Portfolio
Institutional Service
Class Shares
July 10, 1997
P R O S P E C T U S
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses.............................................................. 1
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Financial Highlights....................................................... 5
Investment Objective....................................................... 6
Investment Policies........................................................ 6
Other Investment Policies.................................................. 8
Purchase of Shares......................................................... 15
Redemption of Shares....................................................... 18
Service and Distribution Plans............................................. 20
Shareholder Services....................................................... 22
Valuation of Shares........................................................ 23
Performance Calculations................................................... 23
Dividends, Capital Gains Distributions and Taxes........................... 24
Investment Adviser......................................................... 25
Administrative Services.................................................... 26
Distributor................................................................ 27
General Information........................................................ 27
UAM Funds -- Service Class Shares.......................................... 30
</TABLE>
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
FPA CRESCENT PORTFOLIO
INSTITUTIONAL SERVICE CLASS SHARES
INVESTMENT ADVISER: FIRST PACIFIC ADVISORS, INC.
- -------------------------------------------------------------------------------
PROSPECTUS -- JULY 10, 1997
UAM Funds Trust (the "Fund") is an open-end investment company known as a
"mutual fund." The Fund consists of multiple series (known as Portfolios) each
of which has different investment objectives and policies. The FPA Crescent
Portfolio (the "Portfolio") offers two separate classes of shares: Institu-
tional Class Shares and Institutional Service Class Shares ("Service Class
Shares"). Shares of each class represent equal, pro rata interests in a Port-
folio and accrue dividends in the same manner except that Service Class Shares
bear fees payable by the class (at the rate of .25% per annum) to financial
institutions for services they provide to the owners of such shares. The secu-
rities offered in this Prospectus are Service Class Shares of one diversified,
no-load Portfolio of the Fund managed by First Pacific Advisors, Inc.
FPA CRESCENT PORTFOLIO. The FPA Crescent Portfolio's investment objective is
to provide, through a combination of income and capital appreciation, a total
return consistent with reasonable risk. The Portfolio seeks to achieve its ob-
jective by investing primarily in equity securities (common and preferred
stocks) and fixed income obligations.
There can be no assurance that the Portfolio will achieve its objective.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A Statement of Additional Information ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURI-TIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Service Class Shares would incur. Transaction fees may be charged
if a broker-dealer or other financial intermediary deals with the Fund on your
behalf. (See "PURCHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases......................................... NONE
Sales Load Imposed on Reinvested Dividends.............................. NONE
Deferred Sales Load..................................................... NONE
Redemption Fees......................................................... NONE
Exchange Fees........................................................... NONE
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Investment Advisory Fees ............................................ 1.00%
Administrative Fees ................................................. 0.15%
12b-1 Fees (Including Shareholder Servicing Fees)*................... 0.25%
Other Expenses....................................................... 0.39%
----
Total Operating Expenses ............................................ 1.79%**
====
</TABLE>
- -----------
* See "SERVICE AND DISTRIBUTION PLANS." Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge permit-
ted by rules of the National Association of Securities Dealers, Inc.
** The Adviser has voluntarily agreed to waive all or a portion of its advi-
sory fees and to assume operating expenses to keep the Portfolio's Service
Class Shares' total annual operating expenses (excluding interest, taxes
and extraordinary expenses), after the effect of expense offsets, from ex-
ceeding 2.10% of average daily net assets until further notice.
The table above shows various fees and expenses an investor would bear di-
rectly or indirectly. The fees and expenses set forth above are estimates
based upon the Portfolio's Institutional Class Shares operations during the
fiscal year ended March 31, 1997, except that they have been restated to re-
flect current administrative fees.
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
1
<PAGE>
return and (2) redemption at the end of each time period. The Portfolio
charges no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Expenses..................................... $18 $56 $97 $211
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN ABOVE.
The information set forth in the above table and example relates only to
Service Class Shares of the Portfolio, which shares are subject to different
total fees and expenses than Institutional Class Shares. Broker-dealers or
other financial intermediaries ("Service Agents") may charge other fees to
their customers who are beneficial owners of Service Class Shares in connec-
tion with their customer accounts. (See "SERVICE AND DISTRIBUTION PLANS.")
2
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
First Pacific Advisors, Inc. (the "Adviser") acts as the Portfolio's Adviser
and has its origins dating back to 1954. It currently has over $4.0 billion in
assets under management. The Adviser is an indirect wholly-owned subsidiary of
United Asset Management Corporation ("UAM"). (See "INVESTMENT ADVISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion, to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment is $2,500. The minimum for subsequent investments is $100.
The minimum initial investment for IRA accounts is $1,000. Certain exceptions
to the initial or minimum investment amounts may be made by the officers of
the Fund. (See "PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in the form of dividends in June and December. Any realized net
capital gains will also be distributed annually or more often. Distributions
will be reinvested in the Portfolio's shares automatically unless an investor
elects to receive cash distributions. (See "DIVIDENDS, CAPITAL GAINS DISTRIBU-
TIONS AND TAXES.")
REDEMPTIONS AND EXCHANGES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See "REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of United As-
set Management Corporation, is responsible for performing and overseeing ad-
ministration, fund accounting, dividend disbursing and transfer agency serv-
ices provided to the Fund and its Portfolios by third-party service providers.
(See "ADMINISTRATIVE SERVICES.")
3
<PAGE>
RISK FACTORS
Prospective investors should understand that the Portfolio's performance
will be affected by a variety of factors since it invests in both stocks and
fixed-income securities. The value of the Portfolio's investments will vary
from day to day, generally reflecting global market, economic and political
developments; conditions in global and national markets; changes in currency
exchange rates; factors affecting individual stocks in the Portfolio; and
shifts in interest rates.
. The Portfolio may invest significantly in lower rated fixed-income secu-
rities, which typically offer higher coupon interest rates than invest-
ment grade securities, but also involve greater risks of default and
market volatility. Such securities are sometimes referred to as "junk
bonds" and are considered speculative by rating agencies.
. The Portfolio may engage in short sales of securities, which involve the
risk of loss if the securities increase in price between when the Port-
folio sells them short and repurchases them.
. The Portfolio may invest in repurchase agreements which entail a risk of
loss should the seller default on its transaction.
. The Portfolio may lend its investment securities which entails a risk of
loss should a borrower fail financially.
. The Portfolio may purchase securities on a when-issued basis which do
not earn interest until issued and may decline or appreciate in market
value prior to their delivery to the Portfolio.
. The Portfolio may engage in various hedging, currency and related strat-
egies to seek to hedge its investments against movements in security
prices, interest rates, and exchange rates by the use of derivatives,
including forward contracts, options and futures as well as options on
futures. These strategies involve the risk of imperfect correlation in
movements in the price of options and futures and movements in the price
of securities, interest rates or currencies which are the subject of the
hedge. These transactions are also subject to the risk factors associ-
ated with foreign investments generally. There can be no assurance that
a liquid secondary market for these hedging techniques will exist at any
specific time.
. The Portfolio may enter into interest rate hedging strategies commonly
referred to as derivatives which, if employed incorrectly, may adversely
affect the Portfolio.
Further information about each of the above risk factors and others is con-
tained in the "INVESTMENT POLICIES" section of this Prospectus.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides selected per share information for a share out-
standing throughout the period presented of the Portfolio. The table is part
of the Portfolio's Financial Statements included in the Portfolio's 1997 An-
nual Report to Shareholders. The Report is incorporated into the Portfolio's
SAI. The Portfolio's Annual Financial Statements have been audited by Price
Waterhouse LLP whose unqualified opinion thereon is also incorporated into the
Portfolio's SAI. Please read the following information in conjunction with the
Portfolio's 1997 Annual Report to Shareholders.
<TABLE>
<CAPTION>
JANUARY 24, 1997+
TO
MARCH 31, 1997
-----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......................... $ 13.12
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................................ 0.03
Net Realized and Unrealized Gain on Investments.............. 0.28
-------
Total from Investment Operations............................ 0.31
-------
DISTRIBUTIONS:
Net Investment Income........................................ --
Net Realized Gain............................................ --
-------
Total Distributions......................................... --
-------
NET ASSET VALUE, END OF PERIOD................................ $ 13.43
=======
TOTAL RETURN.................................................. 2.36%**
=======
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)......................... $ 32
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before Expense Reductions.................................... 1.85%*
After Expense Reductions..................................... 1.85%*
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS:
Before Expense Reductions.................................... 2.56%*
After Expense Reductions..................................... 2.56%*
Portfolio Turnover Rate....................................... 45%
Average Commission Rate Paid#................................. $0.0521
</TABLE>
- -----------
* Annualized.
** Not Annualized.
+ Commencement of Operations.
# For fiscal years ending on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
5
<PAGE>
INVESTMENT OBJECTIVE
The investment objective of the Portfolio is to provide, through a combina-
tion of income and capital appreciation, a total return consistent with rea-
sonable investment risk. The Portfolio seeks to achieve its objective by in-
vesting in a combination of equity securities and fixed income obligations.
There is, of course, no assurance that the Portfolio's objective will be
achieved. Because prices of common stocks and fixed-income securities fluctu-
ate, the value of an investment in the Portfolio will vary, as the market
value of its investment portfolio changes.
The Portfolio actively seeks value in all parts of a company's capital
structure, including common and preferred stocks, as well as corporate and
convertible bonds. The Portfolio will typically have between 50% and 70% of
its total assets invested in equity securities with the balance comprised of
fixed-income securities and cash and equivalents.
INVESTMENT POLICIES
EQUITY SECURITIES. The Adviser utilizes a contrarian investment style, which
often leads the Adviser to invest in "what other people do not wish to own."
The Adviser searches for common stocks, preferred stocks, warrants and con-
vertible securities that reflect low price/earnings ratios (P/Es) and trade at
discounts to private market value.
The Adviser selects equity securities for the Portfolio which it believes
offer superior investment value. The Adviser deems the following important in
its stock selection process:
.High return on capital
.Solid balance sheet
.Meaningful cash flow
.Active share repurchase program
.Insider buying
.Superior management seeking to maximize shareholder value
.Projected earnings growth exceeding the stock market average
In the Adviser's view, the stock market prices securities efficiently in the
long term, rewarding companies which successfully grow their earnings and pe-
nalizing those which do not. The Adviser's investment philosophy is based on
the conviction that the market valuation of securities is often inefficient in
the short-term. When reacting to current economic or company information, in-
vestors frequently make purchase or sale decisions hastily. These decisions
could cause a particular security, industry group or the entire market to be-
come underpriced or overpriced in the short-term thereby creating an excellent
opportunity to either buy or sell.
6
<PAGE>
This contrarian style leads to those investments that offer absolute value,
rather than relative value. Absolute value is an investment that trades at
substantial discount to private market value, rather than one that might ap-
pear inexpensive based on a discount to its peer group or the market average.
Attention is directed toward those companies offering the best combination of
such quality criteria as strong market share, good management and high normal-
ized return on capital. A company purchased might not look inexpensive, con-
sidering current earnings and return on capital; however, this may reflect
such conditions as a weak economy, an increase in their raw material costs,
poor management, or any number of other temporary considerations. The price
drops caused by such developments can and often do provide buying opportuni-
ties.
Intensive research identifies these opportunities. The process includes
looking for ideas by reviewing stock price or industry group under-perfor-
mance, insider purchases, management changes and corporate spin-offs. Funda-
mental analysis is the foundation of the Adviser's investment approach. Re-
searching a prospective investment involves communicating directly with com-
pany management, suppliers, and customers, better defining future potential,
financial strength and the company's competitive position. Fundamental analy-
sis provides a thorough view of financial and business characteristics, al-
lowing for the determination of absolute value.
In addition to common stocks, equity securities purchased for the Portfolio
may include preferred stocks, convertible preferred stocks and warrants.
FIXED-INCOME OBLIGATIONS. Through fixed-income investments, the Adviser
seeks a reliable and recurring stream of income for the Portfolio, while pre-
serving its capital. The Adviser attempts to identify the current interest
rate trends and invests funds accordingly. Usually, a defensive interest rate
strategy is employed, with investments made at different points along the
yield curve in an attempt to keep the average maturity of fixed-income invest-
ments less than or equal to ten years.
The Adviser's approach is to invest in U.S. Treasury obligations, U.S. Gov-
ernment Agency and mortgage-backed securities, and corporate and convertible
bonds. The Adviser considers yield spread relationships and their underlying
factors such as credit quality, investor perception and liquidity on a contin-
uous basis to determine which sector offers the best investment value. When
combined with equity securities, the ownership of fixed-income securities not
only broadens the universe of opportunities, but offers additional diversifi-
cation and can help lower portfolio volatility.
The Adviser may invest in corporate bonds with yields substantially higher
than those of government securities. Opportunities frequently present them-
selves in parts of the capital structure of a company beyond common and pre-
ferred stock,
7
<PAGE>
including convertible and high yield bonds. Generally, these investments pro-
vide a return in excess of government securities and can provide potential for
capital appreciation. Historic returns for high yield bonds have been greater
than government securities. The Adviser's analysis includes studying interest
expense coverage, business value/debt coverage and current business trends.
The Portfolio may purchase investment grade corporate debt securities. Secu-
rities rated BBB by Standard & Poor's Corporation ("S&P") or Moody's Investors
Service ("Moody's") are investment grade, but Moody's considers securities
rated Baa to have speculative characteristics. Changes in economic conditions
or other circumstances are more likely to lead to a weakened capacity for such
securities to make principal and interest payments than is the case for high-
er-rated debt securities.
OTHER INVESTMENT POLICIES
LOWER RATED SECURITIES. The Portfolio may invest in debt securities that are
rated below investment grade, but will limit that investment to no more than
30% of its total assets. Such securities, sometimes referred to as "junk
bonds," typically carry higher coupon rates than investment grade securities
but also involve higher risks and are described as speculative by both Moody's
and S&P. They may be subject to greater market price fluctuations, less li-
quidity, and greater risk of income or principal, including a greater possi-
bility of default or bankruptcy of the issuer of such securities, than are
more highly rated debt securities. Lower rated fixed income securities also
are likely to be more sensitive to adverse economic or company developments
and more subject to price fluctuations in response to changes in interest
rates. The market for lower-rated debt issues generally is thinner and less
active than that for higher quality securities, which may limit the Portfo-
lio's ability to sell such securities at fair value in response to changes in
the economy or financial markets.
The Adviser seeks to reduce the risk associated with investing in such secu-
rities by limiting the Portfolio's holdings in such securities and by the
depth of its own credit analysis. In selecting below investment grade securi-
ties, the Adviser seeks securities in companies with improving cash flows and
balance sheet prospects, whose credit ratings the Adviser views as likely to
be upgraded. The Adviser believes that such securities can produce returns
similar to equities, but with less risk. See the SAI for further discussion of
lower rated securities.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements in
order to earn additional income on available cash, or as a defensive invest-
ment in periods when the Fund is primarily in short-term maturities. A repur-
chase agreement is a short-term investment in which the purchaser (i.e., the
Portfolio) acquires ownership of a security (which may be of any maturity) and
the seller agrees to repurchase that obligation at a future time at a set
price, thereby determining the yield during the purchaser's holding period
(usually not more than
8
<PAGE>
seven days from the date of purchase). Any repurchase transaction in which the
Portfolio engages will require full collateralization of the seller's obliga-
tion during the entire term of the repurchase agreement. In the event of a
bankruptcy or other default of the seller, the Portfolio could experience both
delays in liquidating the underlying security and losses in value. However,
the Portfolio intends to enter into repurchase agreements only with banks with
assets of $500 million or more that are insured by the Federal Deposit Insur-
ance Corporation and the most creditworthy registered securities dealers pur-
suant to procedures adopted and regularly reviewed by the Fund's Board of
Trustees. The Adviser monitors the creditworthiness of the banks and securi-
ties dealers with whom the Portfolio engages in repurchase transactions. The
Fund has received permission from the SEC to pool daily uninvested cash bal-
ances of the Fund's Portfolios in order to invest in repurchase agreements on
a joint basis. By entering into joint repurchase agreements, the Portfolio may
incur lower transaction costs and earn higher rates of interest on joint re-
purchase agreements. The Portfolio's contribution would determine its return
from a joint repurchase agreement.
ILLIQUID AND RESTRICTED SECURITIES. The Portfolio may not invest more than
15% of its net assets in illiquid securities, including (i) securities for
which there is no readily available market; (ii) securities the disposition of
which would be subject to legal restrictions (so-called "restricted securi-
ties"); and (iii) repurchase agreements having more than seven days to maturi-
ty. A considerable period of time may elapse between the Portfolio's decision
to dispose of such securities and the time when the Portfolio is able to dis-
pose of them, during which time the value of the securities could decline. Re-
stricted securities do not include those which meet the requirements of Secu-
rities Act Rule 144A and which the Trustees have determined to be liquid based
on the applicable trading markets.
FOREIGN SECURITIES. The Portfolio may invest up to 20% of its total assets
in securities of foreign issuers. The Adviser usually buys securities of
larger foreign companies that have well recognized franchises and are selling
at a discount to the securities of similar domestic businesses.
There may be less publicly available information about these issuers than is
available about companies in the U.S. and foreign auditing requirements may
not be comparable to those in the U.S. In addition, the value of the foreign
securities may be adversely affected by movements in the exchange rates be-
tween foreign currencies and the U.S. dollar, as well as other political and
economic developments, including the possibility of expropriation, confisca-
tory taxation, exchange controls or other foreign governmental restrictions.
The Portfolio may also invest without limit in securities of foreign issuers
which are listed on a domestic national securities exchange.
SHORT SALES. The Portfolio may engage in short sales of securities. In a
short sale, the Portfolio sells stock which it does not own, making delivery
with securities
9
<PAGE>
"borrowed" from a broker. The Portfolio is then obligated to replace the secu-
rity borrowed by purchasing it at the market price at the time of replacement.
This price may or may not be less than the price at which the security was
sold by the Portfolio. Until the security is replaced, the Portfolio is re-
quired to pay to the lender any dividends or interest which accrue during the
period of the loan. In order to borrow the security, the Portfolio may also
have to pay a fee which would increase the cost of the security sold. The pro-
ceeds of the short sale will be retained by the broker, to the extent neces-
sary to meet margin requirements, until the short position is closed out.
The Portfolio also must deposit in a segregated account an amount of cash or
liquid assets equal to the difference between (a) the market value of the se-
curities sold short at the time they were sold short and (b) the value of the
collateral deposited with the broker in connection with the short sale (not
including the proceeds from the short sale). While the short position is open,
the Portfolio must maintain daily the segregated account at such a level that
(1) the amount deposited in it plus the amount deposited with the broker as
collateral equals the current market value of the securities sold short and
(2) the amount deposited in it plus the amount deposited with the broker as
collateral is not less than the market value of the securities at the time
they were sold short.
The Portfolio will incur a loss as a result of the short sale if the price
of the security increases between the date of the short sale and date on which
the Portfolio replaces the borrowed security. The Portfolio will realize a
gain if the security declines in price between those dates. The amount of any
gain will be decreased and the amount of any loss will be increased by any in-
terest the Portfolio may be required to pay in connection with the short sale.
The dollar amount of short sales at any one time (not including short sales
against the box) may not exceed 25% of the net assets of the Portfolio.
A short sale is "against-the-box" if at all times when the short position is
open the Portfolio owns an equal amount of the securities or securities con-
vertible into, or exchangeable without further consideration for, securities
of the same issue as the securities sold short. Such a transaction serves to
defer a gain or loss for Federal income tax purposes.
OPTIONS AND FUTURES. The Portfolio may purchase and write call and put op-
tions on securities, securities indexes and on foreign currencies, and enter
into futures contracts and use options on futures contracts. The Portfolio may
use these techniques to hedge against changes in interest rates, foreign cur-
rency exchange rates or securities prices or as part of its overall investment
strategies. The Portfolio is subject to regulatory limitations on the use of
such techniques and is required to maintain segregated accounts consisting of
cash or liquid securities, (or, as permitted by applicable regulation, enter
into certain offsetting positions) to cover its obligations under options and
futures contracts to avoid leveraging of the Portfolio.
10
<PAGE>
The Portfolio may buy or sell interest rate futures contracts, options on
interest rate futures contracts and options on debt securities for the purpose
of hedging against changes in the value of securities which the Fund owns or
anticipates purchasing due to anticipated changes in interest rates. The Port-
folio also may engage in currency exchange transactions by means of buying or
selling foreign currency on a spot basis, entering into foreign currency for-
ward contracts, and buying and selling foreign currency options, futures and
options on futures. Foreign currency exchange transactions may be entered into
for the purpose of hedging against foreign currency exchange risk arising from
the Portfolio's investment or anticipated investment in securities denominated
in foreign currencies.
See the SAI for further information regarding characteristics of and risks
involved in the use of these instruments.
U.S. GOVERNMENT SECURITIES. The Portfolio may invest in U.S. Government se-
curities. U.S. Government securities include direct obligations issued by the
U.S. Treasury, such as Treasury bills, certificates of indebtedness, notes and
bonds. U.S. Government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal National Mortgage As-
sociation ("FNMA"), Government National Mortgage Association ("GNMA"), Federal
Home Loan Bank, Federal Financing Bank, and Student Loan Marketing Associa-
tion.
All Treasury securities are backed by the full faith and credit of the
United States. Obligations of U.S. Government agencies and instrumentalities
may or may not be supported by the full faith and credit of the United States.
Some, such as the Federal Home Loan Bank, are backed by the right of the
agency or instrumentality to borrow from the Treasury. Others, such as securi-
ties issued by the Federal National Mortgage Association, are supported only
by the credit of the instrumentality and not by the Treasury. If the securi-
ties are not backed by the full faith and credit of the United States, the
owner of the securities must look principally to the agency issuing the obli-
gation for repayment and may not be able to assert a claim against the United
States in the event that the agency or instrumentality does not meet its com-
mitment.
MORTGAGE-RELATED SECURITIES. Mortgage pass-through securities are securities
representing interests in pools of mortgages in which payments of both inter-
est and principal on the securities are generally made monthly, in effect
"passing through" monthly payments made by the individual borrowers on the
residential mortgage loans which underlie the securities (net of fees paid to
the issuer or guarantor of the securities). Early repayment of principal on
mortgage pass-through securities (arising from prepayments of principal due to
the sale of underlying property, refinancing, or foreclosure, net of fees and
costs which may be incurred) may expose a Portfolio to a lower rate of return
upon reinvestment of principal. Also, if a security subject to repayment has
been purchased at a premium, in the event of prepayment the value of the pre-
mium would be lost.
11
<PAGE>
As noted above, payment of principal and interest on some mortgage-related
securities (but not the market value of the securities themselves) may be
guaranteed by the full faith and credit of the U.S. Government (in the case of
securities guaranteed by GNMA), by agencies or instrumentalities of the U.S.
Government (in the case of securities guaranteed by FNMA or the Federal Home
Loan Mortgage Corporation ("FHLMC"), which are supported only by the discre-
tionary authority of the U.S. Government to purchase the agency's obliga-
tions). Mortgage pass-through securities created by non-governmental issuers
(such as commercial banks, savings and loan institutions, private mortgage in-
surance companies, mortgage bankers and other secondary market issuers) may be
supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance, and letters of credit, which may be
issued by governmental entities, private insurers or the mortgage poolers.
Collateralized mortgage obligations ("CMOs") are hybrid instruments with
characteristics of both mortgage-backed bonds and mortgage pass-through secu-
rities. Similar to a bond, interest and prepaid principal on a CMO are paid,
in most cases, semi-annually. CMOs may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of mortgage pass-
through securities guaranteed by GNMA, FHLMC, or FNMA. CMOs are structured
into multiple classes, with each class bearing a different stated maturity.
Monthly payments of principal, including prepayments, are first returned to
investors holding the shortest maturity class. Investors holding the longer
maturity classes receive principal only after the first class has been re-
tired. Other mortgage-related securities include those that directly or indi-
rectly represent a participation in or are secured by and payable from mort-
gage loans on real property, such as CMO residuals or stripped mortgage-backed
securities, and may be structured in classes with rights to receive varying
proportions of principal and interest.
PORTFOLIO TURNOVER. Generally, the annual rate of portfolio turnover is not
expected to exceed 100%. In general, the Adviser will not consider the rate of
portfolio turnover to be a limiting factor in determining when or whether to
purchase or sell securities in order to achieve the Portfolio's objective. The
table set forth in "Financial Highlights" presents the Portfolio's historical
portfolio turnover rates. High rates of portfolio turnover necessarily result
in correspondingly heavier brokerage and portfolio trading costs which are
paid by the Portfolio. In addition to portfolio trading costs, higher rates of
portfolio turnover may result in the realization of capital gains. To the ex-
tent net short-term capital gains are realized, any distributions resulting
from such gains are considered ordinary income for federal income tax purpos-
es. See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES" for more informa-
tion on taxation.
SHORT-TERM INVESTMENTS. In order to earn a return on uninvested assets, meet
anticipated redemptions, or for temporary defensive purposes, the Portfolio
12
<PAGE>
may invest a portion of its assets in domestic and foreign money market in-
struments including certificates of deposit, bankers' acceptances, time depos-
its, U.S. Government obligations, U.S. Government agency securities, short-
term corporate debt securities, and commercial paper rated A-1 or A-2 by S&P
or Prime-1 or Prime-2 by Moody's or if unrated, determined by the Adviser to
be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in
other currencies, (ii) in the case of U.S. banks, it is a member of the Fed-
eral Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an invest-
ment quality comparable with other debt securities which may be purchased by
the Portfolio.
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's Port-
folios, as well as cash for investment purposes, into one or more joint ac-
counts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable rate demand notes and other tax-exempt money instruments.
By entering into these investments on a joint basis, it is expected that a
Portfolio may earn a higher rate of return on investments relative to what it
could earn individually.
The Fund has received an Order from the SEC, which permits each of its Port-
folios to invest the greater of 5% of its total assets or $2.5 million in the
UAM Funds' DSI Money Market Portfolio for cash management purposes. (See "IN-
VESTMENT COMPANIES.")
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES. The Portfo-
lio may purchase and sell securities on a "when-issued," "delayed settlement,"
or "forward delivery" basis. "When-issued" or "forward delivery" refers to se-
curities whose terms and indenture are available, and for which a market ex-
ists, but which are not available for immediate delivery. When-issued and for-
ward delivery transactions may be expected to occur a month or more before de-
livery is due. Delayed settlement is a term used to describe settlement of a
securities transaction in the secondary market which will occur sometime in
the future. No payment or delivery is made by the Portfolio until it receives
delivery or payment from the other party to any of the above transactions. It
is possible that the market price of the securities at the time of delivery
may be higher or lower than the purchase price. The Portfolio will maintain a
separate account of cash or
13
<PAGE>
liquid securities at least equal to the value of the purchase commitments un-
til payment is made. Typically, no income accrues on securities purchased on a
delayed delivery basis prior to the time delivery of the securities is made
although the Portfolio may earn income on securities it has deposited in a
segregated account.
The Portfolio engages in these types of purchases in order to buy securities
that fit with its investment objectives at attractive prices--not to increase
its investment leverage.
Securities purchased on a when-issued basis may decline or appreciate in
market value prior to their actual delivery to the Portfolio.
LENDING OF PORTFOLIO SECURITIES. The Portfolio may lend its investment secu-
rities to qualified institutional investors as a means of earning income. The
Portfolio will not loan portfolio securities to the extent that greater than
one-third of its assets at fair market value, would be committed to loans. By
lending its investment securities, the Portfolio attempts to increase its in-
come through the receipt of interest on the loan. Any gain or loss in the mar-
ket price of the securities loaned that might occur during the term of the
loan would be for the account of the Portfolio. All relevant facts and circum-
stances, including the creditworthiness of the broker, dealer or institution,
will be considered in making decisions with respect to the lending of securi-
ties, subject to review by the Fund's Board of Trustees.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by the investment company's Board of Trustees. The Portfolio will
continue to retain any voting rights with respect to the loaned securities. If
a material event occurs affecting an investment on loan, the loan must be
called and the securities voted.
INVESTMENT COMPANIES. As permitted by the 1940 Act, the Portfolio reserves
the right to invest up to 10% of its total assets, calculated at the time of
investment, in the securities of other open-end or closed-end investment com-
panies. No more than 5% of the investing Portfolio's total assets may be in-
vested in the securities of any one investment company nor may it acquire more
than 3% of the voting securities of any other investment company. The Portfo-
lio will indirectly bear its proportionate share of any management fees paid
by an investment company in which it invests in addition to the advisory fee
paid by the Portfolio.
The Fund has received an Order from the SEC, which permits each of its Port-
folios to invest the greater of 5% of its total assets or $2.5 million in the
UAM Funds' DSI Money Market Portfolio for cash management purposes provided
that the investment is consistent with the Portfolio's investment policies and
restrictions. Based upon the Portfolio's assets invested in the DSI Money Mar-
ket Portfolio, the investing Portfolio's adviser will waive its investment ad-
visory fee and any
14
<PAGE>
other fees earned as a result of the Portfolio's investment in the DSI Money
Market Portfolio. The investing Portfolio will bear expenses of the DSI Money
Market Portfolio on the same basis as all of its other shareholders.
The Portfolio has adopted certain investment restrictions, which are de-
scribed fully in the SAI. Like the Portfolio's investment objective, several
of these restrictions are fundamental and may be changed only by a majority
vote of the Portfolio's outstanding shares.
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), without a sales commission at the net asset value per share
next determined after an order is received by the Fund and payment is received
by the Custodian. (See "VALUATION OF SHARES.") The minimum initial investment
required is $2,500. The minimum initial investment for IRA accounts is $1,000.
Certain exceptions may be made by the officers of the Fund.
The Portfolio issues two classes of shares: Institutional Class and Institu-
tional Service Class. The two classes of shares each represent interests in
the same portfolio of investments, have the same rights and are identical in
all respects, except that the Service Class Shares offered by this Prospectus
bear shareholder servicing expenses, may in the future bear distribution plan
expenses, and have exclusive voting rights with respect to the Rule 12b-1 Dis-
tribution Plan pursuant to which the distribution fee may be paid. The two
classes have different exchange privileges. (See "EXCHANGE PRIVILEGE.") The
net income attributable to Service Class Shares and the dividends payable on
Service Class Shares will be reduced by the amount of the shareholder servic-
ing and distribution fees; accordingly, the net asset value of the Service
Class Shares will be reduced by such amounts.
Some Service Agents may also impose additional or different conditions or
other account fees on the purchase and redemption of Portfolio shares, which
are not subject to the Rule 12b-1 Service and Distribution Plans, which may
include transaction fees and/or service fees paid by the Fund from the Fund
assets attributable to the Service Agent and, would not be imposed if shares
of the Portfolio were purchased directly from the Fund or the Distributor. The
Service Agents may provide shareholder services to their customers that are
not available to a shareholder dealing directly with the Fund. Each Service
Agent is responsible for transmitting to its customers a schedule of any such
fees and information regarding any additional or different purchase and re-
demption conditions. Shareholders who are customers of Service Agents should
consult their Service Agent for information regarding these fees and condi-
tions. A salesperson and any other person entitled to receive compensation for
selling or servicing Portfolio shares may receive different compensation with
respect to one particular class of shares over another in the Fund.
15
<PAGE>
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of a Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer
Agent, Chase Global Funds Services Company, prior to 4 p.m. to receive that
day's share price. Proper payment for the order must be received by the Sub-
Transfer Agent no later than the time when the Portfolio is priced on the fol-
lowing business day. Service Agents are responsible to their customers and the
Fund for timely transmission of all subscription and redemption requests, in-
vestment information, documentation and money.
INITIAL INVESTMENTS
BY MAIL
. Complete and sign an Application and mail it together with a check made
payable to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment.
BY WIRE
. Telephone the UAM Funds Service Center and provide the account name, ad-
dress, telephone number, social security or taxpayer identification num-
ber, Portfolio selected, amount being wired and the name of the bank
wiring the funds. An account number will then be provided to you. Next,
. instruct your bank to wire the specified amount to the Fund's Custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
DDA Acct. #9102772952
Ref: Portfolio Name
Your Account Number
Your Account Name
Wire Control Number
. Forward a completed Application to the Fund at the address shown on the
form. Federal Funds purchases will be accepted only on a day on which
both the NYSE and the Custodian Bank are open for business.
16
<PAGE>
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check made payable to "UAM Funds" to the above address or by wiring money to
the Custodian Bank using the instructions outlined above. When making addi-
tional investments, be sure that the account number, account name and the
Portfolio to be purchased are identified on the check or wire. Prior to wiring
additional investments, notify the UAM Funds Service Center by calling the
number on the cover of this Prospectus. Mail orders should include, when pos-
sible, the "Invest by Mail" stub which accompanies any Fund confirmation
statement.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to suspend the offering of shares of the Portfolio or to reject pur-
chase orders when, in the judgment of management, such suspension or rejection
is in the best interests of the Fund. Purchases of the Portfolio's shares will
be made in full and fractional shares of the Portfolio calculated to three
decimal places. Certificates for fractional shares will not be issued. Certif-
icates for whole shares will not be issued except at the written request of
the shareholder.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by the Port-
folio in exchange for securities will be issued at net asset value determined
as of the same time. All dividends, interest, subscription, or other rights
pertaining to such securities shall become the property of the Portfolio and
must be delivered to the Fund by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for invest-
ment and not for immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be in-
cluded in the Portfolio (current market quotations must be readily
available for such securities);
17
<PAGE>
. the investor represents and agrees that all securities offered to
be exchanged are liquid securities and not subject to any restric-
tions upon their sale by the Portfolio under the Securities Act of
1933, or otherwise; and
. the value of any such securities (except U.S. Government securi-
ties) being exchanged together with other securities of the same
issuer owned by the Portfolio will not exceed 5% of the net assets
of the Portfolio immediately after the transaction.
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of secu-
rities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. No charge is made for redemptions. Any re-
demption may be more or less than the purchase price of the shares depending
on the market value of investment securities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of
shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which they are regis-
tered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pen-
sion and profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the
wire redemption privilege) by completing appropriate sections of
the Application; and
18
<PAGE>
. call the Fund and instruct that the redemption proceeds be mailed
to you or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated
to receive redemption proceeds (this can be accomplished only by a
written request signed by each shareholder, with each signature
guaranteed); and
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the investor to provide certain personal identification at the time an
account is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded
and investors may be required to provide additional telecopied written in-
structions of such transaction requests. The Fund or Sub-Transfer Agent may be
liable for any losses due to unauthorized or fraudulent telephone instructions
if the Fund or the Sub-Transfer Agent do not employ the procedures described
above. Neither the Fund nor the Sub-Transfer Agent will be responsible for any
loss, liability, cost or expense for following instructions received by tele-
phone that it reasonably believes to be genuine.
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than
the registered shareowner(s);
. redemptions where the proceeds are to be sent to someplace other
than the registered address; or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securi-
ties exchanges, registered securities associations, clearing agencies and sav-
ings associations. Broker-dealers guaranteeing signatures must be a member of
a clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after the
19
<PAGE>
receipt of the request, or earlier if required under applicable law. The Fund
may suspend the right of redemption or postpone the date at times when both
the NYSE and Custodian Bank are closed, or under any emergency circumstances
determined by the SEC.
If the Board of Trustees determines that it would be detrimental to the best
interests of remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay redemption proceeds in whole or in part by a
distribution in-kind of liquid securities held by a Portfolio in lieu of cash
in conformity with applicable rules of the SEC. Investors may incur brokerage
charges on the sale of portfolio securities received in payment of redemp-
tions.
SERVICE AND DISTRIBUTION PLANS
Under the Service Plan for Service Class Shares, adopted pursuant to Rule
12b-1 under the 1940 Act, the Fund may enter into service agreements with
Service Agents (broker-dealers or other financial institutions) who receive
fees with respect to the Fund's Service Class Shares owned by shareholders for
whom the Service Agent is the dealer or holder of record, or for whom the
Service Agent performs Servicing, as defined below. These fees are paid out of
the assets allocable to Service Class Shares to the Distributor or to the
Service Agents directly or through the Distributor. The Fund reimburses the
Distributor or the Service Agent for payments made at an annual rate of up to
0.25% of the average daily value of Service Class Shares owned by clients of
the Service Agent during the period payments for Servicing are being made to
it. Such payments are borne exclusively by the Service Class Shares. Each item
for which a payment may be made under the Service Plan constitutes personal
service and/or shareholder account maintenance and may constitute an expense
of distributing Fund shares as the SEC construes such term under Rule 12b-1.
The fees payable for servicing reflect actual expenses incurred up to the lim-
its described herein.
Servicing may include assisting clients in changing dividend options, ac-
count designations and addresses; performing subaccounting; establishing and
maintaining shareholder accounts and records; processing purchase and redemp-
tion transactions; investing client cash account balances automatically in
Service Class Shares; providing periodic statements showing a client's account
balance and integrating such statements with those of other transactions and
balances in the client's other accounts serviced by the Service Agent; arrang-
ing for bank wires; and such other services as the Fund may request, to the
extent the Service Agent is permitted by applicable statute, rule or regula-
tion.
The Glass-Steagall Act and other applicable laws prohibit federally chart-
ered or supervised banks from engaging in certain aspects of the business of
issuing, underwriting, selling and/or distributing securities. Accordingly,
banks are engaged to act as Service Agent only to perform administrative and
shareholder servicing
20
<PAGE>
functions, including transaction-related agency services for their customers.
If a bank is prohibited from acting as a service agent, alternative means for
continuing the servicing of its shareholders would be sought and the share-
holder clients of the bank will remain Fund shareholders.
The Distributor promotes the distribution of the Service Class Shares in ac-
cordance with the terms of a Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act. The Distribution Plan provides for the use of Fund assets
allocable to Service Class Shares to pay expenses of distributing such shares.
The Distribution Plan and Service Plan (the "Plans") were approved by the
Board, including a majority of the Trustees who are not "interested persons"
of the Fund as defined in the 1940 Act (and each of whom has no direct or in-
direct financial interest in the Plans or any agreement related thereto, re-
ferred to herein as the "12b-1 Trustees"). The Plans may be terminated at any
time by the vote of the Board or the 12b-1 Trustees, or by the vote of a ma-
jority of the outstanding Service Class Shares of the Portfolio involved.
While the Plans continue in effect, the selection of the 12b-1 Trustees is
committed to the discretion of such persons then in office. The Plans provide
generally that a Portfolio may incur distribution and service costs under the
Plans which may not exceed in the aggregate 0.75% per annum of that Portfo-
lio's net assets. The Board has currently limited aggregate payments under the
Plans up to 0.50% per annum of a Portfolio's net assets. Upon implementation,
the Distribution Plan would permit payments to the Distributor, broker-deal-
ers, other financial institutions, sales representatives or other third par-
ties who render promotional and distribution services, for items such as ad-
vertising expenses, selling expenses, commissions or travel reasonably in-
tended to result in sales of Service Class Shares and for the printing of pro-
spectuses sent to prospective purchasers of Service Class Shares of the Port-
folio.
Although the Plans may be amended by the Board of Trustees, any changes in
the Plans which would materially increase the amounts authorized to be paid
under the Plans must be approved by shareholders of the Class involved. The
total amounts paid under the foregoing arrangements may not exceed the maximum
limits specified above, and the amounts and purposes of expenditures under the
Plans must be reported to the 12b-1 Trustees quarterly. The amounts allowable
under the Plans for each Class of Shares of the Portfolios are also limited
under certain rules of the National Association of Securities Dealers, Inc.
In addition to payments by the Fund under the Plans, the Distributor, United
Asset Management Corporation, the parent company of UAMFSI, and of the Adviser
or any of their affiliates, may, at its own expense, compensate a Service
Agent or other person for marketing, shareholder servicing, record-keeping
and/or other services performed with respect to the Fund, the Portfolio or any
Class of Shares
21
<PAGE>
of the Portfolio. The person making such payments may do so out of its reve-
nues, its profits or any other source available to it. Such service arrange-
ments, when in effect, are made generally available to all qualified service
providers. The Adviser may compensate its affiliated companies for referring
investors to the Portfolio.
The Distributor, the Adviser and certain of their other affiliates also par-
ticipate, at the date of this Prospectus, in an arrangement with Smith Barney
Inc. under which Smith Barney provides certain defined contribution plan mar-
keting and shareholder services and receives from such entities an amount
equal to up to 33.3% of the portion of the investment advisory fees attribut-
able to the invested assets of Smith Barney's eligible customer accounts with-
out regard to any expense limitation in addition to amounts payable to all
selling dealers. The Fund also compensates Smith Barney for services it pro-
vides to certain defined contribution plan shareholders that are not otherwise
provided by UAMFSI.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Service Class Shares of the Portfolio may be exchanged for Service Class
Shares of any other UAM Funds Portfolio. (See the list of Portfolios of the
UAM Funds at the end of this Prospectus.) Exchange requests should be made by
contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you are interested. Exchanges can only be made with Portfolios that
are qualified for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES--BY TELEPHONE". An exchange
into another UAM Funds Portfolio is a sale of shares and may result in a gain
or loss for income tax purposes. The Fund may modify or terminate the exchange
privilege at any time.
22
<PAGE>
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets attributable to the class, less any liabilities attrib-
utable to the class, by the number of shares outstanding attributable to the
class. The net asset value per share of the Portfolio is determined as of the
close of the NYSE on each day that the NYSE is open for business.
Equity securities listed on a securities exchange for which market quota-
tions are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where
the security is primarily traded. Unlisted equity securities and listed secu-
rities not traded on the valuation date are valued neither exceeding the cur-
rent ask prices nor less than the current bid prices. The prices for securi-
ties denominated in a foreign currency are converted to U.S. dollars based
upon the bid price of the foreign currency against U.S. dollars quoted by any
major bank or by a broker.
Bonds and other fixed income securities are valued according to the broadest
and most representative market, which will ordinarily be the over-the-counter
market. Bonds and other fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities.
Securities purchased with remaining maturities of 60 days or less are valued
at amortized cost.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Board of Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating total return. Total return
figures are based on historical earnings and are not intended to indicate fu-
ture performance.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of time. An average annual total return is a hypothetical rate of re-
turn that, if achieved annually, would have produced the same cumulative total
return if performance had been constant over the entire period.
Performance will be calculated separately for Institutional Class and Serv-
ice Class Shares. Dividends paid by the Portfolio with respect to Institu-
tional Class and Service Class Shares, to the extent any dividends are paid,
will be calculated in the same manner at the same time on the same day and
will be in the same amount,
23
<PAGE>
except that service and distribution fees and any incremental transfer agency
costs relating to Service Class Shares will be borne exclusively by that
class.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices as further de-
scribed in the Portfolio's SAI. This information may also be included in sales
literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. To
receive an Annual Report, contact the UAM Funds Service Center at the address
or telephone number on the cover of this Prospectus.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders in dividends in June and Decem-
ber. If any net capital gains are realized, the Portfolio will normally dis-
tribute them in June, with a supplemental distribution in December of any un-
distributed capital gains earned during the 12 month period ended each Octo-
ber. All dividends and capital gains distributions will be automatically rein-
vested in additional shares of the Portfolio unless the Fund is notified in
writing that the shareholder elects to receive the distributions in cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal in-
come tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends and distributions. To do this,
the Portfolio must, among other things, distribute substantially all of its
ordinary income and net capital gains on an annual basis and maintain a port-
folio of investments which satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income.
Short-term capital gains will be taxed as ordinary income. Long-term capital
gains distributions are taxed as long-term capital gains. Shareholders will be
notified annually of the tax status of dividends and capital gain distribu-
tions received.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
24
<PAGE>
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid in January of the following year.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that the Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you. Consult a tax adviser for more information regarding deduc-
tions and credits for foreign taxes.
INVESTMENT ADVISER
First Pacific Advisors, Inc., located at 11400 West Olympic Blvd., Suite
1200, Los Angeles, CA 90064, acts as the Portfolio's Adviser; Mr. Steven
Romick is responsible for management of the Portfolio. Mr. Romick has 12 years
of experience in the investment management business. He is currently a Senior
Vice President of the Adviser. From 1990-1996, Mr. Romick was Chairman of
Crescent Management, an investment advisory firm he founded. Crescent Manage-
ment served as the Portfolio's adviser until the firm was merged with the cur-
rent Adviser.
Under an Investment Advisory Agreement dated as of September 30, 1996, the
Adviser provides the Portfolio with advice on buying and selling securities,
manages the investments of the Portfolio, furnishes the Portfolio with office
space and certain administrative services, and provides most of the personnel
needed by the Portfolio. As compensation, the Portfolio pays the Adviser a
monthly management fee (accrued daily) based upon the average daily net assets
of the Portfolio at the rate of 1.00% annually.
The Adviser, together with its predecessors, has been in the investment ad-
visory business since 1954. Presently, the Adviser manages assets of approxi-
mately $4.0 billion for six investment companies, including one closed-end in-
vestment company, and more than 30 institutional accounts. The Adviser is an
indirect wholly-owned subsidiary of UAM, a NYSE-listed holding company princi-
pally engaged, through affiliated firms, in providing institutional investment
management and acquiring institutional investment management firms.
The Portfolio is responsible for its own operating expenses. The Adviser has
voluntarily agreed to waive all or a portion of its advisory fees and to as-
sume
25
<PAGE>
operating expenses to keep the Portfolio's Service Class Shares' total annual
operating expenses (excluding interest, taxes and extraordinary expenses), af-
ter the effect of expense offsets, from exceeding 2.10% of average daily net
assets until further notice. To the extent the Adviser performs a service for
which the Portfolio is obligated to pay, the Portfolio shall reimburse the Ad-
viser for its costs incurred in rendering such service.
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Distributor, UAM, the Adviser, or any of its affiliates,
may, at their own expense, compensate a Service Agent or other person for mar-
keting, shareholder servicing, record-keeping and/or other services performed
with respect to the Fund, the Portfolio or any Class of Shares of the Portfo-
lio. The person making such payments may do so out of its revenues, its prof-
its or any other source available to it. Such service arrangements, when in
effect, are made generally available to all qualified service providers.
The Distributor, the Adviser and certain of their other affiliates also par-
ticipate, at the date of this Prospectus, in an arrangement with Smith Barney
Inc. under which Smith Barney provides certain defined contribution plan mar-
keting and other shareholder services and receives from such entities .15 of
1% of the daily net asset value of Institutional Class Shares held by Smith
Barney's eligible customer accounts in addition to amounts payable to all
selling dealers. The Fund also compensates Smith Barney for services its pro-
vides to certain defined contribution plan shareholders that are not otherwise
provided by the Administrator.
The Adviser considers a number of factors in determining which brokers or
dealers to use for the Fund's portfolio transactions. While these are more
fully discussed in the SAI, the factors include, but are not limited to, the
reasonableness of commissions, quality of services and execution, and the
availability of research which the Adviser may lawfully and appropriately use
in its investment management and advisory capacities. Provided the Portfolio
receives prompt execution at competitive prices, the Adviser may also consider
the sale of Portfolio shares as a factor in selecting broker-dealers for the
Fund's portfolio transactions.
ADMINISTRATIVE SERVICES
UAMFSI, a wholly-owned subsidiary of UAM, is responsible for performing and
overseeing administrative, fund accounting, dividend disbursing and transfer
agent services provided to the Fund and its Portfolios. UAMFSI's principal of-
fice is located at 211 Congress Street, Boston, MA 02110. UAMFSI has subcon-
tracted some of these services to Chase Global Funds Services Company
("CGFSC"), an affiliate of The Chase Manhattan Bank, by a Mutual Funds Service
Agreement dated June 30, 1997. CGFSC is located at 73 Tremont Street, Boston,
MA 02108.
26
<PAGE>
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
FPA Crescent Portfolio............................................... 0.06%
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
0.11 of 1% of the next $800 million of combined UAM Funds assets;
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Funds' fees are allocated among the Portfolios on the basis of their
relative assets and are subject to a graduated minimum fee schedule per Port-
folio, which starts at $2,000 per month and increases to $70,000 annually af-
ter two years. If a separate class of shares is added to a Portfolio, its min-
imum annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM, with its principal office
located at 211 Congress Street, Boston, MA 02110, distributes shares of the
Fund. Under the Distribution Agreement (the "Agreement"), the Distributor, as
agent of the Fund, agrees to use its best efforts as sole distributor of Fund
shares. The Distributor does not receive any fee or other compensation under
the Agreement with respect to the Shares offered in this Prospectus except as
described under "Service and Distribution Plans." The Agreement continues in
effect as long as it is approved at least annually by the Fund's Board of
Trustees. Those approving the Agreement must include a majority of Trustees
who are neither parties to the Agreement nor interested persons of any such
party. The Agreement provides that the Fund will bear costs of registration of
its shares with the SEC and various states as well as the printing of its pro-
spectuses, its SAIs and its reports to shareholders.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II". On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
27
<PAGE>
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and have no preference as to conversion, exchange, dividends, re-
tirement or other features and no pre-emptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees can elect 100% of the Trustees. A shareholder is en-
titled 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 of the
Fund.
As of June 16, 1997, Charles Schwab & Co. held of record 39.8% of the out-
standing shares of the Portfolio's Institutional Class for which beneficial
ownership is disclaimed or presumed disclaimed. The persons or organizations
owning 25% or more of the outstanding shares of a Portfolio may be presumed to
"control" (as that term is defined in the 1940 Act) such Portfolio. As a re-
sult, those persons or organizations could have the ability to vote a majority
of the shares of the Portfolio on any matter requiring the approval of share-
holders of such Portfolio.
Both Institutional Class and Institutional Service Class Shares represent an
interest in the same assets of a Portfolio. Service Class Shares bear certain
expenses related to shareholder servicing, and may bear expenses related to
distribution. Service Class shares have exclusive voting rights for matters
relating to such distribution expenditures. Information about the Institu-
tional Class Shares of the Portfolios is available upon request by contacting
the UAM Funds Service Center.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the hold-
ers of not less than 10% of the outstanding shares of the Fund. The Fund will
assist shareholder communications in such matters to the extent required by
the undertaking.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
28
<PAGE>
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the address or telephone number on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN THE PORTFOLIO'S
STATEMENT OF ADDITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR ITS REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT BE LAWFULLY MADE.
29
<PAGE>
UAM FUNDS -- SERVICE CLASS SHARES
<TABLE>
<CAPTION>
<S> <C>
BHM&S Total Return Bond Portfolio
FPA Crescent Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Sirach Growth Portfolio
Sirach Special Equity Portfolio
Sirach Equity Portfolio
Sirach Strategic Balanced Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Short-Term Fixed Income Portfolio
Sterling Partners' Small Cap Value Portfolio
TJ Core Equity Portfolio
</TABLE>
30
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
First Pacific Advisors, Inc.
11400 West Olympic Boulevard
Suite 1200
Los Angeles, CA 90064
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
<PAGE>
LOGO
Hanson Equity Portfolio
Institutional
Class Shares
July 10, 1997
P R O S P E C T U S
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
FUND EXPENSES ........................................................ 1
PROSPECTUS SUMMARY ................................................... 2
RISK FACTORS ......................................................... 3
INVESTMENT OBJECTIVE ................................................. 3
INVESTMENT POLICIES .................................................. 3
OTHER INVESTMENT POLICIES ............................................ 4
PURCHASE OF SHARES ................................................... 8
SHAREHOLDER SERVICES ................................................. 13
VALUATION OF SHARES .................................................. 14
PERFORMANCE CALCULATIONS ............................................. 14
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES ..................... 15
INVESTMENT ADVISER ................................................... 16
ADVISER'S HISTORICAL PERFORMANCE ..................................... 18
ADMINISTRATIVE SERVICES .............................................. 20
DISTRIBUTOR .......................................................... 21
GENERAL INFORMATION .................................................. 22
UAM FUNDS -- INSTITUTIONAL CLASS SHARES .............................. 24
</TABLE>
<PAGE>
LOGO
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, Massachusetts 02208-2798
1-800-638-7983
HANSON EQUITY PORTFOLIO
Institutional Class Shares
Investment Adviser: Hanson Investment Management Company
PROSPECTUS -- July 10, 1997
Hanson Equity Portfolio is one of a series of investment portfolios
available through UAM Funds Trust ("UAM Funds"), an open-end investment company
known as a "mutual fund." Each of the Portfolios that make up the Fund have
different investment objectives and policies. Hanson Equity Portfolio currently
offers only one class of shares. The securities offered in this Prospectus are
Institutional Class Shares of one diversified, no-load Portfolio of the Fund
managed by Hanson Investment Management Company.
Hanson Equity Portfolio. The Hanson Equity Portfolio (the
"Portfolio") seeks to achieve maximum long-term total return, consistent with
reasonable risk to principal, by investing in a diversified portfolio of equity
securities, primarily the common stock of large, U.S.-based companies with
outstanding financial characteristics and strong growth prospects that can be
purchased at reasonable valuations.
There can be no assurance that the Portfolio will achieve its stated
objective.
Keep this Prospectus for future reference. It contains information
that you should know before you invest. A Statement of Additional Information
("SAI") containing additional information about the Fund has been filed with the
Securities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number
above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR A STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Institutional Class Shares would incur. Transaction fees may be
charged if a broker-dealer or other financial intermediary deals with the Fund
on your behalf. (See "PURCHASE OF SHARES.")
<TABLE>
<CAPTION>
Shareholder Transaction Expenses
<S> <C>
Sales Load Imposed on Purchases .............. NONE
Sales Load Imposed on Reinvested Dividends ... NONE
Deferred Sales Load .......................... NONE
Redemption Fees .............................. NONE
Exchange Fees ................................ NONE
</TABLE>
Estimated Annual Fund Operating Expenses
(As a Percentage of Average Net Assets)
<TABLE>
<S> <C>
Investment Advisory Fees...................... 0.70%
Administrative Fees........................... 0.24%
12b-1 Fees.................................... NONE
Other Expenses................................ 0.38%
----
Total Operating Expenses 1.32%
====
</TABLE>
The Adviser has voluntarily agreed to waive a portion of its advisory fees
and to assume expenses otherwise payable by the Portfolio to reduce expense
ratios. As of the date of this Prospectus, the Adviser has agreed to keep the
Portfolio's Institutional Class Shares' total annual operating expenses from
exceeding 2.50% of average daily net assets. The Fund will not reimburse the
Adviser for any advisory fees that are waived or Portfolio expenses that the
Adviser may bear on behalf of the Portfolio for a given fiscal year.
The table above shows various fees and expenses an investor would bear
directly or indirectly. The expenses and fees set forth above for the Portfolio
are based on estimates. For purposes of calculating the fees set forth above,
the table assumes that the Portfolio's average daily assets will be $20 million.
The following example illustrates expenses a shareholder would pay on
a $1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. The Portfolio charges
no redemption fees of any kind.
1 year 3 years
------ -------
Expenses ................................................. $13 $42
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or lesser than those
shown above.
1
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Hanson Investment Management Company (the "Adviser") is a registered
investment adviser. Founded in 1973, the firm currently has over $1.1 billion in
assets under management. The firm is a wholly-owned subsidiary of United Asset
Management Corporation. (See "INVESTMENT ADVISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc.
(the "Distributor"), a wholly-owned subsidiary of United Asset Management
Corporation, to investors at net asset value without a sales commission. Share
purchases may be made by sending investments directly to the Fund. The minimum
initial investment is $2,500 The minimum for subsequent investments is $100. The
minimum initial investment for IRA accounts is $500. The minimum initial
investment for spousal IRA accounts is $250. Certain exceptions to the initial
or minimum investment amounts may be made by the officers of the Fund. (See
"PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net
investment income in quarterly dividends. The Portfolio will distribute any
realized net capital gains annually. Distributions will be reinvested in
Portfolio shares automatically unless an investor elects to receive cash
distributions. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTIONS AND EXCHANGES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemption
request. The redemption price may be more or less than the purchase price. (See
"REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of United
Asset Management Corporation, is responsible for performing and overseeing
administration, fund accounting, dividend disbursing and transfer agency
services provided to the Fund and its Portfolios by third-party service
providers. (See "ADMINISTRATIVE SERVICES.")
2
<PAGE>
RISK FACTORS
The value of the Portfolio's shares will fluctuate in response to changes
in market and economic conditions as well as the financial conditions and
prospects of the issuers in which the Portfolio invests. Prospective investors
should consider the following: (1) The Portfolio may invest in repurchase
agreements which entail a risk of loss should the seller default on its
transaction; (2) The Portfolio may lend its investment securities which entails
a risk of loss should a borrower fail financially; (3) The Portfolio's
performance may depend on the ability of the Adviser who has substantial
experience as an investment adviser but limited experience as an adviser to a
mutual fund.
INVESTMENT OBJECTIVE
The Portfolio seeks to achieve maximum long-term total return, consistent
with reasonable risk to principal, by investing in a diversified portfolio of
equity securities, primarily the common stock of large, U.S.-based companies
with outstanding financial characteristics and strong growth prospects that can
be purchased at reasonable valuations. There can be no assurance that the
Portfolio will achieve its stated objective.
INVESTMENT POLICIES
In seeking its investment objective, the Portfolio will, under normal
circumstances, invest at least 80% of its total assets in equity securities,
primarily the common stock of large capitalization, U.S.-based companies. Large
capitalization companies are defined as those companies with market
capitalizations greater than $1 billion at the time of purchase. Equity
securities include common stock, preferred stock, rights and warrants. The
Portfolio may also invest in short-term investments, convertible preferred stock
and convertible bonds.
Under unusual circumstances, when the Adviser believes that market
conditions warrant a defensive position, up to 100% of the Portfolio's assets
may be held in cash and short-term investments. (See "SHORT-TERM INVESTMENTS"
and "REPURCHASE AGREEMENTS.") When the Portfolio is in a defensive position, it
may not necessarily be pursuing its stated investment objective.
The basis of the Adviser's investment philosophy is to "buy the company,
not the stock." The Adviser believes that superior long-term results can be
achieved by investing in a select number of well-managed companies that have
clear business plans, specific financial goals, above-average earnings and
dividend growth rates, and whose shares can be purchased at reasonable
valuations. The Adviser's stock selection process is a bottom-up approach which
means that it will construct the Portfolio by focusing on individual stocks
rather than industry groups or sectors. (Top-down investors would first decide
which industries or sectors they want to emphasize and then would look for
stocks that fit those requirements.) In determining a suitable equity
investment, the Adviser evaluates a prospective company using the following
process:
3
<PAGE>
1. The Adviser asks three questions:
. Does the Adviser understand the company's business?
. Is the company's management shareholder-conscious?
. Is the company's long-term outlook favorable?
2. The Adviser subjects the company to a screen designed to select companies
with the following characteristics:
. reasonable price-to-earnings ratio
. above-average total return potential
. leader in its industry
. highly profitable
. financially strong
3. Finally, the potential investment is put through an intensive review by the
Investment Committee before it is added to the Portfolio.
The Adviser sells equity investments when: (a) the company fails to meet
the Adviser's investment criteria; (b) a more attractive investment is found; or
(c) the company's share price rises to a level that cannot be justified.
OTHER INVESTMENT POLICIES
Under normal circumstances, the Portfolio may invest up to 20% of its
assets, unless restricted by additional limitations described below or in the
Portfolio's SAI, in the following securities or investment techniques:
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated
redemptions, or for temporary defensive purposes, the Portfolio may invest a
portion of its assets in domestic and foreign money market instruments including
certificates of deposit, bankers' acceptances, time deposits, U.S. Government
obligations, U.S. Government agency securities, short-term corporate debt
securities, and commercial paper rated A-1 or A-2 by Standard & Poor's
Corporation or Prime-1 or Prime-2 by Moody's Investors Service, Inc. or if
unrated, determined by the Adviser to be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless (i)
the bank has total assets of at least $1 billion, or the equivalent in other
currencies, (ii) in the case of U.S. banks, it is a member of the Federal
Deposit Insurance Corporation, and (iii) in the case of foreign branches of U.S.
banks, the security is, in the opinion of the Adviser, of an investment quality
comparable with other debt securities which may be purchased by the Portfolio.
The Fund has received permission from the Securities and Exchange
Commission (the "SEC") to deposit the daily uninvested cash balances of the
Fund's
4
<PAGE>
Portfolios, as well as cash for investment purposes, into one or more joint
accounts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable rate demand notes and tax-exempt money instruments. By
entering into these investments on a joint basis, it is expected that a
Portfolio may earn a higher rate of return on investments relative to what it
could earn individually.
The Fund has received permission from the SEC for each of its Portfolios to
invest, for cash management purposes, the greater of 5% of its total assets or
$2.5 million in the Fund's DSI Money Market Portfolio. (See "INVESTMENT
COMPANIES.")
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities, certificates of deposit, and certain bankers' acceptances
and other securities outlined above under "SHORT-TERM INVESTMENTS." In a
repurchase agreement, the Portfolio buys a security and simultaneously commits
to sell that security back at an agreed upon price plus an agreed upon market
rate of interest. Under a repurchase agreement, the seller is required to
maintain the value of securities subject to the agreement at not less than 100%
of the repurchase price. The value of the securities purchased will be evaluated
daily, and the Adviser will, if necessary, require the seller to maintain
additional securities to ensure that the value is in compliance with the
previous sentence. The use of repurchase agreements involves certain risks. For
example, a default by the seller of the agreement may cause the Portfolio to
experience a loss or delay in the liquidation of the collateral securing the
repurchase agreement. The Portfolio might also incur disposition costs in
liquidating the collateral. While the Fund's management acknowledges these
risks, it is expected that they can be controlled through stringent counter-
party selection criteria and careful monitoring procedures. The Fund has
received permission from the SEC to pool daily uninvested cash balances of the
Fund's Portfolios in order to invest in repurchase agreements on a joint basis.
By entering into joint repurchase agreements, the Portfolio may incur lower
transaction costs and earn higher rates of interest on joint repurchase
agreements. The Portfolio's contribution would determine its return from a joint
repurchase agreement. (See "SHORT-TERM INVESTMENTS.")
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. The Portfolio will not loan securities
to the extent that greater than one-third of its assets at fair market value
would be committed to loans. During the term of a loan, the Portfolio is subject
to a gain or loss depending on any increase or decrease in the market price of
the securities loaned. Lending of securities is subject to review by the Fund's
Board of Trustees. All relevant facts and circumstances, including the
creditworthiness of the broker, dealer
5
<PAGE>
or institution, will be considered in making decisions about securities lending.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Trustees. The Portfolios will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on loan, the loan must be called and the securities
voted.
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT
SECURITIES
The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement," or "forward delivery" basis. "When-issued" or "forward delivery"
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more
before delivery is due. Delayed settlement is a term used to describe settlement
of a securities transaction in the secondary market which will occur sometime in
the future. No payment or delivery is made by the Portfolio until it receives
delivery or payment from the other party to any of the above transactions. It
is possible that the market price of the securities at the time of delivery may
be higher or lower than the purchase price. The Portfolio will maintain a
separate account of cash or liquid securities at least equal to the value of
purchase commitments until payment is made. Typically, no income accrues on
securities purchased on a delayed delivery basis prior to the time delivery is
made although the Portfolio may earn income on securities it has deposited in a
segregated account.
The Portfolio may engage in these types of purchases in order to buy
securities that fit with its investment objectives at attractive prices -- not
to increase its investment leverage.
PORTFOLIO TURNOVER
Portfolio turnover is not anticipated to exceed 60%. In addition to
Portfolio trading costs, higher rates of portfolio turnover may result in the
realization of capital gains. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND
TAXES" for more information on taxation). The Portfolio will not normally engage
in short-term trading, but reserves the right to do so.
INVESTMENT COMPANIES
The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets may be invested in the securities of any one investment company nor
may it acquire more than 3% of the voting securities of any other investment
company. The Portfolio will indirectly bear its proportionate share of any
management fees paid by an investment company in which it invests in addition to
the advisory fee paid by the Portfolio.
6
<PAGE>
The Fund has received permission from the SEC to allow each of its
Portfolios to invest, for cash management purposes, the greater of 5% of its
total assets or $2.5 million in the Fund's DSI Money Market Portfolio provided
that the investment is consistent with the Portfolio's investment policies and
restrictions. Based upon the Portfolio's assets invested in the DSI Money Market
Portfolio, the investing Portfolio's adviser will waive its investment advisory
fee and any other fees earned as a result of the Portfolio's investment in the
DSI Money Market Portfolio. The investing Portfolio will bear expenses of the
DSI Money Market Portfolio on the same basis as all of its other shareholders.
RESTRICTED SECURITIES
The Portfolio may purchase restricted securities that are not registered
for sale to the general public but which are eligible for resale to qualified
institutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Trustees, the Adviser determines the
liquidity of such investments by considering all relevant factors. Provided that
a dealer or institutional trading market in such securities exists, these
restricted securities are not treated as illiquid securities for purposes of a
Portfolio's investment limitations. The Portfolio may also invest up to 15% of
its net assets in illiquid securities. Prices realized from sales of these
securities could be more or less than those originally paid by the Portfolio or
less than what may be considered the fair value of such securities.
AMERICAN DEPOSITARY RECEIPTS
The Portfolio intends to invest primarily in U.S.-based companies. In
addition, the Portfolio may purchase shares of foreign based companies in the
form of American Depositary Receipts (ADRs). ADRs may be sponsored or
unsponsored. Sponsored ADRs are established jointly by a depositary and the
underlying issuer, whereas unsponsored ADR's may be established without
participation by the underlying issuer. Holders of an unsponsored ADR generally
bear all the costs associated with establishing the unsponsored ADR. The
depositary of an unsponsored ADR is under no obligation to distribute
shareholder communications received from the underlying issuer or to pass
through to the holders of the unsponsored ADR voting rights with respect to the
deposited securities or pool of securities. (See "Foreign Securities" in the
SAI.)
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and
interest by the U.S. Government or any of its agencies or
instrumentalities);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding voting securities of any issuer;
7
<PAGE>
(c) invest more than 5% of its assets at the time of purchase in the
securities of companies that have (with predecessors) a continuous
operating history of less than 3 years;
(d) invest more than 25% of its assets in companies within a single
industry; however, there are no limitations on investments made in
instruments issued or guaranteed by the U.S. Government and its
agencies;
(e) make loans except by purchasing debt securities in accordance with its
investment objective and policies or entering into repurchase
agreements or by lending its portfolio securities to banks, brokers,
dealers and other financial institutions so long as the loans are made
in compliance with the 1940 Act, as amended, or the Rules and
Regulations or interpretations of the SEC;
(f) (i) borrow, except from banks and as a temporary measure for
extraordinary or emergency purposes and then, in no event, in excess
of 33 1/3% of the Portfolio's gross assets valued at the lower of
market or cost, and (ii) the Portfolio may not purchase additional
securities when borrowings exceed 5% of total assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent greater
than 33 1/3% of its total assets at fair market value.
The Portfolio's investment objective and investment limitations (a), (b),
(d), (e) and (i) listed above are fundamental policies and may be changed only
with the approval of the holders of a majority of the outstanding voting
securities of the Portfolio. The other investment limitations described here and
those not specified as fundamental in the SAI as well as the Portfolio's
investment policies are not fundamental and the Fund's Board of Trustees may
change them without shareholder approval.
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc.
(the "Distributor"), without a sales commission at the net asset value per share
next determined after an order is received by the Fund and payment is received
by the Custodian. (See "VALUATION OF SHARES.") The minimum initial investment
required is $2,500. The minimum initial investment for IRA accounts is $500. The
minimum initial investment for spousal IRA accounts is $250. Certain exceptions
may be made by the officers of the Fund.
Shares of the Portfolio may be purchased by customers of brokers-dealers or
other financial intermediaries ("Service Agents") which have established a
shareholder servicing relationship with the Fund on behalf of their customers.
Service Agents may impose additional or different conditions on purchases or
redemptions of Portfolio shares and may charge transaction or other account
fees. Each Service Agent is
8
<PAGE>
responsible for transmitting to its customers a schedule of any such fees and
information regarding additional or different purchase or redemption conditions.
Shareholders who are customers of Service Agents should consult their Service
Agent for information regarding these fees and conditions. Amounts paid to
Service Agents may include transaction fees and/or service fees paid by the Fund
from the Fund assets attributable to the Service Agent, which would not be
imposed if shares of the Portfolio were purchased directly from the Fund or the
Distributor. Service Agents may provide shareholder services to their customers
that are not available to a shareholder dealing directly with the Fund. A
salesperson and any other person entitled to receive compensation for selling or
servicing Portfolio shares may receive different compensation with respect to
one particular class of shares over another in the Fund.
Service Agents may enter confirmed purchase orders on behalf of their
customers. If shares of a Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the New
York Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer Agent,
Chase Global Funds Services Company, prior to 4 p.m. to receive that day's share
price. Proper payment for the order must be received by the Sub-Transfer Agent
no later than the time when the Portfolio is priced on the following business
day. Service Agents are responsible to their customers and the Fund for timely
transmission of all subscription and redemption requests, investment
information, documentation and money.
INITIAL INVESTMENTS
BY MAIL
. Complete and sign an Application and mail it together with a check
made payable to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an
account at the next share price calculated for the Portfolio after receipt.
Payment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept it
for investment.
BY WIRE
. Telephone the UAM Funds Service Center and provide the account name,
address, telephone number, social security or taxpayer identification
number, Portfolio selected, amount being wired and the name of the
bank wiring the funds. An account number will then be
9
<PAGE>
provided to you. Next,
. instruct your bank to wire the specified amount to the Fund's
Custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
DDA Acct. #9102772952
Ref: Portfolio Name __________________
Your Account Number __________________
Your Account Name __________________
Wire Control Number __________________
. Forward a completed Application to the Fund at the address shown on
the form. Federal Funds purchases will be accepted only on a day on
which both the NYSE and the Custodian Bank are open for business.
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional
investment is $100. Shares can be purchased at net asset value by mailing a
check made payable to "UAM Funds" to the above address or by wiring money to the
Custodian Bank using the instructions outlined above. When making additional
investments, be sure that the account number, account name and the Portfolio to
be purchased are identified on the check or wire. Prior to wiring additional
investments, notify the UAM Funds Service Center by calling the number on the
cover of this Prospectus. Mail orders should include, when possible, the "Invest
by Mail" stub which accompanies any Fund confirmation statement.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole
discretion, to suspend the offering of shares of the Portfolio or to reject
purchase orders when, in the judgment of management, such suspension or
rejection is in the best interests of the Fund. Purchases of the Portfolio's
shares will be made in full and fractional shares of the Portfolio calculated to
three decimal places. Certificates for fractional shares will not be issued.
Certificates for whole shares will not be issued except at the written request
of the shareholder.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in
exchange for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of
10
<PAGE>
net asset value after acceptance. Shares issued by the Portfolio in exchange for
securities will be issued at net asset value determined as of the same time. All
dividends, interest, subscription, or other rights pertaining to such securities
shall become the property of the Portfolio and must be delivered to the Fund by
the investor upon receipt from the issuer. Securities acquired through an in-
kind purchase will be acquired for investment and not for immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be included
in the Portfolio (current market quotations must be readily available
for such securities);
. the investor represents and agrees that all securities offered to be
exchanged are liquid securities and not subject to any restrictions
upon their sale by the Portfolio under the Securities Act of 1933, or
otherwise; and
. the value of any such securities (except U.S. Government securities)
being exchanged together with other securities of the same issuer
owned by the Portfolio will not exceed 5% of the net assets of the
Portfolio immediately after the transaction.
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of
securities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.
11
<PAGE>
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. No charge is made for redemptions. Any
redemption may be more or less than the purchase price of the shares depending
on the market value of investment securities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests
to redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of
shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which they are registered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pension
and profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the wire
redemption privilege) by completing appropriate sections of the
Application; and
. call the Fund and instruct that the redemption proceeds be mailed to
you or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated to
receive redemption proceeds (this can be accomplished only by a
written request signed by each shareholder, with each signature
guaranteed); and
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may be
liable for any losses if they fail to do so. These procedures include requiring
the investor to provide certain personal identification at the time an account
is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded and
investors may be required to provide additional telecopied written instructions
of such transaction requests. The
12
<PAGE>
Fund or Sub-Transfer Agent may be liable for any losses due to unauthorized or
fraudulent telephone instructions if the Fund or the Sub-Transfer Agent do not
employ the procedures described above. Neither the Fund nor the Sub-Transfer
Agent will be responsible for any loss, liability, cost or expense for following
instructions received by telephone that it reasonably believes to be genuine.
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than
the registered shareowner(s);
. redemptions where the proceeds are to be sent to someplace other than
the registered address; or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor
institution which participates in a signature guarantee program. Eligible
guarantor institutions include banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies and
savings associations. Broker-dealers guaranteeing signatures must be a member of
a clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after the
receipt of the request, or earlier if required under applicable law. The Fund
may suspend the right of redemption or postpone the date at times when both the
NYSE and Custodian Bank are closed, or under any emergency circumstances
determined by the SEC.
If the Board of Trustees determines that it would be detrimental to the
best interests of remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay redemption proceeds in whole or in part by a
distribution in-kind of liquid securities held by the Portfolio in lieu of cash
in conformity with applicable rules of the SEC. Investors may incur brokerage
charges on the sale of portfolio securities received in payment of redemptions.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for
Institutional Class Shares of any other UAM Funds Portfolio. (See the list of
Portfolios of the UAM Funds at the end of this Prospectus.) Exchange requests
should be made by contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
13
<PAGE>
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you are interested. Exchanges can only be made with Portfolios that are
qualified for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone
exchanges will be accepted only if the certificates for the shares to be
exchanged have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4 p.m.
(ET) will be processed as of the close of business on the same day. Requests
received after 4 p.m. will be processed on the next business day. The Board of
Trustees may limit the frequency and amount of exchanges permitted. For
additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES -- BY TELEPHONE". An exchange
into another UAM Funds Portfolio is a sale of shares and may result in a gain or
loss for income tax purposes. The Fund may modify or terminate the exchange
privilege at any time.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets, less any liabilities, by the number of shares
outstanding. The net asset value per share of the Portfolio is determined as of
the close of the NYSE on each day that the NYSE is open for business.
Equity securities listed on a securities exchange for which market
quotations are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where the
security is primarily traded. Unlisted equity securities and listed securities
not traded on the valuation date for which market quotations are readily
available are valued neither exceeding the current ask prices nor less than
the current bid prices. Quotations of foreign securities in a foreign currency
are converted to U.S. dollar equivalents. The converted value is based upon the
bid price of the foreign currency against U.S. dollars quoted by any major bank
or by a broker.
The value of other assets and securities for which no quotations are
readily available (including restricted securities) is determined in good faith
at fair value using methods determined by the Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating total return. Total
return figures are based on historical earnings and are not intended to indicate
future performance.
Total return is the change in value of an investment in the Portfolio over
a given period, assuming reinvestment of any dividends and capital gains. A
cumulative or aggregate total return reflects actual performance over a stated
period of time. An
14
<PAGE>
average annual total return is a hypothetical rate of return that, if achieved
annually, would have produced the same cumulative total return if performance
had been constant over the entire period.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported in
financial and industry publications, and various indices as further described in
the Portfolio's SAI. This information may also be included in sales literature
and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end will contain additional performance information that includes
comparisons with appropriate indices. The Annual Report will be available
without charge. Contact the UAM Funds Service Center at the address or telephone
number on the cover of this Prospectus.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net
investment income (for tax purposes) to shareholders in quarterly dividends. If
any net capital gains are realized, each Portfolio will normally distribute them
annually. All dividends and capital gains distributions will be automatically
reinvested in additional shares of the Portfolio unless the Fund is notified in
writing that the shareholder elects to receive the distributions in cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal
income tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends. To do this, the Portfolio must,
among other things, distribute substantially all of its ordinary income and net
capital gains on an annual basis and maintain a portfolio of investments which
satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income. Short-
term capital gains will be taxed as ordinary income. Long-term capital gains
distributions are taxed as long-term capital gains. Shareholders will be
notified annually of dividend income earned for tax purposes.
Dividends declared in October, November and December to shareholders of
record in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, provided
that the dividends are paid in January of the following year.
15
<PAGE>
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to
withholding and other taxes imposed by foreign countries. These taxes reduce the
Portfolio's dividends but are included in the taxable income reported on your
tax statement if the Portfolio qualifies for this tax treatment and elects to
pass it through to you. Consult a tax adviser for more information regarding
deductions and credits for foreign taxes.
INVESTMENT ADVISER
Hanson Investment Management Company (the "Adviser") is a registered
investment adviser formed in 1973. Its business offices are located at 4000
Civic Center Drive, Suite 200, San Rafael, CA 94903. The Adviser is a wholly-
owned subsidiary of United Asset Management Corporation ("UAM") and provides and
offers investment management and advisory services to corporations, unions,
pensions and profit-sharing plans, trusts, estates and other institutions and
investors. The Adviser currently has over $1.1 billion in assets under
management.
The Portfolio pays an annual fee in monthly installments to the Adviser for
advisory services. This fee is accrued daily and paid every month as a
percentage of the average net assets in the Portfolio for that month. The
percentage fee on an annual basis is 0.70%.
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Distributor, UAM, the Adviser, or any of their affiliates,
may, at its own expense, compensate a Service Agent or other person for
marketing, shareholder servicing, record-keeping and/or other services performed
with respect to the Fund, a Portfolio or any Class of Shares. Payments made for
any of these purposes may be made from its revenues, its profits or any other
source available to it. When such service arrangements are in effect, they are
made generally available to all qualified service providers.
The Distributor, the Adviser and certain of their other affiliates also
participate, at the date of this Prospectus, in an arrangement with Smith Barney
Inc. under which Smith Barney provides certain defined contribution plan
marketing and other shareholder services and receives from such entities .15 of
1% of the daily net asset value of Institutional Class Shares held by Smith
Barney's eligible customer accounts in addition to amounts payable to all
selling dealers. The Fund also compensates Smith Barney for services it provides
to certain defined contribution plan shareholders that are not otherwise
provided by the Administrator.
The investment professionals at the Adviser who comprise the Investment
Committee and who are responsible for the day-to-day management of the Portfolio
16
<PAGE>
and their qualifications are as follows:
Charles H. Raven, Principal, President and Chief Investment Officer.
Charles H. Raven joined Hanson Investment Management Company in 1983 as a
principal of the firm. Prior to joining the firm, Mr. Raven was a senior
portfolio manager for McCullough & Andrews and before that was Vice President,
Investments at Lionel D. Edie & Company where he worked for fourteen years.
Previously, he worked in commercial banking with Bank of America. He received a
BA from Stanford University and an MBA from Harvard Business School.
Anthony P. Wilson, Principal, Director of Marketing & Client Service.
Anthony P. Wilson joined Hanson Investment Management in 1995 as a principal of
the firm. Over the past 25 years Mr. Wilson has held several senior management
positions. Most recently he was Chief Financial Officer for The Lawrenceville
School managing their Endowment Fund. Mr. Wilson also served as the senior US
representative for J.P. Morgan's $11 billion international securities management
division, and as Vice President and Managing Director in the Asset Management
Group at A.G. Becker Paribas. Mr. Wilson received a BA from the University of
Colorado and a MA from Northwestern University.
David E. Post, Principal, Portfolio Manager. David E. Post joined Hanson
Investment Management Company in 1994 as a portfolio manager. In 1983, Mr. Post
founded CSI Capital Management, where he directed the investment of all managed
assets. Previously, he served as president of HS Partners, Inc. He began his
career at Merrill Lynch, Pierce, Fenner & Smith. Mr. Post received a BA from the
University of California, Berkeley.
Steven E. Cutcliffe, Principal, Portfolio Manager. Steven E. Cutcliffe
joined Hanson Investment Management Company in 1991 as an assistant portfolio
manager. In 1993, he was promoted to portfolio manager. Previously, Mr.
Cutcliffe was Vice President, Corporate Finance for McGinn, Smith & Company and
before that worked for Manufacturers Hanover Trust Company. He received an AB
from Dartmouth College and an MBA from Amos Tuck School.
Edward J. Lorain, Director of Research. Edward J. Lorain joined Hanson
Investment Management Company in 1984 as an equity research analyst. Mr. Lorain
has consistently served the research needs of the firm and, in 1995, was
promoted to Director of Research. Prior to joining Hanson, Mr. Lorain was a
financial consultant for Dean Witter Reynolds, Inc. He received a BS from the
University of California, Davis.
Lisa M. Collins, Vice President, Trading. Lisa M. Collins joined Hanson
Investment Management Company in 1986 as a portfolio administrator. She worked
as a portfolio administrator and office manager prior to taking over the trading
area in 1987. In 1993, Ms. Collins was named Vice President and continues to
manage trading for the firm. Before joining Hanson Investment Management
Company, she worked as a research assistant at Paine Webber, Inc. Previously,
Ms. Collins worked as a portfolio administrator at Alliance Capital Management
Co. and, before that, with
17
<PAGE>
Birr Wilson & Co. She received a BA from California Polytechnic University.
Stephen F. Rosenthal, CFA, Research Analyst. Stephen F. Rosenthal joined
Hanson Investment Management Company in 1995 as a research analyst. Prior to
joining Hanson, Mr. Rosenthal also was a Captain in the Marine Corps from 1983
to 1990, where he piloted Marine Attack Helicopters as a Naval Aviator. He
received a BS from the University of Santa Clara and an MBA from the University
of Southern California.
ADVISER'S HISTORICAL PERFORMANCE
Below are certain performance data provided by the Adviser pertaining to
the composite of separately managed accounts of the Adviser that are managed
with substantially similar (although not necessarily identical) objectives,
policies and strategies as those of the Portfolio. The performance data for the
managed accounts is net of all fees and expenses. The investment returns of the
Portfolio may differ from those of the separately managed accounts because such
separately managed accounts may have fees and expenses that differ from those of
the Portfolio. Further, the separately managed accounts are not subject to
investment limitations, diversification requirements, and other restrictions
imposed by the 1940 Act and the Internal Revenue Code; such conditions, if
applicable, may have lowered the returns for the separately managed accounts.
The results presented are not intended to predict or suggest the return to be
experienced by the Portfolio or the return an investor might achieve by
investing in the Portfolio.
18
<PAGE>
Hanson Investment Management Company Composite Returns
For Individual Years Ended December 31
(Percentage Returns Net of Management Fees)
<TABLE>
<CAPTION>
Chicago Asset
Management
Calendar Years Company S & P 500
-------------- -------------- ----------
<S> <C> <C>
1979......................... 17.8 % 18.6 %
1980......................... 24.8 % 32.4 %
1981......................... 11.4 % (5.3)%
1982......................... 26.8 % 21.4 %
1983......................... 26.9 % 22.6 %
1984......................... 7.7 % 6.3 %
1985......................... 33.0 % 31.7 %
1986......................... 18.8 % 18.7 %
1987......................... (1.0)% 5.3 %
1988......................... 24.1 % 16.6 %
1989......................... 28.5 % 31.7 %
1990......................... 0.3 % (3.1)%
1991......................... 33.8 % 30.4 %
1992......................... 9.0 % 7.7 %
1993......................... 1.6 % 10.1 %
1994......................... (4.5)% 1.2 %
1995......................... 34.0 % 37.8 %
9 Months ended 9/30/96 18.0 % 13.4 %
Annualized................... 16.9 % 16.1 %
Cumulative................... 1,488.4 % 1,308.8 %
Eighteen-Year Mean
(1/1/79 - 12/31/96)......... 17.2 % 16.7 %
Value of $1 invested during
(1/1/79-9/30/96)............ $15.88 $14.09
</TABLE>
19
<PAGE>
Notes:
1. The annualized return is calculated from monthly data, allowing for
compounding. The formula used is in accordance with the acceptable
methods set forth by the Association for Investment Management
Research, the Bank Administration Institute, and the Investment
Counsel Association of America. Market value of the account was the
sum of the account's total assets, including cash, cash equivalents,
short-term investments, and securities valued at current market
prices.
2. The cumulative return means that $1 invested in the composite account
on January 1, 1979 had grown to $15.88 by September 30, 1996.
3. The 17-year mean is the arithmetic average of the annual returns for
the calendar years listed.
4. The S&P 500 is an unmanaged index which assumes reinvestment of
dividends and is generally considered representative of securities
similar to those invested in by the Adviser for purpose of the
composite performance numbers set forth above.
5. The Adviser's average annual management fee over the period shown
(1/1/79-9/30/96) was 0.40% or 40 basis points. During the period, fees
on the Adviser's individual accounts ranged from 0.32% to 1.00% (32
basis points to 100 basis points). Net returns to investors vary
depending on the management fee.
ADMINISTRATIVE SERVICES
UAMFSI, a wholly-owned subsidiary of UAM, is responsible for performing and
overseeing administrative, fund accounting, dividend disbursing and transfer
agent services provided to the Fund and its Portfolios. UAMFSI's principal
office is located at 211 Congress Street, Boston, MA 02110. UAMFSI has
subcontracted some of these services to Chase Global Funds Services Company
("CGFSC"), an affiliate of The Chase Manhattan Bank, by a Mutual Funds Service
Agreement dated June 30, 1997. CGFSC is located at 73 Tremont Street, Boston,
MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
Rate
----
Hanson Equity Portfolio.......................................... 0.04%
20
<PAGE>
CGFSC's monthly fee for its services is calculated on an annualized basis
as follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
0.11 of 1% of the next $800 million of combined UAM Funds assets;
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Funds' fees are allocated among the Portfolios on the basis of
their relative assets and are subject to a graduated minimum fee schedule per
Portfolio, which starts at $2,000 per month and increases to $70,000 annually
after two years. If a separate class of shares is added to a Portfolio, its
minimum annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM with its principal office
located at 211 Congress Street, Boston, Massachusetts 02110, distributes the
shares of the Fund. Under the Distribution Agreement (the "Agreement"), the
Distributor, as agent of the Fund, agrees to use its best efforts as sole
distributor of the Fund's shares. The Distributor does not receive any fee or
other compensation under the Agreement with respect to this Portfolio. The
Agreement continues in effect as long as it is approved at least annually by the
Fund's Board of Trustees. Those approving the Agreement must include a majority
of Trustees who are neither parties to the Agreement nor interested persons of
any such party. The Agreement provides that the Fund will bear costs of
registration of its shares with the SEC and various states as well as the
printing of its prospectuses, its SAIs and its reports to shareholders.
21
<PAGE>
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II". On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial interest,
without par value. The Trustees have the power to designate one or more series
("Portfolios") or classes of shares of beneficial interest without further
action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and
nonassessable, and have no preference as to conversion, exchange, dividends,
retirement or other features and no pre-emptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees can elect 100% of the Trustees. 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 of the
Fund.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the holders
of not less than 10% of the outstanding shares of the Fund. The Fund will assist
shareholder communications in such matters to the extent required by the
undertaking.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and
annual financial statements audited by Price Waterhouse LLP.
22
<PAGE>
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service
Center at the address or telephone number on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
No person has been authorized to give any information or to make any
representations not contained in this Prospectus or in the Portfolio's Statement
of Additional Information, in connection with the offering made by this
Prospectus and, if given or made, such information or its representations must
not be relied upon as having been authorized by the Fund. This Prospectus does
not constitute an offering by the Fund in any jurisdiction in which such
offering may not be lawfully made.
23
<PAGE>
UAM FUNDS -- INSTITUTIONAL CLASS SHARES
Acadian Emerging Markets Portfolio
Acadian International Equity Portfolio
BHM&S Total Return Bond Portfolio
Chicago Asset Management Intermediate Bond Portfolio
Chicago Asset Management Value/Contrarian Portfolio
C&B Balanced Portfolio
C&B Equity Portfolio
C&B Equity Portfolio for Taxable Investors
C&B Mid Cap Equity Portfolio
DSI Balanced Portfolio
DSI Disciplined Value Portfolio
DSI Limited Maturity Bond Portfolio
DSI Money Market Portfolio
FMA Small Company Portfolio
FPA Crescent Portfolio
Hanson Equity Portfolio
ICM Equity Portfolio
ICM Fixed Income Portfolio
ICM Small Company Portfolio
IRC Enhanced Index Portfolio
Jacobs International Octagon Portfolio
McKee Domestic Equity Portfolio
McKee International Equity Portfolio
McKee U.S. Government Portfolio
McKee Small Cap Equity Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Rice, Hall James Small Cap Portfolio
Rice, Hall James Small/Mid Cap Portfolio
Sirach Equity Portfolio
Sirach Fixed Income Portfolio
Sirach Growth Portfolio
Sirach Short-Term Reserves Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
SAMI Preferred Stock Income Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Small Cap Portfolio
Sterling Partners' Short-Term Fixed Income Portfolio
Sterling Partners' Small Cap Value Portfolio
TS&W Equity Portfolio
TS&W Fixed Income Portfolio
TS&W International Equity Portfolio
TS&W Balanced Portfolio
24
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Hanson Investment Management Company
4000 Civic Center Drive
Suite 200
San Rafael, CA 94903
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
25
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
IRC Enhanced
Index Portfolio
Institutional
Class Shares
July 10, 1997
P R O S P E C T U S
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses.............................................................. 1
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Financial Highlights....................................................... 4
Investment Objective....................................................... 5
Investment Policies........................................................ 5
Investment Limitations..................................................... 7
Purchase of Shares......................................................... 8
Redemption of Shares....................................................... 10
Shareholder Services....................................................... 12
Valuation of Shares........................................................ 13
Performance Calculations................................................... 13
Dividends, Capital Gains Distributions and Taxes........................... 14
Investment Adviser......................................................... 15
Adviser's Historical Performance........................................... 18
Administrative Services.................................................... 20
Distributor................................................................ 20
Portfolio Transactions..................................................... 21
General Information........................................................ 21
UAM Funds -- Institutional Class Shares.................................... 23
</TABLE>
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
IRC ENHANCED INDEX PORTFOLIO
INSTITUTIONAL CLASS SHARES
INVESTMENT ADVISER: INVESTMENT RESEARCH COMPANY
- -------------------------------------------------------------------------------
PROSPECTUS -- JULY 10, 1997
UAM Funds Trust (the "Fund") is an open-end, management investment company
known as a "mutual fund." The Fund consists of multiple series (known as
"Portfolios") each of which has different investment objectives and policies.
IRC Enhanced Index Portfolio currently offers only one class of shares. The
securities offered in this Prospectus are Institutional Class Shares of one
diversified, no-load Portfolio of the Fund managed by Investment Research Com-
pany.
IRC ENHANCED INDEX PORTFOLIO. IRC Enhanced Index Portfolio (the "Portfolio")
is a mutual fund portfolio which seeks a total return exceeding that of the
Standard & Poor's Composite Stock Price Index ("S&P 500") while carefully con-
trolling risk. IRC plans to achieve this objective by employing its proprie-
tary analytic technology to invest in a diversified portfolio of common stocks
that are listed in the S&P 500 ("S&P 500 stocks").
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A "Statement of Additional Information" ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Institutional Class Shares would incur. Transaction fees may be
charged if a broker-dealer or other financial intermediary deals with the Fund
on your behalf. (See "PURCHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases......................................... NONE
Sales Load Imposed on Reinvested Dividends.............................. NONE
Deferred Sales Load..................................................... NONE
Redemption Fees......................................................... NONE
Exchange Fees........................................................... NONE
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Investment Advisory Fees.............................................. 0.70%
Administrative Fees................................................... 1.56%
12b-1 Fees............................................................ NONE
Other Expenses........................................................ 1.24%
Advisory Fees Waived and Expenses Assumed............................. 1.00%
----
Total Operating Expenses (After Fee Waiver)........................... 2.50%*
====
</TABLE>
- -----------
* The Adviser has voluntarily agreed to waive all or a portion of its advisory
fees and to assume operating expenses, if necessary, to keep the Portfolio's
total annual operating expenses (excluding interest, taxes and extraordinary
expenses), after the effect of expense offsets, from exceeding 2.50% of av-
erage daily net assets. The figures above include the effect of expense off-
sets. If expense offsets were excluded, Total Operating Expenses for the
fiscal year ended April 30, 1997 would be 2.56%. (See "FINANCIAL HIGH-
LIGHTS.") Absent fee waivers and the assumption of expenses by the Adviser,
the Portfolio's total annual operating expenses would have been 3.50% of av-
erage daily net assets. The Adviser will not be reimbursed by the Fund for
any advisory fees which are waived or expenses which the Adviser may bear on
behalf of the Portfolio for a given fiscal year.
The table above shows various fees and expenses an investor would bear di-
rectly or indirectly. The expenses and fees set forth above are based on the
Portfolio's operations during the fiscal year ended April 30, 1997, except
that they have been restated to reflect current administrative fees.
1
<PAGE>
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of the time period indicated.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Expenses..................................... $25 $78 $133 $284
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
2
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Investment Research Company, (the "Adviser") is a subsidiary of United Asset
Management Corporation and has approximately $2.0 billion of assets under man-
agement for institutional investors, including corporations, state govern-
ments, labor unions, foundations, mutual funds, and individuals. (See "INVEST-
MENT ADVISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion, to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment is $2,500. The minimum for subsequent investments is $100.
Certain exceptions to the initial or minimum investment amounts may be made by
the officers of the Fund. (See "PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in quarterly dividends. The Portfolio will distribute any realized
net capital gains annually. Distributions will be reinvested in Portfolio
shares automatically unless an investor elects to receive cash distributions.
(See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTIONS AND EXCHANGES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See "REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of United As-
set Management Corporation, is responsible for performing and overseeing ad-
ministration, fund accounting, dividend disbursing and transfer agency serv-
ices provided to the Fund and its Portfolios by third-party service providers.
(See "ADMINISTRATIVE SERVICES.")
3
<PAGE>
RISK FACTORS
The value of the Portfolio's shares will fluctuate in response to changes in
market and economic conditions as well as the financial conditions and pros-
pects of the issuers in which a Portfolio invests. An investment in the Port-
folio presents risks similar to "overall market risk". The Portfolio presents
risks roughly the same as those which would be incurred by investing in a
portfolio comprised of the common stocks of all 500 companies listed in the
S&P 500, with the weight of each stock in the portfolio equal to the stock's
weight in the S&P 500. (See "INVESTMENT POLICIES.")
FINANCIAL HIGHLIGHTS
The following table provides selected per share information for a share out-
standing throughout the periods presented of the Portfolio. The table is part
of the Portfolio's Financial Statements included in the Portfolio's 1997 An-
nual Report to Shareholders. The Report is incorporated into the Portfolio's
SAI. The Portfolio's Annual Financial Statements have been audited by Price
Waterhouse LLP whose unqualified opinion thereon is also incorporated into the
Portfolio's SAI. Please read the following information in conjunction with the
Portfolio's 1997 Annual Report to Shareholders.
<TABLE>
<CAPTION>
JANUARY 23, 1996* YEAR ENDED
TO APRIL 30, 1996 APRIL 30, 1997
----------------- --------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......... $ 10.00 $ 10.30
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income....................... 0.02 (0.01)
Net Realized and Unrealized Gain on
Investments............................... 0.30 2.20
------- -------
Total from Investment Operations.......... 0.32 2.19
------- -------
DISTRIBUTIONS
Net Investment Income....................... (0.02) (0.02)
Net Realized Gain........................... -- (0.19)
------- -------
Total Distributions....................... (0.02) (0.21)
------- -------
NET ASSET VALUE, END OF PERIOD................ $ 10.30 $ 12.28
======= =======
TOTAL RETURN+................................. 3.20%*** 21.48%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)....... $ 3,933 $ 6,162
Ratio of Expenses to Average Net Assets..... 2.52%** 2.56%
Ratio of Investment Income to Average Net
Assets.................................... 0.67%** (0.16)%
Portfolio Turnover Rate..................... 31% 117%
Average Commission Rate..................... $0.0205 $0.0227
Voluntary Waived Fees and Expenses Assumed
by the Adviser Per Share.................. $ 0.03 $ 0.03
Ratio of Expenses to Average Net Assets
Including Expense Offsets................. 2.50%** 2.50%
</TABLE>
- -----------
* Commencement of Operations.
** Annualized.
*** Not Annualized.
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser.
4
<PAGE>
INVESTMENT OBJECTIVE
The Portfolio seeks a total return exceeding that of its benchmark, the S&P
500, by a consistent premium with minimal downside risk relative to that
benchmark.
INVESTMENT POLICIES
The Portfolio's assets are invested in the stocks of some but not all of the
companies in the S&P 500 universe. The Portfolio's investment adviser uses a
mathematical model to help make the investment decisions. The objective is to
build the Portfolio whose returns will exceed those of the S&P 500. Every
three months the Adviser evaluates each stock in the S&P 500 universe for in-
clusion in the Portfolio, attempting to select the best performers, within
constraints for risk control.
The Adviser believes that institutions create the major demand for stocks,
and institutional preferences change slowly over the short-term (3-6 months).
These stable preferences are therefore important determinants of the sensitiv-
ity of stock returns to various factors and combinations of factors such as
inflation and interest rates. Institutional investor preferences also depend
on individual stock attributes such as price/earnings ratios and other funda-
mentals. These preferences are identifiable, according to stock market re-
search, so today's factor values can be used to estimate the short-term per-
formance of each stock in each of 19 sectors of the S&P 500 universe relative
to other stocks in that sector.
The Adviser focuses on comparisons among stocks and not on market timing.
Generally, the Portfolio will be fully invested in stocks from the S&P 500
universe. The Portfolio may invest up to 10% of its assets in short-term (one
year or less to maturity) U.S. Treasury securities as a cash reserve to hold
cash received from shareholders pending investment or to meet redemption re-
quests from shareholders.
The Portfolio's investment policy of limiting risk while maximizing expected
return is implemented in a number of ways. The Adviser classifies the S&P 500
universe into 19 industrial sectors (such as Transportation, Communications,
Health Care, etc.). Within each sector, the Adviser selects an average of 8-10
stocks as described below. Consequently, risk is first limited by diversifica-
tion within each sector and, when combined, within the resulting Portfolio,
which would normally hold 152-190 stocks. The second element of risk control
lies in the way the stocks are weighted; once a sector group of stocks is se-
lected, its weighting in the Portfolio is set equal to the weighting of that
sector in the benchmark S&P 500 Index so that the Portfolio does not take on
"sector bets." Thirdly, the stock selection process employs dividend and P/E
screens which eliminate the lowest dividend yielding stocks as well as those
with the highest P/E ratios in each sector, as these are the stocks which are
generally the most vulnerable during periods of market
5
<PAGE>
correction. Finally, the Portfolio is rebalanced once every three months to
maintain the continuity of risk control measures.
To select stocks within each of the 19 sectors, the Adviser uses a mathemat-
ical model developed during a combined total of 40 years of research by two of
the Adviser's principals when they were professors in the Graduate School of
Business at the University of Chicago. The model is based on the principle
that institutional investors dominate the demand for stocks, and institutional
preferences change slowly over the near term (3-6 months). These stable pref-
erences are important determinants of the sensitivity of stock returns to
trends now underway in factors such as inflation and interest rates and in in-
dividual stock fundamentals such as dividends and price/earning ratios. In
choosing the stocks in each sector, the model employs a proprietary optimiza-
tion program, the objective of which is to select a combination of stocks
(from among all possible combinations) which has the maximum expected long run
return while controlling the risk that this return will be inferior to the
market performance of that sector.
Within the Portfolio, at least 90% of the net asset value is allocated
strictly to stocks from the S&P 500 universe; the balance of 10% or less is
allocated to short-term U.S. Treasury securities (maturities of one year or
less). No hedging strategies, no financial derivatives, no futures contracts,
no repurchase agreements, and no instruments other than S&P 500 stocks and
U.S. Treasury securities are used to achieve the investment objective.
The S&P 500 is composed of 500 selected common stocks, most of which are
listed on the New York Stock Exchange. Standard & Poor's Corporation ("S&P")
chooses the stocks to be included in the S&P 500 solely on a statistical ba-
sis. The weights of stocks in the S&P 500 are based on each stock's relative
total market value, which is defined as the stock's market price per share
times the number of shares outstanding. Stocks currently in the S&P 500 repre-
sent approximately three-quarters of the total market value of all U.S. common
stocks. The Portfolio is neither sponsored by nor affiliated with S&P.
SHORT-TERM INVESTMENTS
In order to maintain liquidity to meet anticipated redemptions and to hold
cash received from shareholders pending investment, up to 10% of the Portfo-
lio's assets may be invested in U.S. Treasury securities with maturities of
one year or less.
PORTFOLIO TURNOVER
Every 90 days, only the oldest one-third of the stocks (by value) in the
Portfolio are considered for trading. It is anticipated that the Portfolio's
annual turnover rate will not exceed 100% under normal circumstances. To the
extent that net short-term capital gains are realized, any distributions re-
sulting from such gains are considered ordinary income for federal income tax
purposes. See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES" for more in-
formation on
6
<PAGE>
taxation. The Portfolio will not normally engage in short-term trading, but it
reserves the right to do so.
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and in-
terest by the U.S. Government or any of its agencies or instrumentali-
ties);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding voting securities of any issuer;
(c) invest more than 5% of its assets at the time of purchase in the secu-
rities of companies that have (with predecessors) a continuous operat-
ing history of less than 3 years;
(d) invest more than 25% of its assets in companies within a single indus-
try; however, there are no limitations on investments made in instru-
ments issued or guaranteed by the U.S. Government and its agencies;
(e) make loans except by purchasing debt securities in accordance with its
investment objective and policies or entering into repurchase agree-
ments or by lending its portfolio securities to banks, brokers, deal-
ers and other financial institutions so long as the loans are made in
compliance with the 1940 Act, as amended, or the Rules and Regulations
or interpretations of the SEC;
(f) (i) borrow, except from banks and as a temporary measure for extraor-
dinary or emergency purposes and then, in no event, in excess of 33
1/3% of the Portfolio's gross assets valued at the lower of market or
cost, and (ii) the Portfolio may not purchase additional securities
when borrowings exceed 5% of total assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent greater
than 33 1/3% of its total assets at fair market value.
The investment objective of the Portfolio is fundamental and may be changed
only with the approval of the holders of a majority of the outstanding shares
of such Portfolio. Except for limitations (a), (b), (d), (e) and (f)(i), the
Portfolio's investment limitations and policies described in this Prospectus
and in the SAI are not fundamental and may be changed by the Fund's Board of
Trustees upon reasonable notice to investors.
7
<PAGE>
PURCHASE OF SHARES
Shares of each Portfolio are offered through UAM Fund Distributors, Inc.
(the "Distributor"), without a sales commission at the net asset value per
share next determined after an order is received by the Fund and payment is
received by the Custodian. (See "VALUATION OF SHARES.") The minimum initial
investment required is $2,500. Certain exceptions may be made by the officers
of the Fund.
Shares of the Portfolio may be purchased by customers of broker-dealers or
other financial intermediaries ("Service Agents") which have established a
shareholder servicing relationship with the Fund on behalf of their customers.
Service Agents may impose additional or different conditions or other account
fees on the purchase and redemption of Portfolio shares by their customers.
Each Service Agent is responsible for transmitting to its customers a schedule
of any such fees and information regarding any additional or different pur-
chase and redemption conditions. Shareholders who are customers of Service
Agents should consult their Service Agent for information regarding these fees
and conditions. Amounts paid to Service Agents may include transaction fees
and/or service fees paid by the Fund from the Fund assets attributable to the
Service Agent, and would not be imposed if shares of the Portfolio were pur-
chased directly from the Fund or the Distributor. The Service Agents may pro-
vide shareholder services to their customers that are not available to a
shareholder dealing directly with the Fund. A salesperson and any other person
entitled to receive compensation for selling or servicing Portfolio shares may
receive different compensation with respect to one particular class of shares
over another in the Fund.
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of a Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer
Agent prior to 4 p.m. to receive that day's share price. Proper payment for
the order must be received by the Sub-Transfer Agent no later than the time
when the Portfolio is priced on the following business day. Service Agents are
responsible to their customers and the Fund for timely transmission of all
subscription and redemption requests, investment information, documentation
and money.
BY MAIL
. Complete and sign an Application and mail it along with a check payable
to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
8
<PAGE>
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment.
BY WIRE
. Telephone the UAM Funds Service Center and provide the account name, ad-
dress, telephone number, social security or taxpayer identification num-
ber, Portfolio selected, amount being wired and the name of the bank
wiring the funds. An account number will then be provided to you. Next,
. Instruct your bank to wire the specified number of shares or a dollar
amount to the Fund's custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
Credit DDA #9102772952
Ref: Portfolio Name
Your Account Number
Your Account Name
Wire Control Number
. Forward a completed Application to the UAM Funds Service Center. Federal
Funds purchases will be accepted only on days when the NYSE and the Cus-
todian Bank are open for business.
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check made payable to "UAM Funds" to the address above or by wiring money to
the Custodian Bank using the instructions outlined above. When making addi-
tional investments, be sure that the account name and number is identified on
the check or wire and the Portfolio to be purchased is specified.
Prior to wiring additional investments, notify the UAM Funds Service Center
by calling the number on the cover of this prospectus. Mail orders should in-
clude, when possible, the "Invest by Mail" stub which accompanies any Fund
confirmation statement.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to
9
<PAGE>
suspend the offering of shares of each Portfolio or to reject purchase orders
when, in the judgment of management, such suspension or rejection is in the
best interests of the Fund. Purchases of a Portfolio's shares will be made in
full and fractional shares of the Portfolio calculated to three decimal
places. Certificates for fractional shares will not be issued. Certificates
for whole shares will not be issued except at the written request of the
shareholder.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by a Portfo-
lio in exchange for securities will be issued at net asset value determined as
of the same time. All dividends, interest, subscription, or other rights per-
taining to such securities shall become the property of the Portfolio and must
be delivered to the Fund by the investor upon receipt from the issuer. Securi-
ties acquired through an in-kind purchase will be acquired for investment and
not for immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be in-
cluded in the Portfolio (current market quotations must be readily
available for such securities);
. the investor represents and agrees that all securities offered to
be exchanged are liquid securities and not subject to any restric-
tions upon their sale by the Portfolio under the Securities Act of
1933, or otherwise; and
. the value of any such securities (except U.S. Government securi-
ties) being exchanged together with other securities of the same
issuer owned by the Portfolio will not exceed 5% of the net assets
of the Portfolio immediately after the transaction.
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of secu-
rities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.
REDEMPTION OF SHARES
Shares of each Portfolio may be redeemed by mail or telephone at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. No charge is made for redemptions. Any re-
demption may be more or less than the purchase price of the shares depending
on the market value of investment securities held by the Portfolio.
10
<PAGE>
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of
shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which they are regis-
tered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pen-
sion and profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the
wire redemption privilege) by completing appropriate sections of
the Application; and
. call the Fund and instruct that the redemption proceeds be mailed
to you or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated
to receive redemption proceeds (this can be accomplished only by a
written request signed by each shareholder, with each signature
guaranteed); and
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the investor to provide certain personal identification at the time an
account is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded
and investors may be required to provide additional telecopied written in-
structions of such transaction requests. The Fund or Sub-Transfer Agent may be
liable for any losses due to unauthorized or fraudulent telephone instructions
if the Fund or the Sub-Transfer Agent does not employ the procedures described
above. Neither the Fund nor the Sub-Transfer Agent will be responsible for any
loss, liability, cost or expense for following instructions received by tele-
phone that it reasonably believes to be genuine.
11
<PAGE>
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than
the registered shareowner(s);
. redemptions where the proceeds are to be sent to someplace other
than the registered address; or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securi-
ties exchanges, registered securities associations, clearing agencies and sav-
ings associations. Broker-dealers guaranteeing signatures must be a member of
a clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after the
receipt of the request, or earlier if required under applicable law. The Fund
may suspend the right of redemption or postpone the date at times when both
the NYSE and Custodian Bank are closed, or under any emergency circumstances
determined by the SEC.
If the Board of Trustees determines that it would be detrimental to the best
interests of remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay redemption proceeds in whole or in part by a
distribution in-kind of liquid securities held by a Portfolio in lieu of cash
in conformity with applicable rules of the SEC. Investors may incur brokerage
charges on the sale of portfolio securities received in payment of redemp-
tions.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for Institu-
tional Class Shares of any other UAM Funds Portfolio. (See the list of Portfo-
lios of the UAM Funds at the end of this Prospectus.) Exchange requests should
be made by contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you
12
<PAGE>
are interested. Exchanges can only be made with Portfolios that are qualified
for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES -- BY TELEPHONE." An ex-
change into another UAM Funds Portfolio is a sale of shares and may result in
a gain or loss for income tax purposes. The Fund may modify or terminate the
exchange privilege at any time.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets, less any liabilities, by the number of shares out-
standing. The net asset value per share of the Portfolio is determined as of
the close of the NYSE on each day that the NYSE is open for business.
Equity securities listed on a securities exchange for which market quota-
tions are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where
the security is primarily traded. Unlisted equity securities and listed secu-
rities not traded on the valuation date for which market quotations are read-
ily available are valued neither exceeding the current ask prices nor less
than the current bid prices. The prices for securities denominated in a for-
eign currency are converted to U.S. dollars based upon the bid price of the
foreign currency against U.S. dollars quoted by any major bank or by a broker.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating total return. Total return
figures are based on historical earnings and are not intended to indicate fu-
ture performance.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of
13
<PAGE>
time. An average annual total return is a hypothetical rate of return that, if
achieved annually, would have produced the same cumulative total return if
performance had been constant over the entire period.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices as further de-
scribed in the Portfolio's SAI. This information may also be included in sales
literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or phone number on the cover
of this Prospectus.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders in quarterly dividends. If any
net capital gains are realized, the Portfolio will normally distribute such
gains annually. All dividends and capital gains distributions will be automat-
ically reinvested in additional shares of the Portfolio unless the Fund is no-
tified in writing that the shareholder elects to receive distributions in
cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal in-
come tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends. To do this, the Portfolio must,
among other things, distribute substantially all of its ordinary income and
net capital gains on an annual basis and maintain a portfolio of investments
which satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders. Short-term capital gains
will be taxed as ordinary income. Long-term capital gains distributions are
taxed as long-term capital gains. The Portfolio will notify shareholders annu-
ally of dividend income for tax purposes.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid in January of the following year.
14
<PAGE>
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
INVESTMENT ADVISER
The investment adviser to the Portfolio is Investment Research Company lo-
cated at 16236 San Dieguito Road, Rancho Sante Fe, California 92067. The Ad-
viser is a wholly-owned subsidiary of United Asset Management Corporation
("UAM") and provides investment management services to corporations, state
governments, labor unions, mutual funds, and individuals.
The Portfolio pays an annual fee in monthly installments to the Adviser for
advisory services. This fee is accrued daily and paid monthly as a percentage
of the average net assets in the Portfolio for that month. The percentage fee
on an annual basis is 0.70%.
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Distributor, UAM, the Adviser, or any of their affili-
ates, may, at its own expense, compensate a Service Agent or other person for
marketing, shareholder servicing, record-keeping and/or other services per-
formed with respect to the Fund, the Portfolio or any Class of Shares of the
Portfolio. The person making such payments may do so out of its revenues, its
profits or any other source available to it. When such services arrangements
are in effect, they are made generally available to all qualified service
providers.
The Distributor, the Adviser and certain of their other affiliates also par-
ticipate, at the date of this Prospectus, in an arrangement with Smith Barney
Inc. under which Smith Barney provides certain defined contribution plan mar-
keting and other shareholder services and receives from such entities .15 of
1% of the daily net asset value of Institutional Class Shares held by Smith
Barney's eligible customer accounts in addition to amounts payable to all
selling dealers. The Fund also compensates Smith Barney for services it pro-
vides to certain defined contribution plan shareholders that are not otherwise
provided by UAMFSI.
As of the date of this Prospectus, the Adviser had approximately $2.0 bil-
lion in assets under management. The Adviser's clients at that date included
American Hospital Association, Ameritech Corporation, a regional Bell Holding
Company, Energen Corporation, Lockheed Martin Corporation, Lockheed Sanders
Corporation, Minnesota Mining and Manufacturing, St. Cloud Hospital and Shell
Oil Company (corporations); Bricklayers Pension Trust -- Metropolitan Area De-
troit, Oregon
15
<PAGE>
Retail Pension Trust Fund, Intermountain Ironworkers Pension Trust Fund, Re-
tail Clerks Pension Trust Fund, Western States OPEIU Pension Trust, an inter-
national commercial union (Taft Hartley clients); Louisiana Municipal Employ-
ees' Retirement System, City of Miami Fire Fighters & Police Officers Retire-
ment System and Virginia Retirement System (states); Cologne Reinsurance,
Hawaii Medical Service Associations, Medical Malpractice of New York (insur-
ance); and Lincoln Community Foundation (Foundation).
It is not known whether the listed clients approve or disapprove of the Ad-
viser or the advisory services provided. The Adviser used objective criteria
in compiling the client list, such as account size, geographic location and
client classification. The Adviser did not use any performance based criteria.
The following paragraphs describe the background of the Adviser's officers
who are principally involved in managing the Portfolio.
F.J. (JERRY) GOULD, PH.D., CHAIRMAN AND CEO, PROFESSOR EMERITUS, UNIVERSITY
OF CHICAGO: Co-founder of Investment Research Company, Mr Gould is responsible
for coordination of all aspects of IRC activity, with particular emphasis on
performance, product research, new strategy development, and client relations.
During his 25 years of teaching and research, he spent 15 years as the Hobart
W. Williams Professor of Applied Mathematics and Management Science, at the
Graduate School of Business at the University of Chicago, Mr. Gould has been a
consultant in financial markets as well as a portfolio manager and trader in
futures and equities for over 20 years. He holds memberships in the American
Finance Association, The American Economic Association, the Operations Re-
search Society of America, the Institute of Management Science and the Society
for Industrial and Applied Mathematics. While a member of the Statistics De-
partment at the University of North Carolina, Chapel Hill, he was the first
Chairman of the Curriculum in Operations Research and Systems Analysis. Mr.
Gould has authored five books, published over 80 papers in professional jour-
nals, and has written prolifically on aspects of active equity management. He
is also a contributor of articles appearing in the Wall Street Journal as well
as other news publications.
JOHN D. FREEMAN, M.A., EXECUTIVE VICE PRESIDENT: Mr. Freeman joined IRC in
December, 1996, to serve primarily as a resource to our clients, focusing on
strategic issues and product customization. He also serves as a portfolio man-
ager and senior member of the firm's investment advisory committee. Mr. Free-
man has over 15 years of professional investment experience which includes
eight (8) years as Manager of Consulting Services at BARRA, involving proprie-
tary fee-based projects for internationally known institutional investment ad-
visors, plan sponsors and consulting firms. His responsibilities included ac-
tive equity strategy development, investment strategy evaluation, and indepen-
dent confirmation of research results. While at BARRA, Mr. Freeman worked ex-
tensively
16
<PAGE>
on issues of pension fund structure, style indexes, and customized benchmarks.
Since 1992 Mr. Freeman was Vice President and Portfolio Manager at Martingale
Asset Management. There his responsibilities included client service, portfo-
lio management and product development, using sophisticated optimization and
other customized portfolio management techniques. Investment management re-
sponsibilities included a real-time active completeness strategy and testing
of both long and long/short portfolios. He worked directly with clients, pros-
pects and consultants to customize structured equity portfolios and was in
charge of Martingale's in-house research seminars directed at clients, pros-
pects and consultants.
MING WANG, M.A., SENIOR VICE PRESIDENT: Mr. Wang joined IRC in December, 1996.
He is responsible for the conduct and oversight of all research activity in-
cluding data system maintenance, product maintenance, and for testing and de-
velopment of new quantitative methodology. Mr. Wang also serves as a portfolio
manager and a senior member of the investment advisory committee. With two
masters degrees in highly technical areas (Physics, Princeton and Mathematics,
Courant Institute), Mr. Wang has 13 years of investment experience. This in-
cludes seven (7) years working with Richard Brignoli and Harry Markowitz as
Vice President and Assistant Director of Research at Brignoli Models, Inc. In
that capacity he developed and tested proprietary portfolio strategies, imple-
mented mathematical formulations into computer algorithms, and managed the
software development and maintenance team. He wrote a quadratic optimizer
software package to generate the Markowitz efficient portfolios. In 1991 he
joined TIAA-CREF Investment Management, Inc. He was an Assistant Vice Presi-
dent and Senior Quantitative Portfolio Manager in CREF's Quantitative Portfo-
lio Management and Research Group, which was responsible for managing over $50
billion in stocks. He specialized in the use of quantitative techniques such
as factor models and quadratic optimizations to construct alpha-generating and
risk management procedures for index-tracking and index-enhancing portfolios.
His responsibilities included research, software development, portfolio man-
agement and trading.
C.B. (TOM) GARCIA, PH.D., SENIOR VICE PRESIDENT: Co-founder of Investment
Research Company; Dr. Garcia is focusing on research projects for the firm.
IRC's valuation process makes significant use of dividend information, and Dr.
Garcia is currently investigating how stock repurchase plan information can be
used to supplement dividend information in the valuation process. As a former
Professor at the Graduate School of Business, University of Chicago, Dr. Gar-
cia has done extensive research on mathematical programming, complementarity
theory, fixed point approximations, nonlinear equations and equilibrium and
game theory. With his expertise in computer applications and systems design,
Dr. Garcia has also been an active consultant in the area of pension fund ad-
ministration. He holds memberships in the Operations Research Society of Amer-
ica, The Institute of Management Science, the Society for Industrial and Ap-
plied Mathematics, the Mathematical Programming Society of America and the
American Associ -
17
<PAGE>
ation of University Professors, and has published over 30 papers in profes-
sional journals as well as authored and edited several books.
ANGELA FIGG, M.B.A., SENIOR VICE PRESIDENT: Ms. Figg joined IRC in December,
1992. She manages all aspects of the trading and operations area and serves as
IRC's compliance officer. She is also a member of the firm's investment advi-
sory committee. After graduating with high honors from Michigan State Univer-
sity with a B.A. in Finance, she earned her MBA, with majors in both Finance
and Economics, from the University of Chicago's Graduate School of Business in
March, 1997. Previously, Ms. Figg was an equity trader at Harris Investment
Management and a fund accountant at Driehaus Capital Management.
ADVISER'S HISTORICAL PERFORMANCE
Below are certain performance data provided by the Adviser pertaining to the
composite of separately managed accounts of the Adviser that are managed with
substantially similar (although not necessarily identical) objectives, poli-
cies and strategies as those of the Portfolio. The performance data for the
managed accounts is net of all fees and expenses. The investment returns of
the Portfolio may differ from those of the separately managed accounts because
such separately managed accounts may have fees and expenses that differ from
those of the Portfolio. Further, the separately managed accounts are not sub-
ject to investment limitations, diversification requirements and other re-
strictions imposed by the Investment Company Act of 1940 and Internal Revenue
Code; such conditions, if applicable, may have lowered the returns for sepa-
rately managed accounts. The results presented are not intended to predict or
suggest the return to be experienced by the Portfolio or the return an in-
vestor might achieve by investing in the Portfolio.
18
<PAGE>
INVESTMENT RESEARCH COMPANY -- IRC LARGE CAP CORE/BENCHMARK ENHANCEMENT
(PERCENTAGE RETURNS NET OF MANAGEMENT FEES)
<TABLE>
<CAPTION>
INVESTMENT
RESEARCH
CALENDAR YEARS COMPANY S&P 500
-------------- ---------- --------
<S> <C> <C>
1989..................................................... 35.97 % 31.49 %
1990..................................................... (1.81)% (3.17)%
1991..................................................... 30.60 % 30.55 %
1992..................................................... 8.28 % 7.66 %
1993..................................................... 12.04 % 9.99 %
1994..................................................... 3.29 % 1.31 %
1995..................................................... 35.83 % 37.56 %
1996..................................................... 20.64 % 22.95 %
12 Months ended 3/31/97.................................. 18.46 % 19.82 %
Cumulative............................................... 258.03 % 237.26 %
Eight-Year Mean (1/1/89-12/31/96)........................ 18.11 % 17.29 %
Value of $1 invested during (1/1/89-3/31/97)............. $ 3.68 $ 3.46
</TABLE>
Notes:
1. The CUMULATIVE RETURN means that $1 invested in the account on January 1,
1989 had grown to $3.68 by March 31, 1997.
2. The EIGHT-YEAR MEAN is the arithmetic average of the annual returns for the
calendar years listed.
3. The S&P 500 is an unmanaged index which assumes reinvestment of dividends
and is generally considered representative of securities similar to those
invested in by the Adviser for the purpose of the composite performance
numbers set forth above.
4. The Adviser's average annual management fee over the period shown (1/1/89-
3/31/97) was 0.51% or 51 basis points. During the period, fees on the Ad-
viser's individual accounts ranged from 0.20% to 0.80% (20 basis points to
80 basis points). Net returns to investors vary depending on the management
fee.
19
<PAGE>
ADMINISTRATIVE SERVICES
UAMFSI, a wholly-owned subsidiary of UAM, is responsible for performing and
overseeing administrative, fund accounting, dividend disbursing and transfer
agent services provided to the Fund and its Portfolios. UAMFSI's principal of-
fice is located at 211 Congress Street, Boston, MA 02110. UAMFSI has subcon-
tracted some of these services to Chase Global Funds Services Company
("CGFSC"), an affiliate of The Chase Manhattan Bank, by a Mutual Funds Service
Agreement dated June 30, 1997. CGFSC is located at 73 Tremont Street, Boston,
MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
IRC Enhanced Index Portfolio........................................... 0.04%
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
0.11 of 1% of the next $800 million of combined UAM Funds assets;
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Funds' fees are allocated among the Portfolios on the basis of their
relative assets and are subject to a graduated minimum fee schedule per Port-
folio, which starts at $2,000 per month and increases to $70,000 annually af-
ter two years. If a separate class of shares is added to a Portfolio, its min-
imum annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM with its principal office
located at 211 Congress Street, Boston, Massachusetts 02110, distributes the
shares of the Fund. Under the Fund's Distribution Agreement (the "Agreement"),
the Distributor, as agent of the Fund, agrees to use its best efforts as sole
distributor of the Fund's shares. The Distributor does not receive any fee or
other compensation under the Agreement with respect to the Portfolio. The
Agreement continues in effect as long as it is approved at least annually by
the Fund's Board of Trustees. Those approving the Agreement include a majority
of Trustees who are neither parties to the Agreement nor interested persons of
any such party. This Agreement provides that the Fund will bear the costs of
the registration of its shares with the SEC and various states and the print-
ing of its prospectuses, SAIs and reports to shareholders.
20
<PAGE>
PORTFOLIO TRANSACTIONS
The Advisory Agreements for the Fund's Portfolios authorize the Adviser to
select the brokers or dealers that will execute the purchases and sales of in-
vestment securities for each Portfolio. The Agreements direct the Adviser to
use its best efforts to obtain the best available price and most favorable ex-
ecution for all transactions of the Portfolios. If consistent with the inter-
ests of the Portfolios, the Adviser may select brokers on the basis of re-
search, statistical and pricing services these brokers provide to the Portfo-
lios in addition to required Adviser services. Such brokers may be paid a
higher commission than that which another qualified broker would have charged
for effecting the same transaction, provided that such commissions are paid in
compliance with the Securities Exchange Act of 1934, as amended, and that the
Adviser determines in good faith that the commission is reasonable in terms
either of the transaction or the overall responsibility of the Adviser to the
Portfolios and the Adviser's other clients. Although not a typical practice,
the Adviser may place portfolio orders with qualified broker-dealers who refer
clients to the Adviser.
If a purchase or sale of securities is consistent with the investment poli-
cies of a Portfolio and one or more other clients served by the Adviser is
considering a purchase at or about the same time, transactions in such securi-
ties will be allocated among the Portfolio and clients in a manner deemed fair
and reasonable by the Adviser. Although there is no specified formula for al-
locating such transactions, allocations are subject to periodic review by the
Fund's Trustees.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II." On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and have no preference as to conversion, exchange, dividends, re-
tirement or other features and no pre-emptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees can elect 100% of the Trustees. A shareholder is en-
titled 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 of the
Fund.
21
<PAGE>
As of June 16, 1997, Hartnat & Co., held of record for the benefit of NANA
Regional and Coca Cola 33.9% and 25.6%, respectively of the outstanding shares
of the IRC Enhanced Index Portfolio Institutional Class for which ownership is
disclaimed or presumed disclaimed. The persons or organizations owning 25% or
more of the outstanding shares of a Portfolio may be presumed to "control" (as
that term is defined in the 1940 Act) such Portfolio. As a result, those per-
sons or organizations could have the ability to vote a majority of the shares
of the Portfolio on any matter requiring the approval of shareholders of such
Portfolio.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the hold-
ers of not less than 10% of the outstanding shares of the Fund. The Fund will
assist shareholder communications in such matters.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the address or telephone number listed on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE PORTFOLIO'S STATEMENT
OF ADDITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR ITS REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH OF-
FERING MAY NOT BE LAWFULLY MADE.
22
<PAGE>
UAM FUNDS -- INSTITUTIONAL CLASS SHARES
Acadian Emerging Markets Portfolio
Acadian International Equity Portfolio
BHM&S Total Return Bond Portfolio
Chicago Asset Management Intermediate Bond Portfolio
Chicago Asset Management Value/Contrarian Portfolio
C&B Balanced Portfolio
C&B Equity Portfolio
C&B Equity Portfolio for Taxable Investors
C&B Mid Cap Equity Portfolio
DSI Balanced Portfolio
DSI Disciplined Value Portfolio
DSI Limited Maturity Bond Portfolio
DSI Money Market Portfolio
FMA Small Company Portfolio
FPA Crescent Portfolio
Hanson Equity Portfolio
ICM Equity Portfolio
ICM Fixed Income Portfolio
ICM Small Company Portfolio
IRC Enhanced Index Portfolio
Jacobs International Octagon Portfolio
McKee Domestic Equity Portfolio
McKee International Equity Portfolio
McKee U.S. Government Portfolio
McKee Small Cap Equity Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Rice, Hall James Small Cap Portfolio
Rice, Hall James Small/Mid Cap Portfolio
Sirach Equity Portfolio
Sirach Fixed Income Portfolio
Sirach Growth Portfolio
Sirach Short-Term Reserves Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
SAMI Preferred Stock Income Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Short-Term Fixed Income Portfolio
Sterling Partners' Small Cap Portfolio
Sterling Partners' Small Cap Value Portfolio
TS&W Equity Portfolio
TS&W Fixed Income Portfolio
TS&W International Equity Portfolio
TS&W Balanced Portfolio
23
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Investment Research Company
16236 San Dieguito Road
Rancho Sante Fe, California 92067
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
<PAGE>
[LOGO PF UAM FUNDS APPEARS HERE]
Jacobs International
Octagon Portfolio
Institutional
Class Shares
P R O S P E C T U S
July 10, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses.............................................................. 1
Prospectus Summary......................................................... 2
Risk Factors............................................................... 3
Financial Highlights....................................................... 4
Investment Objectives...................................................... 5
Investment Policies........................................................ 5
Other Investment Policies.................................................. 8
Risks and Additional Investment Information................................ 10
Investment Limitations..................................................... 12
Purchase of Shares......................................................... 13
Redemption of Shares....................................................... 16
Shareholder Services....................................................... 17
Valuation of Shares........................................................ 18
Performance Calculations................................................... 18
Dividends, Capital Gains Distributions and Taxes........................... 19
Investment Adviser......................................................... 20
Adviser's Historical Performance........................................... 22
Administrative Services.................................................... 24
Distributor................................................................ 24
General Information........................................................ 25
UAM Funds -- Institutional Class Shares.................................... 27
</TABLE>
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MASSACHUSETTS 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
JACOBS INTERNATIONAL
OCTAGON PORTFOLIO
INSTITUTIONAL CLASS SHARES
INVESTMENT ADVISER: JACOBS ASSET MANAGEMENT
- -------------------------------------------------------------------------------
PROSPECTUS -- JULY 10, 1997
UAM Funds Trust (the "Fund") is an open-end investment company known as a
"mutual fund." The Fund consists of multiple series (known as "Portfolios"),
each of which has different investment objectives and policies. Jacobs Inter-
national Octagon Portfolio currently offers only one class of shares. The se-
curities offered in this Prospectus are Institutional Class Shares of one di-
versified, no-load Portfolio of the Fund managed by Jacobs Asset Management.
JACOBS INTERNATIONAL OCTAGON PORTFOLIO. The Jacobs International Octagon
Portfolio (the "Portfolio") seeks to provide long-term capital appreciation by
investing in equity securities of companies in developed and emerging markets.
The Portfolio may invest across the market capitalization spectrum, although
it intends to emphasize smaller capitalization stocks.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A "Statement of Additional Information" ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECU-
RITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CON-
TRARY IS A CRIMINAL OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Institutional Class Shares would incur. Transaction fees may be
charged if a broker-dealer or other financial intermediary deals with the Fund
on your behalf. (See "PURCHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases......................................... NONE
Sales Load Imposed on Reinvested Dividends.............................. NONE
Deferred Sales Load..................................................... NONE
Redemption Fees......................................................... NONE
Exchange Fees........................................................... NONE
</TABLE>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Investment Advisory Fees.............................................. 1.00 %
Administrative Fees................................................... 0.13 %
12b-1 Fees............................................................ NONE
Other Expenses........................................................ 0.21%
----
Total Operating Expenses.............................................. 1.34%
====
</TABLE>
The Adviser has voluntarily agreed to waive a portion of its advisory fees
and to assume expenses otherwise payable by the Portfolio to reduce expense
ratios. As of the date of this Prospectus, the Adviser has agreed to keep the
Portfolio's Institutional Class Shares total annual operating expenses, after
the effect of expense offsets, from exceeding 1.75% of average daily net as-
sets. The Fund will not reimburse the Adviser for any advisory fees that are
waived or Portfolio expenses that the Adviser may bear on behalf of the Port-
folio for a given fiscal year.
The table above shows various expenses and fees an investor would bear di-
rectly or indirectly. The expenses and fees set forth above for the Portfolio
are based on estimates. For purposes of calculating the fees set forth above,
the table assumes that the Portfolio's average daily assets will be $50 mil-
lion.
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. The Portfolio
charges no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Expenses...................................................... $14 $42
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSE MAY BE GREATER OR LESSER THAN THOSE
SHOWN ABOVE.
1
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Jacobs Asset Management is a registered investment adviser. Founded in 1995,
the firm currently has over $160 million in assets under management. (See "IN-
VESTMENT ADVISER.") United Asset Management Corporation is a limited partner
of the Adviser and owns a controlling interest in the Adviser.
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion, to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment is $2,500. The minimum for subsequent investments is $100.
The minimum initial investment for IRA accounts is $500. The minimum initial
investment for spousal IRA accounts is $250. Certain exceptions to the initial
or minimum investment amounts may be made by the officers of the Fund. (See
"PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in quarterly dividends. Any realized net capital gains will also
be distributed annually. Distributions will be reinvested in the Portfolio's
shares automatically unless an investor elects to receive cash distributions.
(See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTIONS AND EXCHANGES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See "REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc., ("UAMFSI"), a wholly-owned subsidiary of United As-
set Management Corporation, is responsible for performing and overseeing ad-
ministration, fund accounting, dividend disbursing and transfer agency serv-
ices provided to the Fund and its Portfolios by third-party service providers.
(See "ADMINISTRATIVE SERVICES.")
2
<PAGE>
RISK FACTORS
The value of the Portfolio's shares will fluctuate in response to changes in
market and economic conditions as well as the financial conditions and pros-
pects of the issuers in which the Portfolio invests. Investors should consider
the following: (1) The Portfolio will invest in securities of foreign issuers,
which will be subject to additional risk factors, including foreign currency
risks, not applicable to securities of U.S. issuers; (2) The Portfolio may in-
vest in repurchase agreements, which entail a risk of loss should the seller
default on its action; (3) The Portfolio may lend its investment securities,
which entails a risk of loss should a borrower fail financially; (4) The Port-
folio's performance may depend on the ability of the Adviser, a relatively new
entity which has not previously served as a mutual fund adviser; however, the
principals of the Adviser have substantial experience as investment advisers
to mutual funds. (See "OTHER INVESTMENT POLICIES.") Contact the UAM Funds
Service Center at the address or telephone number on the front cover of this
prospectus for a free copy of the Portfolio's Annual Report to Shareholders.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides selected per share information for a share of
the Portfolio outstanding throughout the period presented of the Portfolio.
This table is part of the Portfolio's Financial Statements included in the
Portfolio's 1997 Annual Report to Shareholders. The Report is incorporated
into the Portfolio's SAI. The Portfolio's Annual Financial Statements for the
period from January 2, 1997 to April 30, 1997 have been audited by Price
Waterhouse LLP whose unqualified opinion thereon is also incorporated into the
Portfolio's SAI. Please read the following information in conjunction with the
Portfolio's 1997 Annual Report to Shareholders.
<TABLE>
<CAPTION>
JANUARY 2, 1997*
TO APRIL 30, 1997
-----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income..................................... 0.06
Net Realized and Unrealized Gain on Investments........... 0.11++
-------
Total from Investment Operations........................ 0.17
=======
NET ASSET VALUE, END OF PERIOD.............................. $ 10.17
=======
TOTAL RETURN+............................................... 1.70%***
=======
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)....................... $35,833
Ratio of Expenses to Average Net Assets..................... 1.75%**
Ratio of Net Investment Income to Average Net Assets........ 3.67%**
Portfolio Turnover Rate..................................... 7%
Average Commission Rate..................................... $0.0037
Voluntarily Waived Fees and Expenses Assumed by the Adviser
Per Share................................................. $ 0.01
Ratio of Expenses to Average Net Assets Including Expense
Offsets................................................... 1.75%**
</TABLE>
- -----------
* Commencement of Operations.
** Annualized.
*** Not Annualized.
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser.
++ The amount shown for a share outstanding throughout the period does not
accord with the aggregate net loss on investments for that period because
of the timing of sales and repurchases of the Portfolio shares in relation
to fluctuating market value of the investments in the Portfolio.
4
<PAGE>
INVESTMENT OBJECTIVES
Jacobs International Octagon Portfolio seeks to provide long-term capital
appreciation by investing in equity securities of companies in developed and
emerging markets. The Portfolio may invest across the market capitalization
spectrum, although it intends to emphasize smaller capitalization stocks.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
INVESTMENT POLICIES
In seeking its investment objective, the Portfolio will, under normal cir-
cumstances, invest at least 85% of its total assets in the equity securities
of developed and emerging markets in at least three countries outside the
United States. The amount of total assets invested in the equity securities of
emerging markets may range from a low of 15% to a high of 40%. Under normal
circumstances, approximately 50% of total assets will be invested in small
capitalization companies. Small capitalization companies are defined as those
companies with market capitalizations of less than $1 billion at the time of
purchase. Equity securities include common stock, preferred stock, convertible
preferred stock, rights and warrants, and American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs"), and Global Depositary Re-
ceipts ("GDRs").
Under unusual circumstances, when the Adviser believes that market condi-
tions warrant a defensive position, up to 100% of the Portfolio's assets may
be held in cash and short-term investments. See "TEMPORARY INVESTMENTS" and
"REPURCHASE AGREEMENTS." When the Portfolio is in a defensive position, it may
not necessarily be pursuing its stated investment objective.
Emerging and developed markets in which the Portfolio initially intends to
invest are listed below; however, this list is not exclusive. Investing in
some emerging countries currently is not feasible, or may involve unacceptable
political risks. The Portfolio will focus its investments on those emerging
market countries in which it believes the economies are developing and in
which the markets are becoming more sophisticated. The developed and emerging
countries in which the Adviser initially intends to invest include:
Argentina Hong Kong Peru
Australia Indonesia Philippines
Brazil Ireland Poland
Czech Republic Israel Russia
Chile Italy Singapore
China Japan South Korea
Denmark Malaysia Spain
Finland Mexico Sweden
France Netherlands Switzerland
Great Britain Norway Thailand
5
<PAGE>
An "emerging country" security is one issued by a company that, in the opin-
ion of the Adviser, has one or more of the following characteristics: (i) its
principal securities trading market is in an emerging country, (ii) alone or
on a consolidated basis it derives 50% or more of its annual revenue from ei-
ther goods produced, sales made or services performed in emerging countries,
or (iii) it is organized under the laws of, and has a principal office in, an
emerging country. The Adviser will base determinations as to eligibility on
publicly available information and inquiries made to the companies. (See "FOR-
EIGN INVESTMENTS.")
There are no predetermined investment limitations with respect to any one
country, but the Adviser expects to limit investments within a country in ac-
cordance with the Adviser's perception of risks in that country. Generally,
the Portfolio will invest in the equity securities of non-U.S. companies
listed on U.S. or foreign securities exchanges, but may also invest in securi-
ties traded over-the-counter. The Portfolio seeks to invest in companies that
the Adviser believes will benefit from global trends, promising business or
product developments and specific country opportunities resulting from chang-
ing economic, social and political trends. It is expected that investments
will be diversified throughout the world and within markets to minimize spe-
cific country and currency risks. As markets in other countries develop, the
Portfolio expects to expand and further diversify the emerging countries in
which it invests.
The Adviser will use a flexible, value-oriented approach to selecting the
Portfolio's investments. The Adviser will focus on companies rather than on
countries or markets. The goal is to identify stocks selling at the greatest
discount to their intrinsic future value. In attempting to identify value
across disparate economies in the international marketplace, a rigid adherence
to a single model results in missed opportunities. Therefore, the Adviser as-
certains value in a variety of measures, including price/cash flow, enterprise
value/cash flow, and price/future earnings to identify the companies it will
consider for investment. The Adviser's stock picking approach is used across a
full capitalization range which takes advantage of the opportunities in
smaller capitalization companies. Investments generally will be held by the
Portfolio for two to five years.
The Portfolio does not intend to invest in any security in a country where
the currency is not freely convertible to United States dollars, unless the
Portfolio has obtained the necessary governmental licensing to convert such
currency or other appropriately licensed or sanctioned contractual guarantee
to protect such investment against loss of that currency's external value, or
the Portfolio has a reasonable expectation at the time the investment is made
that such governmental licensing or other appropriately licensed or sanctioned
guarantee would be obtained or that the currency in which the security is
quoted would be freely convertible at the time of any proposed sale of the se-
curity by the Portfolio.
The Portfolio intends to purchase and hold securities for long-term capital
appreciation and normally does not expect to trade for short-term gain.
According-
6
<PAGE>
ly, it is anticipated that the annual portfolio turnover rate normally will
not exceed 100%, although in any particular year, market conditions could re-
sult in portfolio activity at a greater or lesser rate than anticipated. The
rate of portfolio turnover will not be a limiting factor when the Portfolio
deems it appropriate to purchase or sell securities. However, the U.S. federal
tax requirement that the Portfolio derive less than 30% of its gross income
from the sale or disposition of securities held less than three months may
limit the Portfolio's ability to dispose of its securities.
DEPOSITARY RECEIPTS. The Portfolio may invest directly in securities of
emerging and developed country issuers through sponsored or unsponsored ADRs,
EDRs, and GDRs. ADRs are depositary receipts typically used by a U.S. bank or
trust company which evidence ownership of underlying securities issued by a
foreign corporation. EDRs and GDRs are typically issued by foreign banks or
trust companies, although they also may be issued by U.S. banks or trust com-
panies and evidence ownership of underlying securities issued by either a for-
eign or a United States corporation. Generally, depositary receipts in regis-
tered form are designed for use in the U.S. securities market and depositary
receipts in bearer form are designed for use in securities markets outside the
United States. Depositary receipts may not necessarily be denominated in the
same currency as the underlying securities into which they may be converted.
INVESTMENT FUNDS. Some countries have laws and regulations that currently
preclude direct foreign investment in the securities of their companies. How-
ever, indirect foreign investment in the securities of companies listed and
traded on the stock exchanges in these countries is permitted through invest-
ment funds which have been specifically authorized. The Portfolio may invest
in these investment funds subject to the provisions of the 1940 Act and other
applicable law as discussed below under "INVESTMENT LIMITATIONS." If the Port-
folio invests in such investment funds, the Portfolio's shareholders will bear
not only their proportionate share of the expenses of the Portfolio (including
operating expenses and the fees of the Adviser), but also will indirectly bear
similar expenses of the underlying investment funds.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Portfolio may enter into
forward foreign currency exchange contracts. Forward foreign currency exchange
contracts provide for the purchase or sale of an amount of a specified foreign
currency at a future date. The general purpose of these contracts is both to
put currencies in place to settle trades and to generally protect the United
States dollar value of securities held by the Portfolio against exchange rate
fluctuation. While such forward contracts may limit losses to the Portfolio as
a result of exchange rate fluctuation, they will also limit any gains that may
otherwise have been realized. The Portfolio will enter into such contracts
only to protect against the effects of fluctuating rates of currency exchange
and exchange control regulations. (See "FOREIGN INVESTMENTS.")
7
<PAGE>
TEMPORARY INVESTMENTS. During periods in which the Adviser believes changes
in economic, financial or political conditions make it advisable, the Portfo-
lio may for temporary defensive purposes reduce its holdings in equity and
other securities and invest in certain short-term (less than twelve months to
maturity) and medium-term (not greater than five years to maturity) debt secu-
rities or may hold cash. (See "SHORT-TERM INVESTMENTS.")
OTHER INVESTMENT POLICIES
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated redemp-
tions, or for temporary defensive purposes, the Portfolio may invest a portion
of its assets in domestic and foreign money market instruments including cer-
tificates of deposit, bankers' acceptances, time deposits, U.S. Government ob-
ligations, U.S. Government agency securities, short-term corporate debt secu-
rities, and commercial paper rated A-1 or A-2 by Standard & Poor's Corporation
("S&P") or Prime-1 or Prime-2 by Moody's Investors Service, Inc. ("Moody's")
or if unrated, determined by the Adviser to be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in
other currencies, (ii) in the case of U.S. banks, it is a member of the Fed-
eral Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an invest-
ment quality comparable with other debt securities which may be purchased by
the Portfolio.
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's Port-
folios, as well as cash for investment purposes, into one or more joint ac-
counts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable rate demand notes and tax-exempt money instruments. By en-
tering into these investments on a joint basis, it is expected that a Portfo-
lio may earn a higher rate of return on investments relative to what it could
earn individually.
The Fund has received permission from the SEC for each of its Portfolios to
invest, for cash management purposes, the greater of 5% of its total assets or
$2.5 million in the Fund's DSI Money Market Portfolio. (See "INVESTMENT
COMPANIES.")
8
<PAGE>
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities, certificates of deposit, and certain bankers' accept-
ances and other securities outlined above under "SHORT-TERM INVESTMENTS." In a
repurchase agreement, the Portfolio buys a security and simultaneously commits
to sell that security back at an agreed upon price plus an agreed upon market
rate of interest. Under a repurchase agreement, the seller is required to
maintain the value of securities subject to the agreement at not less than
100% of the repurchase price. The value of the securities purchased will be
evaluated daily, and the Adviser will, if necessary, require the seller to
maintain additional securities to ensure that the value is in compliance with
the previous sentence. The use of repurchase agreements involves certain
risks. For example, a default by the seller of the agreement may cause the
Portfolio to experience a loss or delay in the liquidation of the collateral
securing the repurchase agreement. The Portfolio might also incur disposition
costs in liquidating the collateral. While the Fund's management acknowledges
these risks, it is expected that they can be controlled through stringent
counter-party selection criteria and careful monitoring procedures. The Fund
has received permission from the SEC to pool daily uninvested cash balances of
the Fund's Portfolios in order to invest in repurchase agreements on a joint
basis. By entering into joint repurchase agreements, the Portfolio may incur
lower transaction costs and earn higher rates of interest on joint repurchase
agreements. The Portfolio's contribution would determine its return from a
joint repurchase agreement. (See "SHORT-TERM INVESTMENTS.")
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. The Portfolio will not loan securities
to the extent that greater than one-third of its assets at fair market value
would be committed to loans. During the term of a loan, the Portfolio is sub-
ject to a gain or loss depending on any increase or decrease in the market
price of the securities loaned. Lending of securities is subject to review by
the Fund's Board of Trustees. All relevant facts and circumstances, including
the creditworthiness of the broker, dealer or institution, will be considered
in making decisions about securities lending.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Trustees. The Portfolio will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on loan, the loan must be called and the securities
voted.
PORTFOLIO TURNOVER
Portfolio turnover is not anticipated to exceed 100%. In addition to Portfo-
lio trading costs, higher rates of portfolio turnover may result in the reali-
zation of capital gains. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND
9
<PAGE>
TAXES" for more information on taxation). The Portfolio will not normally en-
gage in short-term trading, but reserves the right to do so.
INVESTMENT COMPANIES
The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets may be invested in the securities of any one investment company
nor may it acquire more than 3% of the voting securities of any other invest-
ment company. The Portfolio will indirectly bear its proportionate share of
any management fees paid by an investment company in which it invests in addi-
tion to the advisory fee paid by the Portfolio.
The Fund has received permission from the SEC to allow each of its Portfo-
lios to invest, for cash management purposes, the greater of 5% of its total
assets or $2.5 million in the Fund's DSI Money Market Portfolio provided that
the investment is consistent with the Portfolio's investment policies and re-
strictions. Based upon a Portfolio's assets invested in the DSI Money Market
Portfolio, the investing Portfolio's adviser will waive its investment advi-
sory fee and any other fees earned as a result of the Portfolio's investment
in the DSI Money Market Portfolio. The investing Portfolio will bear expenses
of the DSI Money Market Portfolio on the same basis as all of its other share-
holders.
RISKS AND ADDITIONAL INVESTMENT INFORMATION
FOREIGN INVESTMENTS
Investment in securities of foreign issuers, including ADRs, generally in-
volves more risk than investment in the securities of domestic issuers. In ad-
dition, investment in small capitalization securities involves greater risk
than larger, more mature issuers. Such smaller companies may have limited
product lines, markets or financial resources, and their securities may trade
less frequently and in more limited volume than those of larger, more mature
companies. As a result, the prices of their securities may fluctuate more than
those of larger issuers.
There may be limited publicly available information with respect to foreign
issuers, and foreign issuers are not generally subject to uniform accounting,
auditing and financial standards and requirements comparable to those applica-
ble to domestic companies. Therefore, disclosure of certain material informa-
tion may not be made and less information may be available to investors in-
vesting in emerging countries than in the United States. There may also be
less government supervision and regulation of foreign securities exchanges,
brokers and listed companies than in the United States. Many foreign securi-
ties markets have substantially less volume than United States national secu-
rities exchanges, and securities of some foreign issuers are less liquid and
more volatile than securities of comparable domes-
10
<PAGE>
tic issuers and lack a secondary trading market. Brokerage commissions and
other transaction costs on foreign securities exchanges are generally higher
than in the United States. Dividends and interest paid by foreign issuers may
be subject to withholding and other foreign taxes which may decrease the net
return on foreign investments as compared to dividends and interest paid by
domestic companies. Additional risks include future political and economic de-
velopments, the possibility that a foreign jurisdiction might impose or change
withholding taxes on income payable with respect to foreign securities, and
the possible adoption of foreign governmental restrictions such as exchange
controls.
Prior governmental approval for foreign investments may be required under
certain circumstances in some emerging countries, and the extent of foreign
investment in domestic companies may be subject to limitation in other emerg-
ing countries. Foreign ownership limitations also may be imposed by the char-
ters of individual companies in emerging countries to prevent, among other
concerns, violation of foreign investment limitations. The Portfolio may en-
counter difficulties or be unable to vote proxies, exercise shareholder
rights, pursue legal remedies and obtain judgments in foreign courts. Also,
some countries may withhold portions of income and dividends at the source.
These considerations generally are more of a concern in developing countries,
where the possibility of political instability (including the risk of war) and
dependence on foreign economic assistance may be greater than in developed
countries. Investments in companies domiciled in emerging countries, there-
fore, may be subject to potentially higher risks than investments in developed
countries.
Repatriation of investment income, capital and proceeds of sales by foreign
investors may require governmental registration and/or approval in some emerg-
ing countries. The Portfolio could be adversely affected by delays in or a re-
fusal to grant any required governmental registration or approval for such re-
patriation. Any investment subject to such repatriation controls will be con-
sidered illiquid if it appears reasonably likely that this process will take
more than seven days.
The economies of individual emerging countries may differ favorably or unfa-
vorably from the United States economy in such respect as growth of gross do-
mestic product, rate of inflation, currency depreciation, capital reinvest-
ment, resource self-sufficiency and balance of payments position. Further, the
economies of developing countries generally are heavily dependent upon inter-
national trade and, accordingly, have been and may continue to be adversely
affected by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been and may con-
tinue to be adversely affected by economic conditions in the countries with
which they trade.
Investments in securities of foreign issuers are frequently denominated in
foreign currencies, and since the Portfolio may temporarily hold uninvested re-
11
<PAGE>
serves in bank deposits in foreign currencies, the value of the Portfolio's
assets as measured in U.S. dollars may be affected favorably or unfavorably by
changes in currency rates and in exchange controls regulations. Thus, the
Portfolio may incur costs in connection with conversions between various cur-
rencies.
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and in-
terest by the U.S. Government or any of its agencies or instrumental-
ities);
(b) with respect to 75% of its assets, purchase more than 10% of any
class of the outstanding voting securities of any issuer;
(c) invest more than 5% of its assets at the time of purchase in the se-
curities of companies that have (with predecessors) a continuous op-
erating history of less than 3 years;
(d) invest more than 25% of its assets in companies within a single in-
dustry; however, there are no limitations on investments made in in-
struments issued or guaranteed by the U.S. Government and its agen-
cies.
(e) make loans except by purchasing debt securities in accordance with
its investment objective and policies or entering into repurchase
agreements or by lending its portfolio securities to banks, brokers,
dealers and other financial institutions so long as the loans are
made in compliance with the 1940 Act, as amended, or the Rules and
Regulations or interpretations of the SEC;
(f) (i) borrow, except from banks and as a temporary measure for extraor-
dinary or emergency purposes and then, in no event, in excess of 33
1/3% of the Portfolio's gross assets valued at the lower of market or
cost, and (ii) a Portfolio may not purchase additional securities
when borrowings exceed 5% of total assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent
greater than 33 1/3% of its total assets at fair market value.
The Portfolio's investment objective and investment limitations (a), (b),
(d), (e) and (f)(i) listed above are fundamental policies and may be changed
only with the approval of the holders of a majority of the outstanding voting
securities of the Portfolio. The other investment limitations described here
and those not specified as fundamental in the SAI as well as the Portfolio's
investment policies are not fundamental and the Fund's Board of Trustees may
change them without shareholder approval.
12
<PAGE>
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), without a sales commission at the net asset value per share
next determined after an order is received by the Fund and payment is received
by the Custodian. (See "VALUATION OF SHARES.") The minimum initial investment
required is $2,500. The minimum initial investment for IRA accounts is $500.
The minimum initial investment for spousal IRA accounts is $250. Certain ex-
ceptions may be made by the officers of the Fund.
Shares of the Portfolio may be purchased by customers of brokers-dealers or
other financial intermediaries ("Service Agents") which have established a
shareholder servicing relationship with the Fund on behalf of their customers.
Service Agents may impose additional or different conditions on purchases or
redemptions of Portfolio shares and may charge transaction or other account
fees. Each Service Agent is responsible for transmitting to its customers a
schedule of any such fees and information regarding additional or different
purchase or redemption conditions. Shareholders who are customers of Service
Agents should consult their Service Agent for information regarding these fees
and conditions. Amounts paid to Service Agents may include transaction fees
and/or service fees paid by the Fund from the Fund assets attributable to the
Service Agent, which would not be imposed if shares of the Portfolio were pur-
chased directly from the Fund or the Distributor. Service Agents may provide
shareholder services to their customers that are not available to a share-
holder dealing directly with the Fund. A salesperson and any other person en-
titled to receive compensation for selling or servicing Portfolio shares may
receive different compensation with respect to one particular class of shares
over another in the Fund.
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of the Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer
Agent prior to 4 p.m. to receive that day's share price. Proper payment for
the order must be received by the Sub-Transfer Agent no later than the time
when the Portfolio is priced on the following business day. Service Agents are
responsible to their customers and the Fund for timely transmission of all
subscription and redemption requests, investment information, documentation
and money.
13
<PAGE>
INITIAL INVESTMENTS
BY MAIL
. Complete and sign an Application and mail it together with a check made
payable to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment.
BY WIRE
. Telephone the UAM Funds Service Center and provide the account name, ad-
dress, telephone number, social security or taxpayer identification num-
ber, Portfolio selected, amount being wired and the name of the bank
wiring the funds. An account number will then be provided to you. Next,
. instruct your bank to wire the specified amount to the Fund's Custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
DDA Acct. #9102772952
Ref: Portfolio Name
-----------
Your Account Number
-----------
Your Account Name
-------------
Wire Control Number
-----------
. Forward a completed Application to the Fund at the address shown on the
form. Federal Funds purchases will be accepted only on a day on which
both the NYSE and the Custodian Bank are open for business.
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check made payable to "UAM Funds" to the above address or by wiring money to
the Custodian Bank using the instructions outlined above. When making addi-
tional investments, be sure that the account number, account name and the
Portfolio to be purchased are identified on the check or wire. Prior to wiring
additional investments, notify the UAM Funds Service Center by calling the
number on the cover of this Prospectus. Mail orders should include, when pos-
sible, the "Invest by Mail" stub which accompanies any Fund confirmation
statement.
14
<PAGE>
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to suspend the offering of shares of the Portfolio or to reject pur-
chase orders when, in the judgment of management, such suspension or rejection
is in the best interests of the Fund. Purchases of the Portfolio's shares will
be made in full and fractional shares of the Portfolio calculated to three
decimal places. Certificates for fractional shares will not be issued. Certif-
icates for whole shares will not be issued except at the written request of
the shareholder.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by the Port-
folio in exchange for securities will be issued at net asset value determined
as of the same time. All dividends, interest, subscription, or other rights
pertaining to such securities shall become the property of the Portfolio and
must be delivered to the Fund by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for invest-
ment and not for immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be in-
cluded in the Portfolio (current market quotations must be readily
available for such securities);
. the investor represents and agrees that all securities offered to
be exchanged are liquid securities and not subject to any restric-
tions upon their sale by the Portfolio under the Securities Act of
1933, or otherwise; and
. the value of any such securities (except U.S. Government securi-
ties) being exchanged together with other securities of the same
issuer owned by the Portfolio will not exceed 5% of the net assets
of the Portfolio immediately after the transaction.
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of secu-
rities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.
15
<PAGE>
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. No charge is made for redemptions. Any re-
demption may be more or less than the purchase price of the shares depending
on the market value of investment securities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of
shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which they are regis-
tered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pen-
sion and profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the
wire redemption privilege) by completing appropriate sections of
the Application; and
. call the Fund and instruct that the redemption proceeds be mailed
to you or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated
to receive redemption proceeds (this can be accomplished only by a
written request signed by each shareholder, with each signature
guaranteed); and
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the investor to provide certain personal identification at the time an
account is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded
and investors may be required
16
<PAGE>
to provide additional telecopied written instructions of such transaction re-
quests. The Fund or Sub-Transfer Agent may be liable for any losses due to un-
authorized or fraudulent telephone instructions if the Fund or the Sub-Trans-
fer Agent do not employ the procedures described above. Neither the Fund nor
the Sub-Transfer Agent will be responsible for any loss, liability, cost or
expense for following instructions received by telephone that it reasonably
believes to be genuine.
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than
the registered shareowner(s);
. redemptions where the proceeds are to be sent to someplace other
than the registered address; or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securi-
ties exchanges, registered securities associations, clearing agencies and sav-
ings associations. Broker-dealers guaranteeing signatures must be a member of
a clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after the
receipt of the request, or earlier if required under applicable law. The Fund
may suspend the right of redemption or postpone the date at times when both
the NYSE and Custodian Bank are closed, or under any emergency circumstances
determined by the SEC.
If the Board of Trustees determines that it would be detrimental to the best
interests of remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay redemption proceeds in whole or in part by a
distribution in-kind of liquid securities held by the Portfolio in lieu of
cash in conformity with applicable rules of the SEC. Investors may incur bro-
kerage charges on the sale of portfolio securities received in payment of re-
demptions.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for Institu-
tional Class Shares of any other UAM Funds Portfolio. (See the list of Portfo-
lios of the UAM Funds at the end of this Prospectus.) Exchange requests should
be made by contacting the UAM Funds Service Center.
17
<PAGE>
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into the Portfolio, a shareholder should read its Prospec-
tus and consider the investment objectives of the Portfolio to be purchased.
Call the UAM Funds Service Center for a copy of the Prospectus for the Portfo-
lio(s) in which you are interested. Exchanges can only be made with Portfolios
that are qualified for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES -- BY TELEPHONE." An ex-
change into another UAM Funds Portfolio is a sale of shares and may result in
a gain or loss for income tax purposes. The Fund may modify or terminate the
exchange privilege at any time.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets, less any liabilities, by the number of shares out-
standing. The net asset value per share of the Portfolio is determined as of
the close of the NYSE on each day that the NYSE is open for business.
Equity securities listed on a securities exchange for which market quota-
tions are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where
the security is primarily traded. Unlisted equity securities and listed secu-
rities not traded on the valuation date for which market quotations are read-
ily available are valued neither exceeding the current ask prices nor less
than the current bid prices. Quotations of foreign securities in a foreign
currency are converted to U.S. dollar equivalents. The converted value is
based upon the bid price of the foreign currency against U.S. dollars quoted
by any major bank or by a broker.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating yield and total return.
Both yield and total return figures are based on historical earnings and are
not intended to indicate future performance.
18
<PAGE>
Yield refers to the income generated by an investment in the Portfolio over
a given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all funds. As this
differs from other accounting methods, the quoted yield may not equal the in-
come actually paid to shareholders.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of time. An average annual total return is a hypothetical rate of re-
turn that, if achieved annually, would have produced the same cumulative total
return if performance had been constant over the entire period.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices as further de-
scribed in the Portfolio's SAI. This information may also be included in sales
literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or telephone number on the
cover of this Prospectus.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders in quarterly dividends. If any
net capital gains are realized, the Portfolio will normally distribute such
gains annually. All dividends and capital gains distributions will be automat-
ically reinvested in shares of the Portfolio unless the Fund is notified in
writing that the shareholder elects to receive the distributions in cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal in-
come tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends. To do this, the Portfolio must,
among other things, distribute substantially all of its ordinary income and
net capital gains on an annual basis and maintain a portfolio of investments
which satisfies certain diversification criteria.
19
<PAGE>
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income.
Short-term capital gains will be taxed as ordinary income. Long-term capital
gains distributions are taxed as long-term capital gains. Shareholders will be
notified annually of dividend income earned for tax purposes.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid in January of the following year.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you. Consult a tax adviser for more information regarding deduc-
tions and credits for foreign taxes.
INVESTMENT ADVISER
Jacobs Asset Management (the "Adviser") is a Delaware limited partnership
and is a registered investment adviser formed in July 1995. Its business of-
fices are located at 200 East Broward Boulevard, Suite 1920, Fort Lauderdale,
FL 33301. The Adviser provides and offers investment management and advisory
services to corporations, unions, pensions and profit-sharing plans, trusts,
estates and other institutions and investors. Although the Adviser is a rela-
tively new entity, the principals of the Adviser, who are also the portfolio
managers of the Portfolio, have substantial experience as investment advisers
to mutual funds. As of the date of this Prospectus, the Adviser currently had
over $160 million in assets under management.
United Asset Management Corporation ("UAM") is a limited partner of the Ad-
viser and owns a controlling interest in the Adviser.
The Portfolio pays an annual fee in monthly installments to the Adviser for
advisory services. This fee is accrued daily and paid every month as a per-
centage of the average net assets in the Portfolio for that month. The per-
centage fee on an annual basis is 1.00%.
20
<PAGE>
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Distributor, UAM, the Adviser, or any of their affili-
ates, may, at its own expense, compensate a Service Agent or other person for
marketing, shareholder servicing, record-keeping and/or other services per-
formed with respect to the Fund, a Portfolio or any Class of Shares. Payments
made for any of these purposes may be made from its revenues, its profits or
any other source available to it. When such service arrangements are in ef-
fect, they are made generally available to all qualified service providers.
The Distributor, the Adviser and certain of their other affiliates also par-
ticipate, at the date of this Prospectus, in an arrangement with Smith Barney,
Inc. under which Smith Barney provides certain defined contribution plan mar-
keting and other shareholder services of its Consulting Group and receives .15
of 1% of the daily net asset value of Institutional Class Shares held by Smith
Barney's eligible customer accounts in addition to amounts payable to all
selling dealers. The Fund also compensates Smith Barney for services it pro-
vides to certain defined contribution plan shareholders that are not otherwise
provided by the Administrator.
The investment professionals at the Adviser who comprise the Investment Com-
mittee, and who are responsible for the day-to-day management of the Portfo-
lio, and their qualifications are as follows:
DANIEL L. JACOBS, CFA, PRESIDENT. Mr. Jacobs managed $3.4 billion in inter-
national and global equity portfolios as Executive Vice President and Director
of Templeton Investment Counsel from 1984 to 1995. Mr. Jacobs was Portfolio
Manager of Templeton's $1.4 billion Smaller Companies Growth Fund and was a
Senior Portfolio Manager of institutional separate accounts. Mr. Jacobs served
as President of the Templeton Variable Annuity Fund and Portfolio Manager for
the Equity and the equity portion of the Balanced Funds in the Templeton Vari-
able Annuity Series.
Prior to joining Templeton, he was Vice President/Portfolio Manager, Insti-
tutional Investment Group and International Division of the First National
Bank of Atlanta from 1976 to 1984. Mr. Jacobs received an MBA in Finance from
Emory University (1976) and a BA in Economics from Miami University (1974). In
addition to holding a CFA and CIC, Mr. Jacobs is a founding member of the In-
ternational Society of Financial Analysts.
WAI W. CHIN, MANAGING DIRECTOR, ASIAN RESEARCH AND PORTFOLIO MANAGEMENT. Ms.
Chin was formerly Vice President of the Global Equity Group of Scudder, Ste-
vens & Clark, where she spent over five years as a Pacific Basin analyst, spe-
cializing in the developed and emerging markets of Asia. She started her re-
search analyst career at Baron Capital, Inc. and was a foreign currency trader
at the Bank of America and Creditanstalt Banverein. Ms. Chin holds a BA in
East Asian Studies from Barnard College and received an MBA in Finance from
Columbia University.
21
<PAGE>
ROBERT J. JURGENS, MANAGING DIRECTOR, EUROPEAN RESEARCH AND PORTFOLIO
MANAGEMENT. As Vice President and head of AIG Global Investors' International
Equity Division from 1993 to 1995, Mr. Jurgens was responsible for investment
policy and management of international and global equity portfolios. He has
thirteen years of experience investing in the global stock markets, with par-
ticular expertise in the European markets. Upon graduation from Pennsylvania
State University with a BS in Business/French, Mr. Jurgens spent four years
with Scandinavian Bank Group as a Global Portfolio Manager/Analyst, three
years with Nomura Bank International in London managing global equities, and
two years as an International Equity Manager at the privately held Antessa In-
vestment Management Limited.
ADVISER'S HISTORICAL PERFORMANCE
Below are certain performance data provided by the Adviser pertaining to a
registered, open-end investment company ("mutual fund") that was managed by
Mr. Jacobs with substantially similar (although not necessarily identical) ob-
jectives, policies, and strategies as those of the Portfolio. The investment
returns of the Portfolio may differ from those of the mutual fund because fees
and expenses of the mutual fund may differ from those of the Portfolio. During
Mr. Jacobs' tenure as the portfolio manager of the mutual fund, he was primar-
ily responsible for the day-to-day management of the mutual fund, and no other
person had a significant role in achieving the mutual fund's performance. The
Portfolio and the mutual fund are separate funds, and are members of different
families of investment companies. The results presented are not intended to
predict or suggest the return to be experienced by the Portfolio or the return
an investor might achieve by investing in the Portfolio.
MUTUAL FUND CUMULATIVE RETURNS
ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
THREE YEARS
YEAR ENDED ENDED
JUNE 30, 1995 JUNE 30, 1995
------------- -------------
<S> <C> <C>
Templeton International Fund................... 11.43% 14.55%
Lipper International Index..................... 0.95% 7.22%
Morgan Stanley Capital International ("MSCI")
EAFE Index US$............................... 1.66% 12.68%
</TABLE>
- -----------
Notes:
1. The mutual fund managed by Mr. Jacobs was the Templeton International Fund
of the Templeton Variable Products Series Fund. Mr. Jacobs was the lead
portfolio manager for that mutual fund from inception, May 1, 1992, to
June 30, 1995.
22
<PAGE>
JACOBS ASSET MANAGEMENT HISTORICAL PERFORMANCE
Set forth below are certain performance data provided by the Adviser per-
taining to the composite of separately managed accounts of the Adviser that
are managed with substantially similar (although not necessarily identical)
objectives, policies and strategies as those of the Portfolio. The performance
data for the managed accounts is net of all fees and expenses. The investment
returns of the Portfolio may differ from those of the separately managed ac-
counts because such separately managed accounts may have fees and expenses
that differ from those of the Portfolio. Further, the separately managed ac-
counts are not subject to investment limitations, diversification requirements
and other restrictions imposed by the 1940 Act and the Internal Revenue Code;
such conditions, if applicable, may have lowered the returns for the sepa-
rately managed accounts. The results presented are not intended to predict or
suggest the return to be experienced by the Portfolio or the return an in-
vestor might achieve by investing in the Portfolio.
JACOBS ASSET MANAGEMENT INTERNATIONAL COMPOSITE RETURNS
(PERCENTAGE RETURNS NET OF MANAGEMENT FEES)
<TABLE>
<CAPTION>
MSCI
ADVISER EAFE
------- -----
<S> <C> <C>
1996............................................................ 34.25% 6.36%
1/1/97-3/31/97.................................................. 3.42% (1.49)%
10/1/95-3/31/97................................................. 37.41% 9.11%
Annualized Return............................................... 23.60% 5.98%
Cumulative Return............................................... 37.41% 9.11%
</TABLE>
- -----------
Notes:
1. The annualized return is calculated from monthly data, allowing for com-
pounding. The formula used is in accordance with the acceptable methods
set forth by the Association for Investment Management Research, the Bank
Administration Institute, and the Investment Counsel Association of Ameri-
ca. Market value of the account was the sum of the account's total assets,
including cash, cash equivalents, short-term investments, and securities
valued at current market prices.
2. The cumulative return means that $1 invested in the composite account on
October 1, 1995 had grown to $1.37 by March 31, 1997.
3. The MSCI EAFE is an unmanaged index which assumes reinvestment of divi-
dends and is generally considered representative of securities similar to
those invested in by the Adviser for purpose of the composite performance
numbers set forth above.
4. The Advisor's average annual management fee for the period since inception
on October 1, 1995 to March 31, 1997 was 0.75%, or 75 basis points. Net
returns to investors vary depending on the management fee.
23
<PAGE>
ADMINISTRATIVE SERVICES
UAMFSI, a wholly-owned subsidiary of UAM, is responsible for performing and
overseeing administrative, fund accounting, dividend disbursing and transfer
agent services provided to the Fund and its Portfolios. UAMFSI's principal of-
fice is located at 211 Congress Street, Boston, MA 02110. UAMFSI has subcon-
tracted some of these services to Chase Global Funds Services Company
("CGFSC"), an affiliate of The Chase Manhattan Bank, by a Mutual Funds Service
Agreement dated June 30, 1997. CGFSC is located at 73 Tremont Street, Boston,
MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
Jacobs International Octagon Portfolio................................. 0.04%
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
0.11 of 1% of the next $800 million of combined UAM Funds assets;
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Funds' fees are allocated among the Portfolios on the basis of their
relative assets and are subject to a graduated minimum fee schedule per Port-
folio, which starts at $2,000 per month and increases to $70,000 annually af-
ter two years. If a separate class of shares is added to a Portfolio, its min-
imum annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM, with its principal office
located at 211 Congress Street, Boston, MA 02110, distributes shares of the
Fund. Under the Distribution Agreement (the "Agreement"), the Distributor, as
agent of the Fund, agrees to use its best efforts as sole distributor of Fund
shares. The Distributor does not receive any fee or other compensation under
the Agreement with respect to the Shares offered in this Prospectus. The
Agreement continues in effect as long as it is approved at least annually by
the Fund's Board of Trustees. Those approving the Agreement must include a ma-
jority of Trustees who are neither parties to the Agreement nor interested
persons of any such party. The Agreement provides that the Fund will bear
costs of registration of its shares with the SEC and various states as well as
the printing of its prospectuses, its SAIs and its reports to shareholders.
24
<PAGE>
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II". On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and have no preference as to conversion, exchange, dividends, re-
tirement or other features and no pre-emptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees can elect 100% of the Trustees. A shareholder is en-
titled 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 of the
Fund.
As of June 16, 1997, Michigan State University Foundation held of record
30.2% of the outstanding shares of the Jacobs International Octagon Portfolio
Institutional Class for which beneficial ownership is disclaimed or presumed
disclaimed. The persons or organizations owning 25% or more of the outstanding
shares of a Portfolio may be presumed to "control" (as that term is defined in
the 1940 Act) such Portfolio. As a result, those persons or organizations
could have the ability to vote a majority of the shares of the Portfolio on
any matter requiring the approval of shareholders of such Portfolio.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the hold-
ers of not less than 10% of the outstanding shares of the Fund. The Fund will
assist shareholder communications in such matters to the extent required by
the undertaking.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
25
<PAGE>
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the address or telephone number listed on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT OF AD-
DITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTI-
TUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY
NOT LAWFULLY BE MADE.
26
<PAGE>
UAM FUNDS -- INSTITUTIONAL CLASS SHARES
Acadian Emerging Markets Portfolio
Acadian International Equity Portfolio
BHM&S Total Return Bond Portfolio
Chicago Asset Management Intermediate Bond Portfolio
Chicago Asset Management Value/Contrarian Portfolio
C&B Balanced Portfolio
C&B Equity Portfolio
C&B Equity Portfolio for Taxable Investors
C&B Mid Cap Equity Portfolio
DSI Balanced Portfolio
DSI Disciplined Value Portfolio
DSI Limited Maturity Bond Portfolio
DSI Money Market Portfolio
FMA Small Company Portfolio
FPA Crescent Portfolio
Hanson Equity Portfolio
ICM Equity Portfolio
ICM Fixed Income Portfolio
ICM Small Company Portfolio
IRC Enhanced Index Portfolio
Jacobs International Octagon Portfolio
McKee Domestic Equity Portfolio
McKee International Equity Portfolio
McKee U.S. Government Portfolio
McKee Small Cap Equity Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Rice, Hall James Small Cap Portfolio
Rice, Hall James Small/Mid Cap Portfolio
Sirach Equity Portfolio
Sirach Fixed Income Portfolio
Sirach Growth Portfolio
Sirach ShortTerm Reserves Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
SAMI Preferred Stock Income Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' ShortTerm Fixed Income Portfolio
Sterling Partners' Small Class Portfolio
Sterling Partners' Small Cap Value Portfolio
TS&W Equity Portfolio
TS&W Fixed Income Portfolio
TS&W International Equity Portfolio
TS&W Balanced Portfolio
27
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Jacobs Asset Management
200 East Broward Boulevard
Suite 1920
Fort Lauderdale, FL 33301
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
MJI International
Equity Portfolio
Institutional
Class Shares
July 10, 1997
P R O S P E C T U S
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses.............................................................. 1
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Financial Highlights....................................................... 4
Investment Objective....................................................... 6
Investment Policies........................................................ 6
Other Investment Policies.................................................. 8
Investment Limitations..................................................... 13
Purchase of Shares......................................................... 14
Redemption of Shares....................................................... 17
Shareholder Services....................................................... 19
Valuation of Shares........................................................ 19
Performance Calculations................................................... 20
Dividends, Capital Gains Distributions and Taxes........................... 21
Investment Adviser......................................................... 22
Administrative Services.................................................... 23
Distributor................................................................ 23
General Information........................................................ 24
UAM Funds -- Institutional Class Shares.................................... 26
</TABLE>
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
MJI INTERNATIONAL EQUITY PORTFOLIO
INSTITUTIONAL CLASS SHARES
INVESTMENT ADVISER: MURRAY JOHNSTONE INTERNATIONAL LTD.
- -------------------------------------------------------------------------------
PROSPECTUS -- JULY 10, 1997
UAM Funds Trust (the "Fund") is an open-end investment company known as a
"mutual fund." The Fund consists of multiple series (known as "Portfolios")
each of which has different investment objectives and policies. MJI Interna-
tional Equity Portfolio currently offers two classes of shares: Institutional
Class Shares and Institutional Service Class Shares. Shares of each class rep-
resent equal, pro rata interests in the Portfolio and accrue dividends in the
same manner except that Service Class Shares bear fees payable by the class to
financial institutions for services they provide to the owners of such shares.
The securities offered in this Prospectus are Institutional Class Shares of
one diversified, no-load Portfolio of the Fund managed by Murray Johnstone In-
ternational Ltd.
MJI INTERNATIONAL EQUITY PORTFOLIO. MJI International Equity Portfolio (the
"Portfolio") seeks to maximize total return, including both capital apprecia-
tion and current income, by investing primarily in the common stocks of compa-
nies based outside of the United States. Under normal circumstances, at least
65% of the Portfolio's total assets will be invested in securities of issuers
domiciled in at least three countries other than the United States.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A "Statement of Additional Information" ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Institutional Class Shares would incur. Transaction fees may be
charged if a broker-dealer or other financial intermediary deals with the Fund
on your behalf. (See "PURCHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases......................................... NONE
Sales Load Imposed on Reinvested Dividends.............................. NONE
Deferred Sales Load..................................................... NONE
Redemption Fees......................................................... NONE
Exchange Fees........................................................... NONE
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Investment Advisory Fees............................................ 0.75 %
Administrative Fees................................................. 0.58 %
12b-1 Fees.......................................................... NONE
Other Expenses...................................................... 0.68 %
Advisory Fees Waived and Expenses Assumed........................... (0.51)%
-----
Total Operating Expenses (After Fee Waiver and Expenses Assumed).... 1.50 %*
=====
</TABLE>
- -----------
* Absent the fees waived and expenses assumed by the Adviser, Total Operating
Expenses of the Portfolio would have been 2.02%. The Total Operating Ex-
penses includes the effect of expense offsets. If expense offsets were ex-
cluded, total operating expenses would not be affected. The Adviser has vol-
untarily agreed to waive all or a portion of its advisory fees and to assume
operating expenses to keep total annual operating expenses (excluding inter-
est, taxes and extraordinary expenses), after the effect of expense offsets,
from exceeding 1.50% of average daily net assets until further notice. The
Adviser will not be reimbursed by the Fund for any advisory fees which are
waived or expenses which the Adviser may bear on behalf of the Portfolio for
a given fiscal year.
The table above shows various fees and expenses an investor may bear di-
rectly or indirectly. The expenses and fees set forth above are based on the
Portfolio's Institutional Class Shares' operations during the fiscal year
ended April 30, 1997. Advisory Fees Waived and Expenses Assumed have been re-
stated to reflect the Portfolio's current expense cap.
1
<PAGE>
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Expenses..................................... $15 $47 $82 $179
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSE MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
2
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Murray Johnstone International Ltd. (the "Adviser") is an international in-
vestment adviser and is an affiliate of the Murray Johnstone Group ("MJ
Group"), in Glasgow, Scotland. The MJ Group's origins date back to 1907, and
it currently has $7 billion in assets under management. The MJ Group has a
200-member staff including 40 investment professionals. It became a subsidiary
of United Asset Management Corporation in 1993. The Adviser, the SEC-regis-
tered entity within the MJ Group, has $1.4 billion of assets under management
and has a U.S. office in Chicago. (See "INVESTMENT ADVISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion, to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment in the Portfolio is $2,500. The minimum initial investment
for IRA accounts is $500. The minimum initial investment for spousal IRA ac-
counts is $250. The minimum for any subsequent investment is $100. Certain ex-
ceptions to the initial or minimum investment amounts may be made by the offi-
cers of the Fund. (See "PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in an annual dividend. Any realized net capital gains will also be
distributed annually. Distributions will be reinvested in the Portfolio's
shares automatically unless an investor elects to receive cash distributions.
(See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See "REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of United As-
set Management Corporation ("UAM"), is responsible for performing and oversee-
ing administration, dividend disbursing and transfer agency services provided
to the Fund and its Portfolios by third-party service providers. (See "ADMIN-
ISTRATIVE SERVICES.")
3
<PAGE>
RISK FACTORS
The value of the Portfolio's shares will fluctuate in response to changes in
market and economic conditions as well as the financial conditions and pros-
pects of the issuers in which the Portfolio invests. Prospective investors
should consider the following factors: (1) The Portfolio may invest in repur-
chase agreements which entail a risk of loss should the seller default on its
transaction; (2) The Portfolio may lend its investment securities which en-
tails a risk of loss should a borrower fail financially; (3) The Portfolio may
purchase securities on a when-issued basis which do not earn interest until
issued and may decline or appreciate in market value prior to their delivery
to the Portfolio; (4) The Portfolio may engage in various currency strategies
to seek to hedge its investments against movements in security prices, inter-
est rates, and exchange rates by the use of derivatives, including forward
contracts, options and futures as well as options on futures. Such strategies
are commonly referred to as "derivatives" and involve the risk of imperfect
correlation in movements in the price of options and futures and movements in
the price of securities, interest rates or currencies which are the subject of
the hedge. To the extent these transactions involve foreign securities or cur-
rencies, they are also subject to the risk factors associated with foreign in-
vestments generally. There can be no assurance that a liquid secondary market
for these hedging techniques will exist at any specific time. (See "OTHER IN-
VESTMENT POLICIES.")
FINANCIAL HIGHLIGHTS
The following table provides selected per share information for a share out-
standing throughout the period presented of the Portfolio's Institutional
Class Shares. This table is part of the Portfolio's Financial Statements in-
cluded in the Portfolio's 1997 Annual Report to Shareholders. The Report is
incorporated into the Portfolio's SAI. The Portfolio's Annual Financial State-
ments have been audited by Price Waterhouse LLP whose unqualified opinion on
the Financial Statements for the year ended April 30, 1997 is also incorpo-
rated into the Portfolio's SAI. Please read the following information in con-
junction with the Portfolio's 1997 Annual Report to Shareholders.
4
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 16, YEAR YEAR
1994** ENDED ENDED
TO APRIL 30, APRIL 30, APRIL 30,
1995 1996 1997
------------- --------- ---------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....... $10.00 $ 9.50 $ 10.27
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................... 0.04 0.07 0.06
Net Realized and Unrealized Gain (Loss)
on Investments......................... (0.54)++ 0.75 0.42
------ ------- -------
Total from Investment Operations....... (0.50) 0.82 0.48
------ ------- -------
DISTRIBUTIONS
Net Investment Income.................... -- (0.00)@ (0.01)
In Excess of Net Investment Income....... -- (0.03) (0.00)
Net Realized Gain........................ -- (0.02) (0.09)
------ ------- -------
Total Distributions.................... -- (0.05) (0.10)
------ ------- -------
NET ASSET VALUE, END OF PERIOD............. $ 9.50 $ 10.27 $ 10.65
====== ======= =======
TOTAL RETURN+.............................. (5.00)%** 8.67% 4.67%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands).... $5,535 $ 8,592 $28,818
Ratio of Expenses to Average Net
Assets+................................ 1.00%* 1.45% 1.50%*
Ratio of Net Investment Income to Average
Net Assets............................. 1.49%* 0.88% 0.68%
Portfolio Turnover Rate.................. 81% 59% 47%
Average Commission Rate#................. N/A $0.0316 $0.0323
Voluntary Waived Fees and Expenses
Assumed by the Adviser Per Share....... $ 0.13 $ 0.13 $ 0.05
Ratio of Expenses to Average Net Assets
Including Expense Offsets.............. 1.00%* 1.43% 1.50%
</TABLE>
- -----------
* Annualized.
** Not Annualized.
*** Commencement of Operations.
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser during the periods indicated.
++ The amount shown for the period does not accord with the aggregate net
gains on investments for that period because of the timing of sales and
repurchases of the Portfolio shares in relation to fluctuating market
value of the investments of the Portfolio.
# Beginning with fiscal year 1996, the portfolio is required to disclose the
average commission rate per share it paid for portfolio trades on which
commissions were charged.
@ Amount is less than $0.01 per share.
5
<PAGE>
INVESTMENT OBJECTIVE
The Portfolio seeks to maximize total return, including both capital appre-
ciation and current income, by investing primarily in the common stocks of
companies based outside of the United States. Under normal circumstances, at
least 65% of the Portfolio's total assets will be invested in at least three
different countries other than the United States. There can be no assurance
that the Portfolio will achieve its stated objective.
INVESTMENT POLICIES
The Portfolio's investment process begins by seeking to determine the best
possible allocation among international stock markets. The Portfolio's Adviser
evaluates markets through a proprietary system which analyzes economic fac-
tors, stock prices in each market, market performance and trends in monetary
policy. Drawing on this information, the Adviser decides which markets the
Portfolio should invest in and in what proportion.
Once the country allocation decision has been made, the Adviser selects un-
dervalued stocks in that market. The Adviser rates companies according to the
quality of their management, market position, financial strength, ability to
earn competitive returns on equity and assets, and growth potential. The Port-
folio will invest in stocks that the Adviser determines are undervalued com-
pared to industry norms within their countries. It is expected that invest-
ments will be diversified throughout the world and within markets to minimize
specific country and currency risks. While investments will be made primarily
in securities of companies domiciled in developed countries, investments will
also be made in developing countries. (See "FOREIGN INVESTMENT RISK FACTORS.")
Under normal circumstances, at least 65% of the Portfolio's total assets
will be invested in common stocks of companies in at least three countries
outside the United States. It is expected that generally, the Portfolio will
invest in common stocks of companies listed on U.S. or foreign stock ex-
changes, but it may also invest in stocks traded in the over-the-counter mar-
ket. Common stocks for this purpose also include securities having common
stock characteristics such as rights and warrants to purchase common stocks.
The Portfolio may also invest in convertible securities and preferred stocks.
The Portfolio may also invest in foreign equity securities in the form of
American Depositary Receipts (ADRs), European Depositary Receipts (EDRs) and
other similar global instruments. ADRs (sponsored or unsponsored) are receipts
typically issued by a U.S. bank or trust company evidencing ownership of the
underlying foreign securities. Most ADRs are traded on a U.S. stock exchange.
Issuers of unsponsored ADRs are not contractually obligated to disclose mate-
rial information in the U.S. and, therefore, there may not be a correlation
between such information and the market value of the unsponsored ADR. EDRs are
receipts typically issued by a European bank or trust company evidencing own-
ership of the underlying foreign securities.
6
<PAGE>
FOREIGN INVESTMENT RISK FACTORS
Investors should recognize that investing in foreign securities involves
certain risks which are not typically associated with investing in domestic
securities. Since securities issued by foreign entities may be denominated in
foreign currencies, and the Portfolio may temporarily hold uninvested reserves
in bank deposits in foreign currencies, the Portfolio's value may rise or fall
depending on currency exchange rates. The Portfolio may also have to pay a fee
to convert funds from one currency to another.
Non-U.S.-based companies are not subject to the same accounting, auditing
and financial reporting standards as are domestic companies. There may be less
publicly-available information about non-U.S.-based companies which may make
it difficult to make investment decisions. Also, stock markets outside the
U.S. are typically less liquid -- that is, it is more difficult to sell large
quantities of a stock without driving its price down or to buy without pushing
its price up. Market regulation may be less rigorous in some markets. Finally,
political factors may have an impact in the form of confiscatory taxation, ex-
propriation or political instability in international markets.
Although the Portfolio will seek the most favorable trading costs available
in any given market, foreign commissions are generally higher than those in
the U.S. Custodial expenses will generally be higher than would be the case in
the U.S.
Some foreign governments also levy withholding taxes against dividend and
interest income. Although in some countries a portion of the taxes is recover-
able, the non-recovered portion of foreign withholding taxes will reduce the
income the Portfolio receives from the companies comprising its investments.
Investing in the foreign securities of developing countries presents addi-
tional considerations. The economies of individual developing countries may
differ favorably or unfavorably from the United States economy in such re-
spects as growth of gross domestic product, rate of inflation, currency depre-
ciation, capital reinvestment, resource self-sufficiency and balance of pay-
ments position. Further, the economies of developing countries generally are
heavily dependent upon international trade and, accordingly, have been and may
continue to be adversely affected by trade barriers, exchange controls, man-
aged adjustments in relative currency values and other protectionist measures
imposed or negotiated by the countries with which they trade. These economies
also have been and may continue to be adversely affected by economic condi-
tions in the countries with which they trade.
With respect to any developing country, there is the possibility of nation-
alization, expropriation or confiscatory taxation, repatriation of investment
income, capital and the proceeds of sales by foreign investors, political
changes, governmental regulation, social instability or diplomatic develop-
ments (including war) which could adversely affect the economies of such coun-
tries or the value of the
7
<PAGE>
Portfolio's investments in those countries. In addition, it may be difficult
to obtain and enforce a judgment in a court outside of the United States.
The Portfolio may engage in various investment techniques such as futures
contracts, options on futures contracts, options, and interest rate swap
transactions. (See "OTHER INVESTMENT POLICIES -- HEDGING AND RELATED STRATE-
GIES AND RISK CONSIDERATIONS.")
OTHER INVESTMENT POLICIES
The Portfolio may, under normal circumstances, invest up to 35% of its as-
sets, unless restricted by additional limitations described below or in the
Portfolio's SAI, in the following securities, investments or investment tech-
niques.
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated redemp-
tions, or for temporary defensive purposes, the Portfolio may invest a portion
of its assets in domestic and foreign money market instruments including cer-
tificates of deposit, bankers' acceptances, time deposits, U.S. Government ob-
ligations, U.S. Government agency securities, short-term corporate debt secu-
rities, and commercial paper rated A-1 or A-2 by Standard & Poor's Corporation
or Prime-1 or Prime-2 by Moody's Investors Service, Inc. or if unrated, deter-
mined by the Adviser to be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in
other currencies, (ii) in the case of U.S. banks, it is a member of the Fed-
eral Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an invest-
ment quality comparable with other debt securities which may be purchased by
the Portfolio.
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's Port-
folios, as well as cash for investment purposes, into one or more joint ac-
counts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable rate demand notes and tax-exempt money instruments. By en-
tering into these investments on a joint basis, it is expected that the Port-
folio may earn a higher rate of return on investments relative to what it
could earn individually.
8
<PAGE>
The Fund has received permission from the SEC for each of its Portfolios to
invest, for cash management purposes, the greater of 5% of its total assets or
$2.5 million in the Fund's DSI Money Market Portfolio (See "INVESTMENT COMPA-
NIES.")
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities, certificates of deposit, and certain bankers' accept-
ances and other securities outlined above under "SHORT-TERM INVESTMENTS." In a
repurchase agreement, the Portfolio buys a security and simultaneously commits
to sell that security back at an agreed upon price plus an agreed upon market
rate of interest. Under a repurchase agreement, the seller is also required to
maintain the value of securities subject to the agreement at not less than
100% of the repurchase price. The value of the securities purchased will be
evaluated daily, and the Adviser will, if necessary, require the seller to
maintain additional securities to ensure that the value is in compliance with
the previous sentence. The use of repurchase agreements involves certain
risks. For example, a default by the seller of the agreement may cause the
Portfolio to experience a loss or delay in the liquidation of the collateral
securing the repurchase agreement. The Portfolio might also incur disposition
costs in liquidating the collateral. While the Fund's management acknowledges
these risks, it is expected that they can be controlled through stringent
counter-party selection criteria and careful monitoring procedures. The Fund
has received permission from the SEC to pool daily uninvested cash balances of
the Fund's Portfolios in order to invest in repurchase agreements on a joint
basis. By entering into joint repurchase agreements, the Portfolio may incur
lower transaction costs and earn higher rates of interest on joint repurchase
agreements. The Portfolio's contribution would determine its return from a
joint repurchase agreement. (See "SHORT TERM INVESTMENTS.")
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. The Portfolio will not loan securities
to the extent that greater than one-third of its assets at fair market value
would be committed to loans. During the term of a loan, the Portfolio is sub-
ject to a gain or loss depending on any increase or decrease in the market
price of the securities loaned. Lending of securities is subject to review by
the Fund's Board of Trustees. All relevant facts and circumstances, including
the creditworthiness of the broker, dealer or institution, will be considered
in making decisions about securities lending.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Trustees. The Portfolio will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on loan, the loan must be called and the securities
voted.
9
<PAGE>
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES
The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement," or "forward delivery" basis. "When-issued" or "forward delivery"
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more be-
fore delivery is due. Delayed settlement is a term used to describe settlement
of a securities transaction in the secondary market which will occur sometime
in the future. No payment or delivery is made by the Portfolio until it re-
ceives delivery or payment from the other party to any of the above transac-
tions. It is possible that the market price of the securities at the time of
delivery may be higher or lower than the purchase price. The Portfolio will
maintain a separate account of cash or liquid securities at least equal to the
value of purchase commitments until payment is made. Typically, no income ac-
crues on securities purchased on a delayed delivery basis prior to the time
delivery is made although the Portfolio may earn income on securities it has
deposited in a segregated account.
The Portfolio may engage in these types of purchases in order to buy securi-
ties that fit with its investment objectives at attractive prices not to in-
crease its investment leverage.
PORTFOLIO TURNOVER
Portfolio turnover is not anticipated to exceed 75%. In addition to Portfo-
lio trading costs, higher rates of portfolio turnover may result in the reali-
zation of capital gains. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX-
ES" for more information on taxation). The Portfolio will not normally engage
in short-term trading, but reserves the right to do so. The table set forth in
"Financial Highlights" presents the Portfolio's historical portfolio turnover
rates.
INVESTMENT COMPANIES
The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets may be invested in the securities of any one investment company
nor may it acquire more than 3% of the voting securities of any other invest-
ment company. The Portfolio will indirectly bear its proportionate share of
any management fees paid by an investment company in which it invests in addi-
tion to the advisory fee paid by the Portfolio.
The Fund has received permission from the SEC to allow each of its Portfo-
lios to invest, for cash management purposes, the greater of 5% of its total
assets or $2.5 million in the Fund's DSI Money Market Portfolio provided that
the investment is consistent with the Portfolio's investment policies and re-
strictions. Based
10
<PAGE>
upon the Portfolio's assets invested in the DSI Money Market Portfolio, the
investing Portfolio's adviser will waive its investment advisory fee and any
other fees it earned as a result of the Portfolio's investment in the DSI
Money Market Portfolio. The investing Portfolio will bear expenses of the DSI
Money Market Portfolio on the same basis as all of its other shareholders.
HEDGING AND RELATED STRATEGIES AND RISK CONSIDERATIONS
The Portfolio may use options (both exchange-traded and over-the-counter) to
attempt to enhance income. To reduce the overall risk of its investments
(hedge), the Portfolio may use options, futures contracts, options on futures
and forward currency contracts. These instruments are commonly referred to as
derivatives. Hedging strategies may also be used in an attempt to manage the
Portfolio's exposure to changing interest rates, security prices and currency
exchange rates. The Portfolio may buy or sell futures contracts, write covered
call options and buy put and call options on any security, index or currency
including options and futures traded on foreign exchanges and options not
traded on exchanges. The Portfolio's ability to use these strategies may be
limited by market conditions, regulatory limits and tax considerations. The
Portfolio's obligation under such hedging strategies will be covered by the
maintenance of a segregated account of cash or liquid securities equal to at
least 100% of the Portfolio's commitment. The SAI contains further information
on all of these strategies and the risks associated with them.
The Portfolio may write or purchase options in privately negotiated transac-
tions ("OTC Options") as well as listed options. OTC Options can be closed out
only by agreement with the other party to the transaction. Any OTC Option pur-
chased by the Portfolio is considered an illiquid security. Any OTC Option
written by the Portfolio will be with a qualified dealer pursuant to an agree-
ment under which the Portfolio may repurchase the option at a formula price.
Such options are considered illiquid to the extent that the formula price ex-
ceeds the intrinsic value of the option. The Portfolio may not purchase or
sell futures contracts or related options for which the aggregate initial mar-
gin and premiums exceed 5% of the fair market value of the Portfolio's assets.
In order to prevent leverage in connection with the purchase of futures con-
tracts or call options thereon by the Portfolio, an amount of cash, cash
equivalents or liquid securities equal to the market value of the obligation
under the futures contracts or options (less any related market deposits) will
be maintained in a segregated account with the Fund's Custodian. The Portfolio
may not invest more than 15% of its net assets in illiquid securities and re-
purchase agreements which have a maturity of longer than seven days. A more
complete discussion of the potential risks involved in transactions in options
or futures contracts and related options is contained in the SAI.
The Portfolio may enter into forward foreign currency exchange contracts for
the purchase or sale of a specified currency at a specified future date either
with
11
<PAGE>
respect to specific transactions or with respect to portfolio positions. For
example, when the Adviser anticipates making a currency exchange transaction
in connection with the purchase or sale of a security, the Portfolio may enter
into a forward contract in order to set the exchange rate at which the trans-
action will be made. The Portfolio also may enter into a forward contract to
sell an amount of a foreign currency approximating the value of some or all of
the Portfolio's securities denominated in such currency.
The Portfolio may use forward contracts in one currency or a basket of cur-
rencies to hedge against fluctuations in the value of another currency when
the Adviser anticipates there will be a correlation between the two and may
use forward currency contracts to shift the Portfolio's exposure to foreign
currency fluctuations from one country to another. The purpose of entering
into these contracts is to minimize the risk to the Portfolio from adverse
changes in the relationship between the U.S. dollar and foreign currencies.
The Portfolio may enter into interest rate protection transactions, which
consist of interest rate swaps and interest rate caps, collars and floors, for
hedging purposes. These transactions are commonly known as derivatives. A swap
is an agreement to exchange the return generated by one instrument for the re-
turn generated by another instrument. The swaps in which the Portfolio may
also engage include interest rate caps, floors and collars under which one
party pays a single or periodic fixed amount (or premium), and the other party
pays periodic amounts on the movement of a specified index.
The Portfolio may enter into interest rate protection transactions to pre-
serve a return or spread on a particular investment or portion of its portfo-
lio or to protect against any increase in the price of securities it antici-
pates purchasing at a later date. The Portfolio will enter into interest rate
protection transactions only with banks and recognized securities dealers be-
lieved by the Adviser to present minimal credit risks in accordance with
guidelines established by the Fund's Board of Trustees. Interest rate swaps,
caps, floors and collars will be treated as illiquid securities and will
therefore, be subject to the Portfolio's investment restriction limiting in-
vestment in illiquid securities to no greater than 15% of net assets.
RISK CONSIDERATIONS. The Portfolio might not employ any of the hedging
strategies described above, and there can be no assurance that any strategy
used will succeed. If the Adviser incorrectly forecasts interest rates, market
values or other economic factors in utilizing a strategy for the Portfolio,
the Portfolio would be in a better position if it had not hedged at all. In
addition, the Portfolio will pay commissions and other costs in connection
with such hedging strategies which may increase the Portfolio's expenses and
reduce its return.
The use of these strategies involves certain risks, including (1) the fact
that skills needed to use hedging instruments are different from those needed
to select
12
<PAGE>
the Portfolio's securities, (2) possible imperfect correlation, or even no
correlation, between price movements of hedging instruments and price move-
ments of the investments being hedged, (3) the fact that, while hedging strat-
egies can reduce the risk of loss, they can also reduce the opportunity for
gain, or even result in losses, by offsetting favorable price movements in
hedged investments and (4) the possible inability of the Portfolio to purchase
or sell a portfolio security at a time that otherwise would be favorable for
it to do so, or the possible need for the Portfolio to sell a portfolio secu-
rity at a disadvantageous time, due to the need for it to maintain "cover" or
to segregate securities in connection with hedging transactions and the possi-
ble inability of the Portfolio to close out or to liquidate its hedged posi-
tion.
RESTRICTED AND ILLIQUID SECURITIES
The Portfolio may purchase restricted securities that are not registered for
sale to the general public but which are eligible for resale to qualified in-
stitutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Trustees, the Adviser determines the li-
quidity of such investments by considering all relevant factors. Provided that
a dealer or institutional trading market in such securities exists, these re-
stricted securities are not treated as illiquid securities for purposes of the
Portfolio's investment limitations. The Portfolio may invest up to 15% of its
net assets in securities that are illiquid. The prices realized from the sales
of these securities could be less than those originally paid by the Portfolio
or less than what may be considered the fair value of such securities.
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and in-
terest by the U.S. Government or any of its agencies or instrumentali-
ties);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding voting securities of any issuer;
(c) invest more than 5% of its assets at the time of purchase in the secu-
rities of companies that have (with predecessors) a continuous operat-
ing history of less than 3 years;
(d) invest more than 25% of its assets in companies within a single indus-
try; however, there are no limitations on investments made in instru-
ments issued or guaranteed by the U.S. Government and its agencies.
(e) make loans except by purchasing debt securities in accordance with its
investment objective and policies or entering into repurchase agree-
ments or by lending its portfolio securities to banks, brokers, deal-
ers and other
13
<PAGE>
financial institutions so long as the loans are made in compliance
with the 1940 Act, as amended, or the Rules and Regulations or inter-
pretations of the SEC;
(f) (i) borrow, except from banks and as a temporary measure for extraor-
dinary or emergency purposes and then, in no event, in excess of 33
1/3% of the Portfolio's gross assets valued at the lower of market or
cost, and (ii) a Portfolio may not purchase additional securities when
borrowings exceed 5% of total assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent greater
than 33 1/3% of its total assets at fair market value.
The Portfolio's investment objective and investment limitations (a), (b),
(d), (e) and (f)(i) listed above are fundamental policies and may be changed
only with the approval of the holders of a majority of the outstanding voting
securities of the Portfolio. The other investment limitations described here,
those not specified as fundamental in the SAI, and the Portfolio's investment
policies are not fundamental, and the Fund's Board of Trustees may change them
without shareholder approval.
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), without a sales commission at the net asset value per share
next determined after an order is received by the Fund and payment is received
by the Custodian. (See "VALUATION OF SHARES.") The minimum initial investment
required is $2,500. The minimum initial investment for IRA accounts is $500.
The minimum initial investment for spousal IRA accounts is $250. Certain ex-
ceptions may be made by the officers of the Fund.
Shares of the Portfolio may be purchased by customers of brokers-dealers or
other financial intermediaries ("Service Agents") which have established a
shareholder servicing relationship with the Fund on behalf of their customers.
Service Agents may impose additional or different conditions on purchases or
redemptions of Portfolio shares and may charge transaction or other account
fees. Each Service Agent is responsible for transmitting to its customers a
schedule of any such fees and information regarding additional or different
purchase or redemption conditions. Shareholders who are customers of Service
Agents should consult their Service Agent for information regarding these fees
and conditions. Amounts paid to Service Agents may include transaction fees
and/or service fees paid by the Fund from the Fund assets attributable to the
Service Agent, which would not be imposed if shares of the Portfolio were pur-
chased directly from the Fund or the Distributor. Service Agents may provide
shareholder services to their customers that are not available to a share-
holder dealing directly with the Fund. A salesperson and any other person en-
titled to receive compensation for selling or servicing Portfolio shares may
receive different compensation with respect to one particular class of shares
over another in the Fund.
14
<PAGE>
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of the Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer
Agent prior to 4 p.m. to receive that day's share price. Proper payment for
the order must be received by the Sub-Transfer Agent no later than the time
when the Portfolio is priced on the following business day. Service Agents are
responsible to their customers and the Fund for timely transmission of all
subscription and redemption requests, investment information, documentation
and money.
INITIAL INVESTMENT
BY MAIL
. Complete and sign an Application and mail it, along with a check payable
to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment.
BY WIRE
. Telephone the UAM Funds Service Center at the number listed on the cover
of this prospectus and provide the account name, address, telephone num-
ber, social security or taxpayer identification number, Portfolio se-
lected, amount being wired, and the name of the bank wiring the funds.
An account number will be provided to you. Next,
. instruct your bank to wire the specified amount to the Fund's custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
Credit DDA #9102772952
Ref: Portfolio Name
-----------
Your Account Number
-----------
Your Account Name
------------
Wire Control Number
-----------
15
<PAGE>
. Forward a completed Application to the Fund at the address shown on the
form. Federal Funds purchases will be accepted only on days when the
NYSE and the Custodian Bank are open for business.
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check to the UAM Service Center (payable to "UAM Funds") or by wiring money to
the Custodian Bank using the instructions outlined above. When making addi-
tional investments, be sure that the account name and number is identified on
the check or wire. Prior to wiring additional investments, notify the UAM
Funds Service Center by calling the number on the cover of this prospectus.
Mail orders should include, when possible, the "Invest by Mail" stub which ac-
companies any Fund confirmation statement.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to suspend the offering of shares of the Portfolio or to reject pur-
chase orders when, in the judgment of management, such suspension or rejection
is in the best interests of the Fund. Purchases of the Portfolio's shares will
be made in full and fractional shares of the Portfolio calculated to three
decimal places. Certificates for fractional shares will not be issued. Certif-
icates for whole shares will not be issued except at the written request of
the shareholder.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by the Port-
folio in exchange for securities will be issued at net asset value determined
as of the same time. All dividends, interest, subscription, or other rights
pertaining to such securities shall become the property of the Portfolio and
must be delivered to the Fund by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for invest-
ment and not for immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be in-
cluded in the Portfolio (current market quotations must be readily
available for such securities);
16
<PAGE>
. the investor represents and agrees that all securities offered to
be exchanged are liquid securities and not subject to any restric-
tions upon their sale by the Portfolio under the Securities Act of
1933, or otherwise; and
. the value of any such securities (except U.S. Government securi-
ties) being exchanged together with other securities of the same
issuer owned by the Portfolio will not exceed 5% of the net assets
of the Portfolio immediately after the transaction.
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of secu-
rities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone at any time,
without cost at the net asset value of the Portfolio next determined after re-
ceipt of the redemption request. No charge is made for redemptions. Any re-
demption may be more or less than the purchase price of the shares depending
on the market value of investment securities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of
shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which they are regis-
tered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pen-
sion and profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the
wire redemption privilege) by completing appropriate sections of
the Application; and
. call the Fund and instruct that the redemption proceeds be mailed
to you or wired to your bank.
17
<PAGE>
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated
to receive redemption proceeds (this can be accomplished only by a
written request signed by each shareholder, with each signature
guaranteed);
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the investor to provide certain personal identification at the time an
account is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded
and investors may be required to provide additional telecopied written in-
structions of such transaction requests. The Fund or Sub-Transfer Agent may be
liable for any losses due to unauthorized or fraudulent telephone instructions
if the Fund or the Sub-Transfer Agent does not employ the procedures described
above. Neither the Fund nor the Sub-Transfer Agent will be responsible for any
loss, liability, cost or expense for following instructions received by tele-
phone that it reasonably believes to be genuine.
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than
the registered shareowner(s);
. redemptions where the proceeds are to be sent to someplace other
than the registered address; or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securi-
ties exchanges, registered securities associations, clearing agencies and sav-
ings associations. Broker-dealers guaranteeing signatures must be a member of
a clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after the
receipt of the request, or earlier if required under applicable law. The Fund
may suspend the right of redemption or postpone the date at times when both
the NYSE and Custodian Bank are closed, or under any emergency circumstances
determined by the SEC.
18
<PAGE>
If the Board of Trustees determines that it would be detrimental to the best
interests of remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay redemption proceeds in whole or in part by a
distribution in-kind of liquid securities held by a Portfolio in lieu of cash
in conformity with applicable rules of the SEC. Investors may incur brokerage
charges on the sale of portfolio securities received in payment of redemp-
tions.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for Institu-
tional Class Shares of any other UAM Funds Portfolio. (See the list of Portfo-
lios of the UAM Funds at the end of this Prospectus.) Exchange requests should
be made by contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you are interested. Exchanges can only be made with Portfolios that
are qualified for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES -- BY TELEPHONE." An ex-
change into another UAM Funds Portfolio is a sale of shares and may result in
a gain or loss for income tax purposes. The Fund may modify or terminate the
exchange privilege at any time.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets attributable to the class, less any liabilities attrib-
utable to the class, by the number of shares outstanding attributable to the
class. The net asset value per share of the Portfolio is determined as of the
close of the NYSE on each day that the NYSE is open for business.
Equity securities listed on a securities exchange for which market quota-
tions are readily available are valued at the last quoted sale price of the
day. Price
19
<PAGE>
information on listed securities is taken from the exchange where the security
is primarily traded. Unlisted equity securities and listed securities not
traded on the valuation date for which market quotations are readily available
are valued neither exceeding the current ask prices nor less than the current
bid prices. Quotations of foreign securities in a foreign currency are con-
verted to U.S. dollar equivalents. The converted value is based upon the bid
price of the foreign currency against U.S. dollars quoted by any major bank or
by a broker.
Securities purchased with remaining maturities of 60 days or less are valued
at amortized cost when the Board of Trustees determines that amortized cost
reflects fair value.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating total return. Total return
figures are based on historical earnings and are not intended to indicate fu-
ture performance.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of time. An average annual total return is a hypothetical rate of re-
turn that, if achieved annually, would have produced the same cumulative total
return if performance had been constant over the entire period.
Performance will be calculated separately for Institutional Class and Serv-
ice Class Shares. Dividends paid by the Portfolio with respect to Institu-
tional Class and Service Class Shares, to the extent any dividends are paid,
will be calculated in the same manner at the same time on the same day and
will be in the same amount, except that service fees, distribution charges and
any incremental transfer agency costs relating to Service Class Shares will be
borne exclusively by that class.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices, all as further
described in the Portfolio's SAI. This information may also be included in
sales literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or telephone number on the
cover of this Prospectus.
20
<PAGE>
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders in the form of an annual divi-
dend. If any net capital gains are realized, the Portfolio will normally dis-
tribute them annually. All dividends and capital gains distributions will be
automatically reinvested in additional shares of the Portfolio unless the Fund
is notified in writing that the shareholder elects to receive distributions in
cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal in-
come tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends. To do this, the Portfolio must,
among other things, distribute substantially all of its ordinary income and
net capital gains on an annual basis and maintain a portfolio of investments
which satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income.
Short-term capital gains will be taxed as ordinary income. Long-term capital
gains distributions are taxed as long-term capital gains. Shareholders will be
notified annually of dividend income earned for tax purposes.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid in January of the following year.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you. Consult a tax adviser for more information regarding deduc-
tions and credits for foreign taxes.
21
<PAGE>
INVESTMENT ADVISER
The Adviser is an international investment adviser and is an affiliate of
the MJ Group, in Glasgow, Scotland. The MJ Group's origins date back to 1907,
and it currently has $7 billion in assets under management. The MJ Group has a
200-member staff including 40 investment professionals. It became a subsidiary
of United Asset Management Corporation ("UAM") in 1993. The Adviser, the SEC-
registered entity within the MJ Group, has $1.4 billion of assets under man-
agement and has U.S. offices in Chicago.
The Portfolio pays an annual fee in monthly installments to the Adviser for
advisory services. This fee is accrued daily and paid every month as a per-
centage of the average net assets in the Portfolio for that month. The per-
centage fee on an annual basis is 0.75%. This investment advisory fee is
higher than that paid by many mutual funds but not necessarily higher than
fees paid by funds with investment objectives similar to that of the Portfo-
lio.
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Distributor, UAM, the Adviser, or any of their affili-
ates, may, at its own expense, compensate a Service Agent or other person for
marketing, shareholder servicing, record-keeping and/or other services per-
formed with respect to the Fund, the Portfolio or any Class of Shares of the
Portfolio. The person making such payments may do so out of its revenues, its
profits or any other source available to it. When such services arrangements
are in effect, they are made generally available to all qualified service
providers.
The Distributor, the Adviser and certain of their other affiliates also par-
ticipate, at the date of this Prospectus, in an arrangement with Smith Barney
Inc. under which Smith Barney provides certain defined contribution plan mar-
keting and other shareholder services and receives from such entities .15 of
1% of the daily net asset value of Institutional Class Shares held by Smith
Barney's eligible customer accounts in addition to amounts payable to all
selling dealers. The Fund also compensates Smith Barney for services it pro-
vides to certain defined contribution plan shareholders that are not otherwise
provided by UAMFSI.
The investment professional at the Adviser responsible for the day-to-day
management of the Portfolio and his qualifications are as follows:
RODGER SCULLION, MANAGING DIRECTOR OF THE ADVISER, has 25 years of invest-
ment experience, the last 13 years based in Glasgow with the MJ Group. He is
the portfolio manager of the Murray Smaller Markets Investment Trust, a
closed-end investment fund registered in the United Kingdom, which invests in
as many as 45 markets worldwide. Mr. Scullion is the Adviser's Chief Invest-
ment Officer and the lead person on the country allocation team. During his
tenure at the MJ Group, he has held portfolio management responsibilities for
investments in the U.S., Europe, Japan and the Far East.
22
<PAGE>
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of UAM, is re-
sponsible for performing and overseeing administrative, fund accounting, divi-
dend disbursing and transfer agent services provided to the Fund and its Port-
folios. UAMFSI's principal office is located at 211 Congress Street, Boston,
MA 02110. UAMFSI has subcontracted some of these services to Chase Global
Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan Bank, by
a Mutual Funds Service Agreement dated June 30, 1997. CGFSC is located at 73
Tremont Street, Boston, MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
MJI International Equity Portfolio..................................... 0.06%
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
0.11 of 1% of the next $800 million of combined UAM Funds assets;
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Funds' fees are allocated among the Portfolios on the basis of their
relative assets and are subject to a graduated minimum fee schedule per Port-
folio, which starts at $2,000 per month and increases to $70,000 annually af-
ter two years. If a separate class of shares is added to a Portfolio, its min-
imum annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM with its principal office
located at 211 Congress Street, Boston, Massachusetts 02110, distributes the
shares of the Fund. Under the Fund's Distribution Agreement (the "Agreement"),
the Distributor, as agent of the Fund, agrees to use its best efforts as sole
distributor of the Fund's shares. The Distributor does not receive any fee or
other compensation under the Agreement with respect to the Portfolio's Insti-
tutional Class Shares that are offered in this Prospectus. The Agreement con-
tinues in effect as long as it is approved at least annually by the Fund's
Board of Trustees. Those approving the Agreement include a majority of Trust-
ees who are neither parties to the Agreement nor interested persons of any
such party. This Agreement provides that the Fund
23
<PAGE>
will bear the costs of the registration of its shares with the SEC and various
states and the printing of its prospectuses, SAIs and reports to shareholders.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II." On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and have no preference as to conversion, exchange, dividends, re-
tirement or other features and no pre-emptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees can elect 100% of the Trustees. A shareholder is en-
titled 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 of the
Fund.
As of June 16, 1997, Freya Fanning & Company held of record 29.8% of the
outstanding shares of the Portfolio's Institutional Class; Hartnat & Co. and
Fleet National Bank, Trustee, Davies Medical Pension Plan held of record 49.6%
and 36.8%, respectively, of the outstanding shares of the Portfolio's Institu-
tional Service Class. Beneficial ownership of these accounts is disclaimed or
presumed disclaimed. The persons or organizations owning 25% or more of the
outstanding shares of a Portfolio may be presumed to "control" (as that term
is defined in the 1940 Act) such Portfolio. As a result, those persons or or-
ganizations could have the ability to vote a majority of the shares of the
Portfolio on any matter requiring the approval of shareholders of such Portfo-
lio.
Both Institutional Class and Institutional Service Class Shares represent an
interest in the same assets of a Portfolio. Institutional Service Class Shares
bear certain expenses related to shareholder servicing, and may bear expenses
related to the distribution of such shares. Institutional Service Class Shares
have exclusive voting rights with respect to matters relating to such distri-
bution expenditures. For information about Service Class Shares of the Portfo-
lios, contact the UAM Funds Service Center.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the hold-
ers of not less than 10% of the outstanding shares of the Fund. The Fund will
assist shareholder communications in such matters.
24
<PAGE>
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the address or telephone number listed on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE PORTFOLIO'S STATEMENT
OF ADDITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR ITS REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH OF-
FERING MAY NOT BE LAWFULLY MADE.
25
<PAGE>
UAM FUNDS -- INSTITUTIONAL CLASS SHARES
Acadian Asset Management, Inc.
Acadian Emerging Markets Portfolio
Acadian International Equity Portfolio
BHM&S Total Return Bond Portfolio
Chicago Asset Management Intermediate Bond Portfolio
Chicago Asset Management Value/Contrarian Portfolio
C&B Balanced Portfolio
C&B Equity Portfolio
C&B Equity Portfolio for Taxable Investors
C&B Mid Cap Equity Portfolio
DSI Balanced Portfolio
DSI Disciplined Value Portfolio
DSI Limited Maturity Bond Portfolio
DSI Money Market Portfolio
FMA Small Company Portfolio
FPA Crescent Portfolio
Hanson Equity Portfolio
ICM Equity Portfolio
ICM Fixed Income Portfolio
ICM Small Company Portfolio
IRC Enhanced Index Portfolio
Jacobs International Octagon Portfolio
McKee Domestic Equity Portfolio
McKee International Equity Portfolio
McKee U.S. Government Portfolio
McKee Small Cap Equity Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Rice, Hall James Small Cap Portfolio
Rice, Hall James Small/Mid Cap Portfolio
Sirach Equity Portfolio
Sirach Fixed Income Portfolio
Sirach Growth Portfolio
Sirach Short-Term Reserves Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
SAMI Preferred Stock Income Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Short-Term Fixed Income Portfolio
Sterling Partners' Small Cap Value Portfolio
TS&W Equity Portfolio
TS&W Fixed Income Portfolio
TS&W International Equity Portfolio
TS&W Balanced Portfolio
26
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Murray Johnstone International Ltd.
Glasgow, Scotland
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
MJI International
Equity Portfolio
Institutional Service
Class Shares
July 10, 1997
P R O S P E C T U S
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses.............................................................. 1
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Financial Highlights....................................................... 5
Investment Objective....................................................... 6
Investment Policies........................................................ 6
Other Investment Policies.................................................. 8
Investment Limitations..................................................... 13
Purchase of Shares......................................................... 14
Redemption of Shares....................................................... 17
Service and Distribution Plans............................................. 19
Shareholder Services....................................................... 21
Valuation of Shares........................................................ 22
Performance Calculations................................................... 22
Dividends, Capital Gains Distributions and Taxes........................... 23
Investment Adviser......................................................... 24
Administrative Services.................................................... 25
Distributor................................................................ 25
General Information........................................................ 26
UAM Funds -- Service Class Shares.......................................... 28
</TABLE>
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
MJI INTERNATIONAL EQUITY PORTFOLIO
INSTITUTIONAL SERVICE CLASS SHARES
INVESTMENT ADVISER: MURRAY JOHNSTONE INTERNATIONAL LTD.
- -------------------------------------------------------------------------------
PROSPECTUS -- JULY 10, 1997
UAM Funds Trust (the "Fund"), is an open-end investment company known as a
"mutual fund". The Fund consists of multiple series (known as "Portfolios")
each of which has different investment objectives and policies. MJI Interna-
tional Equity Portfolio currently offers two classes of shares: Institutional
Class Shares and Institutional Service Class Shares ("Service Class Shares").
Shares of each class represent equal, pro rata interests in the Portfolio and
accrue dividends in the same manner except that Service Class Shares bear fees
payable by the class (at the rate of .25% per annum) to financial institutions
for services they provide to the owners of such shares. (See "SERVICE AND DIS-
TRIBUTION PLANS.") The securities offered in this Prospectus are Service Class
Shares of one diversified, no-load Portfolio of the Fund managed by Murray
Johnstone International Ltd.
MJI INTERNATIONAL EQUITY PORTFOLIO. MJI International Equity Portfolio (the
"Portfolio") seeks to maximize total return, including both capital apprecia-
tion and current income, by investing primarily in the common stocks of compa-
nies based outside of the United States. Under normal circumstances, at least
65% of the Portfolio's total assets will be invested in securities of issuers
domiciled in at least three countries other than the United States.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A Statement of Additional Information ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Service Class Shares would incur. Transaction fees may be charged
if a broker-dealer or other financial intermediary deals with the Fund on your
behalf. (See "PURCHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES.
<TABLE>
<S> <C>
Sales Load Imposed on Purchases........................................ NONE
Sales Load Imposed on Reinvested Dividends............................. NONE
Deferred Sales Load.................................................... NONE
Redemption Fees........................................................ NONE
Exchange Fees.......................................................... NONE
</TABLE>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Investment Advisory Fees............................................... 0.75 %
Administrative Fees.................................................... 0.58 %
12b-1 Fees (Including Shareholder Servicing Fees)+..................... 0.25 %
Other Expenses...... 0.68 %
Advisory Fees Waived and Expenses Assumed.............................. (0.51)%
-----
Total Operating Expenses (After Fee Waiver and Expenses Assumed)....... 1.75 %+*
=====
</TABLE>
- -----------
+ See "SERVICE AND DISTRIBUTION PLANS." Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge permitted
by rules of the National Association of Securities Dealers, Inc.
* The Adviser has voluntarily agreed to waive a portion of its advisory fees
and to assume operating expenses to keep the Portfolio's Service Class
Shares' total annual operating expenses (excluding interest, taxes and ex-
traordinary expenses), after the effect of expense offsets, from exceeding
1.75% of average daily net assets until further notice. If it were not for
the fee waiver and/or reimbursement, the Portfolio's Service Class Shares
total annual operating expenses are estimated to be 2.26% of average daily
net assets.
If expense offsets were excluded, total operating expenses would not be af-
fected.
The table above shows various fees and expenses an investor may bear di-
rectly or indirectly. The fees and expenses set forth above are estimates
based upon the Portfolio's Institutional Class Shares' operations during the
fiscal year ended April 30, 1997, except that such information has been re-
stated to reflect the Service Class Shares' 12b-1 fees.
1
<PAGE>
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. The Portfolios
charge no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Expenses:.................................... $18 $55 $95 $206
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
2
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Murray Johnstone International Ltd. (the "Adviser") is an international in-
vestment adviser and is an affiliate of the Murray Johnstone Group ("MJ
Group"), in Glasgow, Scotland. The MJ Group's origins date back to 1907, and
it currently has $7 billion in assets under management. The MJ Group has a
200-member staff including 40 investment professionals. It became a subsidiary
of United Asset Management Corporation in 1993. The Adviser, the SEC-regis-
tered entity within the MJ Group, has $1.4 billion of assets under management
and has U.S. offices in Chicago. (See "INVESTMENT ADVISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion, to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment in the Portfolio is $2,500. The minimum initial investment
for IRA accounts is $500. The minimum initial investment for spousal IRA ac-
counts is $250. The minimum for any subsequent investment is $100. Certain ex-
ceptions to the initial or minimum investment amounts may be made by the offi-
cers of the Fund. (See "PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in an annual dividend. Any realized net capital gains will also be
distributed annually. Distributions will be reinvested in the Portfolio's
shares automatically unless an investor elects to receive cash distributions.
(See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTIONS OF SHARES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See""REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of United As-
set Management Corporation, is responsible for performing and overseeing ad-
ministration, dividend disbursing and transfer agency services provided to the
Fund and its Portfolios by third-party service providers. (See "ADMINISTRATIVE
SERVICES.")
3
<PAGE>
RISK FACTORS
The value of the Portfolio's shares will fluctuate in response to changes in
market and economic conditions as well as the financial conditions and pros-
pects of the issuers in which the Portfolio invests. Prospective investors
should consider the following: (1) The Portfolio may invest in repurchase
agreements which entail a risk of loss should the seller default on its trans-
action; (2) The Portfolio may lend its investment securities which entails a
risk of loss should a borrower fail financially; (3) The Portfolio may pur-
chase securities on a when-issued basis which do not earn interest until is-
sued and may decline or appreciate in market value prior to their delivery to
the Portfolio; (4) The Portfolio may engage in various currency strategies to
seek to hedge its investments against movements in security prices, interest
rates, and exchange rates by the use of derivatives, including forward con-
tracts, options and futures as well as options on futures. Such strategies are
commonly referred to as "derivatives" and involve the risk of imperfect corre-
lation in movements in the price of options and futures and movements in the
price of securities, interest rates or currencies which are the subject of the
hedge. To the extent these transactions involve foreign securities or curren-
cies, they are also subject to the risk factors associated with foreign in-
vestments generally. There can be no assurance that a liquid secondary market
for these hedging techniques will exist at any specific time. (See "INVESTMENT
POLICIES.").
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides selected per share information for a share out-
standing throughout the period presented of the Portfolio's Institutional
Service Class Shares. This table is part of the Portfolio's 1997 Annual Report
to Shareholders. The Report is incorporated into the Portfolio's SAI. The
Portfolio's Annual Financial Statements have been audited by Price Waterhouse
LLP whose unqualified opinion on the Financial Statements for the year ended
April 30, 1997 is also incorporated into the Portfolio's SAI. Please read the
following information in conjunction with the Portfolio's 1997 Annual Report
to Shareholders.
<TABLE>
<CAPTION>
PERIOD FROM
DECEMBER 31,
1996***
TO
APRIL 30, 1997
--------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.53
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income..................................... 0.01
Net Realized and Unrealized Gain (Loss) on Investments.... 0.11
-------
Total from Investment Operations........................ 0.12
-------
DISTRIBUTIONS
Net Investment Income..................................... --
In Excess of Net Investment Income........................ --
Net Realized Gain......................................... --
-------
Total Distributions..................................... --
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.65
=======
TOTAL RETURN+............................................... 1.14%**
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)..................... $ 3,920
Ratio of Expenses to Average Net Assets................... 1.76%*
Ratio of Net Investment Income to Average Net Assets...... 0.59%*
Portfolio Turnover Rate................................... 47%
Average Commission Rate#.................................. $0.0323
Voluntarily Waived Fees and Expenses Assumed by the
Adviser ................................................ $ 0.01
Ratio of Expenses to Average Net Assets Including Expense
Offsets................................................. 1.75%*
</TABLE>
- -----------
* Annualized.
** Not annualized.
*** Commencement of Operations.
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser during the periods indicated.
# Beginning with fiscal year 1996, the portfolio is required to disclose the
average commission rate per share it paid for portfolio trades on which
commissions were charged.
5
<PAGE>
INVESTMENT OBJECTIVE
The Portfolio seeks to maximize total return, including both capital appre-
ciation and current income, by investing primarily in the common stocks of
companies based outside of the United States. Under normal circumstances, at
least 65% of the Portfolio's total assets will be invested in at least three
different countries other than the United States. There can be no assurance
that the Portfolio will achieve its stated objective.
INVESTMENT POLICIES
The Portfolio's investment process begins by seeking to determine the best
possible allocation among international stock markets. The Portfolio's Adviser
evaluates markets through a proprietary system which analyzes economic fac-
tors, stock prices in each market, market performance and trends in monetary
policy. Drawing on this information, the Adviser decides which markets the
Portfolio should invest in and in what proportion.
Once the country allocation decision has been made, the Adviser selects un-
dervalued stocks in that market. The Adviser rates companies according to the
quality of their management, market position, financial strength, ability to
earn competitive returns on equity and assets, and growth potential. The Port-
folio will invest in stocks that the Adviser determines are undervalued com-
pared to industry norms within their countries. It is expected that invest-
ments will be diversified throughout the world and within markets to minimize
specific country and currency risks. While investments will be made primarily
in securities of companies domiciled in developed countries, investments will
also be made in developing countries. (See "FOREIGN INVESTMENT RISK FACTORS.")
Under normal circumstances, at least 65% of the Portfolio's total assets
will be invested in common stocks of companies in at least three countries
outside the United States. It is expected that generally, the Portfolio will
invest in common stocks of companies listed on U.S. or foreign stock ex-
changes, but it may also invest in stocks traded in the over-the-counter mar-
ket. Common stocks for this purpose also include securities having common
stock characteristics such as rights and warrants to purchase common stocks.
The Portfolio may also invest in convertible securities and preferred stocks.
The Portfolio may also invest in foreign equity securities in the form of
American Depositary Receipts (ADRs), European Depositary Receipts (EDRS) and
other similar global instruments. ADRs (sponsored or unsponsored) are receipts
typically issued by a U.S. bank or trust company evidencing ownership of the
underlying foreign securities. Most ADRs are traded on a U.S. stock exchange.
Issuers of unsponsored ADRs are not contractually obligated to disclose mate-
rial information in the U.S. and, therefore, there may not be a correlation
between such information and the market value of the unsponsored ADR. EDRs are
receipts typically issued by a European bank or trust company evidencing own-
ership of the underlying foreign securities.
6
<PAGE>
FOREIGN INVESTMENT RISK FACTORS
Investors should recognize that investing in foreign securities involves
certain risks which are not typically associated with investing in domestic
securities. Since securities issued by foreign entities may be denominated in
foreign currencies, and the Portfolio may temporarily hold uninvested reserves
in bank deposits in foreign currencies, the Portfolio's value may rise or fall
depending on currency exchange rates. The Portfolio may also have to pay a fee
to convert funds from one currency to another.
In addition, non-U.S.-based companies are not subject to the same account-
ing, auditing and financial reporting standards as are domestic companies.
There may be less publicly-available information about non-U.S.-based compa-
nies which may make it difficult to make investment decisions. Also, stock
markets outside the U.S. are typically less liquid -- that is, it is more dif-
ficult to sell large quantities of a stock without driving its price down or
to buy without pushing its price up. Market regulation may be less rigorous in
some markets. Finally, political factors may have an impact in the form of
confiscatory taxation, expropriation or political instability in international
markets.
Although the Portfolio will seek the most favorable trading costs available
in any given market, investors should recognize that foreign commissions are
generally higher than those in the U.S. In addition, custodial expenses, that
is, fees paid to financial institutions for holding the Portfolio's securi-
ties, will generally be higher than would be the case in the U.S.
Some foreign governments also levy withholding taxes against dividend and
interest income. Although in some countries a portion of the taxes is recover-
able, the non-recovered portion of foreign withholding taxes will reduce the
income the Portfolio receives from the companies comprising its investments.
Investing in the foreign securities of developing countries presents addi-
tional considerations. The economies of individual developing countries may
differ favorably or unfavorably from the United States economy in such re-
spects as growth of gross domestic product, rate of inflation, currency depre-
ciation, capital reinvestment, resource self-sufficiency and balance of pay-
ments position. Further, the economies of developing countries generally are
heavily dependent upon international trade and, accordingly, have been and may
continue to be adversely affected by trade barriers, exchange controls, man-
aged adjustments in relative currency values and other protectionist measures
imposed or negotiated by the countries with which they trade. These economies
also have been and may continue to be adversely affected by economic condi-
tions in the countries with which they trade.
With respect to any developing country, there is the possibility of nation-
alization, expropriation or confiscatory taxation, repatriation of investment
income, capital and the proceeds of sales by foreign investors, political
changes, governmental
7
<PAGE>
regulation, social instability or diplomatic developments (including war)
which could adversely affect the economics of such countries or the value of
the Portfolio's investments in those countries. In addition, it may be diffi-
cult to obtain and enforce a judgment in a court outside of the United States.
The Portfolio may engage in various investment techniques such as futures
contracts, options on futures contracts, options, and interest rate swap
transactions. (See "HEDGING AND RELATED STRATEGIES AND RISK CONSIDERATIONS.")
OTHER INVESTMENT POLICIES
The Portfolio may also, under normal circumstances, invest up to 35% of its
assets, unless restricted by additional limitations described below or in the
Portfolio's SAI, in the following securities, investments or investment tech-
niques.
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated redemp-
tions, or for temporary defensive purposes, the Portfolio may invest a portion
of its assets in domestic and foreign money market instruments including cer-
tificates of deposit, bankers' acceptances, time deposits, U.S. Government ob-
ligations, U.S. Government agency securities, short-term corporate debt secu-
rities, and commercial paper rated A-1 or A-2 by Standard & Poor's Corporation
or Prime-1 or Prime-2 by Moody's Investors Service, Inc. or if unrated, deter-
mined by the Adviser to be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of a Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in
other currencies, (ii) in the case of U.S. banks, it is a member of the Fed-
eral Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an invest-
ment quality comparable with other debt securities which may by purchased by
the Portfolio.
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's Port-
folios, as well as cash for investment purposes, into one or more joint ac-
counts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable rate demand notes and tax-exempt money instruments. By en-
tering into these investments on a joint basis, it is expected that the Port-
folio may earn a higher rate of return on investments relative to what it
could earn individually.
8
<PAGE>
The Fund has received permission from the SEC for each of its Portfolios to
invest, for cash management purposes, the greater of 5% of its total assets or
$2.5 million in the Fund's DSI Money Market Portfolio (See "INVESTMENT
COMPANIES.")
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities, certificates of deposit, and certain bankers' accept-
ances and other securities outlined above under "SHORT-TERM INVESTMENTS." In a
repurchase agreement, the Portfolio buys a security and simultaneously commits
to sell that security back at an agreed upon price plus an agreed upon market
rate of interest. Under a repurchase agreement, the seller is also required to
maintain the value of securities subject to the agreement at not less than
100% of the repurchase price. The value of the securities purchased will be
evaluated daily, and the Adviser will, if necessary, require the Seller to
maintain additional securities to ensure that the value is in compliance with
the previous sentence. The use of repurchase agreements involves certain
risks. For example, a default by the seller of the agreement may cause the
Portfolio to experience a loss or delay in the liquidation of the collateral
securing the repurchase agreement. The Portfolio might also incur disposition
costs in liquidating the collateral. While the Fund's management acknowledges
these risks, it is expected that they can be controlled through stringent
counter-party selection criteria and careful monitoring procedures. The Fund
has received permission from the SEC to pool daily uninvested cash balances of
the Fund's Portfolios in order to invest in repurchase agreements on a joint
basis. By entering into joint repurchase agreements, the Portfolio may incur
lower transaction costs and earn higher rates of interest on joint repurchase
agreements. The Portfolio's contribution would determine its return from a
joint repurchase agreement. (See "SHORT TERM INVESTMENTS.")
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. The Portfolio will not loan securities
to the extent that greater than one third of its assets at fair market value
would be committed to loans. During the term of a loan, the Portfolio is sub-
ject to a gain or loss depending on any increase or decrease in the market
price of the securities loaned. Lending of securities is subject to review by
the Fund's Board of Trustees. All relevant facts and circumstances, including
the creditworthiness of the broker, dealer or institution, will be considered
in making decisions about securities lending.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Trustees. The Portfolio will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on loan, the loan must be called and the securities
voted.
9
<PAGE>
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES
The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement," or "forward delivery" basis. "When-issued" or "forward delivery"
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more be-
fore delivery is due. Delayed settlement is a term used to describe settlement
of a securities transaction in the secondary market which will occur sometime
in the future. No payment or delivery is made by the Portfolio until it re-
ceives delivery or payment from the other party to any of the above transac-
tions. It is possible that the market price of the securities at the time of
delivery may be higher or lower than the purchase price. The Portfolio will
maintain a separate account of cash or liquid securities at least equal to the
value of purchase commitments until payment is made. Typically, no income ac-
crues on securities purchased on a delayed delivery basis prior to the time
delivery is made although the Portfolio may earn income on securities it has
deposited in a segregated account.
The Portfolio may engage in these types of purchases in order to buy securi-
ties that fit with its investment objectives at attractive prices -- not to
increase its investment leverage.
PORTFOLIO TURNOVER
Portfolio turnover is not anticipated to exceed 75%. In addition to Portfo-
lio trading costs, higher rates of portfolio turnover may result in the reali-
zation of capital gains. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX-
ES" for more information on taxation). The Portfolio will not normally engage
in short-term trading, but reserves the right to do so. The table set forth in
"Financial Highlights" presents the Portfolio's historical portfolio turnover
rates.
INVESTMENT COMPANIES
The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets may be invested in the securities of any one investment company,
nor may it acquire more than 3% of the voting securities of any other invest-
ment company. The Portfolio will indirectly bear its proportionate share of
any management fees paid by an investment company in which it invests in addi-
tion to the advisory fee paid by the Portfolio.
The Fund has received permission from the SEC to allow each of its Portfo-
lios to invest, for cash management purposes, the greater of 5% of its total
assets or $2.5 million in the Fund's DSI Money Market Portfolio provided that
the investment is consistent with the Portfolio's investment policies and re-
strictions. Based
10
<PAGE>
upon the Portfolio's assets invested in the DSI Money Market Portfolio, the
investing Portfolio's adviser will waive its investment advisory fee and any
other fees it earned as a result of the Portfolio's investment in the DSI
Money Market Portfolio. The investing Portfolio will bear expenses of the DSI
Money Market Portfolio on the same basis as all of its other shareholders.
HEDGING AND RELATED STRATEGIES AND RISK CONSIDERATIONS
The Portfolio may use options (both exchange-traded and over-the-counter) to
attempt to enhance income. To reduce the overall risk of its investments
(hedge), the Portfolio may use options, futures contracts, options on futures
and forward currency contracts. These instruments are commonly referred to as
derivatives. Hedging strategies may also be used in an attempt to manage the
Portfolio's exposure to changing interest rates, security prices and currency
exchange rates. The Portfolio may buy or sell futures contracts, write covered
call options and buy put and call options on any security, index or currency
including options and futures traded on foreign exchanges and options not
traded on exchanges. The Portfolio's ability to use these strategies may be
limited by market conditions, regulatory limits and tax considerations. The
Portfolio's obligation under such hedging strategies will be covered by the
maintenance of a segregated account of cash or liquid securities equal to at
least 100% of the Portfolio's commitment. The SAI contains further information
on all of these strategies and the risks associated with them.
The Portfolio may write or purchase options in privately negotiated transac-
tions ("OTC Options") as well as listed options. OTC Options can be closed out
only by agreement with the other party to the transaction. Any OTC Option pur-
chased by the Portfolio is considered an illiquid security. Any OTC Option
written by the Portfolio will be with a qualified dealer pursuant to an agree-
ment under which the Portfolio may repurchase the option at a formula price.
Such options are considered illiquid to the extent that the formula price ex-
ceeds the intrinsic value of the option. The Portfolio may not purchase or
sell futures contracts or related options for which the aggregate initial mar-
gin and premiums exceed 5% of the fair market value of the Portfolio's assets.
In order to prevent leverage in connection with the purchase of futures con-
tracts or call options thereon by the Portfolio, an amount of cash, cash
equivalents or liquid securities equal to the market value of the obligation
under the futures contracts or options (less any related market deposits) will
be maintained in a segregated account with the Fund's Custodian. The Portfolio
may not invest more than 15% of its net assets in illiquid securities and re-
purchase agreements which have a maturity of longer than seven days. A more
complete discussion of the potential risks involved in transactions in options
or futures contracts and related options is contained in the SAI.
The Portfolio may enter into forward foreign currency exchange contracts for
the purchase or sale of a specified currency at a specified future date either
with
11
<PAGE>
respect to specific transactions or with respect to portfolio positions. For
example, when the Adviser anticipates making a currency exchange transaction
in connection with the purchase or sale of a security, the Portfolio may enter
into a forward contract in order to set the exchange rate at which the trans-
action will be made. The Portfolio also may enter into a forward contract to
sell an amount of a foreign currency approximating the value of some or all of
the Portfolio's securities denominated in such currency.
The Portfolio may use forward contracts in one currency or a basket of cur-
rencies to hedge against fluctuations in the value of another currency when
the Adviser anticipates there will be a correlation between the two and may
use forward currency contracts to shift the Portfolio's exposure to foreign
currency fluctuations from one country to another. The purpose of entering
into these contracts is to minimize the risk to the Portfolio from adverse
changes in the relationship between the U.S. dollar and foreign currencies.
The Portfolio may enter into interest rate protection transactions, which
consist of interest rate swaps and interest rate caps, collars and floors, for
hedging purposes. These transactions are commonly known as derivatives. A swap
is an agreement to exchange the return generated by one instrument for the re-
turn generated by another instrument. The swaps in which the Portfolio may
also engage include interest rate caps, floors and collars under which one
party pays a single or periodic fixed amount (or premium), and the other party
pays periodic amounts on the movement of a specified index.
The Portfolio may enter into interest rate protection transactions to pre-
serve a return or spread on a particular investment or portion of its portfo-
lio or to protect against any increase in the price of securities it antici-
pates purchasing at a later date. The Portfolio will enter into interest rate
protection transactions only with banks and recognized securities dealers be-
lieved by the Adviser to present minimal credit risks in accordance with
guidelines established by the Fund's Board of Trustees. Interest rate swaps,
caps, floors and collars will be treated as illiquid securities and will
therefore, be subject to the Portfolio's investment restriction limiting in-
vestment in illiquid securities to no greater than 15% of net assets.
RISK CONSIDERATIONS. The Portfolio might not employ any of the hedging
strategies described above, and there can be no assurance that any strategy
used will succeed. If the Adviser incorrectly forecasts interest rates, market
values or other economic factors in utilizing a strategy for the Portfolio,
the Portfolio would be in a better position if it had not hedged at all. In
addition, the Portfolio will pay commissions and other costs in connection
with such hedging strategies, which may increase the Portfolio's expenses and
reduce its return.
The use of these strategies involves certain risks, including (1) the fact
that skills needed to use hedging instruments are different from those needed
to select
12
<PAGE>
the Portfolio's securities, (2) possible imperfect correlation, or even no
correlation, between price movements of hedging instruments and price move-
ments of the investments being hedged, (3) the fact that, while hedging strat-
egies can reduce the risk of loss, they can also reduce the opportunity for
gain, or even result in losses, by offsetting favorable price movements in
hedged investments and (4) the possible inability of the Portfolio to purchase
or sell a portfolio security at a time that otherwise would be favorable for
it to do so, or the possible need for the Portfolio to sell a portfolio secu-
rity at a disadvantageous time, due to the need for it to maintain "cover" or
to segregate securities in connection with hedging transactions and the possi-
ble inability of the Portfolio to close out or to liquidate its hedged posi-
tion.
RESTRICTED AND ILLIQUID SECURITIES
The Portfolio may purchase restricted securities that are not registered for
sale to the general public but which are eligible for resale to qualified in-
stitutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Trustees, the Adviser determines the li-
quidity of such investments by considering all relevant factors. Provided that
a dealer or institutional trading market in such securities exists, these re-
stricted securities are not treated as illiquid securities for purposes of the
Portfolio's investment limitations. The Portfolio may invest up to 15% of its
net assets in securities that are illiquid. The prices realized from the sales
of these securities could be less than those originally paid by the Portfolio
or less than what may be considered the fair value of such securities.
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and in-
terest by the U.S. Government or any of its agencies or instrumentali-
ties);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding voting securities of any issuer;
(c) invest more than 5% of its assets at the time of purchase in the secu-
rities of companies that have (with predecessors) a continuous operat-
ing history of less than 3 years;
(d) invest more than 25% of its assets in companies within a single indus-
try; however, there are no limitations on investments made in instru-
ments issued or guaranteed by the U.S. Government and its agencies.
(e) make loans except by purchasing debt securities in accordance with its
investment objective and policies or entering into repurchase agree-
ments
13
<PAGE>
or by lending its portfolio securities to banks, brokers, dealers and
other financial institutions so long as the loans are made in compli-
ance with the 1940 Act, as amended, or the Rules and Regulations or
interpretations of the SEC;
(f) (i) borrow, except from banks and as a temporary measure for extraor-
dinary or emergency purposes and then, in no event, in excess of 33
1/3% of the Portfolio's gross assets valued at the lower of market or
cost, and (ii) the Portfolio may not purchase additional securities
when borrowings exceed 5% of total assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent greater
than 33 1/3% of its total assets at fair market value.
The Portfolio's investment objective and investment limitations (a), (b),
(d), (e) and (f) (i) listed above are fundamental policies and may be changed
only with the approval of the holders of a majority of the outstanding voting
securities of the Portfolio. The other investment limitations described here,
those not specified as fundamental in the SAI, and the Portfolio's investment
policies are not fundamental, and the Fund's Board of Trustees may change them
without shareholder approval.
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), without a sales commission at the net asset value per share
next determined after an order is received by the Fund and payment is received
by the Custodian. (See "VALUATION OF SHARES.") The minimum initial investment
required is $2,500. The minimum initial investment for IRA accounts is $500. The
minimum initial investment for spousal IRA accounts is $250. Certain excep-tions
may be made by the officers of the Fund.
The Portfolio issues two classes of shares: Institutional Class and Service
Class. The two classes of shares each represent interests in the same portfo-
lio of investments, have the same rights and are identical in all respects,
except that the Service Class Shares offered by this Prospectus bear share-
holder servicing expenses and distribution plan expenses, and have exclusive
voting rights with respect to the Rule 12b-1 Distribution Plan pursuant to
which the distribution fee may be paid. The net income attributable to Service
Class Shares and the dividends payable on Service Class Shares will be reduced
by the amount of the shareholder servicing and distribution fees; accordingly,
the net asset value of the Service Class Shares will be reduced by such
amounts.
Some Service Agents may also impose additional or different conditions or
other account fees on the purchase and redemption of Portfolio shares, which
are
14
<PAGE>
not subject to the Rule 12b-1 Service and Distribution Plans, which may in-
clude transaction fees and/or service fees paid by the Fund from the Fund as-
sets attributable to the Service Agent and, would not be imposed if shares of
the Portfolio were purchased directly from the Fund or the Distributor. The
Service Agents may provide shareholder services to their customers that are
not available to a shareholder dealing directly with the Fund. Each Service
Agent is responsible for transmitting to its customers a schedule of any such
fees and information regarding different purchase and redemption conditions.
Shareholders who are customers of Service Agents should consult their Service
Agent for information regarding these fees and conditions. A salesperson and
any other person entitled to receive compensation for selling or servicing
Portfolio shares may receive different compensation with respect to one par-
ticular class of shares over another in the Fund.
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of a Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer
Agent prior to 4 p.m. to receive that day's share price. Proper payment for
the order must be received by the Sub-Transfer Agent no later than the time
when the Portfolio is priced on the following business day. Service Agents are
responsible to their customers and the Fund for timely transmission of all
subscription and redemption requests, investment information, documentation
and money.
INITIAL INVESTMENT
BY MAIL
. Complete and sign an Application, and mail it, together with a check
payable to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment.
BY WIRE
. Telephone the UAM Funds Service Center and provide the account name, ad-
dress, telephone number, social security or taxpayer identification num-
ber, the Portfolio selected (Service Class Shares), the amount being
wired
15
<PAGE>
and the name of the bank wiring the funds. An account number will then
be provided to you. Next,
. instruct your bank to wire the specified amount to the Fund's Custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
Credit DDA #9102772952
Ref: Portfolio Name
Your Account Number
Your Account Name
Wire Control Number
. Forward a completed Application to the Fund at the address shown on the
form. Federal Funds purchases will be accepted only on a day on which
both the NYSE and the Custodian Bank are open for business.
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check made payable to "UAM Funds" to the address above or by wiring money to
the Custodian Bank using the instructions outlined above. When making addi-
tional investments, be sure that the account name and number is identified on
the check or wire.
Prior to wiring additional investments, notify the UAM Funds Service Center
by calling the number on the cover of this prospectus. Mail orders should in-
clude, when possible, the "Invest by Mail" stub which accompanies any Fund
confirmation statement.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to suspend the offering of shares of the Portfolio or to reject pur-
chase orders when, in the judgment of management, such suspension or rejection
is in the best interests of the Fund. Purchases of the Portfolio's shares will
be made in full and fractional shares of the Portfolio calculated to three
decimal places. Certificates for fractional shares will not be issued. Certif-
icates for whole shares will not be issued except at the written request of
the shareholder.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this
16
<PAGE>
Prospectus. Securities to be exchanged which are accepted by the Fund will be
valued as described under "VALUATION OF SHARES" at the next determination of
net asset value after acceptance. Shares issued by the Portfolio in exchange
for securities will be issued at net asset value determined as of the same
time. All dividends, interest, subscription, or other rights pertaining to
such securities shall become the property of the Portfolio and must be deliv-
ered to the Fund by the investor upon receipt from the issuer. Securities ac-
quired through an in-kind purchase will be acquired for investment and not for
immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be in-
cluded in the Portfolio (current market quotations must be readily
available for such securities);
. the investor represents and agrees that all securities offered to
be exchanged are liquid securities and not subject to any restric-
tions upon their sale by the Portfolio under the Securities Act of
1933, or otherwise; and
. the value of any such securities (except U.S. Government securi-
ties) being exchanged together with other securities of the same
issuer owned by the Portfolio will not exceed 5% of the net assets
of the Portfolio immediately after the transaction.
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of secu-
rities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone, at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. No charge is made for redemptions. Any re-
demption may be more or less than the purchase price of your shares depending
on the market value of the investment securities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of
shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which they are regis-
tered;
17
<PAGE>
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pen-
sion and profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the
wire redemption privilege) by completing appropriate sections of
the Application; and
. call the Fund and instruct that the redemption proceeds be mailed
to you or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated
to receive redemption proceeds (this can be accomplished only by a
written request signed by each shareholder, with each signature
guaranteed);
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the investor to provide certain personal identification at the time an
account is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded
and investors may be required to provide additional telecopied written in-
structions of such transaction requests. The Fund or Sub-Transfer Agent may be
liable for any losses due to unauthorized or fraudulent telephone instructions
if the Fund or the Sub-Transfer Agent does not employ the procedures described
above. Neither the Fund nor the Sub-Transfer Agent will be responsible for any
loss, liability, cost or expense for following instructions received by tele-
phone that it reasonably believes to be genuine.
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than
the registered shareowner(s);
. redemptions where the proceeds are to be sent to someplace other
than the registered address; or
. share transfer requests.
18
<PAGE>
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securi-
ties exchanges, registered securities associations, clearing agencies and sav-
ings associations. Broker- dealers guaranteeing signatures must be a member of
a clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after the
receipt of the request, or earlier if required under applicable law. The Fund
may suspend the right of redemption or postpone the date at times when both
the NYSE and Custodian Bank are closed, or under any emergency circumstances
determined by the SEC.
If the Board of Trustees determines that it would be detrimental to the best
interests of remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay redemption proceeds in whole or in part by a
distribution in-kind of liquid securities held by the Portfolio in lieu of
cash in conformity with applicable rules of the SEC. Investors may incur bro-
kerage charges on the sale of portfolio securities received in payment of re-
demptions.
SERVICE AND DISTRIBUTION PLANS
Under the Service Plan for Service Class Shares, adopted pursuant to Rule
12b-1 under the 1940 Act, the Fund may enter into service agreements with
Service Agents (broker-dealers or other financial institutions) who receive
fees with respect to the Fund's Service Class Shares owned by shareholders for
whom the Service Agent is the dealer or holder of record, or for whom the
Service Agent performs Servicing, as defined below. These fees are paid out of
the assets allocable to Service Class Shares to the Distributor or to the
Service Agents directly or through the Distributor. The Fund reimburses the
Distributor or the Service Agent for payments made at an annual rate of up to
0.25% of the average daily value of Service Class Shares owned by clients of
the Service Agent during the period payments for Servicing are being made to
it. Such payments are borne exclusively by the Service Class Shares. Each item
for which a payment may be made under the Service Plan constitutes personal
service and/or shareholder account maintenance and may constitute an expense
of distributing Fund shares as the SEC construes such term under Rule 12b-1.
The fees payable for servicing reflect actual expenses incurred up to the
limit described herein.
Servicing may include assisting clients in changing dividend options, ac-
count designations and addresses; performing subaccounting; establishing and
maintain-
19
<PAGE>
ing shareholder accounts and records; processing purchase and redemption
transactions; investing client cash account balances automatically in Service
Class Shares; providing periodic statements showing a client's account balance
and integrating such statements with those of other transactions and balances
in the client's other accounts serviced by the Service Agent; arranging for
bank wires; and such other services as the Fund may request, to the extent the
Service Agent is permitted by applicable statute, rule or regulation.
The Glass-Steagall Act and other applicable laws prohibit federally chart-
ered or supervised banks from engaging in certain aspects of the business of
issuing, underwriting, selling and/or distributing securities. Accordingly,
banks are engaged to act as Service Agent only to perform administrative and
shareholder servicing functions, including transaction-related agency services
for their customers. If a bank is prohibited from acting as a service agent,
alternative means for continuing the servicing of its shareholders would be
sought and the shareholder clients of the bank will remain Fund shareholders.
The Distributor promotes the distribution of the Service Class Shares in ac-
cordance with the terms of a Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act. The Distribution Plan provides for the use of Fund assets
allocable to Service Class Shares to pay expenses of distributing such shares.
The Distribution Plan and Service Plan (the "Plans") were approved by the
Board, including a majority of the Trustees who are not "interested persons"
of the Fund as defined in the 1940 Act (and each of whom has no direct or in-
direct financial interest in the Plans or any agreement related thereto, re-
ferred to herein as the "12b-1 Trustees"). The Plans may be terminated at any
time by the vote of the Board or the 12b-1 Trustees, or by the vote of a ma-
jority of the outstanding Service Class Shares of the Portfolio involved.
While the Plans continue in effect, the selection of the 12b-1 Trustees is
committed to the discretion of such persons then in office. The Plans provide
generally that a Portfolio may incur distribution and service costs under the
Plans which may not exceed in the aggregate 0.75% per annum of that Portfo-
lio's net assets. The Board has currently limited aggregate payments under the
Plans up to 0.50% per annum of the Portfolio's net assets. The Service Class
Shares offered by this Prospectus currently are not making payments under the
Distribution Plan. Under the plans as implemented, expenses may be no more
than 0.25%. Upon implementation, the Distribution Plan would permit payments
to the Distributor, broker-dealers, other financial institutions, sales repre-
sentatives or other third parties who render promotional and distribution
services, for items such as advertising expenses, selling expenses, commis-
sions or travel reasonably intended to result in sales of Service Class Shares
and for the printing of prospectuses sent to prospective purchasers of Service
Class Shares of the Portfolio.
20
<PAGE>
Although the Plans may be amended by the Board of Trustees, any changes in
the Plans which would materially increase the amounts authorized to be paid
under the Plans must be approved by shareholders of the Class involved. The
total amounts paid under the foregoing arrangements may not exceed the maximum
limits specified above, and the amounts and purposes of expenditures under the
Plans must be reported to the 12b-1 Trustees quarterly. The amounts allowable
under the Plans for each Class of Shares of the Portfolios are also limited
under certain rules of the National Association of Securities Dealers, Inc.
In addition to payments by the Fund under the Plans, the Distributor, United
Asset Management Corporation, the parent company of UAMFSI, and of the Adviser
or any of their affiliates, may, at its own expense, compensate a Service
Agent or other person for marketing, shareholder servicing, record-keeping
and/or other services performed with respect to the Fund, the Portfolio or any
Class of Shares of the Portfolio. The person making such payments may do so
out of its revenues, its profits or any other source available to it. Such
service arrangements, when in effect, are made generally available to all
qualified service providers. The Adviser may compensate its affiliated compa-
nies for referring investors to the Portfolio.
The Distributor, the Adviser and certain of their other affiliates also par-
ticipate, at the date of this Prospectus, in an arrangement with Smith Barney
Inc. under which Smith Barney provides certain defined contribution plan mar-
keting and shareholder services and receives from such entities an amount
equal to up to 33.3% of the portion of the investment advisory fees attribut-
able to the invested assets of Smith Barney's eligible customer accounts with-
out regard to any expense limitation in addition to amounts payable to all
selling dealers. The Fund also compensates Smith Barney for services it pro-
vides to certain defined contribution plan shareholders that are not otherwise
provided by UAMFSI.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Service Class Shares of the Portfolio may be exchanged for Service Class
Shares of any other UAM Funds Portfolio. (See the list of Portfolios of the
UAM Funds at the end of this Prospectus.) Exchange requests should be made by
contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into the Portfolio, a shareholder should read its Prospec-
tus and consider the investment objectives of the Portfolio to be purchased.
Call the UAM Funds Service Center for a copy of the Prospectus for the Portfo-
lio(s) in which you are interested. Exchanges can only be made with Portfolios
that are qualified for sale in a shareholder's state of residence.
21
<PAGE>
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES -- BY TELEPHONE." An ex-
change into another UAM Funds Portfolio is a sale of shares and may result in
a gain or loss for income tax purposes. The Fund may modify or terminate the
exchange privilege at any time.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets attributable to the class, less any liabilities attrib-
utable to the class, by the number of shares outstanding attributable to the
class. The net asset value per share of the Portfolio is determined as of the
close of the NYSE on each day that the NYSE is open for business.
Equity securities listed on a securities exchange for which market quota-
tions are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where
the security is primarily traded. Unlisted equity securities and listed secu-
rities not traded on the valuation date for which market quotations are read-
ily available are valued neither exceeding the current ask prices nor less
than the current bid prices. Quotations of foreign securities in a foreign
currency are converted to U.S. dollar equivalents. The converted value is
based upon the bid price of the foreign currency against U.S. dollars quoted
by any major bank or by a broker.
Securities purchased with remaining maturities of 60 days or less are valued
at amortized cost when the Board of Trustees determines that amortized cost
reflects fair value.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Fund's Board of Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating total return. Total return
figures are based on historical earnings and are not intended to indicate fu-
ture performance.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cumu-
22
<PAGE>
lative or aggregate total return reflects actual performance over a stated pe-
riod of time. An average annual total return is a hypothetical rate of return
that, if achieved annually, would have produced the same cumulative total re-
turn if performance had been constant over the entire period.
Performance will be calculated separately for Institutional Class and Serv-
ice Class Shares. Dividends paid by the Portfolio with respect to Institu-
tional Class and Service Class Shares, to the extent any dividends are paid,
will be calculated in the same manner at the same time on the same day and
will be in the same amount, except that service fees, distribution charges and
any incremental transfer agency costs relating to Service Class Shares will be
borne exclusively by that class.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices, all as further
described in the Portfolio's SAI. This information may also be included in
sales literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or phone number on the cover
of this Prospectus.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders of both of its classes annual-
ly. If any net capital gains are realized, the Portfolio will normally dis-
tribute them annually. All dividends and capital gains distributions will be
automatically reinvested in additional shares of the Portfolio unless the Fund
is notified in writing that the shareholder elects to receive distributions in
cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal in-
come tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends. To do this, the Portfolio must,
among other things, distribute substantially all of its ordinary income and
net capital gains on an annual basis and maintain a portfolio of investments
which satisfies certain diversification criteria.
Dividends, whether distributed as cash or reinvested in shares are taxable
to shareholders as ordinary income. Short-term capital gains will also be
taxed as
23
<PAGE>
ordinary income. Long-term capital gains distributions are taxed as long-term
capital gains. The Portfolio will notify shareholders annually of dividend in-
come for tax purposes.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid in January of the following year.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you. Consult a tax adviser for more information regarding deduc-
tions and credits for foreign taxes.
INVESTMENT ADVISER
The Adviser is an international investment adviser and is an affiliate of
the MJ Group, in Glasgow, Scotland. The MJ Group's origins date back to 1907,
and it currently has $7 billion in assets under management. The MJ Group has a
200-member staff including 40 investment professionals. It became a subsidiary
of United Asset Management Corporation ("UAM") in 1993. The Adviser, the SEC-
registered entity within the MJ Group, has $1.4 billion of assets under man-
agement and has U.S. offices in Chicago.
The Portfolio pays an annual fee in monthly installments to the Adviser for
advisory services. This fee is accrued daily and paid every month as a per-
centage of the average net assets in the Portfolio for that month. The per-
centage fee on an annual basis is 0.75%. This investment advisory fee is
higher than that paid by many mutual funds but not necessarily higher than
fees paid by funds with investment objectives similar to that of the Portfo-
lio.
The investment professional at the Adviser responsible for the day-to-day
management of the Portfolio and his qualifications are as follows:
RODGER SCULLION, MANAGING DIRECTOR OF THE ADVISER, has 25 years of invest-
ment experience, the last 13 years based in Glasgow with the MJ Group. He is
the
24
<PAGE>
portfolio manager of the Murray Smaller Markets Investment Trust, a closed-end
investment fund registered in the United Kingdom, which invests in as many as
45 markets worldwide. Mr. Scullion is the Adviser's Chief Investment Officer
and the lead person on the country allocation team. During his tenure at the
MJ Group, he has held portfolio management responsibilities for investments in
the U.S., Europe, Japan and the Far East.
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of UAM, is re-
sponsible for performing and overseeing administrative, fund accounting, divi-
dend disbursing and transfer agent services provided to the Fund and its Port-
folios. UAMFSI's principal office is located at 211 Congress Street, Boston,
MA 02110. UAMFSI has subcontracted some of these services to Chase Global
Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan Bank, by
a Mutual Funds Service Agreement dated June 30, 1997. CGFSC is located at 73
Tremont Street, Boston, MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
MJI International Equity Portfolio..................................... 0.06%
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
0.11 of 1% of the next $800 million of combined UAM Funds assets;
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Funds' fees are allocated among the Portfolios on the basis of their
relative assets and are subject to a graduated minimum fee schedule per Port-
folio, which starts at $2,000 per month and increases to $70,000 annually af-
ter two years. If a separate class of shares is added to a Portfolio, its min-
imum annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM with its principal office
located at 211 Congress Street, Boston, Massachusetts 02110, distributes the
shares of the Fund. Under the Fund's Distribution Agreement (the "Agreement"),
the Distributor, as agent of the Fund, agrees to use its best efforts as sole
distributor of
25
<PAGE>
the Fund's shares. The Distributor does not receive any fee or other compensa-
tion under the Agreement with respect to this Portfolio (except as described
under "Service and Distribution Agreements). This Agreement provides that the
Fund will bear the costs of the registration of its shares with the SEC and
various states and the printing of its prospectuses, SAIs and reports to
shareholders.
GENERAL INFORMATION
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II." On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and have no preference as to conversion, exchange, dividends, re-
tirement or other features and no preemptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees can elect 100% of the Trustees. A shareholder is en-
titled 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 of the
Fund.
As of June 16, 1997, Harnat & Co. and Fleet National Bank, Trustee, Davies
Medical Pension Plan, held of record 49.6% and 36.8% of the outstanding shares
of the Portfolio's Institutional Service Class; Freya Fanning & Co. held of
record 29.8% of the outstanding shares of the Portfolio's Institutional Class.
Beneficial ownership of these accounts is disclaimed or presumed disclaimed.
The persons or organizations owning 25% or more of the outstanding shares of a
Portfolio may be presumed to "control" (as that term is defined in the 1940
Act) such Portfolio. As a result, those persons or organizations could have
the ability to vote a majority of the shares of the Portfolio on any matter
requiring the approval of shareholders of such Portfolio.
Both Institutional Class and Service Class Shares represent an interest in
the same assets of a Portfolio and are identical in all respects except that
the Service Class Shares bear certain expenses related to shareholder servic-
ing, and the distribution of such shares and have exclusive voting rights with
respect to matters relating to such distribution expenditures. Information
about the Service Class Shares of the Portfolios along with the fees and ex-
penses associated with such shares is available upon request by contacting the
UAM Funds Service Center.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of
26
<PAGE>
shareholders if such a meeting is requested in writing by the holders of not
less than 10% of the outstanding shares of the Fund. To the extent required by
the undertaking, the Fund will assist shareholder communications in such mat-
ters.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the address or telephone number listed on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE PORTFOLIO'S STATEMENT
OF ADDITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR ITS REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH OF-
FERING MAY NOT BE LAWFULLY MADE.
27
<PAGE>
UAM FUNDS -- SERVICE CLASS SHARES
BHM&S Total Return Bond Portfolio
FPA Crescent Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Sirach Growth Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
Sirach Equity Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Short-Term Fixed Income Portfolio
Sterling Partners' Small Cap Value Portfolio
TJ Core Equity Portfolio
28
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Murray Johnstone International Ltd.
Glasgow, Scotland
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
Newbold's Equity Portfolio
Institutional
Class Shares
July 10, 1997
P R O S P E C T U S
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses.............................................................. 1
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Financial Highlights....................................................... 5
Investment Objectives...................................................... 6
Investment Policies........................................................ 6
Other Investment Policies.................................................. 7
Investment Limitations..................................................... 12
Purchase of Shares......................................................... 13
Redemption of Shares....................................................... 16
Shareholder Services....................................................... 18
Valuation of Shares........................................................ 18
Performance Calculations................................................... 19
Dividends, Capital Gains Distributions and Taxes........................... 19
Investment Adviser......................................................... 20
Administrative Services.................................................... 21
Distributor................................................................ 22
General Information........................................................ 22
UAM Funds -- Institutional Class Shares.................................... 24
</TABLE>
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
NEWBOLD'S EQUITY PORTFOLIO
INSTITUTIONAL CLASS SHARES
INVESTMENT ADVISER: NEWBOLD'S ASSET MANAGEMENT, INC.
- -------------------------------------------------------------------------------
PROSPECTUS -- JULY 10, 1997
UAM Funds Trust (the "Fund") is an open-end investment company known as a
"mutual fund." The Fund consists of multiple series (known as "Portfolios")
each of which has different investment objectives and policies. Newbold's Eq-
uity Portfolio currently offers two separate classes: Institutional Class
Shares and Institutional Service Class Shares ("Service Class Shares"). Shares
of each class represent equal, pro rata interests in a Portfolio and accrue
dividends in the same manner except that Service Class Shares bear fees pay-
able by the class to financial institutions for services they provide to the
owners of such shares. The securities offered in this Prospectus are Institu-
tional Class Shares of one diversified, no-load Portfolio of the Fund managed
by Newbold's Asset Management, Inc.
NEWBOLD'S EQUITY PORTFOLIO. Newbold's Equity Portfolio (the "Portfolio")
seeks to achieve maximum long-term total return, consistent with reasonable
risk to principal, by investing primarily in a diversified portfolio of under-
valued equity securities of statistically attractive companies.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
Shareholders of the Portfolio should note that the Fund's Board of Trustees
voted unanimously on June 19, 1997 to combine the Portfolio with PBHG Large
Cap Value Fund, a series of The PBHG Funds, Inc. It is anticipated that the
terms of the proposed combination will be submitted to shareholders of the
Portfolio for approval at a meeting to be held on September 27, 1997. Proxy
materials will be delivered to Shareholders before that date, which will ex-
plain in detail the terms of the proposed combination.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A "Statement of Additional Information" ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Institutional Class Shares would incur. Transaction fees may be
charged if a broker-dealer or other financial intermediary deals with the Fund
on your behalf. (See "PURCHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases:........................................ NONE
Sales Load Imposed on Reinvested Dividends:............................. NONE
Deferred Sales Load:.................................................... NONE
Redemption Fees:........................................................ NONE
Exchange Fees:.......................................................... NONE
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE AVERAGE OF NET ASSETS)
<TABLE>
<S> <C>
Investment Advisory Fees:........................................... 0.50 %
Administrative Fees:................................................ 0.48 %
12b-1 Fees:......................................................... NONE
Other Expenses:..................................................... 0.47 %
Advisory Fees Waived and Expenses Assumed:.......................... (0.55)%
-----
Total Operating Expenses (After Fee Waiver):........................ 0.90 %*
=====
</TABLE>
- -----------
* The Adviser has agreed to waive all or a portion of its advisory fees and to
assume operating expenses to keep the Portfolio's total annual operating ex-
penses (excluding interest, taxes and extraordinary expenses), after the ef-
fect of expense offsets, from exceeding 0.90% of average daily net assets
through January 29, 1998. For the fiscal year ended April 30, 1997, the
Portfolio had no expense offsets. Absent the fee waivers and assumption of
expenses by the Adviser, the Portfolio's Institutional Class Shares' total
annual operating expenses would have been 1.45% of average daily net assets.
The Adviser will not be reimbursed by the Fund for any advisory fees which
are waived or expenses which the Adviser may bear on behalf of the Portfolio
for a given fiscal year.
The table above shows various fees and expenses an investor would bear di-
rectly or indirectly. The expenses and fees set forth above are based on the
Portfolio's Institutional Class Shares' operations during the fiscal year
ended April 30, 1997.
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of the time period indicated. The Portfo-
lio charges no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Expenses..................................... $9 $29 $50 $111
</TABLE>
1
<PAGE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
2
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Newbold's Asset Management, Inc. (the "Adviser") is a registered investment
adviser. Founded in 1940, the firm currently has over $4.8 billion in assets
under management. The Adviser is a wholly-owned subsidiary of United Asset
Management Corporation. (See "INVESTMENT ADVISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion, to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment in the Portfolio is $2,500. The minimum initial investment
for IRA accounts is $500. The minimum initial investment for spousal IRA ac-
counts is $250. The minimum for any subsequent investment is $100. Certain ex-
ceptions to the initial or minimum investment amounts may be made by the offi-
cers of the Fund. (See "PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in an annual dividend. Any realized net capital gains will also be
distributed annually. Distributions will be reinvested in the Portfolio's
shares automatically unless an investor elects to receive cash distributions.
(See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTIONS OF SHARES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See "REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of United As-
set Management Corporation, is responsible for performing and overseeing ad-
ministration, dividend disbursing and transfer agency services provided to the
Fund and its Portfolios by third-party service providers. (See "ADMINISTRATIVE
SERVICES.")
3
<PAGE>
RISK FACTORS
The value of the Portfolio's shares will fluctuate in response to changes in
market and economic conditions as well as the financial conditions and pros-
pects of the issuers in which the Portfolio invests. Prospective investors
should consider the following: (1) The Portfolio may engage in various strate-
gies to seek to hedge its investments against movements in security prices by
the use of derivatives including options and futures as well as options on
futures. Such strategies are commonly referred to as "derivatives" and involve
the risk of imperfect correlation in movements in the price of options and
futures and movements in the price of securities which are the subject of the
hedge. Options and futures transactions in foreign markets are also subject to
the risk factors associated with foreign investments generally. There can be
no assurance that a liquid secondary market for options and futures contracts
will exist at any specific time; (2) The Portfolio may invest in the securi-
ties of foreign issuers which may be subject to additional risk factors, in-
cluding foreign currency risks, not applicable to securities of U.S. issuers;
(3) The Portfolio may invest in repurchase agreements which entail a risk of
loss should the seller default on its transaction; (4) The Portfolio may lend
its investment securities which entails a risk of loss should a borrower fail
financially; (5) The Portfolio may purchase securities on a when-issued basis
which do not earn interest until issued and may decline or appreciate in mar-
ket value prior to their delivery to the Portfolio. (See "OTHER INVESTMENT
POLICIES.")
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides selected per share information for a share out-
standing throughout the periods presented of the Portfolio's Institutional
Class Shares. This table is part of the Portfolio's Financial Statements in-
cluded in the Portfolio's 1997 Annual Report to Shareholders. The Report is
incorporated into the Portfolio's SAI. The Portfolio's Financial Statements in
the Annual Report have been audited by Price Waterhouse LLP whose unqualified
opinion on the Financial Statements for the year ended April 30, 1997 is also
incorporated into the Portfolio's SAI. Please read the following information
in conjunction with the Portfolio's 1997 Annual Report to Shareholders.
<TABLE>
<CAPTION>
SEPTEMBER 13, 1995*
TO YEAR ENDED
APRIL 30, 1996 APRIL 30, 1997
------------------- --------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....... $ 10.00 $ 10.98
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................... 0.14 0.24
Net Realized and Unrealized Gain on
Investments............................ 0.98 1.79
------- -------
Total From Investment Operations....... 1.12 2.03
------- -------
DISTRIBUTIONS
Net Investment Income.................... (0.12) (0.25)
Net Realized Gain........................ (0.02) (1.25)
------- -------
Total Distributions.................... (0.14) (1.50)
------- -------
NET ASSET VALUE, END OF PERIOD............. $ 10.98 $ 11.51
======= =======
TOTAL RETURN+.............................. 11.31%*** 19.89%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)...... $14,090 $12,642
Ratio of Net Expenses to Average Net
Assets................................... 0.90%** 0.90%
Ratio of Net Investment Income to Average
Net Assets............................... 2.27%** 2.10%
Portfolio Turnover Rate.................... 75% 83%
Average Commission Rate.................... $0.0566 $0.0599
Voluntary Waived Fees and Expenses Assumed
by the Adviser Per Share................. $ 0.06 $ 0.06
Ratio of Expenses to Average Net Assets
Including Expense Offsets................. 0.90%** 0.90%
</TABLE>
- -----------
* Commencement of Operations.
** Annualized.
*** Not Annualized.
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser.
5
<PAGE>
INVESTMENT OBJECTIVE
The Newbold's Equity Portfolio seeks to achieve maximum long-term total re-
turn, consistent with reasonable risk to principal, by investing primarily in
a diversified portfolio of undervalued equity securities of statistically at-
tractive companies. The Adviser believes that the Portfolio's performance over
the long term will be superior to its benchmark index (the Standard & Poor's
500 Stock Index). There can be no assurance that the Portfolio will achieve
its stated objective.
INVESTMENT POLICIES
In seeking its investment objective, the Portfolio will invest at least 65%
of its total assets, under normal circumstances, in equity securities, con-
sisting of common stock, preferred stock, convertible preferred stock, con-
vertible bonds, rights and warrants. The Portfolio will invest primarily in
equity securities of large capitalization companies which are defined as those
with equity capitalizations greater than $1 billion at the time of purchase.
The Adviser believes that investment value and return can be achieved by in-
vesting in stocks with a low price relative to current earnings. This bottom-
up approach seeks to identify companies whose earnings growth suggests an in-
creasing stream of future dividend income and whose share prices represent a
level below realizable value.
The Adviser is able to identify prospective companies through a computerized
screening process which rates on four key elements: Market capitalization --
$1 billion or more for purposes of liquidity; Dividend payout -- ordinarily
must pay cash dividends; Financial leverage -- debt should not be excessive,
and an investment grade bond rating is required; and Return on average five-
year equity -- after the three previous criteria have been applied, this eval-
uation is used as a measurement of profitability in selecting the top 500 com-
panies.
The stock issues of the top 500 companies are then sorted by price/earnings
ratio, ranked from highest to lowest and broken into five groups, each con-
sisting of 100 stocks. The bottom two groups are subject to intense fundamen-
tal analysis by the Adviser. The objective is to assemble a portfolio of 40-70
statistically attractive stocks which represent relative "value" not generally
recognized by the market. However, the Portfolio has the flexibility to invest
in less than 40 stocks or more than 70 stocks, as the Adviser deems necessary.
Earnings for cyclical stocks are normalized in this valuation process.
Once the Portfolio has been constructed, its price/earnings multiples are
continually monitored. The Portfolio will stop buying a stock when its price-
/earnings ratio approaches the current price/earnings multiple of the Standard
& Poor's 500 Stock Index. The stock is sold when it moves above the market's
multiple.
6
<PAGE>
When the Adviser believes that market conditions warrant a defensive posi-
tion, up to 100% of the Portfolio's assets may be held in cash and short-term
investments. See "SHORT-TERM INVESTMENTS" below for a description of the types
of short-term instruments in which the Portfolio may invest for temporary de-
fensive purposes. When the Portfolio is in a defensive position, it may not
necessarily be pursuing its stated investment objective.
OTHER INVESTMENT POLICIES
The Portfolio may also, under normal circumstances, invest up to 35% of its
assets, unless restricted by additional limitations described below or in the
Portfolio's SAI, in the following securities or investment techniques:
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated redemp-
tions, or for temporary defensive purposes, the Portfolio may invest a portion
of its assets in domestic and foreign money market instruments including cer-
tificates of deposit, bankers' acceptances, time deposits, U.S. Government ob-
ligations, U.S. Government agency securities, short-term corporate debt secu-
rities, and commercial paper rated A-1 or A-2 by Standard & Poor's Corporation
or Prime-1 or Prime-2 by Moody's Investors Service, Inc. or if unrated, deter-
mined by the Adviser to be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in
other currencies, (ii) in the case of U.S. banks, it is a member of the Fed-
eral Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an invest-
ment quality comparable with other debt securities which may be purchased by
the Portfolio.
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's Port-
folios, as well as cash for investment purposes, into one or more joint ac-
counts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable rate demand notes and tax-exempt money instruments. By en-
tering into these investments on a joint basis, it is expected that the Port-
folio may earn a higher rate of return on investments relative to what it
could earn individually.
The Fund has received permission from the SEC for each of its Portfolios to
invest, for cash management purposes, the greater of 5% of its total assets or
$2.5 million in the Fund's DSI Money Market Portfolio. (See "INVESTMENT COMPA-
NIES.")
7
<PAGE>
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities, certificates of deposit, and certain bankers' accept-
ances and other securities outlined above under "SHORT-TERM INVESTMENTS." In a
repurchase agreement, the Portfolio buys a security and simultaneously commits
to sell that security back at an agreed upon price plus an agreed upon market
rate of interest. Under a repurchase agreement, the seller is also required to
maintain the value of securities subject to the agreement at not less than
100% of the repurchase price. The value of the securities purchased will be
evaluated daily, and the Adviser will, if necessary, require the seller to
maintain additional securities to ensure that the value is in compliance with
the previous sentence. The use of repurchase agreements involves certain
risks. For example, a default by the seller of the agreement may cause the
Portfolio to experience a loss or delay in the liquidation of the collateral
securing the repurchase agreement. The Portfolio might also incur disposition
costs in liquidating the collateral. While the Fund's management acknowledges
these risks, it is expected that they can be controlled through stringent
counterparty selection criteria and careful monitoring procedures. The Fund
has received permission from the SEC to pool daily uninvested cash balances of
the Fund's Portfolios in order to invest in repurchase agreements on a joint
basis. By entering into joint repurchase agreements, the Portfolio may incur
lower transaction costs and earn higher rates of interest on joint repurchase
agreements. The Portfolio's contribution would determine its return from a
joint repurchase agreement. (See "SHORT-TERM INVESTMENTS.")
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. The Portfolio will not loan securities
to the extent that greater than one-third of its assets at fair market value
would be committed to loans. During the term of a loan, the Portfolio is sub-
ject to a gain or loss depending on any increase or decrease in the market
price of the securities loaned. Lending of securities is subject to review by
the Fund's Board of Trustees. All relevant facts and circumstances, including
the creditworthiness of the broker, dealer or institution, will be considered
in making decisions about securities lending.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Trustees. The Portfolio will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on a loan, the loan must be called and the securities
voted.
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES
The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement," or "forward delivery" basis. "When-issued" or "forward delivery"
8
<PAGE>
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more be-
fore delivery is due. Delayed settlement is a term used to describe settlement
of a securities transaction in the secondary market which will occur sometime
in the future. No payment or delivery is made by the Portfolio until it re-
ceives delivery or payment from the other party to any of the above transac-
tions. It is possible that the market price of the securities at the time of
delivery may be higher or lower than the purchase price. The Portfolio will
maintain a separate account of cash or liquid securities at least equal to the
value of purchase commitments until payment is made. Typically, no income ac-
crues on securities purchased on a delayed delivery basis prior to the time
delivery is made although the Portfolio may earn income on securities it has
deposited in a segregated account.
The Portfolio may engage in these types of purchases in order to buy securi-
ties that fit with its investment objectives at attractive prices--not to in-
crease its investment leverage.
PORTFOLIO TURNOVER
Portfolio turnover is not anticipated to exceed 60%. In addition to Portfo-
lio trading costs, higher rates of portfolio turnover may result in the reali-
zation of capital gains. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX-
ES" for more information on taxation). The Portfolio will not normally engage
in short-term trading, but each reserves the right to do so. The table set
forth in "Financial Highlights" presents the Portfolio's historical portfolio
turnover rates.
INVESTMENT COMPANIES
The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets may be invested in the securities of any one investment company
nor may it acquire more than 3% of the voting securities of any other invest-
ment company. The Portfolio will indirectly bear its proportionate share of
any management fees paid by an investment company in which it invests in addi-
tion to the advisory fee paid by the Portfolio.
The Fund has received permission from the SEC to allow each of its Portfo-
lios to invest, for cash management purposes, the greater of 5% of its total
assets or $2.5 million in the Fund's DSI Money Market Portfolio provided that
the investment is consistent with the Portfolio's investment policies and re-
strictions. Based upon the Portfolio's assets invested in the DSI Money Market
Portfolio, the investing Portfolio's adviser will waive its investment advi-
sory fee and any other fees earned as a result of the Portfolio's investment
in the DSI Money Market Portfolio. The investing Portfolio will bear expenses
of the DSI Money Market Portfolio on the same basis as all of its other share-
holders.
9
<PAGE>
AMERICAN DEPOSITARY RECEIPTS
The Portfolio intends to invest primarily in U.S.-based companies. In addi-
tion, the Portfolio may purchase shares of foreign-based companies in the form
of American Depositary Receipts (ADRs). ADRs may be sponsored or unsponsored.
Sponsored ADRs are established jointly by a depositary and the underlying is-
suer, whereas unsponsored ADRs may be established without participation by the
underlying issuer. Holders of an unsponsored ADR generally bear all the costs
associated with establishing the unsponsored ADR. The depositary of an
unsponsored ADR is under no obligation to distribute shareholder communica-
tions received from the underlying issuer or to pass through voting rights to
the holders of the unsponsored ADR with respect to the deposited securities or
pool of securities.
FOREIGN INVESTMENTS
Investing in foreign companies may involve additional risks and considera-
tions which are not typically associated with investing in U.S. companies.
Since stocks of foreign companies are normally denominated in foreign curren-
cies, the Portfolio may be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations, and may incur costs in
connection with conversions between various currencies.
As non-U.S. companies are not generally subject to uniform accounting, au-
diting and financial reporting standards and practices comparable to those ap-
plicable to U.S. companies, comparable information may not be readily avail-
able about certain foreign companies. Securities of some non-U.S. companies
may be less liquid and more volatile than securities of comparable U.S. compa-
nies. In addition, in certain foreign countries, there is the possibility of
expropriation or confiscatory taxation, political or social instability, or
diplomatic developments which could affect U.S. investments in those coun-
tries.
Although the Portfolio will seek the most favorable trading costs available
in any given market, investors should recognize that foreign commissions are
generally higher than those in the U.S. In addition, custodial expenses, that
is, fees paid to financial institutions for holding the Portfolio's securi-
ties, will generally be higher than would be the case in the U.S.
Some foreign governments also levy withholding taxes against dividend and
interest income. Although in some countries a portion of the taxes is recover-
able, the non-recovered portion of foreign withholding taxes will reduce the
income the Portfolio receives from the companies comprising its investments.
HEDGING AND RELATED STRATEGIES AND RISK CONSIDERATIONS
To reduce the overall risk of its investments (hedge), the Portfolio may use
options, futures contracts, and options on futures contracts. Hedging strate-
gies may also be used in an attempt to manage the Portfolio's exposure to
changing security
10
<PAGE>
prices. The Portfolio's ability to use these strategies may be limited by mar-
ket conditions, regulatory limits and tax considerations. The Portfolio's ob-
ligation under such hedging strategies will be covered by the maintenance of a
segregated account consisting of cash or liquid securities equal to at least
100% of the Portfolio's commitment. The Portfolio may buy or sell futures con-
tracts, write covered call options and buy put and call options on any secu-
rity or index, including options and futures traded on foreign exchanges and
options not traded on exchanges. The Portfolio's SAI contains further informa-
tion on all of these strategies and the risks associated with them.
The Portfolio may write or purchase options in privately negotiated transac-
tions ("OTC Options") as well as listed options. OTC Options can be closed out
only by agreement with the other party to the transaction. Any OTC Option pur-
chased by the Portfolio is considered an illiquid security. Any OTC Option
written by the Portfolio will be with a qualified dealer pursuant to an agree-
ment under which the Portfolio may repurchase the option at a formula price.
Such options are considered illiquid to the extent that the formula price ex-
ceeds the intrinsic value of the option. The Portfolio may not purchase or
sell futures contracts or related options for which the aggregate initial mar-
gin and premiums exceed 5% of the fair market value of the Portfolio's assets.
In order to prevent leverage in connection with the purchase of futures con-
tracts or call options thereon by the Portfolio, an amount of cash, cash
equivalents or liquid securities equal to the market value of the obligation
under the futures contracts or options (less any related market deposits) will
be maintained in a segregated account with the Fund's Custodian. The Portfolio
may not invest more than 15% of its net assets in illiquid securities and re-
purchase agreements which have a maturity of longer than seven days. A more
complete discussion of the potential risks involved in transactions in options
or futures contracts and related options is contained in the Portfolio's SAI.
RISK CONSIDERATIONS. The Portfolio might not employ any of the hedging
strategies described above, and there can be no assurance that any strategy
used will succeed. If the Adviser incorrectly forecasts market values or other
economic factors in utilizing a strategy for the Portfolio, the Portfolio
would be in a better position if it had not hedged at all. In addition, the
Portfolio will pay commissions and other costs in connection with such invest-
ments which may increase the Portfolio's expenses and reduce its return.
The use of these strategies involves certain risks, including (1) the fact
that skills needed to use hedging instruments are different from those needed
to select the Portfolio's securities, (2) possible imperfect correlation, or
even no correlation, between price movements of hedging instruments and price
movements of the investments being hedged, (3) the fact that, while hedging
strategies can reduce the risk of loss, they can also reduce the opportunity
for gain, or even result in losses, by offsetting favorable price movements in
hedged investments and (4) the possible
11
<PAGE>
inability of the Portfolio to purchase or sell a security at a time that oth-
erwise would be favorable for it to do so, or the possible need for the Port-
folio to sell a security at a disadvantageous time due to the need for it to
maintain "cover" or to segregate securities in connection with hedging trans-
actions, and the possible inability of the Portfolio to close out or to liqui-
date its hedged position.
RESTRICTED AND ILLIQUID SECURITIES
The Portfolio may purchase restricted securities that are not registered for
sale to the general public but which are eligible for resale to qualified in-
stitutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Trustees, the Adviser determines the li-
quidity of such investments by considering all relevant factors. Provided that
a dealer or institutional trading market in such securities exists, these re-
stricted securities are not treated as illiquid securities for purposes of the
Portfolio's investment limitations. The Portfolio may also invest up to 15% of
its net assets in securities that are illiquid. The prices realized from the
sales of these securities could be less than those originally paid by the
Portfolio or less than what may be considered the fair value of such securi-
ties.
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and in-
terest by the U.S. Government or any of its agencies or instrumentali-
ties);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding voting securities of any issuer;
(c) invest more than 5% of its assets at the time of purchase in the secu-
rities of companies that have (with predecessors) a continuous operat-
ing history of less than 3 years;
(d) invest more than 25% of its assets in companies within a single indus-
try; however, there are no limitations on investments made in instru-
ments issued or guaranteed by the U.S. Government and its agencies.
(e) make loans except by purchasing debt securities in accordance with its
investment objective and policies or entering into repurchase agree-
ments or by lending its portfolio securities to banks, brokers, deal-
ers and other financial institutions so long as the loans are made in
compliance with the 1940 Act, as amended, or the Rules and Regulations
or interpretations of the SEC;
(f) (i) borrow, except from banks and as a temporary measure for extraor-
dinary or emergency purposes and then, in no event, in excess of 33
1/3% of the Portfolio's gross assets valued at the lower of market or
cost, and
12
<PAGE>
(ii) the Portfolio may not purchase additional securities when
borrowings exceed 5% of total assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent greater
than 33 1/3% of its total assets at fair market value.
The Portfolio's investment objective and investment limitations (a), (b),
(d), (e) and (f)(i) listed above are fundamental policies and may be changed
only with the approval of the holders of a majority of the outstanding voting
securities of the Portfolio. The other investment limitations described here,
those not specified as fundamental in the SAI, and the Portfolio's investment
policies are not fundamental, and the Fund's Board of Trustees may change them
without shareholder approval.
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), without a sales commission at the net asset value per share
next determined after an order is received by the Fund and payment is received
by the Custodian. (See "VALUATION OF SHARES.") The minimum initial investment
required is $2,500. The minimum initial investment for IRA accounts is $500.
The minimum initial investment for spousal IRA accounts is $250. Certain ex-
ceptions may be made by officers of the Fund.
Shares of the Portfolio may be purchased by customers of brokers-dealers or
other financial intermediaries ("Service Agents") which have established a
shareholder servicing relationship with the Fund on behalf of their customers.
Service Agents may impose additional or different conditions on purchases or
redemptions of Portfolio shares and may charge transaction or other account
fees. Each Service Agent is responsible for transmitting to its customers a
schedule of any such fees and information regarding additional or different
purchase or redemption conditions. Shareholders who are customers of Service
Agents should consult their Service Agent for information regarding these fees
and conditions. Amounts paid to Service Agents may include transaction fees
and/or service fees paid by the Fund from the Fund assets attributable to the
Service Agent, which would not be imposed if shares of the Portfolio were pur-
chased directly from the Fund or the Distributor. Service Agents may provide
shareholder services to their customers that are not available to a share-
holder dealing directly with the Fund. A salesperson and any other person en-
titled to receive compensation for selling or servicing Portfolio shares may
receive different compensation with respect to one particular class of shares
over another in the Fund.
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of a Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York
13
<PAGE>
Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer Agent
prior to 4 p.m. to receive that day's share price. Proper payment for the or-
der must be received by the Sub-Transfer Agent no later than the time when the
Portfolio is priced on the following business day. Service Agents are respon-
sible to their customers and the Fund for timely transmission of all subscrip-
tion and redemption requests, investment information, documentation and money.
INITIAL INVESTMENT BY MAIL
. Complete and sign an Application, and mail it together with a check pay-
able to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment.
BY WIRE
. Telephone the UAM Funds Service Center and provide the account name, ad-
dress, telephone number, social security or taxpayer identification num-
ber, Portfolio selected, amount being wired, and the name of the bank
wiring the funds. An account number will be provided to you. Next,
. instruct your bank to wire the specified amount to the Fund's custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
Credit DDA #9102772952
Ref: Portfolio Name ________________
Your Account Number __________________
Your Account Name _________________
Wire Control Number ________________
. Forward a completed Application to the Fund at the address shown on the
form. Federal Funds purchases will be accepted only on days when the
NYSE and the Custodian Bank are open for business.
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check
14
<PAGE>
to the UAM Service Center (payable to "UAM Funds") or by wiring money to the
Custodian Bank using the instructions outlined above. When making additional
investments, be sure that the account name and number is identified on the
check or wire and the Portfolio to be purchased is specified.
Prior to wiring additional investments, notify the Fund by calling the num-
ber on the cover of this prospectus. Mail orders should include, when possi-
ble, the "Invest by Mail" stub which accompanies any Fund confirmation state-
ment.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to suspend the offering of shares of the Portfolio or to reject pur-
chase orders when, in the judgment of management, such suspension or rejection
is in the best interests of the Fund. Purchases of the Portfolio's shares will
be made in full and fractional shares of the Portfolio calculated to three
decimal places. Certificates for fractional shares will not be issued. Certif-
icates for whole shares will not be issued except at the written request of
the shareholder.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by the Port-
folio in exchange for securities will be issued at net asset value determined
as of the same time. All dividends, interest, subscription, or other rights
pertaining to such securities shall become the property of the Portfolio and
must be delivered to the Fund by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for invest-
ment and not for immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be included in
the Portfolio (current market quotations must be readily available for
such securities);
. the investor represents and agrees that all securities offered to be ex-
changed are liquid securities and not subject to any restrictions upon
their sale by the Portfolio under the Securities Act of 1933, or other-
wise; and
. the value of any such securities (except U.S. Government securities) be-
ing exchanged together with other securities of the same issuer owned by
the
15
<PAGE>
Portfolio will not exceed 5% of the net assets of the Portfolio immedi-
ately after the transaction.
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of securi-
ties or local currency exchanged. Investors interested in such exchanges should
contact the Adviser.
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone, at any time,
without cost, at the net asset value of the Portfolio next determined after re-
ceipt of the redemption request. No charge is made for redemptions. Any redemp-
tion may be more or less than the purchase price of your shares depending on
the market value of the investment securities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of shares
or dollar amount to be redeemed, signed by all registered owners of the
shares in the exact names in which they are registered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of es-
tates, trusts, guardianships, custodianships, corporations, pension and
profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the wire
redemption privilege) by completing appropriate sections of the Applica-
tion; and
. call the Fund and instruct that the redemption proceeds be mailed to you
or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated to
receive redemption proceeds (this can be accomplished only by a written
request signed by each shareholder, with each signature guaranteed);
. redemption of certificated shares by telephone.
16
<PAGE>
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the investor to provide certain personal identification at the time an
account is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded
and investors may be required to provide additional telecopied written in-
structions of such transaction requests. The Fund or Sub-Transfer Agent may be
liable for any losses due to unauthorized or fraudulent telephone instructions
if the Fund or the Sub-Transfer Agent does not employ the procedures described
above. Neither the Fund nor the Sub-Transfer Agent will be responsible for any
loss, liability, cost or expense for following instructions received by tele-
phone that it reasonably believes to be genuine.
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than the
registered shareholder(s);
. redemptions where the proceeds are to be sent to an address which is not
the registered address; or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible guarantor
institutions include banks, as well as through most brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. Broker-dealers guaranteeing signa-
tures must be a member of a clearing corporation or maintain net capital of at
least $100,000. Credit unions must be authorized to issue signature guaran-
tees. A notary public can not provide a signature guarantee.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares sold under proper proce-
dures within one business day of and no more than seven days after receipt of
the request, or earlier if required under applicable law. The Fund may suspend
the right of redemption or postpone the date at times when both the NYSE and
Custodian Bank are closed, or under any emergency circumstances as determined
by the SEC.
If the Fund's Board of Trustees determines that it would be detrimental to
the best interests of the remaining shareholders of the Fund to make payments
wholly or partly in cash, the Fund may pay the redemption proceeds in whole or
in part by a distribution in-kind of liquid securities held by the Portfolio
instead of cash in conformity with applicable rules of the SEC. Investors may
incur brokerage charges when they sell portfolio securities received in pay-
ment of redemptions.
17
<PAGE>
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for Institu-
tional Class Shares of any other UAM Funds Portfolio. (See the list of Portfo-
lios of the UAM Funds at the end of this Prospectus.) Exchange requests should
be made by contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you are interested. Exchanges can only be made with Portfolios that
are qualified for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES BY TELEPHONE". An exchange
into another UAM Funds Portfolio is a sale of shares and may result in a gain
or loss for income tax purposes. The Fund may modify or terminate the exchange
privilege at any time.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets attributable to the class, less any liabilities attrib-
utable to the class, by the number of shares outstanding attributable to the
class. The net asset value per share of the Portfolio is determined as of the
close of the NYSE on each day that the NYSE is open for business.
Equity securities listed on a securities exchange for which market quota-
tions are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where
the security is primarily traded. Unlisted equity securities and listed secu-
rities not traded on the valuation date for which market quotations are read-
ily available are valued neither exceeding the current ask prices nor less
than the current bid prices. Quotations of foreign securities in a foreign
currency are converted to U.S. dollar equivalents. The converted value is
based upon the bid price of the foreign currency against U.S. dollars quoted
by any major bank or by a broker.
18
<PAGE>
Securities purchased with remaining maturities of 60 days or less are valued
at amortized cost when the Board of Trustees determines that amortized cost
reflects fair value.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Fund's Board of Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating total return. Total return
figures are based on historical earnings and are not intended to indicate fu-
ture performance.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of time. An average annual total return is a hypothetical rate of re-
turn that, if achieved annually, would have produced the same cumulative total
return if performance had been constant over the entire period.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices, all as further
described in the Portfolio's SAI. This information may also be included in
sales literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or telephone number on the
cover of this Prospectus.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes), to shareholders in quarterly dividends. If any
net capital gains are realized, the Portfolio will normally distribute them
annually. All dividends and capital gains distributions will be automatically
reinvested in additional shares of the Portfolio unless the Fund is notified
in writing that the shareholder elects to receive distributions in cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal
19
<PAGE>
income tax purposes and to meet all other requirements that are necessary for
it (but not its shareholders) to be exempt from federal taxes on income and
gains paid to shareholders in the form of dividends. To do this, the Portfolio
must, among other things, distribute substantially all of its ordinary income
and net capital gains on an annual basis and maintain a portfolio of invest-
ments which satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income.
Short-term capital gains will be taxed as ordinary income. Long-term capital
gains distributions are taxed as long-term capital gains. Shareholders will be
notified annually of dividend income earned for tax purposes.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid before February of the following year.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you. Consult a tax adviser for more information regarding deduc-
tions and credits for foreign taxes.
INVESTMENT ADVISER
The Adviser is a registered investment adviser formed in 1940. Its business
offices are located at 950 Haverford Road in Bryn Mawr, Pennsylvania. The Ad-
viser is a wholly-owned subsidiary of United Asset Management Corporation
("UAM") and provides and offers investment management and advisory services to
corporations, unions, pensions and profit-sharing plans, trusts, estates and
other institutions and investors. The Adviser currently has over $4.8 billion
in assets under management.
The Portfolio pays an annual fee in monthly installments to the Adviser for
advisory services. This fee is accrued daily and paid monthly as a percentage
of the average net assets in the Portfolio for that month. The percentage fee
on an annual basis is 0.50%.
20
<PAGE>
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Distributor, UAM, the Adviser, or any of their affili-
ates, may, at its own expense, compensate a Service Agent or other person for
marketing, shareholder servicing, record-keeping and/or other services per-
formed with respect to the Fund, the Portfolio or any Class of Shares of the
Portfolio. The person making such payments may do so out of its revenues, its
profits or any other source available to it. Such services arrangements, when
in effect, are made generally available to all qualified service providers.
The Distributor, the Adviser and certain of their other affiliates also par-
ticipate, at the date of this Prospectus, in an arrangement with Smith Barney
Inc. under which Smith Barney provides certain defined contribution plan mar-
keting and other shareholder services and receives from such entities .15 of
1% of the daily net asset value of Institutional Class Shares held by Smith
Barney's eligible customer accounts in addition to amounts payable to all
selling dealers. The Fund also compensates Smith Barney for services it pro-
vides to certain defined contribution plan shareholders that are not otherwise
provided by UAMFSI.
An Investment Committee at the Adviser is responsible for the day-to-day
management of the Portfolio.
ADMINISTRATIVE SERVICES
UAMFSI, a wholly-owned subsidiary of UAM, is responsible for performing and
overseeing administrative, fund accounting, dividend disbursing and transfer
agent services provided to the Fund and its Portfolios. UAMFSI's principal of-
fice is located at 211 Congress Street, Boston, MA 02110. UAMFSI has subcon-
tracted some of these services to Chase Global Funds Services Company
("CGFSC"), an affiliate of The Chase Manhattan Bank, by a Mutual Funds Service
Agreement dated June 30, 1997. CGFSC is located at 73 Tremont Street, Boston,
MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
Newbold's Equity Portfolio............................................. 0.06%
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
0.11 of 1% of the next $800 million of combined UAM Funds assets;
21
<PAGE>
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Funds are allocated among the Portfolios on the basis of their rela-
tive assets and are subject to a graduated minimum fee schedule per Portfolio,
which starts at $2,000 per month and increases to $70,000 annually after two
years. If a separate class of shares is added to a Portfolio, its minimum an-
nual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM with its principal office
located at 211 Congress Street, Boston, Massachusetts 02110, distributes the
shares of the Fund. Under the Fund's Distribution Agreement (the "Agreement"),
the Distributor, as agent of the Fund, agrees to use its best efforts as sole
distributor of the Fund's shares. The Distributor does not receive any fee or
other compensation under the Agreement with respect to the Institutional Class
Shares offered in this Prospectus. The Agreement continues in effect as long
as it is approved at least annually by the Fund's Board of Trustees. Those ap-
proving the Agreement include a majority of Trustees who are neither parties
to the Agreement nor interested persons of any such party. This Agreement pro-
vides that the Fund will bear the costs of the registration of its shares with
the SEC and various states and the printing of its prospectuses, SAIs and re-
ports to shareholders.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II." On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and have no preference as to conversion, exchange, dividends, re-
tirement or other features and no pre-emptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees can elect 100% of the Trustees. A shareholder is en-
titled 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 of the
Fund.
22
<PAGE>
Both Institutional Class and Institutional Service Class Shares represent an
interest in the same assets of a Portfolio. Institutional Service Class Shares
bear certain expenses related to shareholder servicing, and may bear expenses
related to the distribution of such shares. Service Class Shares have exclu-
sive voting rights with respect to matters relating to such distribution ex-
penditures. For information about the Service Class Shares of the Portfolios
contact the UAM Funds Service Center at the number on the cover of this Pro-
spectus.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the hold-
ers of not less than 10% of the outstanding shares of the Fund. The Fund will
assist shareholder communications in such matters.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the number or address listed on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE PORTFOLIO'S STATEMENT
OF ADDITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR ITS REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH OF-
FERING MAY NOT BE LAWFULLY MADE.
23
<PAGE>
UAM FUNDS -- INSTITUTIONAL CLASS SHARES
Acadian Emerging Markets Portfolio
Acadian International Equity Portfolio
BHM&S Total Return Bond Portfolio
Chicago Asset Management Intermediate Bond Portfolio
Chicago Asset Management Value/Contrarian Portfolio
C&B Balanced Portfolio
C&B Equity Portfolio
C&B Equity Portfolio for Taxable Investors
C&B Mid Cap Equity Portfolio
DSI Balanced Portfolio
DSI Disciplined Value Portfolio
DSI Limited Maturity Bond Portfolio
DSI Money Market Portfolio
FMA Small Company Portfolio
FPA Crescent Portfolio
Hanson Equity Portfolio
ICM Equity Portfolio
ICM Fixed Income Portfolio
ICM Small Company Portfolio
IRC Enhanced Index Portfolio
Jacobs International Octagon Portfolio
McKee Domestic Equity Portfolio
McKee International Equity Portfolio
McKee U.S. Government Portfolio
McKee Small Cap Equity Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Rice, Hall James Small Cap Portfolio
Rice, Hall James Small/Mid Cap Portfolio
Sirach Equity Portfolio
Sirach Fixed Income Portfolio
Sirach Growth Portfolio
Sirach Short-Term Reserves Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
SAMI Preferred Stock Income Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Short-Term Fixed Income Portfolio
Sterling Partners' Small Cap Value Portfolio
TS&W Equity Portfolio
TS&W Fixed Income Portfolio
TS&W International Equity Portfolio
TS&W Balanced Portfolio
24
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Newbold's Asset Management, Inc.
950 Haverford Road
Bryn Mawr, Pennsylvania
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
Newbold's Equity
Portfolio
Institutional Service
Class Shares
July 10, 1997
P R O S P E C T U S
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses.............................................................. 1
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Investment Objective....................................................... 4
Investment Policies........................................................ 4
Other Investment Policies.................................................. 5
Investment Limitations..................................................... 11
Purchase of Shares......................................................... 12
Redemption of Shares....................................................... 15
Other Redemption Information............................................... 16
Service and Distribution Plans............................................. 17
Shareholder Services....................................................... 19
Valuation of Shares........................................................ 19
Performance Calculations................................................... 20
Dividends, Capital Gains Distributions and Taxes........................... 21
Investment Adviser......................................................... 22
Administrative Services.................................................... 22
Distributor................................................................ 23
General Information........................................................ 23
UAM Funds -- Service Class Shares.......................................... 25
</TABLE>
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
NEWBOLD'S EQUITY PORTFOLIO
INSTITUTIONAL SERVICE CLASS SHARES
INVESTMENT ADVISER: NEWBOLD'S ASSET MANAGEMENT, INC.
- -------------------------------------------------------------------------------
PROSPECTUS -- JULY 10, 1997
UAM Funds Trust (the "Fund") is an open-end investment company known as a
"mutual fund." The Fund consists of multiple series (known as "Portfolios")
each of which has different investment objectives and policies. Shares of each
class represent equal, pro rata interests in a Portfolio and accrue dividends
in the same manner except that Service Class Shares bear fees payable by the
class (at the rate of .40% per annum) to financial institutions for services
they provide to the owners of such shares. (See "SERVICE AND DISTRIBUTION
PLANS.") Newbold's Equity Portfolio currently offers two classes of shares:
Institutional Class Shares and Institutional Service Class Shares ("Service
Class Shares"). The securities offered in this Prospectus are Service Class
Shares of one diversified, Portfolio of the Fund managed by Newbold's Asset
Management, Inc.
NEWBOLD'S EQUITY PORTFOLIO. The Newbold's Equity Portfolio (the "Portfolio")
seeks to achieve maximum long-term total return, consistent with reasonable
risk to principal, by investing primarily in a diversified portfolio of under-
valued equity securities of statistically attractive companies.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
Shareholders of the Portfolio should note that the Fund's Board of Trustees
voted unanimously on June 19, 1997 to combine the Portfolio with PBHG Large
Cap Value Fund, a series of The PBHG Funds, Inc. It is anticipated that the
terms of the proposed combination will be submitted to shareholders of the
Portfolio for approval at a meeting to be held on September 27, 1997. Proxy
materials will be delivered to Shareholders before that date, which will ex-
plain in detail the terms of the proposed combination.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A "Statement of Additional Information" ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Service Class Shares would incur. Transaction fees may be charged
if a broker-dealer or other financial intermediary deals with the Fund on your
behalf. (See "PURCHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases......................................... NONE
Sales Load Imposed on Reinvested Dividends.............................. NONE
Deferred Sales Load..................................................... NONE
Redemption Fees......................................................... NONE
Exchange Fees........................................................... NONE
</TABLE>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Investment Advisory Fees............................................ 0.50%
Administrative Fees................................................. 0.48%
12b-1 Fees (Including Shareholder Servicing Fees)+.................. 0.40%
Other Expenses...................................................... 0.47%
Advisory Fees Waived and Expenses Assumed........................... (0.55)%
-----
Total Operating Expenses (After Fee Waiver and Expenses Assumed).... 1.30%+*
=====
</TABLE>
- -----------
+ See "SERVICE AND DISTRIBUTION PLANS." Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charges permit-
ted by rules of the National Association of Securities Dealers, Inc.
* The Adviser has voluntarily agreed to waive its advisory fees and assume op-
erating expenses to keep the Portfolio's Service Class Shares' total operat-
ing expenses (excluding interest, taxes and extraordinary expenses), after
the effect of expense offset arrangements, from exceeding 1.30% of average
daily net assets until January 29, 1998. Absent the fee waivers and assump-
tion of expenses by the Adviser, the Portfolio's Service Class Shares' total
annual operating expenses would have been 1.85% of average daily net assets.
The Portfolio will not reimburse the Adviser for any advisory fees which the
Adviser may bear on behalf of the Portfolio for a given fiscal year.
The table above shows various fees and expense an investor would bear di-
rectly or indirectly. The fees and expenses set forth above are based upon the
Portfolio's Institutional Class Shares operations during the fiscal year ended
April 30, 1997, except they have been restated to reflect the Service Class
Shares' 12b-1 fees.
1
<PAGE>
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. The Portfolios
charge no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Expenses...................................................... $ 13 $ 41
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
2
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Newbold's Asset Management, Inc. (the "Adviser") is a registered investment
adviser. Founded in 1940, the firm currently has over $4.8 billion in assets
under management. The Adviser is a wholly-owned subsidiary of United Asset
Management Corporation. (See "INVESTMENT ADVISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion, to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment in the Portfolio is $2,500. The minimum initial investment
for IRA accounts is $500. The minimum initial investment for spousal IRA ac-
counts is $250. The minimum for any subsequent investment is $100. Certain ex-
ceptions to the initial or minimum investment amounts may be made by the offi-
cers of the Fund. (See "PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in an annual dividend. Any realized net capital gains will also be
distributed annually. Distributions will be reinvested in the Portfolio's
shares automatically unless an investor elects to receive cash distributions.
(See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTIONS OF SHARES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See "REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of United As-
set Management Corporation ("UAM"), is responsible for performing and oversee-
ing administration, dividend disbursing and transfer agency services provided
to the Fund and its Portfolios by third-party service providers. (See "ADMIN-
ISTRATIVE SERVICES.")
3
<PAGE>
RISK FACTORS
The value of the Portfolio's shares will fluctuate in response to changes in
market and economic conditions as well as the financial conditions and pros-
pects of the issuers in which the Portfolio invests. Prospective investors
should consider the following: (1) The Portfolio may engage in various strate-
gies to seek to hedge its investments against movements in security prices by
the use of derivatives including options and futures as well as options on
futures. Such strategies are commonly referred to as "derivatives" and involve
the risk of imperfect correlation in movements in the price of options and
futures and movements in the price of securities which are the subject of the
hedge. Options and futures transactions in foreign markets are also subject to
the risk factors associated with foreign investments generally. There can be
no assurance that a liquid secondary market for options and futures contracts
will exist at any specific time; (2) The Portfolio may invest in the securi-
ties of foreign issuers which may be subject to additional risk factors, in-
cluding foreign currency risks, not applicable to securities of U.S. issuers;
(3) The Portfolio may invest in repurchase agreements which entail a risk of
loss should the seller default on its transaction; (4) The Portfolio may lend
its investment securities which entails a risk of loss should a borrower fail
financially; (5) The Portfolio may purchase securities on a when-issued basis
which do not earn interest until issued and may decline or appreciate in mar-
ket value prior to their delivery to the Portfolio. (See "OTHER INVESTMENT
POLICIES.")
INVESTMENT OBJECTIVE
The Portfolio seeks to achieve maximum long-term total return, consistent
with reasonable risk to principal, by investing primarily in a diversified
portfolio of undervalued equity securities of statistically attractive compa-
nies. The Adviser believes that the Portfolio's performance over the long term
will be superior to its benchmark index (the Standard & Poor's 500 Stock In-
dex). There can be no assurance that the Portfolio will achieve its stated ob-
jective.
INVESTMENT POLICIES
In seeking its investment objective, the Portfolio will invest at least 65%
of its total assets, under normal circumstances, in equity securities, con-
sisting of common stock, preferred stock, convertible preferred stock, con-
vertible bonds, rights and warrants. The Portfolio will invest primarily in
equity securities of large capitalization companies which are defined as those
with equity capitalizations greater than $1 billion at the time of purchase.
The Adviser believes that investment value and return can be achieved by in-
vesting in stocks with a low price relative to current earnings. This bottom-
up approach seeks to identify companies whose earnings growth suggests an in-
creasing stream of future dividend income and whose share prices represent a
level below realizable value.
4
<PAGE>
The Adviser is able to identify prospective companies through a computerized
screening process which rates on three key elements: Market capitalization--$1
billion or more for purposes of liquidity; Dividend payout--ordinarily must
pay cash dividends; Financial leverage--debt should not be excessive, and an
investment grade bond rating is required.
The stock issues of the qualifying companies are then sorted by price-
/earnings ratio, ranked from highest to lowest and broken into five groups,
each consisting of 100 stocks. The bottom two groups are subject to intense
fundamental analysis by the Adviser. The objective is to assemble a portfolio
of 40-70 statistically attractive stocks which represent relative "value" not
generally recognized by the market. However, the Portfolio has the flexibility
to invest in less than 40 stocks or more than 70 stocks, as the Adviser deems
necessary. Earnings for cyclical stocks are normalized in this valuation proc-
ess.
Once the portfolio has been constructed, its price/earnings multiples are
continually monitored. The Portfolio will stop buying a stock when its price-
/earnings ratio approaches the current price/earnings multiple of the Standard
& Poor's 500 Stock Index. The stock is sold when it moves above the market's
multiple.
When the Adviser believes that market conditions warrant a defensive posi-
tion, up to 100% of the Portfolio's assets may be held in cash and short-term
investments. See "SHORT-TERM INVESTMENTS" below for a description of the types
of short-term instruments in which the Portfolio may invest for temporary de-
fensive purposes. When the Portfolio is in a defensive position, it may not
necessarily be pursuing its stated investment objective.
OTHER INVESTMENT POLICIES
The Portfolio may also, under normal circumstances, invest up to 35% its as-
sets, unless restricted by additional limitations described below or in the
Portfolio's SAI, in the following securities or investment techniques:
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated redemp-
tions, or for temporary defensive purposes, the Portfolio may invest a portion
of its assets in domestic and foreign money market instruments including cer-
tificates of deposit, bankers' acceptances, time deposits, U.S. Government ob-
ligations, U.S. Government agency securities, short-term corporate debt secu-
rities, and commercial paper rated A-1 or A-2 by Standard & Poor's Corporation
or Prime-1 or Prime-2 by Moody's Investors Service, Inc., or if unrated, de-
termined by the Adviser to be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will
5
<PAGE>
not invest in any security issued by a commercial bank unless (i) the bank has
total assets of at least $1 billion, or the equivalent in other currencies,
(ii) in the case of U.S. banks, it is a member of the Federal Deposit Insur-
ance Corporation, and (iii) in the case of foreign branches of U.S. banks, the
security is, in the opinion of the Adviser, of an investment quality compara-
ble with other debt securities which may be purchased by the Portfolio.
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's Port-
folios, as well as cash for investment purposes, into one or more joint ac-
counts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable rate demand notes and tax-exempt money instruments. By en-
tering into these investments on a joint basis, it is expected that the Port-
folio may earn a higher rate of return on investments relative to what it
could earn individually.
The Fund has received permission from the SEC for each of its Portfolios to
invest, for cash management purposes, the greater of 5% of its total assets or
$2.5 million in the Fund's DSI Money Market Portfolio. (See "INVESTMENT
COMPANIES.")
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities, certificates of deposit, and certain bankers' accept-
ances and other securities outlined above under "SHORT-TERM INVESTMENTS." In a
repurchase agreement, the Portfolio buys a security and simultaneously commits
to sell that security back at an agreed upon price plus an agreed upon market
rate of interest. Under a repurchase agreement, the seller is also required to
maintain the value of securities subject to the agreement at not less than
100% of the repurchase price. The value of the securities purchased will be
evaluated daily, and the Adviser will, if necessary, require the seller to
maintain additional securities to ensure that the value is in compliance with
the previous sentence. The use of repurchase agreements involves certain
risks. For example, a default by the seller of the agreement may cause the
Portfolio to experience a loss or delay in the liquidation of the collateral
securing the repurchase agreement. The Portfolio might also incur disposition
costs in liquidating the collateral. While the Fund's management acknowledges
these risks, it is expected that they can be controlled through stringent
counter-party selection criteria and careful monitoring procedures. The Fund
has received permission from the SEC to pool daily uninvested cash balances of
the Fund's Portfolios in order to invest in repurchase agreements on a joint
basis. By entering into joint repurchase agreements, the Portfolio may incur
lower transactions costs and earn higher rates of interest on joint repurchase
agreements. The
6
<PAGE>
Portfolio's contribution would determine its return from a joint repurchase
agreement. (See "SHORT-TERM INVESTMENTS.")
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. The Portfolio will not loan securities
to the extent that greater than one-third of its assets at fair market value
would be committed to loans. During the term of a loan, the Portfolio is sub-
ject to a gain or loss depending on any increase or decrease in the market
price of the securities loaned. Lending of securities is subject to review by
the Fund's Board of Trustees. All relevant facts and circumstances, including
the creditworthiness of the broker, dealer or institution, will be considered
in making decisions about securities lending.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Trustees. The Portfolios will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on a loan, the loan must be called and the securities
voted.
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES
The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement," or "forward delivery" basis. "When-issued" or "forward delivery"
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more be-
fore delivery is due. Delayed settlement is a term used to describe settlement
of a securities transaction in the secondary market which will occur sometime
in the future. No payment or delivery is made by the Portfolio until it re-
ceives delivery or payment from the other party to any of the above transac-
tions. It is possible that the market price of the securities at the time of
delivery may be higher or lower than the purchase price. The Portfolio will
maintain a separate account of cash or liquid securities at least equal to the
value of purchase commitments until payment is made. Typically, no income ac-
crues on securities purchased on a delayed delivery basis prior to the time
delivery is made although the Portfolio may earn income on securities it has
deposited in a segregated account.
The Portfolio may engage in these types of purchases in order to buy securi-
ties that fit with its investment objectives at attractive prices--not to in-
crease its investment leverage.
PORTFOLIO TURNOVER
Portfolio turnover is not anticipated to exceed 60%. In addition to Portfo-
lio trading costs, higher rates of portfolio turnover may result in the reali-
zation of
7
<PAGE>
capital gains. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES" for
more information on taxation). The Portfolio will not normally engage in
short-term trading, but reserves the right to do so. The table set forth in
"Financial Highlights" presents the Portfolio's historical portfolio turnover
rates.
INVESTMENT COMPANIES
The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets may be invested in the securities of any one investment company
nor may it acquire more than 3% of the voting securities of any other invest-
ment company. The Portfolio will indirectly bear its proportionate share of
any management fees paid by an investment company in which it invests in addi-
tion to the advisory fee paid by the Portfolio.
The Fund has received permission from the SEC to allow each of its Portfo-
lios to invest, for cash management purposes, the greater of 5% of its total
assets or $2.5 million in the Fund's DSI Money Market Portfolio provided that
the investment is consistent with the Portfolio's investment policies and re-
strictions. Based upon the Portfolio's assets invested in the DSI Money Market
Portfolio, the investing Portfolio's adviser will waive its investment advi-
sory fee and any other fees earned as a result of the Portfolio's investment
in the DSI Money Market Portfolio. The investing Portfolio will bear expenses
of the DSI Money Market Portfolio on the same basis as all of its other share-
holders.
AMERICAN DEPOSITARY RECEIPTS
The Portfolio intends to invest primarily in U.S.-based companies. In addi-
tion, the Portfolio may purchase shares of foreign-based companies in the form
of American Depositary Receipts (ADRs). ADRs may be sponsored or unsponsored.
Sponsored ADRs are established jointly by a depositary and the underlying is-
suer, whereas unsponsored ADRs may be established without participation by the
underlying issuer. Holders of an unsponsored ADR generally bear all the costs
associated with establishing the unsponsored ADR. The depositary of an
unsponsored ADR is under no obligation to distribute shareholder communica-
tions received from the underlying issuer or to pass through voting rights to
the holders of the unsponsored ADR with respect to the deposited securities or
pool of securities.
FOREIGN INVESTMENTS
Investing in foreign companies may involve additional risks and considera-
tions which are not typically associated with investing in U.S. companies.
Since stocks of foreign companies are normally denominated in foreign curren-
cies, the Portfolio may be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations, and may incur costs in
connection with conversions between various currencies.
8
<PAGE>
As non-U.S. companies are not generally subject to uniform accounting, au-
diting and financial reporting standards and practices comparable to those
applicable to U.S. companies, comparable information may not be readily avail-
able about certain foreign companies. Securities of some non-U.S. companies
may be less liquid and more volatile than securities of comparable U.S. compa-
nies. In addition, in certain foreign countries, there is the possibility of
expropriation or confiscatory taxation, political or social instability, or
diplomatic developments which could affect U.S. investments in those coun-
tries.
Although the Portfolio will seek the most favorable trading costs available
in any given market, investors should recognize that foreign commissions are
generally higher than those in the U.S. In addition, custodial expenses, that
is, fees paid to financial institutions for holding the Portfolio's securi-
ties, will generally be higher than would be the case in the U.S.
Some foreign governments also levy withholding taxes against dividend and
interest income. Although in some countries a portion of the taxes is recover-
able, the non-recovered portion of foreign withholding taxes will reduce the
income the Portfolio receives from the companies comprising its investments.
HEDGING AND RELATED STRATEGIES AND RISK CONSIDERATIONS
To reduce the overall risk of its investments (hedge), the Portfolio may use
options, futures contracts, and options on futures contracts. Hedging strate-
gies may also be used in an attempt to manage the Portfolio's exposure to
changing security prices. The Portfolio's ability to use these strategies may
be limited by market conditions, regulatory limits and tax considerations. The
Portfolio's obligation under such hedging strategies will be covered by the
maintenance of a segregated account consisting of cash, or liquid securities
equal to at least 100% of the Portfolio's commitment. The Portfolio may buy or
sell futures contracts, write covered call options and buy put and call op-
tions on any security or index, including options and futures traded on for-
eign exchanges and options not traded on exchanges. The Portfolio's SAI con-
tains further information on all of these strategies and the risks associated
with them.
The Portfolio may write or purchase options in privately negotiated transac-
tions ("OTC Options") as well as listed options. OTC Options can be closed out
only by agreement with the other party to the transaction. Any OTC Option pur-
chased by the Portfolio is considered an illiquid security. Any OTC Option
written by the Portfolio will be with a qualified dealer pursuant to an agree-
ment under which the Portfolio may repurchase the option at a formula price.
Such options are considered illiquid to the extent that the formula price ex-
ceeds the intrinsic value of the option. The Portfolio may not purchase or
sell futures contracts or related options for which the aggregate initial mar-
gin and premiums exceed 5% of the fair market value of the Portfolio's assets.
In order to prevent leverage in connection
9
<PAGE>
with the purchase of futures contracts or call options thereon by the Portfo-
lio, an amount of cash, cash equivalents or liquid securities equal to the
market value of the obligation under the futures contracts or options (less
any related market deposits) will be maintained in a segregated account with
the Fund's Custodian. The Portfolio may not invest more than 15% of its net
assets in illiquid securities and repurchase agreements which have a maturity
of longer than seven days. A more complete discussion of the potential risks
involved in transactions in options or futures contracts and related options
is contained in the Portfolio's SAI.
RISK CONSIDERATIONS. The Portfolio might not employ any of the hedging
strategies described above, and there can be no assurance that any strategy
used will succeed. If the Adviser incorrectly forecasts market values or other
economic factors in utilizing a strategy for the Portfolio, the Portfolio
would be in a better position if it had not hedged at all. In addition, the
Portfolio will pay commissions and other costs in connection with such invest-
ments which may increase the Portfolio's expenses and reduce its return.
The use of these strategies involves certain risks, including (1) the fact
that skills needed to use hedging instruments are different from those needed
to select the Portfolio's securities, (2) possible imperfect correlation, or
even no correlation, between price movements of hedging instruments and price
movements of the investments being hedged, (3) the fact that, while hedging
strategies can reduce the risk of loss, they can also reduce the opportunity
for gain, or even result in losses, by offsetting favorable price movements in
hedged investments and (4) the possible inability of the Portfolio to purchase
or sell a security at a time that otherwise would be favorable for it to do
so, or the possible need for the Portfolio to sell a security at a disadvanta-
geous time due to the need for it to maintain "cover" or to segregate securi-
ties in connection with hedging transactions, and the possible inability of
the Portfolio to close out or to liquidate its hedged position.
RESTRICTED AND ILLIQUID SECURITIES
The Portfolio may purchase restricted securities that are not registered for
sale to the general public but which are eligible for resale to qualified in-
stitutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Trustees, the Adviser determines the li-
quidity of such investments by considering all relevant factors. Provided that
a dealer or institutional trading market in such securities exists, these re-
stricted securities are not treated as illiquid securities for purposes of the
Portfolio's investment limitations. The Portfolio may also invest up to 15% of
its net assets in securities that are illiquid. The prices realized from the
sales of these securities could be less than those originally paid by the
Portfolio or less than what may be considered the fair value of such securi-
ties.
10
<PAGE>
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than obligations issued or guaranteed as to principal and in-
terest by the U.S. Government or any of its agencies or instrumentali-
ties);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding voting securities of any issuer;
(c) invest more than 5% of its assets at the time of purchase in the secu-
rities of companies that have (with predecessors) a continuous operat-
ing history of less than 3 years;
(d) invest more than 25% of its assets in companies within a single indus-
try; however, there are no limitations on investments made in instru-
ments issued or guaranteed by the U.S. Government and its agencies.
(e) make loans except by purchasing debt securities in accordance with its
investment objective and policies or entering into repurchase agree-
ments or by lending its portfolio securities to banks, brokers, deal-
ers and other financial institutions so long as the loans are made in
compliance with the 1940 Act, as amended, or the Rules and Regulations
or interpretations of the SEC;
(f) (i) borrow, except from banks and as a temporary measure for extraor-
dinary or emergency purposes and then, in no event, in excess of 33
1/3% of the Portfolio's gross assets valued at the lower of market or
cost, and (ii) the Portfolio may not purchase additional securities
when borrowings exceed 5% of total assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent greater
than 33 1/3% of its total assets at fair market value.
The Portfolio's investment objective and investment limitations (a), (b),
(d), (e) and (f)(i) listed above are fundamental policies and may be changed
only with the approval of the holders of a majority of the outstanding voting
securities of the Portfolio. The other investment limitations described here,
those not specified as fundamental in the SAI, and the Portfolio's investment
policies are not fundamental, and the Fund's Board of Trustees may change them
without shareholder approval.
11
<PAGE>
PURCHASE OF SHARES
Shares of the Portfolio and Classes are offered through UAM Fund Distribu-
tors, Inc. (the "Distributor") without a sales commission, at the net asset
value per share next determined after an order is received by the Fund and
payment is received by the custodian. The required minimum initial investment
for the Portfolio is $2,500. The initial investment minimum for IRA accounts
is $500. The minimum initial investment for spousal IRA accounts is $250. Cer-
tain exceptions may be determined by the officers of the Fund.
The Portfolio issues two classes of shares: Institutional Class and Institu-
tional Service Class. The two classes of shares each represent interests in
the same portfolio of investments, have the same rights and are identical in
all respects, except that the Service Class Shares offered by this Prospectus
bear shareholder servicing expenses and distribution plan expenses, and have
exclusive voting rights with respect to the Rule 12b-1 Distribution Plan pur-
suant to which the distribution fee may be paid. The two classes have differ-
ent exchange privileges. (See "EXCHANGE PRIVILEGE.") The net income attribut-
able to Service Class Shares and the dividends payable on Service Class Shares
will be reduced by the amount of the shareholder servicing and distribution
fees; accordingly, the net asset value of the Service Class Shares will be re-
duced by such amounts.
Some Service Agents may also impose additional or different conditions or
other account fees on the purchase and redemption of Portfolio shares, which
are not subject to the Rule 12b-1 Service and Distribution Plans, which may
include transaction fees and/or service fees paid by the Fund from the Fund
assets attributable to the Service Agent, and would not be imposed if shares
of the Portfolio were purchased directly from the Fund or the Distributor. The
Service Agents may provide shareholder services to their customers that are
not available to a shareholder dealing directly with the Fund. Each Service
Agent is responsible for transmitting to its customers a schedule of any such
fees and information regarding different purchase and redemption conditions.
Shareholders who are customers of Service Agents should consult their Service
Agent for information regarding these fees and conditions. A salesperson and
any other person entitled to receive compensation for selling or servicing
Portfolio shares may receive different compensation with respect to one par-
ticular class of shares over another in the Fund.
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of the Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer
Agent prior to 4 p.m. to receive that day's share price. Proper payment for
the order must be received by the Sub-Transfer Agent no later than the time
when the Portfolio is priced on the following business day. Service Agents are
responsible to their customers and the Fund for timely transmission of all
subscription and redemption requests, investment information, documentation
and money.
12
<PAGE>
INITIAL INVESTMENT
BY MAIL
. Complete and sign an Application and forward it together with a check
payable to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment.
BY WIRE
. Telephone the UAM Funds Service Center and provide the account name, ad-
dress, telephone number, social security or taxpayer identification num-
ber, the Portfolio selected (Service Class Shares), the amount being
wired and the name of the bank wiring the funds. An account number will
then be provided to you. Next,
. instruct your bank to wire the specified amount to the Fund's Custodian;
The Chase Manhattan Bank
ABA #021000021
UAM Funds
Credit DDA #9102772952
Ref: Portfolio Name
Your Account Number
Your Account Name
Wire Control Number
. Forward a completed Application to the Fund at the address shown on the
form. Federal Funds purchases will be accepted only on days when the
NYSE and the Custodian Bank are open for business.
ADDITIONAL INVESTMENTS
Additional investment may be made at any time. The minimum additional in-
vestment is $100. Shares may be purchased at net asset value through your
Service Agent or by mailing a check to the UAM Funds Service Center (payable
to "UAM Funds") at the above address or by wiring monies to the Custodian Bank
using the instructions outlined above. When making additional investments, be
sure
13
<PAGE>
that your account number, account name, class of shares, and the Portfolio to
be purchased, are specified on the check or wire.
Prior to wiring additional investments, please notify the UAM Funds Service
Center. Mail orders should include, when possible, the "Invest by Mail" stub
which accompanies any Fund confirmation statement.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to suspend the offering of shares of each Portfolio or to reject pur-
chase orders when, in the judgment of management, such suspension or rejection
is in the best interests of the Fund. Purchases of a Portfolio's shares will
be made in full and fractional shares of the Portfolio calculated to three
decimal places. Certificates for fractional shares will not be issued. Certif-
icates for whole shares will not be issued except at the written request of
the shareholder.
IN-KIND PURCHASES
If accepted by the Fund, shares of a Portfolio may be purchased in exchange
for securities which are eligible for acquisition by the Portfolio, as de-
scribed in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by a Portfo-
lio in exchange for securities will be issued at net asset value determined as
of the same time. All dividends, interest, subscription, or other rights per-
taining to such securities shall become the property of the Portfolio and must
be delivered to the Fund by the investor upon receipt from the issuer. Securi-
ties acquired through an in-kind purchase will be acquired for investment and
not for immediate resale.
The Fund will not accept securities in exchange for shares of a Portfolio
unless:
. at the time of exchange, such securities are eligible to be included in
the Portfolio (current market quotations must be readily available for
such securities);
. the investor represents and agrees that all securities offered to be ex-
changed are liquid securities and not subject to any restrictions upon
their sale by the Portfolio under the Securities Act of 1933, or other-
wise; and
. the value of any such securities (except U.S. Government securities) be-
ing exchanged together with other securities of the same issuer owned by
the Portfolio will not exceed 5% of the net assets of the Portfolio im-
mediately after the transaction.
14
<PAGE>
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of secu-
rities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.
REDEMPTION OF SHARES
Shares of the Portfolio may be redeemed by mail or telephone, at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. No charge is made for redemptions. Any re-
demption may be more or less than the purchase price of your shares depending
on the market value of the investment securities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of shares
or dollar amount to be redeemed, signed by all registered owners of the
shares in the exact names in which they are registered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of es-
tates, trusts, guardianships, custodianships, corporations, pension and
profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the wire
redemption privilege) by completing appropriate sections of the Applica-
tion; and
. call the Fund and instruct that the redemption proceeds be mailed to you
or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated to
receive redemption proceeds (this can be accomplished only by a written
request signed by each shareholder, with each signature guaranteed);
. redemption of certificated shares by telephone.
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be
15
<PAGE>
liable for any losses if they fail to do so. These procedures include requir-
ing the investor to provide certain personal identification at the time an ac-
count is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded
and investors may be required to provide additional telecopied written in-
structions of such transaction requests. The Fund or Sub-Transfer Agent may be
liable for any losses due to unauthorized or fraudulent telephone instructions
if the Fund or the Sub-Transfer Agent does not employ the procedures described
above. Neither the Fund nor the Sub-Transfer Agent will be responsible for any
loss, liability, cost or expense for following instructions received by tele-
phone that it reasonably believes to be genuine.
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than the
registered shareholder(s);
. redemptions where the proceeds are to be sent to an address which is not
the registered address; or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible signature
guarantors include most banks, as well as most brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. Broker-dealers guaranteeing signa-
tures must be a member of a clearing corporation or maintain net capital of at
least $100,000. Credit unions must be authorized to issue signature guaran-
tees. A notary public can not provide a signature guarantee.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares sold under proper proce-
dures within one business day of and no more than seven days after the receipt
of the request, or earlier if required under applicable law. The Fund may sus-
pend the right of redemption or postpone the date at times when both the NYSE
and Custodian Bank are closed, or under any emergency circumstances determined
by the SEC.
If the Board of Trustees determines that it would be detrimental to the best
interests of remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay redemption proceeds in whole or in part by a
distribution in-kind of liquid securities held by the Portfolio in lieu of
cash in conformity with applicable rules of the SEC. Investors may incur bro-
kerage charges on the sale of portfolio securities received in payment of re-
demptions.
16
<PAGE>
SERVICE AND DISTRIBUTION PLANS
Under the Service Plan for Service Class Shares, adopted pursuant to Rule
12b-1 under the 1940 Act, the Fund may enter into service agreements with
Service Agents (broker-dealers or other financial institutions) who receive
fees with respect to the Fund's Service Class Shares owned by shareholders for
whom the Service Agent is the dealer or holder of record, or for whom the
Service Agent performs Servicing, as defined below. These fees are paid out of
the assets allocable to Service Class Shares to the Distributor or to the
Service Agents directly or through the Distributor. The Fund reimburses the
Distributor or the Service Agent for payments made at an annual rate of up to
0.40% of the average daily value of Service Class Shares owned by clients of
the Service Agent during the period payments for Servicing are being made to
it. Such payments are borne exclusively by the Service Class Shares. Each item
for which a payment may be made under the Service Plan constitutes personal
service and/or shareholder account maintenance and may constitute an expense
of distributing Fund shares as the SEC construes such term under Rule 12b-1.
The fees payable for Servicing reflect actual expenses incurred up to the
limit described herein.
Servicing may include assisting clients in changing dividend options, ac-
count designations and addresses; performing subaccounting; establishing and
maintaining shareholder accounts and records; processing purchase and redemp-
tion transactions; investing client cash account balances automatically in
Service Class Shares; providing periodic statements showing a client's account
balance and integrating such statements with those of other transactions and
balances in the client's other accounts serviced by the Service Agent; arrang-
ing for bank wires; and such other services as the Fund may request, to the
extent the Service Agent is permitted by applicable statute, rule or regula-
tion.
The Glass-Steagall Act and other applicable laws prohibit federally chart-
ered or supervised banks from engaging in certain aspects of the business of
issuing, underwriting, selling and/or distributing securities. Accordingly,
banks will be engaged to act as Service Agents only to perform administrative
and shareholder servicing functions, including transaction-related agency
services for their customers. If a bank were prohibited from so acting, its
shareholder clients would be permitted to remain Fund shareholders and alter-
native means for continuing the servicing of such shareholders would be
sought.
The Distributor promotes the distribution of the Service Class Shares in ac-
cordance with the terms of a Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act. The Distribution Plan provides for the use of Fund assets
allocable to Service Class Shares to pay expenses of distributing such shares.
The Distribution Plan and Service Plan (the "Plans") were approved by the
Board, including a majority of the Trustees who are not "interested persons"
of
17
<PAGE>
the Fund as defined in the 1940 Act (and each of whom has no direct or indi-
rect financial interest in the Plans or any agreement related thereto, re-
ferred to herein as the "12b-1 Trustees"). The Plans may be terminated at any
time by the vote of the Board or the 12b-1 Trustees, or by the vote of a ma-
jority of the outstanding Service Class Shares of the Portfolio involved.
While the Plans continue in effect, the selection of the 12b-1 Trustees is
committed to the discretion of such persons then in office. The Plans provide
generally that the Portfolio may incur distribution and service costs under
the Plans which may not exceed in the aggregate 0.75% per annum of that Port-
folio's net assets. The Board has currently limited aggregate payments under
the Plans up to 0.50% per annum of the Portfolio's net assets. Under the Plans
as implemented, Distribution Plan expenses may be no more than 0.15% and Serv-
ice Plan expenses may be no more than 0.25%. Upon implementation, the Distri-
bution Plan would permit payments to the Distributor, broker-dealers, other
financial institutions, sales representatives or other third parties who ren-
der promotional and distribution services, for items such as advertising ex-
penses, selling expenses, commissions or travel reasonably intended to result
in sales of Service Class Shares and for the printing of prospectuses sent to
prospective purchasers of Service Class Shares of the Portfolio.
Although the Plans may be amended by the Board of Trustees, any changes in
the Plans which would materially increase the amounts authorized to be paid
under the Plans must be approved by shareholders of the Class involved. The
total amounts paid under the foregoing arrangements may not exceed the maximum
limits specified above, and the amounts and purposes of expenditures under the
Plans must be reported to the 12b-1 Trustees quarterly. The amounts allowable
under the Plans for each Class of Shares of the Portfolios are also limited
under certain rules of the National Association of Securities Dealers, Inc.
In addition to payments by the Fund under the Plans, the Distributor, United
Asset Management Corporation, the parent company of UAMFSI, and of the Adviser
or any of their affiliates, may, at its own expense, compensate a Service
Agent or other person for marketing, shareholder servicing, record-keeping
and/or other services performed with respect to the Fund, the Portfolio or any
Class of Shares of the Portfolio. The person making such payments may do so
out of its revenues, its profits or any other source available to it. Such
service arrangements, when in effect, are made generally available to all
qualified service providers. The Adviser may compensate its affiliated compa-
nies for referring investors to the Portfolio.
The Distributor, the Adviser and certain of their other affiliates also par-
ticipate, at the date of this Prospectus, in an arrangement with Smith Barney
Inc. under which Smith Barney provides certain defined contribution plan mar-
keting and shareholder services and receives from such entities an amount
equal to up to
18
<PAGE>
33.3% of the portion of the investment advisory fees attributable to the in-
vested assets of Smith Barney's eligible customer accounts without regard to
any expense limitation in addition to amounts payable to all selling dealers.
The Fund also compensates Smith Barney for services it provides to certain de-
fined contribution plan shareholders that are not otherwise provided by
UAMFSI.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Service Class Shares of the Portfolio may be exchanged for Service Class
Shares of any other UAM Funds Portfolio. (See the list of Portfolios of the
UAM Funds at the end of this Prospectus.) Exchange requests should be made by
contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you are interested. Exchanges can only be made with Portfolios that
are qualified for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES BY TELEPHONE." An exchange
into another UAM Funds Portfolio is a sale of shares and may result in a gain
or loss for income tax purposes. The Fund may modify or terminate the exchange
privilege at any time.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets attributable to the class, less any liabilities attrib-
utable to the class, by the number of shares outstanding attributable to the
class. The net asset value per share of the Portfolio is determined as of the
close of the NYSE on each day that the NYSE is open for business.
Equity securities listed on a securities exchange for which market quota-
tions are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where
the security is
19
<PAGE>
primarily traded. Unlisted equity securities and listed securities not traded
on the valuation date for which market quotations are readily available are
valued neither exceeding the current ask prices nor less than the current bid
prices. Quotations of foreign securities in a foreign currency are converted
to U.S. dollar equivalents. The converted value is based upon the bid price of
the foreign currency against U.S. dollars quoted by any major bank or by a
broker.
Securities purchased with remaining maturities of 60 days or less are valued
at amortized cost when the Board of Trustees determines that amortized cost
reflects fair value.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Fund's Board of Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating total return. Total return
figures are based on historical earnings and are not intended to indicate fu-
ture performance.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of time. An average annual total return is a hypothetical rate of re-
turn that, if achieved annually, would have produced the same cumulative total
return if performance had been constant over the entire period.
Performance will be calculated separately for Institutional Class and Serv-
ice Class Shares. Dividends paid by the Portfolio with respect to Institu-
tional Class and Service Class Shares, to the extent any dividends are paid,
will be calculated in the same manner at the same time on the same day and
will be in the same amount, except that service fees, distribution charges and
any incremental transfer agency costs relating to Service Class Shares will be
borne exclusively by that class.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices, all as further
described in the Portfolio's SAI. This information may also be included in
sales literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or telephone number on the
cover of this Prospectus.
20
<PAGE>
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders in quarterly dividends. If any
net capital gains are realized, the Portfolio will normally distribute them
annually. All dividends and capital gains distributions will be automatically
reinvested in additional shares of the Portfolio unless the Fund is notified
in writing that the shareholder elects to receive distributions in cash.
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal in-
come tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends. To do this, the Portfolio must,
among other things, distribute substantially all of its ordinary income and
net capital gains on an annual current basis and maintain a portfolio of in-
vestments which satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income.
Short-term capital gains will be taxed as ordinary income. Long-term capital
gains distributions are taxed as long-term capital gains. Shareholders will be
notified annually of dividend income earned for tax purposes.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid in January of the following year.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you. Consult a tax adviser for more information regarding deduc-
tions and credits for foreign taxes.
21
<PAGE>
INVESTMENT ADVISER
The Adviser is a registered investment adviser formed in 1940. Its business
offices are located at 950 Haverford Road in Bryn Mawr, Pennsylvania. The Ad-
viser is a wholly-owned subsidiary of United Asset Management Corporation
("UAM") and provides and offers investment management and advisory services to
corporations, unions, pensions and profit-sharing plans, trusts, estates and
other institutions and investors. The Adviser currently has over $4.8 billion
in assets under management.
The Portfolio pays an annual fee in monthly installments to the Adviser for
advisory services. This fee is accrued daily and paid monthly as a percentage
of the average net assets in the Portfolio for that month. The percentage fee
on an annual basis is 0.50%.
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Adviser and its parent company may also make payments to
unaffiliated brokers who perform distribution, marketing, shareholder and
other services with respect to the Portfolio.
An Investment Committee at the Adviser is responsible for the day-to-day
management of the Portfolio.
ADMINISTRATIVE SERVICES
UAMFSI, a wholly-owned subsidiary of UAM, is responsible for performing and
overseeing administrative, fund accounting, dividend disbursing and transfer
agent services provided to the Fund and its Portfolios. UAMFSI's principal of-
fice is located at 211 Congress Street, Boston, MA 02110. UAMFSI has subcon-
tracted some of these services to Chase Global Funds Services Company
("CGFSC"), an affiliate of The Chase Manhattan Bank, by a Mutual Funds Service
Agreement dated June 30, 1997. CGFSC is located at 73 Tremont Street, Boston,
MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
Newbold's Equity Portfolio........................................... 0.04%
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
22
<PAGE>
0.11 of 1% of the next $800 million of combined UAM Funds assets;
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Fund's are allocated among the Portfolios on the basis of their rel-
ative assets and are subject to a graduated minimum fee schedule per Portfo-
lio, which starts at $2,000 per month and increases to $70,000 annually after
two years. If a separate class of shares is added to a Portfolio, its minimum
annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM with its principal office
located at 211 Congress Street, Boston, Massachusetts 02110, distributes the
shares of the Fund. Under the Fund's Distribution Agreement (the "Distribution
Agreement"), the Distributor, as agent of the Fund, agrees to use its best ef-
forts as sole distributor of the Fund's shares. The Distributor does not re-
ceive any fee or other compensation under the Distribution Agreement (except
as described under "Service and Distribution Plans" above). The Agreement con-
tinues in effect as long as it is approved at least annually by the Fund's
Board of Trustees. Those approving the Agreement include a majority of Trust-
ees who are neither parties to the Agreement nor interested persons of any
such party. This Distribution Agreement provides that the Fund will bear the
costs of the registration of its shares with the SEC and various states and
the printing of its prospectuses, SAIs and reports to shareholders.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II." On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and have no preference as to conversion, exchange, dividends, re-
tirement or other features and no pre-emptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees
23
<PAGE>
can elect 100% of the Trustees. 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 of the Fund.
Both Institutional Class and Service Class Shares represent an interest in
the same assets of a Portfolio and are identical in all respects except that
the Service Class Shares bear certain expenses related to shareholder servic-
ing, and the distribution of such shares and have exclusive voting rights with
respect to the Rule 12b-1 Distribution Plan pursuant to which the distribution
fee may be paid and with respect to matters relating to such distribution ex-
penditures. Information about the Institutional Class Shares of the Portfolios
is available upon request by contacting the UAM Funds Service Center.
Annual meetings except as required by the 1940 Act and other applicable
laws. The Fund has undertaken that its Trustees will call a meeting of share-
holders if such a meeting is requested in writing by the holders of not less
than 10% of the outstanding shares of the Fund. The Fund will assist share-
holder communications in such matters.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the address or telephone number listed on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE PORTFOLIO'S STATEMENT
OF ADDITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR ITS REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH OF-
FERING MAY NOT BE LAWFULLY MADE.
24
<PAGE>
UAM FUNDS--SERVICE CLASS SHARES
BHM&S Total Return Bond Portfolio
FPA Crescent Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Sirach Growth Portfolio
Sirach Equity Portfolio
Sirach Strategic Balanced Portfolio
Sirach Special Equity Portfolio
Sterling Partner's Balanced Portfolio
Sterling Partner's Equity Portfolio
Sterling Partner's Short-Term Fixed Income
Sterling Partners' Small Cap Value Portfolio
TJ Core Equity Portfolio
25
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Newbold's Asset Management, Inc.
950 Haverford Road
Bryn Mawr, Pennsylvania
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
TJ Core Equity
Portfolio
Institutional Service
Class Shares
July 10, 1997
P R O S P E C T U S
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses.............................................................. 1
Prospectus Summary......................................................... 3
Risk Factors............................................................... 4
Financial Highlights....................................................... 5
Investment Objective....................................................... 6
Investment Policies........................................................ 6
Other Investment Policies.................................................. 7
Investment Limitations..................................................... 12
Purchase of Shares......................................................... 13
Redemption of Shares....................................................... 16
Service and Distribution Plans............................................. 18
Shareholder Services....................................................... 20
Valuation of Shares........................................................ 20
Performance Calculations................................................... 21
Dividends, Capital Gains Distributions and Taxes........................... 21
Investment Adviser......................................................... 22
Administrative Services.................................................... 24
Distributor................................................................ 24
General Information........................................................ 25
UAM Funds -- Service Class Shares.......................................... 27
</TABLE>
<PAGE>
[LOGO OF UAM FUNDS APPEARS HERE]
UAM FUNDS SERVICE CENTER
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
1-800-638-7983
- -------------------------------------------------------------------------------
TJ CORE EQUITY PORTFOLIO
INSTITUTIONAL SERVICE CLASS SHARES
INVESTMENT ADVISER: TOM JOHNSON INVESTMENT MANAGEMENT, INC.
- -------------------------------------------------------------------------------
PROSPECTUS--JULY 10, 1997
UAM Funds Trust (the "Fund") is an open-end investment company known as a
"mutual fund." The Fund consists of multiple series (known as "Portfolios")
each of which has different investment objectives and policies. TJ Core Equity
Portfolio currently offers only one class of shares. The securities offered in
this Prospectus are Institutional Service Class Shares ("Service Class
Shares") of one diversified no-load Portfolio of the Fund managed by Tom John-
son Investment Management, Inc.
TJ CORE EQUITY PORTFOLIO. TJ Core Equity Portfolio (the "Portfolio") seeks
maximum total return consistent with reasonable risk to principal by investing
in the common stock of quality companies with lower valuations in sectors of
the economy exhibiting strong, or improving relative performance.
There can be no assurance that the Portfolio will achieve its stated objec-
tive.
Keep this Prospectus for future reference. It contains information that you
should know before you invest. A "Statement of Additional Information" ("SAI")
containing additional information about the Fund has been filed with the Secu-
rities and Exchange Commission. The SAI is dated July 10, 1997 and has been
incorporated by reference into this Prospectus. For a free copy of the SAI
contact the UAM Funds Service Center at the address or telephone number above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
FUND EXPENSES
The following table illustrates expenses and fees that a shareholder of the
Portfolio's Service Class Shares would incur. Transaction fees may be charged
if a broker-dealer or other financial intermediary deals with the Fund on your
behalf. (See "PURCHASE OF SHARES.")
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases......................................... NONE
Sales Load Imposed on Reinvested Dividends.............................. NONE
Deferred Sales Load..................................................... NONE
Redemption Fees......................................................... NONE
Exchange Fees........................................................... NONE
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Investment Advisory Fees......................................... 0.75 %
Administrative Fees.............................................. 3.16 %
12b-1 Fees (Including Shareholder Servicing Fees)................ 0.25 %
Other Expenses................................................... 2.44 %
Advisory Fees Waived and Expenses Assumed........................ (5.35)%
-----
Total Operating Expenses (After Fee Waivers and Expenses
Assumed)....................................................... 1.25 %+*
=====
</TABLE>
- -----------
+ See "SERVICE AND DISTRIBUTION PLANS." Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charges permit-
ted by rules of the National Association of Securities Dealers, Inc.
* The Adviser has voluntarily agreed to waive all or a portion of its advisory
fees and to assume operating expenses to keep the Portfolio's Service Class
Shares' total annual operating expenses (excluding interest, taxes and ex-
traordinary expenses), after the effect of expense offsets, from exceeding
1.25% of average daily net assets through January 1, 1999. The figures above
include the effect of expense offsets. If expense offsets were excluded, To-
tal Operating Expenses for the fiscal year ended April 30, 1997 would be
1.26%. (See "FINANCIAL HIGHLIGHTS.") Absent the fee waivers and assumption
of expenses by the Adviser, the total annual operating expenses of the Port-
folio's Service Class Shares would have been 6.60% of average daily net as-
sets. The Adviser will not be reimbursed by the Fund for any advisory fees
which are waived or expenses which the Adviser may bear on behalf of the
Portfolio for a given fiscal year.
The table above shows various fees and expenses an investor would bear di-
rectly or indirectly. The expenses and fees set forth above are based on the
1
<PAGE>
Portfolio's Service Class Shares' operations during the fiscal year ended
April 30, 1997, except that they have been restated to reflect the current ex-
pense cap.
The following example illustrates expenses a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. The Portfolio
charges no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Expenses..................................... $13 $40 $69 $151
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
2
<PAGE>
PROSPECTUS SUMMARY
INVESTMENT ADVISER
Tom Johnson Investment Management, Inc. (the "Adviser") is a registered in-
vestment adviser. Founded in 1983, the Adviser currently has approximately
$2.2 billion in assets under management. The Adviser is a wholly-owned subsid-
iary of United Asset Management Corporation. (See "INVESTMENT ADVISER.")
PURCHASE OF SHARES
Shares of the Portfolio are offered through UAM Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of United Asset Management Corpora-
tion to investors at net asset value without a sales commission. Share pur-
chases may be made by sending investments directly to the Fund. The minimum
initial investment is $2,500. The minimum for subsequent investments is $100.
The minimum initial investment for IRA accounts is $500. The minimum initial
investment for spousal IRA accounts is $250. Certain exceptions to the initial
or minimum investment amounts may be made by the officers of the Fund. (See
"PURCHASE OF SHARES.")
DIVIDENDS AND DISTRIBUTIONS
The Portfolio will normally distribute substantially all of its net invest-
ment income in quarterly dividends. The Portfolio will distribute any realized
net capital gains annually. Distributions will be reinvested in Portfolio
shares automatically unless an investor elects to receive cash distributions.
(See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES.")
REDEMPTIONS AND EXCHANGES
Shares of the Portfolio may be redeemed at any time, without cost, at the
net asset value of the Portfolio next determined after receipt of the redemp-
tion request. The redemption price may be more or less than the purchase
price. (See "REDEMPTION OF SHARES.")
ADMINISTRATIVE SERVICES
UAM Funds Services Inc. ("UAMFSI"), a wholly-owned subsidiary of United As-
set Management Corporation, is responsible for performing and overseeing ad-
ministration, fund accounting, dividend disbursing and transfer agency serv-
ices provided to the Fund and its Portfolios by third-party service providers.
(See "ADMINISTRATIVE SERVICES.")
3
<PAGE>
RISK FACTORS
The value of the Portfolio's shares will fluctuate in response to changes in
market and economic conditions as well as the financial conditions and pros-
pects of the issuers in which a Portfolio invests. Investors should consider
the following factors: (1) The Portfolio may invest in repurchase agreements
which entail a risk of loss should the seller default on its transaction; (2)
The Portfolio may invest a portion of its assets in derivatives including
futures contracts and options; (3) The Portfolio may invest in the securities
of foreign issuers which may be subject to additional risk factors, including
foreign currency risks, not applicable to securities of U.S. issuers; (4) The
fixed income securities held by the Portfolio will be affected by general
changes in interest rates resulting in increases or decreases in the value of
the securities. The value of fixed income securities can be expected to vary
inversely to the changes in prevailing interest rates, i.e., as interest rates
decline, the market value of fixed income securities tends to increase and
vice versa; (5) The Portfolio may invest in investment grade debt securities,
but reserves the right to hold securities that have been downgraded. Adverse
economic and corporate changes and changes in interest rates may have a
greater impact on issuers of lower rated debt securities which the Portfolio
may hold, which may lead to greater price volatility. Also, lower rated secu-
rities may be more difficult to value accurately or sell in the secondary mar-
ket; (6) The Portfolio may lend its investment securities which entails a risk
of loss should a borrower fail financially; (7) The Portfolio may purchase se-
curities on a when-issued basis which do not earn interest until issued and
may decline or appreciate in market value prior to their delivery to the Port-
folio; (8) The Portfolio's performance may depend on the ability of the Ad-
viser who has substantial experience as an investment adviser but limited ex-
perience as an adviser to a mutual fund. (See "INVESTMENT POLICIES.")
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides selected per share information for a share out-
standing throughout the periods presented of the Portfolio. This table is part
of the Portfolio's Financial Statements included in the Portfolio's 1997 An-
nual Report to Shareholders. The Report is incorporated into the Portfolio's
SAI. The Portfolio's Annual Financial Statements have been audited for the pe-
riod ended April 30, 1997 by Price Waterhouse LLP whose unqualified opinion
thereon is also incorporated into the Portfolio's SAI. Please read the follow-
ing information in conjunction with the Portfolio's 1997 Annual Report to
Shareholders.
<TABLE>
<CAPTION>
SEPTEMBER 28, 1995*
TO YEAR ENDED
APRIL 30, 1996 APRIL 30, 1997
------------------- --------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 10.00 $ 11.05
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income..................... 0.06 0.12
Net Realized and Unrealized Gain on
Investments............................. 1.05 2.08
------- -------
Total From Investment Operations........ 1.11 2.20
------- -------
DISTRIBUTIONS
Net Investment Income..................... (0.06) (0.11)
Net Realized Gain......................... -- (0.09)
Total Distributions..................... (0.06) (0.20)
------- -------
NET ASSET VALUE, END OF PERIOD.............. $ 11.05 $ 13.05
======= =======
TOTAL RETURN+............................... 11.13 % 20.14 %
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)..... $ 1,023 $ 2,888
Ratio of Expenses to Average Net Assets... 1.38 %** 1.26 %
Ratio of Net Investment Income to Average
Net Assets.............................. 1.06 %** 1.07 %
Portfolio Turnover Rate................... 17 % 27 %
Average Commission Rate................... $0.0600 $0.0600
Voluntary Waived Fees and Expenses Assumed
by the Adviser Per Share................ $ 0.74 $ 0.60
Ratio of Expenses to Average Net Assets
Including Expense Offsets............... 1.25 %** 1.25 %**
</TABLE>
- -----------
* Commencement of Operations.
** Annualized.
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser during the period.
5
<PAGE>
INVESTMENT OBJECTIVE
The Portfolio seeks maximum total return consistent with reasonable risk to
principal by investing in the common stock of quality companies with lower
valuations in sectors of the economy exhibiting strong, or improving relative
performance. The Portfolio may also invest in other equity-related securities
such as preferred stocks, convertible preferred stocks, convertible bonds, op-
tions, futures, rights and warrants. There can be no assurance that the Port-
folio will achieve its stated objective.
INVESTMENT POLICIES
In seeking its investment objective, the Portfolio will invest at least 65%
of its total assets, under normal circumstances, in equity securities, con-
sisting primarily of common stock of companies with market capitalizations
greater than $200 million at the time of purchase. Furthermore, the Portfolio
will invest so that 80% of the Portfolio's common stock holdings will be of
issuers with market capitalizations greater than $800 million. The Portfolio
may also invest in other equity-related securities such as preferred stock,
convertible preferred stock, convertible bonds, options on stock indices,
rights and warrants. The Portfolio may also invest up to 35% of its assets in
investment grade debt securities which are generally considered to be those
securities having one of the four highest grades assigned by Moody's Investors
Service, Inc. (Aaa, Aa, A or Baa) or Standard & Poor's Corporation (AAA, AA, A
or BBB) or, if unrated, of equivalent quality in the Adviser's judgment. Secu-
rities rated Baa or BBB may possess speculative characteristics and may be
more sensitive to changes in the economy and the financial condition of is-
suers than higher rated securities. The Adviser also reserves the right to re-
tain securities which are downgraded by one or both of the rating agencies, if
in the Adviser's judgment, the retention of securities is warranted. Up to 20%
of the Portfolio's assets may be invested in the securities of foreign is-
suers.
The Adviser believes that maximum total return can be achieved by investing
in the common stock of quality companies with lower valuations in sectors of
the economy exhibiting strong, or improving relative performance. Beginning
with a thorough analysis of current and anticipated economic fundamentals, ex-
amining key economic variables such as the level and direction of interest
rates, forecasted growth in the GDP, anticipated gains in corporate profits,
inflationary pressures, and money supply growth, as well as other variables,
the Adviser is able to determine the basis for asset allocation between stocks
and cash and cash equivalents.
The analysis of key economic variables also helps identify industry groups
or specific industries which should benefit as a result of anticipated eco-
nomic fundamentals. These industry groups are then analyzed in detail begin-
ning with industry screens, going onto individual company analysis, and fi-
nally specific purchase recommendations. Of particular interest to the Adviser
is the valuation being placed
6
<PAGE>
upon the company as well as the forecasted growth in earnings and dividends
over the next 1 to 5 years.
It is anticipated that cash reserves will represent a relatively small per-
centage of the Portfolio's assets. Under normal circumstances, it will be less
than 20%. However, when the Adviser believes that market conditions warrant a
defensive position, up to 100% of the Portfolio's assets may be held in cash
and short-term investments. See "SHORT-TERM INVESTMENTS and REPURCHASE AGREE-
MENTS" below for a description of the types of short-term instruments in which
the Portfolio may invest for temporary defensive purposes. When the Portfolio
is in a defensive position, it may not necessarily be pursuing its stated in-
vestment objective.
OTHER INVESTMENT POLICIES
The Portfolio may also, under normal circumstances, invest up to 35% of its
assets, unless restricted by additional limitations described below or in the
Portfolio's SAI, in the following securities, investments or investment tech-
niques:
SHORT-TERM INVESTMENTS
In order to earn a return on uninvested assets, meet anticipated redemp-
tions, or for temporary defensive purposes, the Portfolio may invest a portion
of its assets in domestic and foreign money market instruments including cer-
tificates of deposit, bankers' acceptances, time deposits, U.S. Government ob-
ligations, U.S. Government agency securities, short-term corporate debt secu-
rities, and commercial paper rated A-1 or A-2 by Standard & Poor's Corporation
or Prime-1 or Prime-2 by Moody's Investors Service, Inc. or, if unrated, de-
termined by the Adviser to be of comparable quality.
Time deposits maturing in more than seven days will not be purchased by the
Portfolio, and time deposits maturing from two business days through seven
calendar days will not exceed 10% of the total assets of the Portfolio. The
Portfolio will not invest in any security issued by a commercial bank unless
(i) the bank has total assets of at least $1 billion, or the equivalent in
other currencies, (ii) in the case of U.S. banks, it is a member of the Fed-
eral Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an invest-
ment quality comparable with other debt securities which may be purchased by
the Portfolio.
The Fund has received permission from the Securities and Exchange Commission
(the "SEC") to deposit the daily uninvested cash balances of the Fund's Port-
folios, as well as cash for investment purposes, into one or more joint ac-
counts and to invest the daily balance of the joint accounts in the following
short-term investments: fully collateralized repurchase agreements, interest-
bearing or discounted commercial paper including dollar-denominated commercial
paper of foreign issuers, and any other short-term money market instruments
including variable
7
<PAGE>
rate demand notes and tax-exempt money instruments. By entering into these in-
vestments on a joint basis, it is expected that a Portfolio may earn a higher
rate of return on investments relative to what it could earn individually.
The Fund has received permission from the SEC, for each of its Portfolios to
invest, for cash management purposes, the greater of 5% of its total assets or
$2.5 million in the Fund's DSI Money Market Portfolio. (See "INVESTMENT
COMPANIES.")
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities, certificates of deposit, and certain bankers' accept-
ances and other securities outlined above under "SHORT-TERM INVESTMENTS." In a
repurchase agreement, the Portfolio buys a security and simultaneously commits
to sell that security back at an agreed upon price plus an agreed upon market
rate of interest. Under a repurchase agreement, the seller is also required to
maintain the value of securities subject to the agreement at not less than
100% of the repurchase price. The value of the securities purchased will be
evaluated daily, and the Adviser will, if necessary, require the seller to
maintain additional securities to ensure that the value is in compliance with
the previous sentence. The use of repurchase agreements involves certain
risks. For example, a default by the seller of the agreement may cause the
Portfolio to experience a loss or delay in the liquidation of the collateral
securing the repurchase agreement. The Portfolio might also incur disposition
costs in liquidating the collateral. While the Fund's management acknowledges
these risks, it is expected that they can be controlled through stringent
counter-party selection criteria and careful monitoring procedures. The Fund
has received permission from the SEC to pool daily uninvested cash balances of
the Fund's Portfolios in order to invest in repurchase agreements on a joint
basis. By entering into joint repurchase agreements, a Portfolio may incur
lower transaction costs and earn higher rates of interest on joint repurchase
agreements. Each Portfolio's contribution would determine its return from a
joint repurchase agreement. (See "SHORT-TERM INVESTMENTS.")
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. The Portfolio will not loan securities
to the extent that greater than one-third of its assets at fair market value
would be committed to loans. During the term of a loan, the Portfolio is sub-
ject to a gain or loss depending on any increase or decrease in the market
price of the securities loaned. Lending of securities is subject to review by
the Fund's Board of Trustees. All relevant facts and circumstances, including
the creditworthiness of the broker, dealer or institution, will be considered
in making decisions about securities lending.
An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
8
<PAGE>
approved by its Board of Trustees. The Portfolio will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on a loan, the loan must be called and the securities
voted.
WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES
The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement," or "forward delivery" basis. "When-issued" or "forward delivery"
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more be-
fore delivery is due. Delayed settlement is a term used to describe settlement
of a securities transaction in the secondary market which will occur sometime
in the future. No payment or delivery is made by the Portfolio until it re-
ceives delivery or payment from the other party to any of the above transac-
tions. It is possible that the market price of the securities at the time of
delivery may be higher or lower than the purchase price. The Portfolio will
maintain a separate account of cash or liquid securities at least equal to the
value of purchase commitments until payment is made. Typically, no income ac-
crues on securities purchased on a delayed delivery basis prior to the time
delivery is made although the Portfolio may earn income on securities it has
deposited in a segregated account.
The Portfolio may engage in these types of purchases in order to buy securi-
ties that fit with its investment objectives at attractive prices -- not to
increase its investment leverage.
PORTFOLIO TURNOVER
Portfolio turnover is not anticipated to exceed 60%. In addition to Portfo-
lio trading costs, higher rates of portfolio turnover may result in the reali-
zation of capital gains. (See "DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX-
ES" for more information on taxation). The Portfolio will not normally engage
in short-term trading, but each reserves the right to do so. The table set
forth in "Financial Highlights" presents the Portfolio's historical portfolio
turnover rates.
INVESTMENT COMPANIES
The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets may be invested in the securities of any one investment company,
nor may it acquire more than 3% of the voting securities of any other invest-
ment company. The Portfolio will indirectly bear its proportionate share of
any management fees paid by an investment company in which it invests in addi-
tion to the advisory fee paid by the Portfolio.
9
<PAGE>
The Fund has received permission from the SEC to allow each of its Portfo-
lios to invest, for cash management purposes, the greater of 5% of its total
assets or $2.5 million in the Fund's DSI Money Market Portfolio provided that
the investment is consistent with the Portfolio's investment policies and re-
strictions. Based upon the Portfolio's assets invested in the DSI Money Market
Portfolio, the investing Portfolio's adviser will waive its investment advi-
sory fee and any other fees earned as a result of the Portfolio's investment
in the DSI Money Market Portfolio. The investing Portfolio will bear expenses
of the DSI Money Market Portfolio on the same basis as all of its other share-
holders.
FUTURES AND OPTIONS TRANSACTIONS
In order to remain fully invested, and to reduce transaction costs, the
Portfolio may utilize appropriate futures contracts and options to a limited
extent. These instruments are commonly referred to as "derivatives." Because
transaction costs associated with futures and options may be lower than the
costs of investing in securities directly, it is expected that the use of in-
dex futures and options to facilitate cash flows may reduce the Portfolio's
overall transaction costs. The Portfolio will enter into futures contracts and
options for bona fide hedging purposes only and for other purposes so long as
aggregate initial margins and premiums required in connection with non-hedging
positions do not exceed 5% of the Portfolio's total assets.
Futures and options can be volatile and involve various degrees and types of
risk. If the Portfolio judges market conditions incorrectly or employs a
strategy that does not correlate well with its investments, use of futures and
options contracts could result in a loss. The Portfolio could also suffer
losses if it is unable to liquidate its position due to an illiquid secondary
market. In the opinion of the Trustees, the risk that the Portfolio will be
unable to close out a futures position or options contract will be minimized
by only entering into futures contracts or options transactions traded on na-
tional exchanges and for which there appears to be a liquid secondary market.
For additional information regarding futures contracts and options, please see
the SAI.
FOREIGN INVESTMENTS
The Portfolio may invest up to 20% of its assets in foreign securities which
involve additional risks not typically associated with investing in domestic
securities. Since the securities issued by foreign entities may be denominated
in foreign currencies, and the Portfolio may temporarily hold uninvested re-
serves in bank deposits in foreign currencies, the Portfolio's value may rise
or fall depending on currency exchange rates. The Portfolio may also have to
pay a fee to convert funds from one currency to another.
Non-U.S.-based companies are not subject to the same accounting, auditing
and financial reporting standards as are domestic companies and may have poli-
cies
10
<PAGE>
that are not comparable to those of domestic companies. There may be less pub-
licly-available information about non-U.S.-based companies which may make it
difficult to make investment decisions. Securities of some foreign companies
are generally less liquid and more volatile than securities of comparable do-
mestic companies. There is generally less government supervision and regula-
tion of stock exchanges, brokers and listed companies than in the U.S. Politi-
cal factors may have an impact in the form of confiscatory taxation, expropri-
ation or political instability in international markets.
Although the Portfolio will seek the most favorable trading costs available
in any given market, investors should recognize that foreign commissions are
generally higher than those in the U.S. In addition, custodial expenses, that
is, fees paid to financial institutions for holding the Portfolio's securi-
ties, will generally be higher than would be the case in the U.S.
Some foreign governments also levy withholding taxes against dividend and
interest income. Although in some countries a portion of the taxes is recover-
able, the non-recovered portion of foreign withholding taxes will reduce the
income the Portfolio receives from the companies comprising its investments.
For additional information regarding foreign securities, please see the SAI.
RESTRICTED AND ILLIQUID SECURITIES
The Portfolio may purchase restricted securities that are not registered for
sale to the general public but which are eligible for resale to qualified in-
stitutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Trustees, the Adviser determines the li-
quidity of such investments. Provided that a dealer or institutional trading
market in such securities exists, these restricted securities are not treated
as illiquid securities for purposes of the Portfolio's investment limitations.
The Portfolio may invest up to 15% of its net assets in illiquid securities.
The prices realized from the sales of these securities could be less than
those originally paid by the Portfolio or less than what may be considered the
fair value of such securities.
AMERICAN DEPOSITARY RECEIPTS
The Portfolio intends to invest primarily in U.S.-based companies. In addi-
tion, the Portfolio may purchase shares of foreign-based companies in the form
of American Depositary Receipts (ADRs). Investments in ADRs, which are domes-
tic securities representing ownership rights in foreign companies, will not
exceed 25% of the Portfolio's assets. ADRs may be sponsored or unsponsored.
Sponsored ADRs are established jointly by a depositary and the underlying is-
suer, whereas unsponsored ADRs may be established without participation by the
underlying issuer. Holders of an unsponsored ADR generally bear all the costs
associated with establishing the unsponsored ADR. The depositary of an
unsponsored ADR is under no obligation to distribute shareholder communica-
tions received from the
11
<PAGE>
underlying issuer or to pass through voting rights to the holders of the
unsponsored ADR with respect to the deposited securities or pool of securi-
ties.
INVESTMENT LIMITATIONS
The Portfolio will not:
(a) with respect to 75% of its assets, invest more than 5% of its total
assets at the time of purchase in the securities of any single issuer
(other than investments issued or guaranteed by the U.S. Government or
any of its agencies or instrumentalities);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding voting securities of any one issuer;
(c) invest more than 5% of its assets at the time of purchase in the secu-
rities of companies that have (with predecessors) a continuous operat-
ing history of less than 3 years;
(d) invest more than 25% of its assets in companies within a single indus-
try; however, there are no limitations on investments made in instru-
ments issued or guaranteed by the U.S. Government and its agencies.
(e) make loans except by purchasing debt securities in accordance with its
investment objective and policies or entering into repurchase agree-
ments or by lending its portfolio securities to banks, brokers, deal-
ers and other financial institutions so long as the loans are made in
compliance with the 1940 Act, as amended, or the Rules and Regulations
or interpretations of the SEC;
(f) (i) borrow, except from banks and as a temporary measure for extraor-
dinary or emergency purposes and then, in no event, in excess of 33
1/3% of the Portfolio's gross assets valued at the lower of market or
cost, and (ii) the Portfolio may not purchase additional securities
when borrowings exceed 5% of total assets; or
(g) pledge, mortgage or hypothecate any of its assets to an extent greater
than 33 1/3% of its total assets at fair market value.
The Portfolio's investment objective and investment limitations (a), (b),
(d), (e) and (f)(i) listed above are fundamental policies and may be changed
only with the approval of the holders of a majority of the outstanding voting
securities of the Portfolio. The other investment limitations described here,
those not specified as fundamental in the SAI, and the Portfolio's investment
policies are not fundamental, and the Fund's Board of Trustees may change them
without shareholder approval.
12
<PAGE>
PURCHASE OF SHARES
Shares of each Portfolio and Class are offered through UAM Fund Distribu-
tors, Inc. (the "Distributor") without a sales commission, at the net asset
value per share next determined after an order is received by the Fund and
payment is received by the custodian. The required minimum initial investment
for the Portfolio is $2,500. The initial investment minimum for IRA accounts
is $500. The minimum for spousal IRA accounts is $250. Certain exceptions may
be determined by the officers of the Fund.
The Portfolio issues Institutional Service Class Shares, which bear share-
holder servicing expenses and distribution plan expenses, and have exclusive
voting rights with respect to the Rule 12b-1 Distribution Plan pursuant to
which the distribution fee may be paid. The net income attributable to Service
Class Shares and the dividends payable on Service Class Shares will be reduced
by the amount of the shareholder servicing and distribution fees; accordingly,
the net asset value of the Service Class Shares will be reduced by such
amounts.
Some Service Agents may also impose additional or different conditions or
other account fees on the purchase and redemption of Portfolio shares, which
are not subject to the Rule 12b-1 Service and Distribution Plans. Amounts paid
to Service Agents may include transaction fees and/or service fees paid by the
Fund from the Fund assets attributable to the Service Agent and, would not be
imposed if shares of the Portfolio were purchased directly from the Fund or
the Distributor. The Service Agents may provide shareholder services to their
customers that are not available to a shareholder dealing directly with the
Fund. Each Service Agent is responsible for transmitting to its customers a
schedule of any such fees and information regarding any different purchase and
redemption conditions. Shareholders who are customers of Service Agents should
consult their Service Agent for information regarding these fees and condi-
tions. A salesperson and any other person entitled to receive compensation for
selling or servicing Portfolio shares may receive different compensation with
respect to one particular class of shares over another in the Fund.
Service Agents may enter confirmed purchase orders on behalf of their cus-
tomers. If shares of a Portfolio are purchased in this manner, the Service
Agent must receive your investment order before the close of trading on the
New York Stock Exchange ("NYSE"), and transmit it to the Fund's Sub-Transfer
Agent prior to 4 p.m. to receive that day's share price. Proper payment for
the order must be received by the Sub-Transfer Agent no later than the time
when the Portfolio is priced on the following business day. Service Agents are
responsible to their customers and the Fund for timely transmission of all
subscription and redemption requests, investment information, documentation
and money.
13
<PAGE>
INITIAL INVESTMENT
BY MAIL
. Complete and sign an Application and mail it together with a check pay-
able to UAM Funds to:
UAM Funds Trust
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Payment for purchases of shares received by mail will be credited to an ac-
count at the next share price calculated for the Portfolio after receipt. Pay-
ment does not need to be converted into Federal Funds (monies credited to the
Fund's Custodian Bank by a Federal Reserve Bank) before the Fund will accept
it for investment.
BY WIRE
. Telephone the UAM Funds Service Center and provide the account name, ad-
dress, telephone number, social security or taxpayer identification num-
ber, Portfolio selected, amount being wired and the name of the bank
wiring the funds. An account number will then be provided to you. Next.
. Instruct the bank to wire a specified amount to the Fund's custodian:
The Chase Manhattan Bank
ABA #021000021
UAM Funds
Credit DDA #9102772952
Ref: Portfolio Name
------------
Your Account Number
------------
Your Account Name
-------------
Wire Control Number
------------
. Forward a completed Application to the Fund at the address shown on the
form. Federal Funds purchases will be accepted only on a day on which
both the NYSE and the Custodian Bank are open for business.
ADDITIONAL INVESTMENTS
Additional investments can be made at any time. The minimum additional in-
vestment is $100. Shares can be purchased at net asset value by mailing a
check made payable to "UAM Funds" to the above address or by wiring money to
the Custodian Bank using the instructions outlined above. When making addi-
tional investments, be sure that the account number, account name and the
Portfolio to be purchased are identified on the check or wire. Prior to wiring
additional investments, notify the UAM Funds Service Center by calling the
number on the cover
14
<PAGE>
of this Prospectus. Mail orders should include, when possible, the "Invest by
Mail" stub which accompanies any Fund confirmation statement.
Prior to wiring additional investments, notify the Fund by calling the num-
ber on the cover of this prospectus. Mail orders should include, when possi-
ble, the "Invest by Mail" stub which accompanies any Fund confirmation state-
ment.
OTHER PURCHASE INFORMATION
Investments received by 4 p.m. ET (the close of the NYSE) will be invested
at the share price calculated after the NYSE closes on that day. Investments
received after the close of the NYSE will be executed at the price computed on
the next day the NYSE is open. The Fund reserves the right, in its sole dis-
cretion, to suspend the offering of shares or reject purchase orders of the
Portfolio when, in the judgment of management, such suspension or rejection is
in the best interests of the Fund.
Purchases of shares will be made in full and fractional shares calculated to
three decimal places. Certificates for whole shares will not be issued except
at the written request of the shareholder. Certificates for fractional shares
will not be issued.
IN-KIND PURCHASES
If accepted by the Fund, shares of the Portfolio may be purchased in ex-
change for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as described under "VALUATION OF SHARES" at the next
determination of net asset value after acceptance. Shares issued by a Portfo-
lio in exchange for securities will be issued at net asset value determined as
of the same time. All dividends, interest, subscription, or other rights per-
taining to such securities shall become the property of the Portfolio and must
be delivered to the Fund by the investor upon receipt from the issuer. Securi-
ties acquired through an in-kind purchase will be acquired for investment and
not for immediate resale.
The Fund will not accept securities in exchange for shares of the Portfolio
unless:
. at the time of exchange, such securities are eligible to be in-
cluded in the Portfolio (current market quotations must be readily
available for such securities);
. the investor represents and agrees that all securities offered to
be exchanged are liquid securities and not subject to any restric-
tions upon their sale by the Portfolio under the Securities Act of
1933, or otherwise; and
. the value of any such securities (except U.S. Government securi-
ties) being exchanged together with other securities of the same
issuer owned by the Portfolio will not exceed 5% of the net assets
of the Portfolio immediately after the transaction.
15
<PAGE>
Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of secu-
rities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.
REDEMPTION OF SHARES
Shares of each Portfolio may be redeemed by mail or telephone at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. No charge is made for redemptions. Any re-
demption may be more or less than the purchase price of the shares depending
on the market value of investment securities held by the Portfolio.
BY MAIL
Address requests for redemption to the UAM Funds Service Center. Requests to
redeem shares must include:
. share certificates, if issued;
. a letter of instruction or an assignment specifying the number of
shares or dollar amount to be redeemed, signed by all registered
owners of the shares in the exact names in which they are regis-
tered;
. any required signature guarantees (see "SIGNATURE GUARANTEES"); and
. any other necessary legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pen-
sion and profit sharing plans and other organizations.
BY TELEPHONE
A redemption request by telephone requires the following:
. establish the telephone redemption privilege (and if desired, the
wire redemption privilege) by completing appropriate sections of
the Application; and
. call the Fund and instruct that the redemption proceeds be mailed
to you or wired to your bank.
The following tasks cannot be accomplished by telephone:
. changing the name of the commercial bank or the account designated
to receive redemption proceeds (this can be accomplished only by a
written request signed by each shareholder, with each signature
guaranteed);
. redemption of certificated shares by telephone.
16
<PAGE>
The Fund and its Sub-Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may
be liable for any losses if they fail to do so. These procedures include re-
quiring the investor to provide certain personal identification at the time an
account is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded
and investors may be required to provide additional telecopied written in-
structions of such transaction requests. The Fund or Sub-Transfer Agent may be
liable for any losses due to unauthorized or fraudulent telephone instructions
if the Fund or the Sub-Transfer Agent does not employ the procedures described
above. Neither the Fund nor the Sub-Transfer Agent will be responsible for any
loss, liability, cost or expense for following instructions received by tele-
phone that it reasonably believes to be genuine.
SIGNATURE GUARANTEES
Signature guarantees are required for the following redemptions:
. redemptions where the proceeds are to be sent to someone other than
the registered shareholder(s);
. redemptions where the proceeds are to be sent to an address which
is not the registered address; or
. share transfer requests.
Signature guarantees will be accepted from any eligible guarantor institu-
tion which participates in a signature guarantee program. Eligible signature
guarantors include most banks, as well as most brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. Broker-dealers guaranteeing signa-
tures must be a member of a clearing corporation or maintain net capital of at
least $100,000. Credit unions must be authorized to issue signature guaran-
tees. A notary public can not provide a signature guarantee.
OTHER REDEMPTION INFORMATION
Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after the
receipt of the request, or earlier if required under applicable law. The Fund
may suspend the right of redemption or postpone the date at times when both
the NYSE and Custodian Bank are closed, or under any emergency circumstances
determined by the SEC.
If the Fund's Board of Trustees determines that it would be detrimental to
the best interests of the remaining shareholders of the Fund to make payments
wholly or partly in cash, the Fund may pay the redemption proceeds in whole or
in part by a distribution in-kind of liquid securities held by the Portfolio
instead of cash in conformity with applicable rules of the SEC. Investors may
incur brokerage charges when they sell portfolio securities received in pay-
ment of redemptions.
17
<PAGE>
SERVICE AND DISTRIBUTION PLANS
Under the Service Plan for Service Class Shares, adopted pursuant to Rule
12b-1 under the 1940 Act, the Fund may enter into service agreements with
Service Agents (broker-dealers or other financial institutions) who receive
fees with respect to the Fund's Service Class Shares owned by shareholders for
whom the Service Agent is the dealer or holder of record, or for whom the
Service Agent performs Servicing, as defined below. These fees are paid out of
the assets allocable to Service Class Shares to the Distributor or to the
Service Agents directly or through the Distributor. The Fund reimburses the
Distributor or the Service Agent for payments made at an annual rate of up to
0.25% of the average daily value of Service Class Shares owned by clients of
the Service Agent during the period payments for Servicing are being made to
it. Such payments are borne exclusively by the Service Class Shares. Each item
for which a payment may be made under the Service Plan constitutes personal
service and/or shareholder account maintenance and may constitute an expense
of distributing Fund shares as the SEC construes such term under Rule 12b-1.
The fees payable for Servicing reflect actual expenses incurred up to the
limit described herein.
Servicing may include assisting clients in changing dividend options, ac-
count designations and addresses; performing subaccounting; establishing and
maintaining shareholder accounts and records; processing purchase and redemp-
tion transactions; investing client cash account balances automatically in
Service Class Shares; providing periodic statements showing a client's account
balance and integrating such statements with those of other transactions and
balances in the client's other accounts serviced by the Service Agent; arrang-
ing for bank wires; and such other services as the Fund may request, to the
extent the Service Agent is permitted by applicable statute, rule or regula-
tion.
The Glass-Steagall Act and other applicable laws prohibit federally chart-
ered or supervised banks from engaging in certain aspects of the business of
issuing, underwriting, selling and/or distributing securities. Accordingly,
banks are engaged to act as Service Agent only to perform administrative and
shareholder servicing functions, including transaction-related agency services
for their customers. If a bank is prohibited from acting as a service agent,
alternative means for continuing the servicing of its shareholders would be
sought and the shareholder clients of the bank will remain Fund shareholders.
The Distributor promotes the distribution of the Service Class Shares in ac-
cordance with the terms of a Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act. The Distribution Plan provides for the use of Fund assets
allocable to Service Class Shares to pay expenses of distributing such shares.
The Distribution Plan and Service Plan (the "Plans") were approved by the
Board, including a majority of the Trustees who are not "interested persons"
of
18
<PAGE>
the Fund as defined in the 1940 Act (and each of whom has no direct or indi-
rect financial interest in the Plans or any agreement related thereto, re-
ferred to herein as the "12b-1 Trustees"). The Plans may be terminated at any
time by the vote of the Board or the 12b-1 Trustees, or by the vote of a ma-
jority of the outstanding Service Class Shares of the Portfolio involved.
While the Plans continue in effect, the selection of the 12b-1 Trustees is
committed to the discretion of such persons then in office. The Plans provide
generally that a Portfolio may incur distribution and service costs under the
Plans which may not exceed in the aggregate 0.75% per annum of that Portfo-
lio's net assets. The Board has currently limited aggregate payments under the
Plans up to 0.50% per annum of the Portfolio's net assets. The Service Class
Shares offered by this Prospectus currently are not making payments under the
Distribution Plan. Upon implementation, the Distribution Plan would permit
payments to the Distributor, broker-dealers, other financial institutions,
sales representatives or other third parties who render promotional and dis-
tribution services, for items such as advertising expenses, selling expenses,
commissions or travel reasonably intended to result in sales of Service Class
Shares and for the printing of prospectuses sent to prospective purchasers of
Service Class Shares of the Portfolio.
Although the Plans may be amended by the Board of Trustees, any changes in
the Plans which would materially increase the amounts authorized to be paid
under the Plans must be approved by shareholders of the Class involved. The
total amounts paid under the foregoing arrangements may not exceed the maximum
limits specified above, and the amounts and purposes of expenditures under the
Plans must be reported to the 12b-1 Trustees quarterly. The amounts allowable
under the Plans for each Class of Shares of the Portfolios are also limited
under certain rules of the National Association of Securities Dealers, Inc.
In addition to payments by the Fund under the Plans, the Distributor, United
Asset Management Corporation, the parent company of UAMFSI, and of the Adviser
or any of their affiliates, may, at its own expense, compensate a Service
Agent or other person for marketing, shareholder servicing, record-keeping
and/or other services performed with respect to the Fund, the Portfolio or any
Class of Shares of the Portfolio. The person making such payments may do so
out of its revenues, its profits or any other source available to it. Such
service arrangements, when in effect, are made generally available to all
qualified service providers. The Adviser may compensate its affiliated compa-
nies for referring investors to the Portfolio.
The Distributor, the Adviser and certain of their other affiliates also par-
ticipate, at the date of this Prospectus, in an arrangement with Smith Barney
Inc. under which Smith Barney provides certain defined contribution plan mar-
keting and shareholder services and receives from such entities an amount
equal to up to 33.3% of the portion of the investment advisory fees attribut-
able to the invested assets of Smith Barney's eligible customer accounts with-
out regard to any expense
19
<PAGE>
limitation in addition to amounts payable to all selling dealers. The Fund
also compensates Smith Barney for services it provides to certain defined con-
tribution plan shareholders that are not otherwise provided by UAMFSI.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Service Class Shares of the Portfolio may be exchanged for Service Class
Shares of any other UAM Funds Portfolio. (See the list of Portfolios of the
UAM Funds at the end of this Prospectus.) Exchange requests should be made by
contacting the UAM Funds Service Center.
Any exchange will be based on the net asset value of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Call
the UAM Funds Service Center for a copy of the Prospectus for the Portfolio(s)
in which you are interested. Exchanges can only be made with Portfolios that
are qualified for sale in a shareholder's state of residence.
Exchange requests may be made either by mail or telephone. Telephone ex-
changes will be accepted only if the certificates for the shares to be ex-
changed have not been issued to the shareholder and if the registration of the
two accounts will be identical. Requests for exchanges received prior to 4
p.m. (ET) will be processed as of the close of business on the same day. Re-
quests received after 4 p.m. will be processed on the next business day. The
Board of Trustees may limit the frequency and amount of exchanges permitted.
For additional information regarding responsibility for the authenticity of
telephoned instructions, see "REDEMPTION OF SHARES BY TELEPHONE." An exchange
into another UAM Funds Portfolio is a sale of shares and may result in a gain
or loss for income tax purposes. The Fund may modify or terminate the exchange
privilege at any time.
VALUATION OF SHARES
The net asset value of the Portfolio is determined by dividing the value of
the Portfolio's assets, less any liabilities, by the number of shares out-
standing. The net asset value per share of the Portfolio is determined as of
the close of the NYSE on each day that the NYSE is open for business.
Equity securities listed on a securities exchange for which market quota-
tions are readily available are valued at the last quoted sale price of the
day. Price information on listed securities is taken from the exchange where
the security is primarily traded. Unlisted equity securities and listed secu-
rities not traded on the valuation date for which market quotations are read-
ily available are valued neither exceeding the current ask prices nor less
than the current bid prices. Quotations
20
<PAGE>
of foreign securities in a foreign currency are converted to U.S. dollar
equivalents. The converted value is based upon the bid price of the foreign
currency against U.S. dollars quoted by any major bank or by a broker.
Securities purchased with remaining maturities of 60 days or less are valued
at amortized cost when the Board of Trustees determines that amortized cost
reflects fair value.
The value of other assets and securities for which no quotations are readily
available (including restricted securities) is determined in good faith at
fair value using methods determined by the Fund's Board of Trustees.
PERFORMANCE CALCULATIONS
The Portfolio measures performance by calculating total return. Total return
figures are based on historical earnings and are not intended to indicate fu-
ture performance.
Total return is the change in value of an investment in the Portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A cu-
mulative or aggregate total return reflects actual performance over a stated
period of time. An average annual total return is a hypothetical rate of re-
turn that, if achieved annually, would have produced the same cumulative total
return if performance had been constant over the entire period.
The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported
in financial and industry publications, and various indices as further de-
scribed in the Portfolio's SAI. This information may also be included in sales
literature and advertising.
The Portfolio's Annual Report to Shareholders for the most recent fiscal
year end contains additional performance information that includes comparisons
with appropriate indices. The Annual Report is available without charge. Con-
tact the UAM Funds Service Center at the address or telephone number on the
cover of this Prospectus.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS
The Portfolio will normally distribute substantially all of its net invest-
ment income (for tax purposes) to shareholders in quarterly dividends. If any
net capital gains are realized, each Portfolio will normally distribute them
annually. All dividends and capital gains distributions will be automatically
reinvested in additional shares of the Portfolio unless the Fund is notified
in writing that the shareholder elects to receive distributions in cash.
21
<PAGE>
FEDERAL TAXES
The Portfolio intends to qualify as a "regulated investment company" under
subchapter M of the Internal Revenue Code of 1986, as amended, for federal in-
come tax purposes and to meet all other requirements that are necessary for it
(but not its shareholders) to be exempt from federal taxes on income and gains
paid to shareholders in the form of dividends. To do this, the Portfolio must,
among other things, distribute substantially all of its ordinary income and
net capital gains on an annual basis and maintain a portfolio of investments
which satisfies certain diversification criteria.
Dividends paid by the Portfolio from net investment income, whether in cash
or reinvested in shares, are taxable to shareholders as ordinary income.
Short-term capital gains will be taxed as ordinary income. Long-term capital
gains distributions are taxed as long-term capital gains. Shareholders will be
notified annually of dividend income earned for tax purposes.
Dividends declared in October, November and December to shareholders of rec-
ord in such a month will be treated as if they had been paid by the Fund and
received by the shareholders on December 31 of the same calendar year, pro-
vided that the dividends are paid in January of the following year.
The Fund is required by Federal law to withhold 31% of reportable payments
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify that your Social Security
or Taxpayer Identification Number you have provided is correct and that either
you are not currently subject to backup withholding or you are exempt from
backup withholding. This certification must be made on the Application or on a
separate form supplied by the Fund.
Dividends and interest received by the Portfolio may give rise to withhold-
ing and other taxes imposed by foreign countries. These taxes reduce the Port-
folio's dividends but are included in the taxable income reported on your tax
statement if the Portfolio qualifies for this tax treatment and elects to pass
it through to you. Consult a tax adviser for more information regarding deduc-
tions and credits for foreign taxes.
INVESTMENT ADVISER
The Adviser is a registered investment adviser formed in 1983 with business
offices located at Two Leadership Square, 211 North Robinson, Suite 450, Okla-
homa City, Oklahoma. It is a wholly-owned subsidiary of United Asset Manage-
ment Corporation ("UAM") and provides and offers investment management and ad-
visory services to corporations, unions, pensions and profit-sharing plans,
trusts, estates and other institutions and investors. The Adviser currently
has approximately $2.2 billion in assets under management.
22
<PAGE>
The Portfolio pays an annual fee in monthly installments to the Adviser for
advisory services. This fee is calculated every month as a percentage of the
average net assets in the Portfolio for that month. The percentage fee on an
annual basis is 0.75%.
Although the advisory fee rate payable by the Portfolio is higher than the
rate payable by most mutual funds, the Fund believes it is comparable to the
rates paid by many other funds with similar investment objectives and policies
and is appropriate for the Portfolio in light of its investment objective.
The Adviser may compensate its affiliated companies for referring investors
to the Portfolio. The Adviser and its parent company may also make payments to
unaffiliated brokers who perform distribution, marketing, shareholder and
other services with respect to the Portfolio.
The investment professionals at the Adviser who are responsible for the day-
to-day management of the Portfolio and their qualifications are as follows:
THOMAS E. JOHNSON, CFA, PRESIDENT, SENIOR PORTFOLIO MANAGER -- Texas Tech
University, B.B.A., 1963; Texas Tech University, M.B.A., 1964; President and
Senior Portfolio Manager, Tom Johnson Investment Management, Inc., 1983-Pres-
ent.
JERRY WISE, CFA, CPA, EXECUTIVE VICE PRESIDENT, SENIOR PORTFOLIO MANAGER --
Oklahoma University, B.B.A., 1978; Oklahoma University, M.B.A., 1984; Execu-
tive Vice President and Senior Portfolio Manager, Tom Johnson Investment Man-
agement, Inc., 1986-Present.
RICHARD PARRY, CFA, VICE PRESIDENT, SENIOR PORTFOLIO MANAGER -- University
of Colorado, B.S., 1979; Oklahoma City University, M.B.A., 1983; Vice Presi-
dent and Senior Portfolio Manager, Tom Johnson Investment Management, Inc.,
1989-Present.
THOMAS GILES, CFA, PORTFOLIO MANAGER -- University of Texas, B.B.A., 1979;
University of Texas, M.B.A., 1982; Portfolio Manager, Tom Johnson Investment
Management, Inc., 1989-Present.
JAMES MCGLYNN, CFA, PORTFOLIO MANAGER -- University of Texas at Austin,
B.B.A., 1980; Portfolio Manager, Tom Johnson Investment Management, Inc.,
1991-Present.
JOHN SHEPLEY, CFA, PORTFOLIO MANAGER -- Midwestern State University, B.B.A.,
1982; Oklahoma City University, M.B.A., 1994; Portfolio Manager, Tom Johnson
Investment Management, Inc., 1990-Present.
DOUGLAS A. HAWS, TRADER -- University of Oklahoma, B.B.A., 1993; Internal
Auditor, Union Pacific Corporation, May, 1993-October, 1994; Trader, Tom John-
son Investment Management, Inc., October, 1994-Present.
23
<PAGE>
ADMINISTRATIVE SERVICES
UAM Fund Services, Inc. ("UAMFSI"), a wholly-owned subsidiary of UAM is re-
sponsible for performing and overseeing administrative, fund accounting, divi-
dend disbursing and transfer agent services provided to the Fund and its Port-
folios. UAMFSI's principal office is located at 211 Congress Street, Boston,
MA 02110. UAMFSI has subcontracted some of these services to Chase Global
Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan Bank, by
a Mutual Funds Service Agreement dated June 30, 1997. CGFSC is located at 73
Tremont Street, Boston, MA 02108.
Each Portfolio pays UAMFSI a two part monthly fee: a Portfolio-specific fee
which is retained by UAMFSI and a sub-administration fee which UAMFSI in turn
pays to CGFSC. The following Portfolio-specific fees are calculated from the
aggregate net assets of the Portfolio:
<TABLE>
<CAPTION>
RATE
----
<S> <C>
TJ Core Equity Portfolio............................................... 0.04%
</TABLE>
CGFSC's monthly fee for its services is calculated on an annualized basis as
follows:
0.19 of 1% of the first $200 million of combined UAM Funds assets;
0.11 of 1% of the next $800 million of combined UAM Funds assets;
0.07 of 1% of combined UAM Funds assets in excess of $1 billion but less
than $3 billion;
0.05 of 1% of combined UAM Funds assets in excess of $3 billion.
The UAM Funds' fees are allocated among the Portfolios on the basis of their
relative assets and are subject to a graduated minimum fee schedule per Port-
folio, which starts at $2,000 per month and increases to $70,000 annually af-
ter two years. If a separate class of shares is added to a Portfolio, its min-
imum annual fee increases by $20,000.
DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of UAM with its principal office
located at 211 Congress Street, Boston, Massachusetts 02110, distributes the
shares of the Fund. Under the Fund's Distribution Agreement (the "Agreement"),
the Distributor, as agent of the Fund, agrees to use its best efforts as sole
distributor of the Fund's shares. The Distributor does not receive any fee or
other compensation under the Agreement (except as described under "Service and
Distribution Plans" above). The Agreement continues in effect as long as it is
approved at least annually by the Fund's Board of Trustees. Those approving
the Agreement include a majority of Trustees who are neither parties to the
Agreement nor interested persons of any such party. The Agreement provides
that the Fund will bear the costs of the registration of its shares with the
SEC and various states and the printing of its prospectuses, SAIs and reports
to shareholders.
24
<PAGE>
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized as a Delaware business trust on May 18, 1994 under
the name "The Regis Fund II." On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial inter-
est, without par value. The Trustees have the power to designate one or more
series ("Portfolios") or classes of shares of beneficial interest without fur-
ther action by shareholders.
At its discretion, the Board of Trustees may create additional Portfolios
and classes of shares. The shares of each Portfolio are fully paid and nonas-
sessable, and have no preference as to conversion, exchange, dividends, re-
tirement or other features and no pre-emptive rights. They have noncumulative
voting rights, which means that holders of more than 50% of shares voting for
the election of Trustees can elect 100% of the Trustees. A shareholder is en-
titled 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 of the
Fund.
As of June 16, 1997, Fleet National Bank, Trustee, Laidlaw Allied Industries
401K held of record 28.2% of the outstanding shares of the Portfolio's Insti-
tutional Service Class, for which beneficial ownership is disclaimed or pre-
sumed disclaimed. The persons or organizations owning 25% or more of the out-
standing shares of a Portfolio may be presumed to "control" (as that term is
defined in the 1940 Act) such Portfolio. As a result, those persons or organi-
zations could have the ability to vote a majority of the shares of the Portfo-
lio on any matter requiring the approval of shareholders of such Portfolio.
Both Institutional Class and Service Class Shares represent an interest in
the same assets of a Portfolio. Service Class Shares bear certain expenses re-
lated to shareholder servicing and may bear expenses related to distribution.
Service Class Shares have exclusive voting rights with respect to matters re-
lating to such distribution expenditures. Information about Institutional
Class Shares of the Fund is available upon request by contacting the UAM Funds
Service Center. Currently, the Portfolio offers only the Service Class Shares.
Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the hold-
ers of not less than 10% of the outstanding shares of the Fund. The Fund will
assist shareholder communications in such matters.
CUSTODIAN
The Chase Manhattan Bank serves as custodian of the Fund's assets.
25
<PAGE>
ACCOUNTANTS
Price Waterhouse LLP is the independent accountant for the Fund.
REPORTS
Investors will receive unaudited semi-annual financial statements and annual
financial statements audited by Price Waterhouse LLP.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be made by contacting the UAM Funds Service Center
at the address or phone number listed on the cover of this Prospectus.
LITIGATION
The Fund is not involved in any litigation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE PORTFOLIO'S STATEMENT
OF ADDITIONAL INFORMATION, IN CONNECTION WITH THE OFFERING MADE BY THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR ITS REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH OF-
FERING MAY NOT BE LAWFULLY MADE.
26
<PAGE>
UAM FUNDS -- SERVICE CLASS SHARES
BHM&S Total Return Bond Portfolio
FPA Crescent Portfolio
MJI International Equity Portfolio
Newbold's Equity Portfolio
NWQ Balanced Portfolio
NWQ Value Equity Portfolio
Sirach Growth Portfolio
Sirach Special Equity Portfolio
Sirach Strategic Balanced Portfolio
Sirach Equity Portfolio
Sterling Partners' Balanced Portfolio
Sterling Partners' Equity Portfolio
Sterling Partners' Short-Term Fixed Income Portfolio
Sterling Partners' Small Cap Value Portfolio
TJ Core Equity Portfolio
27
<PAGE>
UAM Funds Service Center
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
1-800-638-7983
Investment Adviser
Tom Johnson Investment Management, Inc.
Two Leadership Square, 211 North Robinson,
Suite 450,
Oklahoma City, OK 73102
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
PROSPECTUS
July 10, 1997
<PAGE>
APPLICATION INSTITUTIONAL CLASS SHARES
UAM FUNDS
REGULAR MAIL: UAM Funds EXPRESS MAIL: UAM Funds
P.O. Box 2798 73 Tremont Street, 9th Floor
Boston, MA 02208-2798 Boston, MA 02108-3913
FOR HELP WITH THIS APPLICATION, OR FOR MORE INFORMATION, CALL US TOLL
FREE: 1-800-638-7983.
Distributed by UAM Fund Distributors, Inc.
BEFORE YOU COMPLETE THE APPLICATION, PLEASE BE SURE TO READ THE INSTRUCTIONS
- ----------------------------------------------------------------------------
ON THE REVERSE SIDE.
- --------------------
- --------------------------------------------------------------------------------
1 ACCOUNT REGISTRATION (Check one box.)
- --------------------------------------------------------------------------------
[_] Individual or Joint Account
---------------------------------------------------------------------------
Owner's Name: First, Initial, Last
- -
-------------------------------------
Owner's Social Security Number
---------------------------------------------------------------------------
Joint Owner's Name: First, Initial, Last
- -
-------------------------------------
Joint Owner's Social Security Number
Joint accounts will be registered joint tenants with right of survivorship
unless otherwise indicated.
[_] Trust [_] Exempt [_] Non-Exempt [_] Qualified Plan
---------------------------------------------------------------------------
Trustee(s)' Name
---------------------------------------------------------------------------
Name of Trust Agreement
---------------------------------------------------------------------------
Beneficiary's Name
-
--------------------- --------------------------------------------------
Taxpayer's ID Date of Trust Agreement
[_] Corporation, Partnership or Other Entity
Type: [_] Corp. [_] Partnership [_] Other
---------------------------------------------------------------------------
Name of Corp. or Other Entity
- [_] Exempt [_] Non-Exempt
------------------
Taxpayer ID Number
A Corporate Resolution Form is required.
- --------------------------------------------------------------------------------
2 ADDRESS
- --------------------------------------------------------------------------------
---------------------------------------------------------------------------
Street or P.O. Box Number
---------------------------------------------------------------------------
City State Zip Code
( ) ( )
------------------- --------------------
Daytime Phone Evening Phone
Citizenship: [_] U.S. [_] Resident- [_] Non- -----------------
Alien Resident Specify Country
Alien
- --------------------------------------------------------------------------------
3 INVESTMENT
- --------------------------------------------------------------------------------
Fill in the name of the Portfolio EXACTLY AS IT APPEARS ON THE FRONT OF THE
PROSPECTUS.
$
- ----------------------- ------
$
- ----------------------- ------
TOTAL $
------
- --------------------------------------------------------------------------------
4 METHOD OF PAYMENT
- --------------------------------------------------------------------------------
A. [_] Check (payable to UAM Funds) An Account No. will be assigned.
B. [_] This application confirms my prior wire purchase on (date): ________
I was assigned the following wire reference control number:________________
- --------------------------------------------------------------------------------
5 DISTRIBUTIONS
- --------------------------------------------------------------------------------
Unless otherwise instructed, all distributions will be reinvested in additional
shares.
All dividends are to be [_] reinvested [_] paid in cash
All capital gains are to be [_] reinvested [_] paid in cash
- --------------------------------------------------------------------------------
6 TELEPHONE REDEMPTION AND EXCHANGE
- --------------------------------------------------------------------------------
I/We authorize Chase Global Funds Services Company to honor any request(s)
believed to be authentic for the following:
[_] Telephone Exchange [_] Telephone Redemption
[_] a. Mail proceeds to name and address in which account is registered.
[_] b. Wire redemption proceeds to bank indicated below.
A VOIDED CHECK OR DEPOSIT SLIP MUST BE ATTACHED.
- -------------------------------------------------------------------------------
Bank Name
- -------------------------------------------------------------------------------
Bank Address
( )
- ------------------ ------------------------------------------------------------
Account Number Bank Phone
- -------------------------------------------------------------------------------
Name(s) in which Account is Registered
- -------------------------------------------------------------------------------
Bank Transit Routing Number (ABA #)
- --------------------------------------------------------------------------------
7 SIGNATURE(S)
- --------------------------------------------------------------------------------
. I/We have full authority and legal capacity to purchase Fund shares.
. I/We have received the current Prospectus of the Portfolio(s) and agree to
be bound by its (their) terms.
- --------------------------------------------------------------------------------
. UNDER PENALTY OF PERJURY, I/WE ALSO CERTIFY THAT --
A. THE NUMBER SHOWN ON THIS FORM IS A CORRECT TAXPAYER ID NUMBER OR
SOCIAL SECURITY NUMBER.
B. I AM NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE (I) I HAVE NOT BEEN
NOTIFIED BY THE INTERNAL REVENUE SERVICE THAT I AM SUBJECT TO BACKUP
WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS,
OR (II) THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP
WITHHOLDING. (CROSS OUT ITEM "B" IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT
YOU ARE SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST
OR DIVIDENDS ON YOUR TAX RETURN.)
- --------------------------------------------------------------------------------
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
- ----------------------------------- ---------------------------------
Signature (Owner, Trustee, etc.) Date
- ------------------------------------ ---------------------------------
Signature (Joint Owner, Co-trustee, etc.) Date
- --------------------------------------------------------------------------------
8 BROKER-DEALER
- --------------------------------------------------------------------------------
This section should be completed if you are investing through a Broker-Dealer.
- -------------------------- ---------------------------------------------------
Dealer Name Address of Office Servicing Account
- -------------------------- ---------------------------------------------------
Address of Home Office City State Zip Code
- -------------------------- ---------------------------------------------------
City State Zip Code Representative's
Name/Number/Branch Number
- -------------------------- ---------------------------------------------------
Authorized Signature of Representative's Telephone Number
Dealer
- --------------------------------------------------------------------------------
UAM Funds Service Center
(Over Please)
7/97
<PAGE>
- --------------------------------------------------------------------------------
9 EMPLOYMENT INFORMATION
- --------------------------------------------------------------------------------
It is required by the National Association of Securities Dealers, Inc. to
request this information.
- -------------------------------------------------------------------------------
Owner's Occupation Owner's Date of Birth
- -------------------------------------------------------------------------------
Employer's Name
- -------------------------------------------------------------------------------
Employer's Address
- -------------------------------------------------------------------------------
Joint Owner's Occupation Joint Owner's Date of Birth
- -------------------------------------------------------------------------------
Joint Owner's Employer's Name
- -------------------------------------------------------------------------------
Joint Owner's Employer's Address
- --------------------------------------------------------------------------------
10 INTERESTED PARTY
- --------------------------------------------------------------------------------
In addition to the account statement sent to your registered address, you may
also have a monthly consolidated statement mailed to up to ten interested
parties. You may add a sheet with additional interested party names and
addresses.
- -------------------------------------------------------------------------------
Name
- -------------------------------------------------------------------------------
Address
- -------------------------------------------------------------------------------
City State Zip Code
APPLICATION INSTRUCTIONS
- -------------------------------------------------------------------------------
IF YOU NEED ASSISTANCE, A REPRESENTATIVE OF UAM FUNDS WILL BE PLEASED TO HELP
YOU. OUR TOLL-FREE NUMBER IS 1-800-638-7983.
- -------------------------------------------------------------------------------
[1] NEW ACCOUNT APPLICATION. An account can be registered as only one of the
following:
. individual ) Supply the Social Security Number of the registered
)- account owner who is to be taxed.
. joint tenants )
. a trust ) Supply the Taxpayer Identification Number of the legal
. a corporation, )- entity or organization that will report income and/or
partnership, organ- ) capital gains.
ization, fiduciary )
Please check the box that corresponds with the type of account you are opening
and fill in the required information exactly as you wish it to appear on the
account.
Redemption Authorizations. Corporations, other organizations, trusts and
fiduciaries will be required to furnish additional paperwork to authorize
redemptions. Call a representative of UAM Funds at 1-800-638-7983 for more
information.
[2] Your Mailing Address. Please be sure to provide us with the address at which
you wish to receive your mail.
[3] Your Investment. Please be sure to indicate the total amount invested. For
more than two investments, please attach a separate sheet or an additional
application.
[4] Establishing Your Account.
A. Section 4A lets you open your account by check. Your check(s) should be
made payable to UAM Funds. Be sure to enclose your check(s) with this
application.
B. If you are confirming a new Fund purchase previously made by wire, be
sure to fill in Section 4B and provide the wire reference control number
you were assigned at the time of this purchase. A completed application
must follow all wire purchases.
All applications are subject to acceptance by UAM Funds.
[5] Receiving Your Dividends and Capital Gains. Check the distribution option
you prefer. If you do not select an option, all dividends and capital gains
will be reinvested in your account.
[6] Telephone Redemption and Exchange. Telephone redemption proceeds mailed to a
shareholder will be sent only to the address listed on the account. The
Funds' bank wire feature is available for redeeming out of your Fund account
to your bank account. Be sure to check with your bank for proper wiring
instructions. The Funds require the transit/routing number of your bank or
its correspondent if your bank is unable to receive wires directly. Please
complete Section 6 to add the bank wire feature.
Telephone exchanges may be made only if a Fund holds all share certificates
and if the registration of the two accounts will be identical.
[7] Your Signature(s). Please be sure to sign this application. If the account
is registered in the name of:
. an individual, the individual should sign
. joint tenants, both should sign
. a trust or other fiduciary, the fiduciary or fiduciaries should sign
(please indicate capacity)
. a corporation or other organization, an officer should sign (please
indicate corporate office or title)
--IMPORTANT--
REGULAR MAIL: UAM Funds
P.O. Box 2798
Boston, MA 02208-2798
EXPRESS MAIL: UAM Funds
73 Tremont Street, 9th Floor
Boston, MA 02108-3913
MORE QUESTIONS? Call a representative of UAM Funds at 1-800-638-7983.
-----------------------------------------------
FOR INTERNAL USE ONLY
Source:
-------------------------------
Code:
---------------------------------
-----------------------------------------------
<PAGE>
------------------------------------
APPLICATION
INSTITUTIONAL SERVICE CLASS SHARES
------------------------------------
UAM FUNDS
REGULAR MAIL: UAM Funds EXPRESS MAIL: UAM Funds
P.O. Box 2798 73 Tremont Street, 9th Floor
Boston, MA 02208-2798 Boston, MA 02108-3913
FOR HELP WITH THIS APPLICATION, OR FOR MORE INFORMATION, CALL US TOLL FREE:
1-800-638-7983.
Distributed by UAM Fund Distributors, Inc.
BEFORE YOU COMPLETE THE APPLICATION, PLEASE BE SURE TO READ THE INSTRUCTIONS
----------------------------------------------------------------------------
ON THE REVERSE SIDE.
-------------------
- --------------------------------------------------------------------------------
1 ACCOUNT REGISTRATION (Check one box.)
- --------------------------------------------------------------------------------
[_] Individual or Joint Account
---------------------------------------------------------------------------
Owner's Name: First, Initial, Last
- -
-----------------------------------------
Owner's Social Security Number
---------------------------------------------------------------------------
Joint Owner's Name: First, Initial, Last
- -
-----------------------------------------
Joint Owner's Social Security Number
Joint accounts will be registered joint tenants with right of survivorship
unless otherwise indicated.
[_] Trust [_] Exempt [_] Non-Exempt [_] Qualified Plan
---------------------------------------------------------------------------
Trustee(s)' Name
---------------------------------------------------------------------------
Name of Trust Agreement
---------------------------------------------------------------------------
Beneficiary's Name
-
---------------------------------- ------------------------------------
Taxpayer's ID Date of Trust Agreement
[_] Corporation, Partnership or Other Entity
Type: [_] Corp. [_] Partnership [_] Other
---------------------------------------------------------------------------
Name of Corp. or Other Entity
- [_] Exempt [_] Non-Exempt
----------------------------------
Taxpayer ID Number
A Corporate Resolution Form is required.
- --------------------------------------------------------------------------------
2 ADDRESS
- --------------------------------------------------------------------------------
---------------------------------------------------------------------------
Street or P.O. Box Number
---------------------------------------------------------------------------
City State Zip Code
( ) ( )
---------------------------------- --------------------------------------
Daytime Phone Evening Phone
Citizenship: [_] U.S. [_] Resident- [_] Non- ---------------
Alien Resident Specify Country
Alien
- --------------------------------------------------------------------------------
3 INVESTMENT
- --------------------------------------------------------------------------------
Fill in the name of the Portfolio EXACTLY AS IT APPEARS ON THE FRONT OF THE
PROSPECTUS.
$
- ----------------------------------------------------- -------
- ----------------------------------------------------- $
- ----------------------------------------------------- -------
TOTAL $
-------
- --------------------------------------------------------------------------------
4 METHOD OF PAYMENT
- --------------------------------------------------------------------------------
A. [_] Check (payable to UAM Funds) An Account No. will be assigned.
B. [_] This application confirms my prior wire purchase on (date):
------------
I was assigned the following wire reference control number:
--------------------
- --------------------------------------------------------------------------------
5 DISTRIBUTIONS
- --------------------------------------------------------------------------------
Unless otherwise instructed, all distributions will be reinvested in
additional shares.
All dividends are to be [_] reinvested [_] paid in cash
All capital gains are to be [_] reinvested [_] paid in cash
- --------------------------------------------------------------------------------
6 TELEPHONE REDEMPTION AND EXCHANGE
- --------------------------------------------------------------------------------
I/We authorize Chase Global Funds Services Company to honor any request(s)
believed to be authentic for the following:
[_] Telephone Exchange [_] Telephone Redemption
[_] a. Mail proceeds to name and address in which account is registered.
[_] b. Wire redemption proceeds to bank indicated below.
A VOIDED CHECK OR DEPOSIT SLIP MUST BE ATTACHED.
- --------------------------------------------------------------------------------
Bank Name
- --------------------------------------------------------------------------------
Bank Address
( )
- -------------------------------------- -------------------------------------
Account Number Bank Phone
- -------------------------------------------------------------------------------
Name(s) in which Account is Registered
- -------------------------------------------------------------------------------
Bank Transit Routing Number (ABA #)
- --------------------------------------------------------------------------------
7 SIGNATURE(S)
- --------------------------------------------------------------------------------
. I/We have full authority and legal capacity to purchase Fund shares.
. I/We have received the current Prospectus of the Portfolio(s) and agree to
be bound by its (their) terms.
- --------------------------------------------------------------------------------
. UNDER PENALTY OF PERJURY, I/WE ALSO CERTIFY THAT --
A. THE NUMBER SHOWN ON THIS FORM IS A CORRECT TAXPAYER ID NUMBER OR SOCIAL
SECURITY NUMBER.
B. I AM NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE (I) I HAVE NOT BEEN
NOTIFIED BY THE INTERNAL REVENUE SERVICE THAT I AM SUBJECT TO BACKUP
WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS,
OR (II) THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP
WITHHOLDING. (CROSS OUT ITEM "B" IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT
YOU ARE SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST
OR DIVIDENDS ON YOUR TAX RETURN.)
- --------------------------------------------------------------------------------
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
- --------------------------------------------------- ------------------------
Signature (Owner, Trustee, etc.) Date
- --------------------------------------------------- ------------------------
Signature (Joint Owner, Co-trustee, etc.) Date
- --------------------------------------------------------------------------------
8 BROKER-DEALER
- --------------------------------------------------------------------------------
This section should be completed if you are investing through a Broker-Dealer.
- ------------------------------------- -----------------------------------------
Dealer Name Address of Office Servicing Account
- ------------------------------------- -----------------------------------------
Address of Home Office City State Zip Code
- ------------------------------------- -----------------------------------------
City State Zip Code Representative's
Name/Number/Branch Number
- ------------------------------------- -----------------------------------------
Authorized Signature of Dealer Representative's Telephone Number
- --------------------------------------------------------------------------------
UAM Funds Service Center
(Over Please)
7/97
<PAGE>
- --------------------------------------------------------------------------------
9 EMPLOYMENT INFORMATION
- --------------------------------------------------------------------------------
It is required by the National Association of Securities Dealers, Inc. to re-
quest this information.
________________________________________________________________________________
Owner's Occupation Owner's Date of Birth
________________________________________________________________________________
Employer's Name
________________________________________________________________________________
Employer's Address
________________________________________________________________________________
Joint Owner's Occupation Joint Owner's Date of Birth
________________________________________________________________________________
Joint Owner's Employer's Name
________________________________________________________________________________
Joint Owner's Employer's Address
- --------------------------------------------------------------------------------
10 INTERESTED PARTY
- --------------------------------------------------------------------------------
In addition to the account statement sent to your registered address, you may
also have a monthly consolidated statement mailed to up to ten interested
parties. You may add a sheet with additional interested party names and
addresses.
________________________________________________________________________________
Name
________________________________________________________________________________
Address
________________________________________________________________________________
City State Zip Code
APPLICATION INSTRUCTIONS
- --------------------------------------------------------------------------------
IF YOU NEED ASSISTANCE, A REPRESENTATIVE OF UAM FUNDS WILL BE PLEASED TO HELP
YOU. OUR TOLL-FREE NUMBER IS 1-800-638-7983.
- --------------------------------------------------------------------------------
[ 1 ] NEW ACCOUNT APPLICATION. An account can be registered as only one of the
following:
. individual ) Supply the Social Security Number
. joint tenants )- of the registered account owner
) who is to be taxed.
. a trust ) Supply the Taxpayer Identification Number of the legal
. a corporation, ) entity or organization that will report income and/or
partnership, )- capital gains.
organization, )
fiduciary )
Please check the box that corresponds with the type of account you are opening
and fill in the required information exactly as you wish it to appear on the
account.
Redemption Authorizations. Corporations, other organizations, trusts and fidu-
ciaries will be required to furnish additional paperwork to authorize redemp-
tions. Call a representative of UAM Funds at 1-800-638-7983 for more informa-
tion.
[ 2 ] Your Mailing Address. Please be sure to provide us with the address at
which you wish to receive your mail.
[ 3 ] Your Investment. Please be sure to indicate the total amount invested.
For more than two investments, please attach a separate sheet or an
additional application.
[ 4 ] Establishing Your Account.
A. Section 4A lets you open your account by check. Your check(s) should
be made payable to UAM Funds. Be sure to enclose your check(s) with this
application.
B. If you are confirming a new Fund purchase previously made by wire, be
sure to fill in Section 4B and provide the wire reference control number
you were assigned at the time of this purchase. A completed application
must follow all wire purchases.
All applications are subject to acceptance by UAM Funds.
[ 5 ] Receiving Your Dividends and Capital Gains. Check the distribution option
you prefer. If you do not select an option, all dividends and capital
gains will be reinvested in your account.
[ 6 ] Telephone Redemption and Exchange. Telephone redemption proceeds mailed
to a shareholder will be sent only to the address listed on the account.
The Funds' bank wire feature is available for redeeming out of your Fund
account to your bank account. Be sure to check with your bank for proper
wiring instructions. The Funds require the transit/routing number of your
bank or its correspondent if your bank is unable to receive wires direct-
ly. Please complete Section 6 to add the bank wire feature.
Telephone exchanges may be made only if a Fund holds all share certifi-
cates and if the registration of the two accounts will be identical.
[ 7 ] Your Signature(s). Please be sure to sign this application. If the
account is registered in the name of:
.an individual, the individual should sign
.joint tenants, both should sign
.a trust or other fiduciary, the fiduciary or fiduciaries should sign
(please indicate capacity)
.a corporation or other organization, an officer should sign (please
indicate corporate office or title)
--IMPORTANT--
REGULAR MAIL: UAM Funds
P.O. Box 2798
Boston, MA 02208-2798
EXPRESS MAIL: UAM Funds
73 Tremont Street,
9th Floor
Boston, MA 02108-3913
MORE QUESTIONS? Call a representative of UAM Funds at 1-800-638-7983.
- --------------------------------------------------------------------------------
FOR INTERNAL USE ONLY
Source: _______________________________
Code: _________________________________
- --------------------------------------------------------------------------------
<PAGE>
UAM FUNDS TRUST
POST-EFFECTIVE AMENDMENT NO. 16
PART B
The following Statements of Additional Information are included in this Post
Effective Amendment No. 16:
. BHM&S Total Return Bond Portfolio Institutional and Institutional Service
Class Shares
. Chicago Asset Management Intermediate Bond Portfolio Institutional Class
Shares and Value/Contrarian Portfolio Institutional Class Shares
. FPA Crescent Portfolio Institutional and Institutional Service Class Shares
. Hanson Equity Portfolio Institutional Class Shares
. IRC Enhanced Index Portfolio Institutional Class Shares
. Jacobs International Octagon Portfolio Institutional Class Shares
. MJI International Equity Portfolio Institutional and Institutional
Service Class Shares
. Newbold's Equity Portfolio Institutional and Institutional Service Class
Shares
. TJ Core Equity Portfolio Institutional Service Class Shares
The following Statement of Additional Information is incorporated by reference
to Post-Effective Amendment No. 2 filed on November 25, 1994:
. Dwight Principal Preservation Portfolio Institutional Class Shares
<PAGE>
PART B
UAM FUNDS
BHM&S TOTAL RETURN BOND PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION -- JULY 10, 1997
This Statement of Additional Information ("SAI") is not a Prospectus but
should be read in conjunction with the Prospectus of the UAM Funds Trust (the
"UAM Funds" or the "Fund") for the BHM&S Total Return Bond Portfolio dated July
10, 1997 relating to the Institutional Class Shares, and the Prospectus dated
July 10, 1997 relating to the Institutional Service Class Shares (the "Service
Class Shares"). To obtain a Prospectus, please call the UAM Funds Service Center
at 1-800-638-7983.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES........................... 2
PURCHASE AND REDEMPTION OF SHARES........................... 2
SHAREHOLDER SERVICES........................................ 3
INVESTMENT LIMITATIONS...................................... 4
MANAGEMENT OF THE FUND...................................... 4
INVESTMENT ADVISER.......................................... 7
SERVICE AND DISTRIBUTION PLANS.............................. 7
PORTFOLIO TRANSACTIONS...................................... 9
ADMINISTRATIVE SERVICES..................................... 10
PERFORMANCE CALCULATIONS.................................... 10
GENERAL INFORMATION......................................... 12
APPENDIX A -- DESCRIPTION OF SECURITIES AND RATINGS......... A-1
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES.. B-1
FINANCIAL STATEMENTS
</TABLE>
INVESTMENT ADVISER
Barrow, Hanley, Mewhinney & Strauss, Inc.
<PAGE>
DISTRIBUTOR
UAM Fund Distributors, Inc. (Distributor)
ADMINISTRATOR AND TRANSFER AGENT
UAM Fund Services, Inc. (FSI)
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INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the investment objective and policies of
the BHM&S Total Return Bond Portfolio (the "Portfolio") as set forth in the
Prospectuses for the Institutional Class Shares and Service Class Shares of the
Portfolio:
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified brokers,
dealers, domestic and foreign banks or other financial institutions, so long as
the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940, as amended, (the "1940
Act") or the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "SEC") thereunder, which currently require that (a) the
borrower pledge and maintain with the Portfolio collateral consisting of cash,
an irrevocable letter of credit issued by a domestic U.S. bank or securities
issued or guaranteed by the United States Government having a value at all times
not less than 100% of the value of the securities loaned, (b) the borrower add
to such collateral whenever the price of the securities loaned rises (i.e., the
borrower "marks to the market" on a daily basis), (c) the loan be made subject
to termination by the Portfolio at any time, and (d) the Portfolio receives
reasonable interest on the loan (which may include the Portfolio investing any
cash collateral in interest bearing short-term investments). As with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the securities loaned if the borrower of the securities fails
financially. These risks are similar to the ones involved with repurchase
agreements as discussed in the Prospectus.
PURCHASE AND REDEMPTION OF SHARES
Both Classes of shares of the Portfolio may be purchased without sales
commission at their net asset value per share next determined after an order is
received in proper form by the Fund, and payment is received by the Fund's
custodian. An order received in proper form prior to the 4:00 p.m. close of the
New York Stock Exchange (the "Exchange") will be executed at the price computed
on the date of receipt; and an order received not in proper form or after the
4:00 p.m. close of the Exchange will be executed at the price computed on the
next day the Exchange is open after proper receipt. The Exchange will be closed
on the following days: New Year's Day, Martin Luther King, Jr.'s Birthday,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The Portfolio reserves the right in its sole discretion (1) to suspend the
offering of its shares, (2) to reject purchase orders when in the judgment of
management such rejection is in the best interests of the Fund, and (3) to
reduce or waive the minimum for initial and subsequent investment for certain
fiduciary accounts such as employee benefit plans or under circumstances where
certain economies can be achieved in sales of a Portfolio's shares.
The Portfolio may suspend redemption privileges or postpone the date of
payment (1) during any period that both the Exchange and custodian bank are
closed or trading on the Exchange is restricted as determined by the SEC, (2)
during any period when an emergency exists as defined by the rules of the
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SEC as a result of which it is not reasonably practicable for a Portfolio to
dispose of securities owned by it or to fairly determine the value of its
assets, and (3) for such other periods as the SEC may permit. The Fund has made
an election with the SEC to pay in cash all redemptions requested by any
shareholder of record limited in amount during any 90-day period to the lesser
of $250,000 or 1% of the net assets of the Fund at the beginning of such period.
Such commitment is irrevocable without the prior approval of the SEC.
Redemptions in excess of the above limits may be paid, in whole or in part, in
investment securities or in cash as the Board of Trustees may deem advisable;
however, payment will be made wholly in cash unless the Board of Trustees
believe that economic or market conditions exist which would make such a
practice detrimental to the best interests of the Fund. If redemptions are paid
in investment securities, such securities will be valued as set forth in each
Prospectus under "How Shares Prices are Determined," and a redeeming shareholder
would normally incur brokerage expenses if he converted those securities to
cash.
No charge is made by a Portfolio for redemptions. Any redemption may be
more or less than the shareholder's initial cost depending on the market value
of the securities held by the Portfolio.
SIGNATURE GUARANTEES
To protect your account, the Fund and Chase Global Funds Services Company
("CGFSC") from fraud, signature guarantees are required for certain redemptions.
Signature guarantees are required for (1) redemptions where the proceeds are to
be sent to someone other than the registered shareowner(s) or the registered
address or (2) share transfer requests.
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, and as
further described in the Portfolio's Prospectuses. The signature guarantee must
appear either: (1) on the written request for redemption; (2) on a separate
instrument for assignment ("stock power") which should specify the total number
of shares to be redeemed; or (3) on all stock certificates tendered for
redemption and, if shares held by the Fund are also being redeemed, on the
letter or stock power.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the BHM&S Total Return Bond Portfolio may be
exchanged for Institutional Class Shares of any other UAM Funds or UAM Funds,
Inc. Portfolio. Likewise, Service Class Shares of the BHM&S Total Return Bond
Portfolio may be exchanged for Service Class Shares of any other UAM Funds or
UAM Funds, Inc. Portfolio. Exchange requests should be made by calling the Fund
(1-800-638-7983) or by writing to UAM Funds, UAM Funds Service Center, c/o Chase
Global Funds Services Company, P.O. Box 2798, Boston,
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MA 02208-2798. The exchange privilege is only available with respect to
Portfolios that are qualified for sale in the shareholder's state of residence.
Any such exchange will be based on the respective net asset values of the
shares involved. There is no sales commission or charge of any kind. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objective of the Portfolio to be purchased. You may
obtain a Prospectus for the Portfolio(s) you are interested in by calling the
UAM Funds Service Center at 1-800-638-7983.
Neither the Fund nor CGFSC will be responsible for the authenticity of the
exchange instructions received by telephone. Exchanges may also be subject to
limitations as to amounts or frequency and to other restrictions established by
the Board of Trustees to assure that such exchanges do not disadvantage the Fund
and its shareholders.
For Federal income tax purposes an exchange between Portfolios is a taxable
event, and, accordingly, a capital gain or loss may be realized. In a revenue
ruling relating to circumstances similar to the Fund's, an exchange between
series of a Fund was also deemed to be a taxable event. It is likely, therefore,
that a capital gain or loss would be realized on an exchange between Portfolios;
you may want to consult your tax adviser for further information in this regard.
The exchange privilege may be modified or terminated at any time.
TRANSFER OF SHARES
Shareholders may transfer shares to another person by making a written
request to the Fund. The request should clearly identify the account and number
of shares to be transferred, and include the signature of all registered owners
and all stock certificates, if any, which are subject to the transfer. The
signature on the letter of request, the stock certificate or any stock power
must be guaranteed in the same manner as described under "Purchase and
Redemption of Shares." As in the case of redemptions, the written request must
be received in good order before any transfer can be made.
INVESTMENT LIMITATIONS
The following limitations supplement those set forth in each Prospectus of
the Portfolio. Whenever an investment limitation sets forth a percentage
limitation on investment or utilization of assets, such limitation shall be
determined immediately after and as a result of a Portfolio's acquisition of
such security or other asset. Accordingly, any later increase or decrease
resulting from a change in values, net assets or other circumstances will not be
considered when determining whether the investment complies with a Portfolio's
investment limitations. Investment limitations (1), (2), (3), (4) and (5) are
classified as fundamental. A Portfolio's fundamental investment limitations
cannot be changed without approval by a "majority of the outstanding shares" (as
defined in the 1940 Act) of the Portfolio. The Portfolio will not:
(1) invest in physical commodities or contracts on physical commodities;
(2) purchase or sell real estate or real estate limited partnerships,
although it may purchase and sell securities of companies which deal
in real estate and may purchase and sell securities which are secured
by interests in real estate;
(3) make loans except (i) by purchasing debt securities in accordance with
its investment objectives and (ii) by lending its portfolio securities
to banks, brokers, dealers and other financial institutions
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so long as such loans are not inconsistent with the 1940 Act or the
rules and regulations or interpretations of the SEC thereunder;
(4) underwrite the securities of other issuers;
(5) issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Portfolio from (i)
making any permitted borrowings, mortgages or pledges, or (ii)
entering into repurchase transactions;
(6) purchase on margin or sell short;
(7) invest more than an aggregate of 15% of the net assets of the
Portfolio, determined at the time of investment, in securities subject
to legal or contractual restrictions on resale or securities for which
there are no readily available markets; and
(8) invest for the purpose of exercising control over management of any
company.
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The Officers of the Fund manage its day-to-day operations and are
responsible to the Fund's Board of Trustees. The Trustees set broad policies for
the Fund and elect its Officers. The following is a list of the Trustees and
Officers of the Fund and a brief statement of their present positions, date of
birth, address and principal occupations during the past five years. Those
people who are "interested persons" of the Fund as that term is defined in the
1940 Act are indicated by an asterisk (*).
JOHN T. BENNETT, JR. (1/26/29), Trustee; College Road--RFD 3, Meredith, NH
03253; President of Squam Investment Management Company, Inc. and Great Island
Investment Company, Inc.; President of Bennett Management Company from 1988 to
1993.
NANCY J. DUNN (8/14/51), Trustee; 10 Garden Street, Cambridge, MA 02138; Vice
President for Finance and Administration and Treasurer of Radcliffe College
since 1991.
PHILIP D. ENGLISH (8/5/48), Trustee; 16 West Madison Street, Baltimore, MD
21201; President and Chief Executive Officer of Broventure Company, Inc.;
Chairman of the Board of Chektec Corporation and Cyber Scientific, Inc.
WILLIAM A. HUMENUK (4/21/42), Trustee; 4000 Bell Atlantic Tower, 1717 Arch
Street, Philadelphia, PA 19103; Partner in the Philadelphia office of the law
firm Dechert Price & Rhoads; Director, Hofler Corp.
NORTON H. REAMER* (3/21/35), Trustee; One International Place, Boston, MA 02110;
President and Chairman of the Fund; President, Chief Executive Officer and a
Director of United Asset Management Corporation; Director, Partner or Trustee of
each of the Investment Companies of the Eaton Vance Group of Mutual Funds.
CHARLES H. SALISBURY, JR.* (8/24/40), Trustee; One International Place, Boston,
MA 02110; Executive Vice President of United Asset Management Corporation;
formerly an executive officer and Director of T. Rowe Price and President and
Chief Investment Officer of T. Rowe Price Trust Company.
PETER M. WHITMAN, JR.* (7/1/43), Trustee; One Financial Center, Boston, MA
02111; President and Chief Investment Officer of Dewey Square Investors
Corporation ("DSI") since 1988; Director and Chief Executive Officer of H. T.
Investors, Inc., formerly a subsidiary of DSI.
WILLIAM H. PARK* (9/19/47), Vice President; One International Place, Boston, MA
02110; Executive Vice President and Chief Financial Officer of United Asset
Management Corporation.
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GARY L. FRENCH* (7/4/51), Treasurer; 211 Congress Street, Boston, MA 02110;
President of UAM Fund Services, Inc. and UAM Fund Distributors, Inc.; formerly
Vice President of Operations, Development and Control of Fidelity Investment in
1995; Treasurer of the Fidelity Group of Mutual Funds from 1991 to 1995.
MICHAEL E. DEFAO* (2/28/68), Secretary; 211 Congress Street, Boston, MA 02110;
Vice President and General Counsel of UAM Fund Services, Inc. and UAM Fund
Distributors, Inc.; Associate Attorney of Ropes & Gray (a law firm) from 1993 to
1995.
ROBERT R. FLAHERTY* (9/18/63), Assistant Treasurer; 211 Congress Street, Boston,
MA 02110; Vice President of UAM Fund Services, Inc.; formerly Manager of Fund
Administration and Compliance of Chase Global Fund Services Company from 1995 to
1996; Deloitte & Touche LLP from 1985 to 1995, Senior Manager.
KARL O. HARTMANN* (3/7/55), Assistant Secretary; 73 Tremont Street, Boston, MA
02108; Senior Vice President and General Counsel of Chase Global Funds Services
Company.
GORDON M. SHONE* (7/30/56), Assistant Treasurer; 73 Tremont Street, Boston, MA
02108; Vice President of Fund Administration and Compliance of Chase Global
Funds Services Company; formerly Senior Audit Manager of Coopers & Lybrand LLP
(1983-1996).
REMUNERATION OF TRUSTEES AND OFFICERS
The Fund pays each Trustee, who is not also an officer or affiliated
person, a $150 quarterly retainer fee per active Portfolio which currently
amounts to $1,050 per quarter. In addition, each unaffiliated Trustee receives a
$2,000 meeting fee which is aggregated for all the Trustees and allocated
proportionately among the Portfolios of the Fund and UAM Funds, Inc., and
reimbursement for travel and other expenses incurred while attending Board
meetings. Trustees who are also officers or affiliated persons receive no
remuneration for their service as Trustees. The Fund's officers and employees
are paid by either the Adviser, United Asset Management Corporation ("UAM"), FSI
or CGFSC and receive no compensation from the Fund. As of June 30, 1997, the
Trustees and Officers of the Fund owned less than 1% of the Fund's outstanding
shares. The following table shows aggregate compensation paid to each of the
Fund's Independent Trustees by the Fund, as well as total compensation from the
Fund and UAM Funds, Inc. (collectively the "Fund Complex"), respectively, in the
fiscal year ended April 30, 1997.
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COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(1) (2) (3) (4) (5)
TOTAL
PENSION OR COMPENSATION
RETIREMENT ESTIMATED FROM REGISTRANT
AGGREGATE BENEFITS ACCRUED ANNUAL AND
NAME OF PERSON, COMPENSATION AS PART OF BENEFITS UPON FUND COMPLEX
POSITION FROM REGISTRANT FUND EXPENSES RETIREMENT PAID TO TRUSTEES
- ---------------------- ---------------- ----------------- ------------- ----------------
John T. Bennett, Jr.
Trustee............. $4,874 0 0 $31,700
J. Edward Day
Former Trustee...... $2,168 0 0 $15,550
Philip D. English
Trustee............. $4,874 0 0 $31,700
William A. Humenuk
Trustee............. $4,874 0 0 $31,700
Nancy J. Dunn
Trustee............. $ 0 0 0 $ 0
</TABLE>
PRINCIPAL HOLDER OF SECURITIES
As of June 16, 1997, the following persons or organizations held of
record or beneficially 5% or more of the shares of the Portfolio:
BHM&S Total Return Bond Portfolio Institutional Class Shares: Hartnat
& Co., Hoag Memorial Conservative Collective, P.O. Box 92800, Rochester, NY,
26.1%*; Sarah Campbell Blaffer Foundation, Texas Commerce Bank, P.O. Box, 2558
10TCT 315, Houston, TX, 25.9%*; Hartnat & Co., Hoag Memorial Hospital, Moderate
Collective, P.O. Box 92800, Rochester, NY, 23.4%*; Hartnat & Co., Barrow Hanley,
P.O. Box 92800, Rochester, NY, 22.8%.
BHM&S Total Return Bond Portfolio Service Class Shares: Hartnat & Co.,
North Texas, P.O. Box 92800, Rochester, NY, 24.5%*; Fleet National Bank,
Trustee, FBO Cherokee Nation, P.O. Box 92800, Rochester, NY, 13.7%*; Fleet
National Bank, Trustee, FBO Laidlaw Allied Moderate Collective, P.O. Box 92800,
Rochester, NY, 13.2%*; Fleet National Bank, Trustee, FBO Laidlaw Industries 401K
Pl., P.O. Box 92800, Rochester, NY, 8.7%*; Hartnat & Co., Allied Waste, P.O. Box
92800, Rochester, NY, 8.6%*; Hartnat & Co., Lillick & Charles Barrow Hanley,
P.O. Box 92800, Rochester, NY, 8.6%*; Fleet National Bank Trustee, FBO Laidlaw
Allied Conserv. Collective, P.O. Box 92800, Rochester, NY, 6.6%*; and Robert H.
Nagle, ADMR Trust City of Miami FF & P.O. Retirement Trust, P.O. Box 330708,
Miami, FL, 5.1%*.
The persons(s) or organization(s) listed above as owning 25% or more
of the outstanding shares of the Portfolio may be presumed to "control" (as that
term is defined in the 1940 Act) such Portfolio. As a result, those persons or
organizations could have the ability to vote a majority of the shares of the
Portfolio on any matter requiring the approval of shareholders of such
Portfolio.
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______
* Denotes shares held by a trustee or fiduciary for which beneficial ownership
is disclaimed or presumed disclaimed.
INVESTMENT ADVISER
CONTROL OF ADVISER
The Adviser is a wholly-owned subsidiary of UAM, a holding company
incorporated in Delaware in December 1980 for the purpose of acquiring and
owning firms engaged primarily in institutional investment management. Since its
first acquisition in August 1983, UAM has acquired or organized over 45 such
wholly-owned affiliated firms (the "UAM Affiliated Firms"). UAM believes that
permitting UAM Affiliated Firms to retain control over their investment advisory
decisions is necessary to allow them to continue to provide investment
management services that are intended to meet the particular needs of their
respective clients.
Accordingly, after acquisition by UAM, UAM Affiliated Firms continue
to operate under their own firm name, with their own leadership and individual
investment philosophy and approach. Each UAM Affiliated Firm manages its own
business independently on a day-to-day basis. Investment strategies employed and
securities selected by UAM Affiliated Firms are separately chosen by each of
them. Several UAM Affiliated Firms also act as investment advisers to separate
series or Portfolios of the UAM Funds, Inc., a registered investment company.
ADVISORY FEES
As compensation for services rendered by the Adviser under the
Investment Advisory Agreement, the Portfolio pays the Adviser an annual fee in
monthly installments, calculated by applying the following annual percentage
rate to the Portfolio's average daily net assets for the month:
BHM&S Total Return Bond Portfolio 0.35%
From November 1, 1995 (date of commencement) to April 30, 1996, and for the
fiscal year ended April 30, 1997, the BHM&S Total Return Bond Portfolio paid
advisory fees of $0. During these periods, the Adviser voluntarily waived
advisory fees of $6,000 and $40,683, respectively. Until December 31, 1997, the
Adviser has voluntarily agreed to waive all or a portion of its advisory fees
and to assume operating expenses, otherwise payable by the Portfolio, if
necessary, in order to keep the Portfolio's total annual operating expenses,
after the effect of expense offset arrangements, from exceeding 0.55% and 0.80%
of average daily net assets of the Portfolio's Institutional Class Shares and
Service Class Shares, respectively.
SERVICE AND DISTRIBUTION PLANS
As stated in the Portfolio's Service Class Shares Prospectus, the
Distributor may enter into agreements with broker-dealers and other financial
institutions ("Service Agents"), pursuant to which they will provide
administrative support services to Service Class shareholders who are their
customers ("Customers") in consideration of the Fund's payment of 0.25% (on an
annualized basis) of the average daily net asset value of the Service Class
Shares held by the Service Agent for the benefit of its Customers. Such services
include:
(a) acting as the sole shareholder of record and nominee for beneficial
owners;
(b) maintaining account records for such beneficial owners of the Fund's
shares;
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(c) opening and closing accounts;
(d) answering questions and handling correspondence from shareholders
about their accounts;
(e) processing shareholder orders to purchase, redeem and exchange shares;
(f) handling the transmission of funds representing the purchase price or
redemption proceeds;
(g) issuing confirmations for transactions in the Fund's shares by
shareholders;
(h) distributing current copies of prospectuses, statements of additional
information and shareholder reports;
(i) assisting customers in completing application forms, selecting
dividend and other account options and opening any necessary custody
accounts;
(j) providing account maintenance and accounting support for all
transactions; and
(k) performing such additional shareholder services as may be agreed upon
by the Fund and the Service Agent, provided that any such additional
shareholder services must constitute a permissible non-banking
activity in accordance with the then current regulations of, and
interpretations thereof by, the Board of Governors of the Federal
Reserve System, if applicable.
Each agreement with a Service Agent is governed by a Shareholder Service
Plan (the "Service Plan") that has been adopted by the Fund's Board of Trustees.
Pursuant to the Service Plan, the Board of Trustees reviews, at least quarterly,
a written report of the amounts expended under each agreement with Service
Agents and the purposes for which the expenditures were made. In addition,
arrangements with Service Agents must be approved annually by a majority of the
Fund's Trustees, including a majority of the Trustees who are not "interested
persons" of the Fund as defined in the 1940 Act and have no direct or indirect
financial interest in such arrangements.
The Board of Trustees has approved the arrangements with Service Agents
based on information provided by the Fund's service contractors that there is a
reasonable likelihood that the arrangements will benefit the Fund and its
shareholders by affording the Fund greater flexibility in connection with the
servicing of the accounts of the beneficial owners of its shares in an efficient
manner. Any material amendment to the Fund's arrangements with Service Agents
must be approved by a majority of the Fund's Board of Trustees (including a
majority of the disinterested Trustees). So long as the arrangements with
Service Agents are in effect, the selection and nomination of the members of the
Fund's Board of Trustees who are not "interested persons" (as defined in the
1940 Act) of the Fund will be committed to the discretion of such non-interested
Trustees.
Pursuant to Rule 12b-1 under the 1940 Act, the Fund has adopted a
Distribution Plan for the Service Class Shares of the Fund (the "Distribution
Plan"). The Distribution Plan permits the Fund to pay for certain distribution,
promotional and related expenses involved in the marketing of only the Service
Class Shares.
The Distribution Plan permits the Service Class Shares, pursuant to the
Distribution Agreement, to pay a monthly fee to the Distributor for its services
and expenses in distributing and promoting sales of the Service Class Shares.
These expenses include, among other things, preparing and distributing
advertisements, sales literature and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, and paying distribution
and maintenance fees to securities brokers and dealers who enter into agreements
with the Distributor. In addition, the Service Class Shares may make payments
directly to other unaffiliated parties who either aid in the distribution of
their shares or provide services to the Class.
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<PAGE>
The maximum annual aggregate fee payable by the Fund under the Service and
Distribution Plans (the "Plans"), is 0.75% of the Service Class Shares' average
daily net assets for the year. The Fund's Board of Trustees may reduce this
amount at any time. Although the maximum fee payable under the 12b-1 Plan
relating to the Service Class Shares is 0.75% of average daily net assets of
such class, the Board of Trustees has determined that the annual fee, payable on
a monthly basis, under the Plans relating to the Service Class Shares, currently
cannot exceed 0.50% of the average daily net assets represented by the Service
Class. While the current fee which will be payable
under the Service Plan has been set at 0.25%, the Plans permit a full 0.75% on
all assets to be paid at any time following appropriate Board approval.
All of the distribution expenses incurred by the Distributor and others,
such as broker/dealers, in excess of the amount paid by the Service Class Shares
will be borne by such persons without any reimbursement from such Classes.
Subject to seeking best price and execution, the Fund may, from time to time,
buy or sell portfolio securities from or to firms which receive payments under
the Plans. From time to time, the Distributor may pay additional amounts from
its own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans, the Distribution Agreement and the form of dealer's and services
agreements have all been approved by the Board of Trustees of the Fund,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Fund and who have no direct or indirect
financial interest in the Plans or any related agreements, by vote cast in
person at a meeting duly called for the purpose of voting on the Plans and such
Agreements. Continuation of the Plans, the Distribution Agreement and the
related agreements must be approved annually by the Board of Trustees in the
same manner, as specified above.
Each year the Trustees must determine whether continuation of the Plans is
in the best interest of the shareholders of Service Class Shares and that there
is a reasonable likelihood of the Plans providing a benefit to the Class. The
Plans, the Distribution Agreement and the related agreements with any broker-
dealer or others relating to the Class may be terminated at any time without
penalty by a majority of those Trustees who are not "interested persons" or by a
majority vote of the outstanding voting securities of the Class. Any amendment
materially increasing the maximum percentage payable under the Plans must
likewise be approved by a majority vote of the relevant Class' outstanding
voting securities, as well as by a majority vote of those Trustees who are not
"interested persons." Also, any other material amendment to the Plans must be
approved by a majority vote of the Trustees including a majority of the Trustees
of the Fund having no interest in the Plans. In addition, in order for the Plans
to remain effective, the selection and nomination of Trustees who are not
"interested persons" of the Fund must be effected by the Trustees who themselves
are not "interested persons" and who have no direct or indirect financial
interest in the Plans. Persons authorized to make payments under the Plans must
provide written reports at least quarterly to the Board of Trustees for their
review. The National Association of Securities Dealers, Inc. has adopted
amendments to its conduct Rules relating to investment company sales charges.
The Fund and the Distributor intend to operate in compliance with these rules.
Fees paid to Service Agents on behalf of the Portfolio for the fiscal years
ended April 30, 1996 and April 30, 1997 totaled $1,369 and $7,616, respectively.
PORTFOLIO TRANSACTIONS
The Investment Advisory Agreement authorizes the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolio and directs the Adviser to use its best efforts to
obtain the best execution with respect to all transactions for the Portfolio.
The Adviser may, however, consistent with the interests of the Portfolio, select
brokers on the basis of the research, statistical and pricing services they
provide to the Portfolio. Information and research received from such brokers
will be in addition to, and not in lieu of, the services required to be
performed by the Adviser under the Investment Advisory Agreements. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the
11
<PAGE>
same transaction, provided that such commissions are paid in compliance with the
Securities Exchange Act of 1934, as amended, and that the Adviser determines in
good faith that such commission is reasonable in terms either of the transaction
or the overall responsibility of the Adviser to the Portfolio and the Adviser's
other clients.
It is not the Fund's practice to allocate brokerage or effect principal
transactions with dealers on the basis of sales of Fund shares which may be made
through broker-dealer firms. However, the Adviser may place portfolio orders
with qualified broker-dealers who refer clients to the Adviser.
Some securities considered for investment by the Portfolio may also be
appropriate for other clients served by the Adviser. If purchases or sales of
securities consistent with the investment policies of a Portfolio and one or
more of these other clients served by the Adviser is considered at or about the
same time, transactions in such securities will be allocated among the Portfolio
and clients in a manner deemed fair and reasonable by the Adviser. Although
there is no specified formula for allocating such transactions, the various
allocation methods used by the Adviser, and the results of such allocations, are
subject to periodic review by the Fund's Board of Trustees.
ADMINISTRATIVE SERVICES
As stated in the Prospectus, the Board of Trustees of the Fund approved a
new Fund Administration Agreement between FSI a wholly owned subsidiary of UAM,
and the Fund. The Fund's Trustees also approved a Mutual Fund Services Agreement
between FSI and CGFSC. The services provided by FSI and CGFSC and the basis of
the fees payable by the Fund under the Fund Administration Agreement are
described in the Portfolios' Prospectus. Prior to April 15, 1996, CGFSC or its
predecessor, Mutual Funds Service Company, provided certain administrative
services to the Fund under an Administration Agreement between the Fund and U.S.
Trust Company of New York.
The basis of the fees paid to CGFSC for the period November 1, 1995 to
April 14, 1996 was as follows: the Fund paid a monthly fee for its services
which on an annualized basis equaled 0.20% of the first $200 million in combined
assets; plus 0.12% of the next $800 million in combined assets; plus 0.08% on
assets over $1 billion but less than $3 billion; plus 0.06% on assets over $3
billion. The fees were allocated among the Portfolios on the basis of their
relative assets and were subject to a designated minimum fee schedule per
Portfolio, which ranged from $2,000 per month upon inception of a Portfolio to
$70,000 annually after two years. For the period ended April 30, 1996, and for
the fiscal year ended April 30, 1997, administrative services fees paid to the
CGFSC by the BHM&S Total Return Bond Portfolio totaled $22,073 and $82,083,
respectively. For the period April 15, 1996 to April 30, 1996, and for the
fiscal year ended April 30, 1997, FSI earned $1,927 and $838, respectively, from
the BHM&S Total Return Bond Portfolio as Administrator. The services provided by
FSI and CGFSC and the fees payable to both effective April 15, 1996 are
described in the Portfolio's Prospectuses.
PERFORMANCE CALCULATIONS
PERFORMANCE
The Portfolio may from time to time quote various performance figures to
illustrate past performance. Performance quotations by investment companies are
subject to rules adopted by the SEC, which require the use of standardized
performance quotations or, alternatively, that every non-standardized
performance quotation furnished by each class of the Fund be accompanied by
certain standardized performance information computed as required by the SEC.
Current yield and average annual compounded total return
12
<PAGE>
quotations used by the Fund are based on the standardized methods of computing
performance mandated by the SEC. An explanation of those methods used to compute
or express performance follows.
YIELD
Current yield reflects the income per share earned by a Portfolio's
investment. The current yield of a Portfolio is determined by dividing the net
investment income per share earned during a 30-day base period by the maximum
offering price per share on the last day of the period and annualizing the
result. Expenses accrued for the period include any fees charged to all
shareholders during the base period. Since Service Class Shares of a Portfolio
bear additional service and distribution expenses, the yield of the Service
Class Shares of a Portfolio will generally be lower than that of the
Institutional Class Shares of the same Portfolio. The yield for the BHM&S Total
Return Bond Portfolio Institutional Class Shares and Service Class Shares for
the 30-day period ended on April 30, 1997 was 6.69% and 6.44% respectively.
A yield figure is obtained using the following formula:
<TABLE>
<CAPTION>
Yield = 2[(a - b + 1)/6/ - 1]
---------
cd
<S> <C> <C>
where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were entitled to
receive income distributions
d = the maximum offering price per share on the last day of the period.
</TABLE>
TOTAL RETURN
The average annual total return of a Portfolio is determined by finding the
average annual compounded rates of return over 1, 5 and 10 year periods that
would equate an initial hypothetical $1,000 investment to its ending redeemable
value. The calculation assumes that all dividends and distributions are
reinvested when paid. The quotation assumes the amount was completely redeemed
at the end of each 1, 5 and 10 year period and the deduction of all applicable
Fund expenses on an annual basis. Since Service Class Shares of a Portfolio bear
additional service and distribution expenses, the average annual total return of
the Service Class Shares of a Portfolio will generally be lower than that of the
Institutional Class Shares of the same Portfolio.
These figures are calculated according to the following formula:
<TABLE>
<CAPTION>
P(1 + T)/n/ = ERV
<S> <C> <C>
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning of the 1, 5 or
10 year periods at the end of the 1, 5 or 10 year periods (or fractional portion thereof).
</TABLE>
The average annual total return for the BHM&S Total Return Bond Portfolio
from inception on November 1, 1995 to April 30, 1997 is 4.51% for the
Institutional Class Shares and
13
<PAGE>
4.23% for the Service Class Shares. The total return for the one-year period
ended April 30, 1997 is 6.75% for the Institutional Class Shares and 6.47% for
the Service Class Shares.
COMPARISONS
To help investors better evaluate how an investment in either Portfolio of
the Fund might satisfy their investment objective, advertisements regarding the
Fund may discuss various measures of Fund performance as reported by various
financial publications. Advertisements may also compare performance (as
calculated above) to performance as reported by other investments, indices and
averages. Please see Appendix B for publications, indices and averages which may
be used.
14
<PAGE>
In assessing such comparisons of performance, an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the composition of investments in a Portfolio, that
the averages are generally unmanaged, and that the items included in the
calculations of such averages may not be identical to the formula used by the
Portfolio to calculate its performance. In addition, there can be no assurance
that the Portfolio will continue this performance as compared to such other
averages.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized under the name The Regis Fund II as a Delaware
business trust on May 18, 1994. On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's principal office is located at One
International Place, Boston, MA 02110; however, all investor correspondence
should be directed to the Fund at UAM Funds Service Center, c/o Chase Global
Funds Services Company, P.O. Box 2798, Boston, MA 02208-2798. The Fund's
Agreement and Declaration of Trust permits the Fund to issue an unlimited number
of shares of beneficial interest, without par value. The Trustees have the power
to designate one or more series ("Portfolios") or classes of shares of
beneficial interest without further action by shareholders.
On each matter submitted to a vote of the Shareholders, each holder of a
share shall be entitled to one vote for each whole share and a fractional vote
for each fractional share standing in his name on the books of the Fund.
In the event of liquidation of the Fund, the holders of the Shares of each
Portfolio or any class thereof that has been established and designated shall be
entitled to receive, when and as declared by the Trustees, the excess of the
assets belonging to that Portfolio, or in the case of a class, belonging to that
Portfolio and allocable to that class, over the liabilities belonging to that
Portfolio or class. The assets so distributable to the holders of Shares of any
particular Portfolio or class thereof shall be distributed to the holders in
proportion to the number of Shares of that Portfolio or class thereof held by
them and recorded on the books of the Fund. The liquidation of any Portfolio or
class thereof may be authorized at any time by vote of a majority of the
Trustees then in office.
Shareholders of both Classes of the Fund's Portfolios have no pre-emptive
or other rights to subscribe to any additional Shares or other securities issued
by the Fund or any Portfolio, except as the Trustees in their sole discretion
shall have determined by vote. Both Institutional Class and Service Class Shares
represent an interest in the same assets of a Portfolio and are identical in all
respects except that the Service Class 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.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
15
<PAGE>
The Fund's policy is to distribute substantially all of the Portfolio's net
investment income, if any, together with any net realized capital gains in the
amount and at the times that will avoid both income (including capital gains)
taxes incurred and the imposition of the Federal excise tax on undistributed
income and capital gains. The amounts of any income dividends or capital gains
distributions cannot be predicted. See discussion under "Dividends, Capital
Gains Distributions and Taxes" in the Prospectuses.
Any dividend or distribution paid shortly after the purchase of shares of
the Portfolio by an investor may have the effect of reducing the per share net
asset value of the Portfolio by the per share amount of the dividend or
distribution. Furthermore, such dividends or distributions, although in effect a
return of capital, are subject to income taxes as set forth in the Prospectuses.
As set forth in the Prospectuses, unless the shareholder elects otherwise
in writing, all dividend and capital gains distributions are automatically
received in additional shares of the Portfolio of the Fund at net asset value
(as of the business day following the record date). This will remain in effect
until the Fund is notified by the shareholder in writing at least three days
prior to the record date that either the Income Option (income dividends in cash
and capital gains distributions in additional shares at net asset value) or the
Cash Option (both income dividends and capital gains distributions in cash) has
been elected. An account statement is sent to shareholders whenever an income
dividend or capital gains distribution is paid.
The Portfolio will be treated as a separate entity (and hence as a separate
"regulated investment company") for Federal tax purposes. Any net capital gains
recognized by the Portfolio will be distributed to its investors without need to
offset (for Federal income tax purposes) such gains against any net capital
losses realized by another Portfolio.
CODE OF ETHICS
The Fund has adopted a Code of Ethics which restricts to a certain extent
personal transactions by access persons of the Fund and imposes certain
disclosure and reporting obligations.
FEDERAL TAXES
In order for the Portfolio to continue to qualify for Federal income tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), at least 90% of the Portfolio's gross income for
a taxable year must be derived from certain qualifying income, i.e., dividends,
interest, income derived from loans of securities and gains from the sale or
other disposition of stock, securities or other related income, derived with
respect to its business investing in stock or securities. Qualification as a
regulated investment company also requires that less than 30% of a Portfolio's
gross income be derived from the sale or other disposition of stock or
securities held less than three months.
The Portfolio will distribute to shareholders annually any net capital
gains which have been recognized for Federal income tax purposes (including
unrealized gains at the end of the Portfolio's taxable year on futures
transactions). Such distribution will be combined with distributions of capital
gains realized on the Portfolio's other investments, and shareholders will be
advised as to the character of the payment.
FINANCIAL STATEMENTS
The Financial Statements of the BHM&S Total Return Bond Portfolio for the
period from inception on November 1, 1995 to April 30, 1996, and for the fiscal
year ended April 30, 1997, and the Financial Highlights for the respective
periods presented and the report thereon of Price Waterhouse LLP, the Fund's
16
<PAGE>
independent accountant, which appear in the Portfolio's 1997 Financial
Statements, are attached to this SAI.
17
<PAGE>
APPENDIX A -- DESCRIPTION OF SECURITIES AND RATINGS
I. DESCRIPTION OF CORPORATE BOND RATINGS
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA -- Bonds which are Aaa are judged to be the best quality; They carry
the smallest degree of investment risk and are generally referred to as "gilt-
edge." Interest payments are protected by a large or by an exceptionally stable
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Moody's applies numerical modifiers 1, 2 and 3 in the Aa and A rating
categories. The modifier 1 indicates that the security ranks at a higher end of
the rating category, modifier 2 indicates a mid-range rating and the modifier 3
indicates that the issue ranks at the lower end of the rating category.
BAA -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA -- Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation and indicate an extremely strong capacity to pay
principal and interest.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only to a small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher rated categories.
A-1
<PAGE>
II. DESCRIPTION OF MUNICIPAL NOTE RATINGS
MOODY'S INVESTORS SERVICE INC.'S MUNICIPAL NOTES RATINGS:
MIG1 -- Municipal Notes which are rated MIG1 are considered best quality.
There is present strong protection by established cash flows, superior liquidity
support or demonstrated broad-based access to the market for refinancing.
MIG2 -- Municipal Notes which are rated MIG2 are considered high quality.
Margins of protection are ample although not so large as in the preceding group.
MIG3 -- Municipal Notes which are rated MIG3 are considered favorable
quality. All security elements are accounted for but there is lacking the
undeniable strength of the preceding grades. Liquidity and cash flow protection
may be narrow and market access for refinancing is likely to be less well
established.
STANDARD & POOR'S CORPORATION'S MUNICIPAL NOTES RATINGS:
SP-1 -- Municipal Notes which are rated SP-1 are considered to possess a
strong capacity to pay principal and interest. Issues determined to possess very
strong characteristics are given a plus (+) designation.
SP-2 -- Municipal Notes which are rated SP-2 are considered to possess a
satisfactory capacity to pay principal and interest, with some vulnerability to
adverse financial and economic changes over the term of the notes.
III. DESCRIPTION OF U.S. GOVERNMENT SECURITIES
The term "U.S. Government Securities" refers to a variety of securities
which are issued or guaranteed by the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government.
U.S. Treasury securities are backed by the "full faith and credit" of the
United States. Securities issued or guaranteed by Federal agencies and U.S.
Government sponsored instrumentalities may or may not be backed by the full
faith and credit of the United States.
In the case of securities not backed by the full faith and credit of the
United States, the investor must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for ultimate repayment,
and may not be able to assess a claim against the United States itself in the
event the agency or instrumentality does not meet its commitment. Agencies which
are backed by the full faith and credit of the United States include the Export-
Import Bank, Farmers Home Administration, Federal Financing Bank, and others.
Certain agencies and instrumentalities, such as the GNMA are, in effect, backed
by the full faith and credit of the United States through provisions in their
charters that they may make "indefinite and unlimited" drawings on the U.S.
Treasury, if needed to service its debt. Debt from certain other agencies and
instrumentalities, including the Federal Home Loan Bank and FNMA, is not
guaranteed by the United States, but those institutions are protected by the
discretionary authority of the U.S. Treasury to purchase certain amounts of
their securities to assist the institution in meeting its debt obligations.
Finally, other agencies and instrumentalities, such as the Farm Credit System
and the FHLMC, are federally chartered institutions under Government
supervision, but their debt securities are backed only by the credit worthiness
of those institutions, not the U.S. Government.
Some of the U.S. Government agencies that issue or guarantee securities
include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and the Tennessee Valley Authority.
A-2
<PAGE>
IV. DESCRIPTION OF COMMERCIAL PAPER
The Portfolio may invest in commercial paper (including variable amount
master demand notes) rated A-1 or better by Standard & Poor's Corporation "S&P")
or Prime-1 by Moody's Investors Service, Inc. ("Moody's") or by S&P. Commercial
paper refers to short-term, unsecured promissory notes issued by corporations to
finance short-term credit needs. Commercial paper is usually sold on a discount
basis and has a maturity at the time of issuance not exceeding nine months.
Variable amount master demand notes are demand obligations that permit the
investment of fluctuating amounts at varying market rates of interest pursuant
to arrangement between the issuer and a commercial bank acting as agent for the
payees of such notes whereby both parties have the right to vary the amount of
the outstanding indebtedness on the notes. As variable amount master demand
notes are direct lending arrangements between a lender and a borrower, it is not
generally contemplated that such instruments will be traded, and there is no
secondary market for these notes, although they are redeemable (and thus
immediately repayable by the borrower) at face value, plus accrued interest, at
any time. In connection with the Portfolio's investment in variable amount
master demand notes, the Adviser's investment management staff will monitor, on
an ongoing basis, the earning power, cash flow and other liquidity ratios of the
issuer and the borrower's ability to pay principal and interest on demand.
Commercial paper rated A-1 by S&P has the following characteristics:
(1) liquidity ratios are adequate to meet cash requirements; (2) long-term
senior debt is rated "A" or better; (3) the issuer has access to at least two
additional channels of borrowing; (4) basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; (5) typically, the
issuer's industry is well established, and the issuer has a strong position
within the industry; and (6) the reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determine
whether the issuer's commercial paper is A-1, A-2 or A-3. The rating Prime-1 is
the highest commercial paper rating assigned by Moody's. Among the factors
considered by Moody's in assigning ratings are the following: (1) evaluation of
the management of the issuer; (2) economic evaluation of the issuer's industry
or industries and the appraisal of speculative-type risks which may be inherent
in certain areas; (3) evaluation of the issuer's products in relation to
completion and customer acceptance; (4) liquidity; (5) amount and quality of
long term debt; (6) trend of earnings over a period of ten years; (7) financial
strength of a parent company and the relationships which exist with the issuer;
and (8) recognition by the management of issuer of obligations which may be
present or may arise as a result of public interest questions and preparations
to meet such obligations. Relative strength or weakness of the above factors
determine whether the issuer's commercial paper is Prime-1 or Prime-2.
V. DESCRIPTION OF BANK OBLIGATIONS
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Certificates of deposit are negotiable short-term obligations of commercial
banks. Variable rate certificates of deposit are certificates of deposit on
which the interest rate is periodically adjusted prior to their stated maturity
based upon a specified market rate. As a result of these adjustments, the
interest rate on these obligations may increase or decrease periodically.
Frequently, dealers selling variable rate certificates of deposit to the
Portfolio will agree to repurchase such instruments, at the Portfolio's option,
at par on or near the coupon dates. The dealers' obligations to repurchase these
instruments are subject to conditions imposed by various dealers. Such
conditions typically are the continued credit standing of the issuer and the
existence of reasonably orderly market conditions. The Portfolio is also able to
sell variable rate certificates of deposit in the secondary market. Variable
rate certificates of deposit normally carry a higher interest rate than
comparable fixed rate certificates of deposit. A banker's acceptance is a time
draft drawn on a commercial bank by a borrower usually in connection with an
international commercial transaction to finance the import, export, transfer or
storage of goods. The borrower is liable for payment as well as the bank which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
the secondary markets prior to maturity.
A-3
<PAGE>
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES
With respect to the comparative measures of performance for equity
securities described herein, comparisons of performance assume
reinvestment of dividends, except as otherwise stated below.
(a) Dow Jones Composite Average or its component averages -- an unmanaged
index composed of 30 blue-chip industrial corporation stocks (Dow
Jones Industrial Average), 15 utilities company stocks and 20
transportation stocks.
(b) Standard & Poor's 500 Stock Index or its component indices -- an
unmanaged index composed of 400 industrial stocks, 40 financial
stocks, 40 utilities stocks and 20 transportation stocks.
(c) Standard & Poor's 400 Mid Cap Index - consists of 400 domestic stocks
chosen for market size, liquidity, and industry group representation.
It is also a market-value weighted index and was the first benchmark
of mid cap stock price movement.
(d) The New York Stock Exchange composite or component indices --
unmanaged indices of all industrial, utilities, transportation and
finance stocks listed on the New York Stock Exchange.
(e) Wilshire 5000 Equity Index or its component indices -- represents the
return on the market value of all common equity securities for which
daily pricing is available.
(f) Lipper -- Mutual Fund Performance Analysis and Lipper -- Fixed Income
Fund Performance Analysis -- measure total return and average current
yield for the mutual fund industry. Rank individual mutual fund
performance over specified time periods, assuming reinvestment of all
distributions, exclusive of any applicable sales charges.
(g) Lipper Capital Appreciation Funds Index - a fund that aims at maximum
capital appreciation, frequently by means of 100% or more portfolio
turnover, leveraging, purchasing unregistered securities, purchasing
options, etc. The fund may take large cash positions.
(h) Lipper Small Cap Funds Index- a fund that by prospectus or portfolio
practice invests primarily in companies with market capitalizations
of less than $1 billion at the time of purchase.
(i) Morgan Stanley Capital International EAFE Index and World Index --
respectively, arithmetic, market value-weighted averages of the
performance of over 900 securities listed on the stock exchanges of
countries in Europe, Australia and the Far East, and over 1,400
securities listed on the stock exchanges of these continents,
including North America.
(j) Goldman Sachs 100 Convertible Bond Index -- currently includes 67
bonds and 33 preferred. The original list of names was generated by
screening for convertible issues of 100 million or greater in market
capitalization. The index is priced monthly.
(k) Salomon Brothers GNMA Index -- includes pools of mortgages originated
by private lenders and guaranteed by the mortgage pools of the
Government National Mortgage Association.
B-1
<PAGE>
(l) Salomon Brothers High Grade Corporate Bond Index -- consists of
publicly issued, non-convertible corporate bonds rated AA or AAA. It
is a value-weighted, total return index, including approximately 800
issues with maturities of 12 years or greater.
(m) Salomon Brothers Broad Investment Grade Bond Index -- is a market-
weighted index that contains approximately 4,700 individually priced
investment grade corporate bonds rated BBB or better, U.S.
Treasury/agency issues and mortgage pass through securities.
(n) Lehman Brothers Long-Term Treasury Bond Index -- is composed of all
bonds covered by the Lehman Brothers Treasury Bond Index with
maturities of 10 years or greater.
(o) Lehman Brothers Government/Corporate Index -- is a combination of the
Government and Corporate Bond Indices. The Government Index includes
public obligations of the U.S. Treasury, issues of Government
agencies, and corporate debt backed by the U.S. Government. The
Corporate Bond Index includes fixed-rate nonconvertible corporate
debt. Also included are Yankee Bonds and nonconvertible debt issued
by or guaranteed by foreign or international governments and
agencies. All issues are investment grade (BBB) or higher, with
maturities of at least one year and an outstanding par value of at
least $100 million for U.S. Government issues and $25 million for
others. Any security downgraded during the month is held in the index
until month-end and then removed. All returns are market value
weighted inclusive of accrued income.
(p) Lehman Brothers Aggregate Bond Index --- is a fixed income market
value-weighted index that combines the Lehman Brothers Government
Corporate Bond Index and the Lehman Brothers Mortgage-Backed
Securities Index. It includes fixed rate issues of investment grade
(BBB) or higher, with maturities of at least one year and outstanding
per values of at least $100 million for U.S. Government issues and
$25 million for others.
(q) NASDAQ Industrial Index -- is composed of more than 3,000 industrial
issues. It is a value-weighted index calculated on price change only
and does not include income.
(r) Value Line -- composed of over 1,600 stocks in the Value Line
Investment Survey.
(s) Russell 2000 Index -- composed of the 2,000 smallest stocks in the
Russell 3000, a market value-weighted index of the 3,000 largest U.S.
publicly-traded companies.
(t) Salomon Brothers 3 Month T-Bill Average - the average return for all
Treasury bills for the previous three month period.
(u) Composite Indices -- 60% Standard & Poor's 500 Stock Index, 30%
Lehman Brothers Long-Term Treasury Bond and 10% U.S. Treasury Bills;
70% Standard & Poor's 500 Stock Index and 30% NASDAQ Industrial
Index; 35% Standard & Poor's 500 Stock Index and 65% Salomon Brothers
High Grade Bond Index; all stocks on the NASDAQ system exclusive of
those traded on an exchange, and 65% Standard & Poor's 500 Stock
Index and 35% Salomon Brothers High Grade Bond Index.
B-2
<PAGE>
(v) CDA Mutual Fund Report published by CDA Investment Technologies, Inc.
-- analyzes price, current yield, risk, total return and average rate
of return (average compounded growth rate) over specified time
periods for the mutual fund industry.
(w) Mutual Fund Source Book published by Morningstar, Inc. -- analyzes
price, yield, risk and total return for equity funds.
(x) Financial publications: Business Week, Changing Times, Financial
World, Forbes, Fortune, Money, Barron's, Consumer's Digest, Financial
Times, Global Investor, Wall Street Journal and Weisenberger
Investment Companies Service -- publications that rate fund
performance over specified time periods.
(y) Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics -- a statistical measure of change over
time in the price of goods and services in major expenditure groups.
(z) Stocks, Bonds, Bills and Inflation, published by Ibbotson Associates
-- historical measure of yield, price and total return for common and
small company stock, long-term government bonds, U.S. Treasury bills
and inflation.
(aa) Savings and Loan Historical Interest Rates -- as published by the
U.S. Savings & Loan League Fact Book.
(ab) Historical data supplied by the research departments of First Boston
Corporation; the J.P. Morgan companies; Salomon Brothers; Merrill
Lynch, Pierce, Fenner & Smith; Lehman Brothers, Inc.; and Bloomberg
L.P.
B-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
UAM Funds Trust and Shareholders of
BHM&S Total Return Bond Portfolio
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the BHM&S Total
Return Bond Portfolio (the "Portfolio"), a Portfolio of UAM Funds Trust, at
April 30, 1997, and the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Portfolio's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at April 30, 1997 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 9, 1997
- -------------------------------------------------------------------------------
FEDERAL TAX INFORMATION (UNAUDITED):
For the year ended April 30, 1997, the percentage of income earned from direct
treasury obligations was 31.65%.
16
<PAGE>
BHM&S TOTAL RETURN BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
- --------------------------------------------------------------------------------
CORPORATE BONDS & NOTES (31.0%)
- --------------------------------------------------------------------------------
<S> <C> <C>
BANKS (6.7%)
Chase Manhattan Corp.
8.625%, 05/01/02....................................... $ 400,000 $ 426,716
Chemical NY Corp.
9.75%, 06/15/99........................................ 205,000 217,778
NationsBank Corp. Senior Notes
7.00%, 09/15/01........................................ 500,000 501,320
-----------
1,145,814
- --------------------------------------------------------------------------------
FINANCIAL (7.0%)
Associates Corp. of North America
6.57%, 10/04/99........................................ 200,000 198,920
Chrysler Financial Corp.
6.95%, 03/25/02........................................ 500,000 498,230
Ford Motor Credit Corp.
6.375%, 09/15/99....................................... 200,000 198,714
6.80%, 04/23/01........................................ 300,000 299,016
-----------
1,194,880
- --------------------------------------------------------------------------------
INDUSTRIAL (13.5%)
Atlantic Richfield Co.
8.50%, 04/01/12........................................ 225,000 245,983
Dresser Industries, Inc.
6.25%, 06/01/00........................................ 500,000 492,500
May Department Stores Co.
7.625%, 08/15/13....................................... 350,000 349,366
Millennium America, Inc.
7.00%, 11/15/06........................................ 250,000 239,162
Sears Roebuck Acceptance
7.26%, 04/21/03........................................ 500,000 502,500
Texaco Capital Corp.
6.19%, 07/09/03........................................ 500,000 476,335
-----------
2,305,846
- --------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
BHM&S TOTAL RETURN BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
- ---------------------------------------------------------------------------------
CORPORATE BONDS & NOTES--(CONTINUED)
- ---------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION (1.7%)
Federal Express Corp.
9.65%, 06/15/12......................................... $ 250,000 $ 293,440
- ---------------------------------------------------------------------------------
UTILITIES (2.1%)
Southern California Edison Co.
8.25%, 02/01/00......................................... 115,000 118,808
U.S. West Capital Funding, Inc.
6.85%, 01/15/02......................................... 250,000 247,457
-----------
366,265
- ---------------------------------------------------------------------------------
TOTAL CORPORATE BONDS & NOTES (COST $5,344,645)........... 5,306,245
- ---------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES (30.4%)
- ---------------------------------------------------------------------------------
U.S. TREASURY BONDS (19.0%)
10.375%, 11/15/12....................................... 700,000 879,704
11.25%, 02/15/15........................................ 455,000 651,078
8.75%, 05/15/17......................................... 1,260,000 1,489,358
8.125%, 08/15/19........................................ 205,000 229,377
-----------
3,249,517
- ---------------------------------------------------------------------------------
U.S. TREASURY NOTE (11.4%)
7.125%, 02/29/00........................................ 1,925,000 1,958,996
- ---------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES (COST $5,245,054)........ 5,208,513
- ---------------------------------------------------------------------------------
AGENCY SECURITIES (30.1%)
- ---------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP. (17.1%)
Gold Pool #C00436
7.50%, 12/01/25......................................... 2,928,796 2,917,813
- ---------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (9.8%)
Gold Pool #E20271
7.00%, 11/01/11......................................... 434,068 430,131
Pool #349359
7.00%, 06/01/26......................................... 1,293,116 1,252,707
-----------
1,682,838
- ---------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
BHM&S TOTAL RETURN BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
- -------------------------------------------------------------------------------
AGENCY SECURITIES--(CONTINUED)
- -------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (3.2%)
Pool #407633
7.50%, 07/15/25....................................... $ 547,353 $ 543,248
- -------------------------------------------------------------------------------
TOTAL AGENCY SECURITIES (COST $5,135,967)............... 5,143,899
- -------------------------------------------------------------------------------
ASSET-BACKED SECURITIES (5.0%)
- -------------------------------------------------------------------------------
Chase Manhattan Auto Owner Trust
Series 1996-C A3
5.95%, 11/15/03...................................... 150,000 148,875
Chase Manhattan Credit Card Master Trust
Series 1996-4, Class A
6.73%, 02/15/03...................................... 500,000 502,500
NationsBank Auto Owner Trust
Series 1996-A A3
6.375%, 07/15/00..................................... 200,000 200,322
- -------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES (COST $858,742)........... 851,697
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENT (2.1%)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Chase Securities, Inc. 5.20%, dated 04/30/97, due
05/01/97, to be repurchased at $358,052,
collateralized by $360,050 of various U.S. Treasury
Notes, 4.75%-6.125%, due from 08/31/98-10/31/98,
valued at $358,288 (COST $358,000).................... 358,000 358,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (98.6%) (COST $16,942,408)(a)......... 16,868,354
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (NET) (1.4%)............... 238,606
- -------------------------------------------------------------------------------
NET ASSETS (100%)....................................... $17,106,960
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
+ See Note A to Financial Statements.
(a) The cost for federal income tax purposes was $16,951,433. At April 30,
1997, net unrealized depreciation for all securities based on tax cost was
$83,079. This consisted of aggregate gross unrealized appreciation for all
securities of $26,021 and aggregate gross unrealized depreciation for all
securities of $109,100.
7
<PAGE>
BHM&S TOTAL RETURN BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997
<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at Cost............................................. $16,942,408
===========
Investments, at Value............................................ $16,868,354
Cash............................................................. 767
Interest Receivable.............................................. 246,690
Receivable for Portfolio Shares Sold............................. 57,582
Receivable due from Investment Adviser--Note B................... 21,459
Other Assets..................................................... 60
- -------------------------------------------------------------------------------
Total Assets.................................................... 17,194,912
- -------------------------------------------------------------------------------
LIABILITIES
Payable for Portfolio Shares Redeemed............................ 28,223
Payable for Administrative Fees--Note C.......................... 8,942
Payable for Distribution and Service Fees--Note E................ 3,106
Payable for Account Services Fees--Note F........................ 2,954
Payable for Trustees' Fees--Note G............................... 521
Other Liabilities................................................ 44,206
- -------------------------------------------------------------------------------
Total Liabilities............................................... 87,952
- -------------------------------------------------------------------------------
NET ASSETS........................................................ $17,106,960
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid in Capital.................................................. $17,107,733
Undistributed Net Investment Income.............................. 117,102
Accumulated Net Realized Loss.................................... (43,821)
Unrealized Depreciation.......................................... (74,054)
- -------------------------------------------------------------------------------
NET ASSETS........................................................ $17,106,960
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
Net Assets....................................................... $13,062,040
Net Asset Value, Offering and Redemption Price Per Share
1,311,135 shares outstanding (unlimited authorization, no par
value).......................................................... $ 9.96
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INSTITUTIONAL SERVICE CLASS SHARES
Net Assets....................................................... $ 4,044,920
Net Asset Value, Offering and Redemption Price Per Share
406,663 shares outstanding (unlimited authorization, no par
value).......................................................... $ 9.95
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
BHM&S TOTAL RETURN BOND PORTFOLIO
STATEMENT OF OPERATIONS
For the Year Ended April 30, 1997
<TABLE>
- ---------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME
Interest..................................................... $768,681
- ---------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees--Note B
Basic Fees.................................................. $40,683
Less: Fees Waived........................................... (40,683) --
-------
Administrative Fees--Note C.................................. 82,921
Audit Fees................................................... 12,954
Printing Fees................................................ 28,301
Filing and Registration Fees................................. 29,185
Distribution and Service Fees--Note E........................ 7,616
Legal Fees................................................... 6,829
Custodian Fees--Note D....................................... 2,285
Account Services Fees--Note F................................ 2,954
Trustees' Fees--Note G....................................... 2,161
Other Expenses............................................... 1,572
Fees Assumed by Adviser--Note B.............................. (102,882)
- ---------------------------------------------------------------------------------
Total Expenses.............................................. 73,896
Expense Offset--Note A....................................... (1,904)
- ---------------------------------------------------------------------------------
Net Expenses................................................ 71,992
- ---------------------------------------------------------------------------------
NET INVESTMENT INCOME......................................... 696,689
- ---------------------------------------------------------------------------------
NET REALIZED LOSS ON INVESTMENTS.............................. (41,214)
NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON
INVESTMENTS.................................................. 61,915
- ---------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS....................................... 20,701
- ---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......... $717,390
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
BHM&S TOTAL RETURN PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 1,
APRIL 30, 1995** TO
1997 APRIL 30, 1996
- ---------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income............................... $ 696,689 $ 99,017
Net Realized Loss................................... (41,214) (2,447)
Net Change in Unrealized Appreciation/Depreciation.. 61,915 (135,969)
- ---------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
From Operations................................... 717,390 (39,399)
- ---------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income:
Institutional Class................................ (462,628) (38,548)
Institutional Service Class........................ (152,667) (24,975)
- ---------------------------------------------------------------------------------
Total Distributions................................. (615,295) (63,523)
- ---------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE I):
Institutional Class:
Issued--Regular................................... 10,616,111 2,785,396
--In Lieu of Cash Distributions................... 462,628 38,548
Redeemed.......................................... (532,897) (340,122)
- ---------------------------------------------------------------------------------
Net Increase from Institutional Class Shares....... 10,545,842 2,483,822
- ---------------------------------------------------------------------------------
Institutional Service Class:
Issued--Regular................................... 2,374,305 2,930,372
--In Lieu of Cash Distributions................... 152,667 24,975
Redeemed.......................................... (1,383,926) (20,270)
- ---------------------------------------------------------------------------------
Net Increase from Institutional Service Class
Shares............................................ 1,143,046 2,935,077
- ---------------------------------------------------------------------------------
Net Increase from Capital Share Transactions....... 11,688,888 5,418,899
- ---------------------------------------------------------------------------------
Total Increase...................................... 11,790,983 5,315,977
Net Assets:
Beginning of Period................................. 5,315,977 --
- ---------------------------------------------------------------------------------
End of Period (including undistributed net
investment income of $117,102 and $34,746,
respectively)...................................... $17,106,960 $5,315,977
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
</TABLE>
** Commencement of Operations
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
BHM&S TOTAL RETURN BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE
INSTITUTIONAL CLASS CLASS
-------------------------- --------------------------
YEAR NOVEMBER 1, YEAR NOVEMBER 1,
ENDED 1995*** ENDED 1995***
APRIL 30, TO APRIL 30, TO
1997++ APRIL 30, 1996++ 1997++ APRIL 30, 1996++
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $ 9.85 $10.00 $ 9.84 $10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income... 0.60 0.28 0.57 0.27
Net Realized and
Unrealized Gain (Loss)
on Investments......... 0.05 (0.27) 0.05 (0.27)
- --------------------------------------------------------------------------------
Total from Investment
Operations............ 0.65 0.01 0.62 --
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income... (0.54) (0.16) (0.51) (0.16)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD.................. $ 9.96 $ 9.85 $ 9.95 $ 9.84
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL RETURN+............ 6.75% 0.08%** 6.47% (0.07)%**
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL
DATA
Net Assets, End of Period
(Thousands)............. $13,062 $2,445 $4,045 $2,871
Ratio of Expenses to
Average Net Assets...... 0.57% 0.61%* 0.82% 0.83%*
Ratio of Net Investment
Income to Average Net
Assets.................. 6.01% 5.53%* 5.78% 5.44%*
Portfolio Turnover Rate.. 151% 55% 151% 55%
- --------------------------------------------------------------------------------
Voluntarily Waived Fees
and Expenses Assumed by
the Adviser Per Share... $ 0.12 $ 0.23 $ 0.14 $ 0.20
Ratio of Expenses to
Average Net Assets
Including Expense
Offsets................. 0.55% 0.55%* 0.80% 0.80%*
- --------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Not Annualized.
*** Commencement of Operations.
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser during the period.
++ Per share amounts are based on average outstanding shares.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
BHM&S TOTAL RETURN BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
UAM Funds Trust and UAM Funds, Inc. (collectively the "UAM Funds") are
registered under the Investment Company Act of 1940, as amended. The BHM&S
Total Return Bond Portfolio (the "Portfolio"), a portfolio of UAM Funds Trust,
is a diversified, open-end management investment company. At April 30, 1997,
the UAM Funds were composed of forty-two active portfolios. The financial
statements of the remaining portfolios are presented separately. The Portfolio
is authorized to offer two separate classes of shares--Institutional Class
shares and Institutional Service Class shares. Both classes of shares have
identical voting rights (except Institutional 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 objective of the BHM&S Total Return Bond Portfolio is to provide a maximum
long term total return consistent with reasonable risk to principal by
investing in investment grade fixed income securities of varying maturities.
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: Fixed income securities are stated on the basis of
valuations provided by brokers and/or a pricing service which uses
information with respect to transactions in fixed income securities,
quotations from dealers, market transactions in comparable securities and
various relationships between securities in determining value. Short-term
investments that have remaining maturities of sixty days or less at time of
purchase are valued at amortized cost, if it approximates market value. The
value of other assets and securities for which no quotations are readily
available is determined in good faith at fair value using methods
determined by the Board of Trustees.
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 provision
for Federal income taxes is required in the financial statements.
For the year ended April 30, 1997, the Portfolio expects to defer to May 1,
1997 for federal income tax purposes, post-October capital losses of $480.
At April 30, 1997, the Portfolio had available a capital loss carryover for
federal income tax purposes of $34,317 which will expire on April 30, 2005.
3. REPURCHASE AGREEMENTS: In connection with transactions involving
repurchase agreements, the Portfolio's custodian bank takes possession of
the underlying securities, the value of which exceeds the principal amount
of the repurchase transaction, including accrued interest. To the extent
that any repurchase transaction exceeds one business day, the value of the
collateral is monitored on a daily basis to determine the adequacy of the
collateral. In the event of default on the obligation to repurchase, the
Portfolio has the right to liquidate the collateral and apply the proceeds
in satisfaction of the obligation. In the event of default or bankruptcy by
the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
12
<PAGE>
BHM&S TOTAL RETURN BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission, the UAM Funds may transfer their daily uninvested cash balances
into a joint trading account which invests in one or more repurchase
agreements. This joint repurchase agreement is covered by the same
collateral requirements as discussed above.
4. DISTRIBUTIONS TO SHAREHOLDERS: The Portfolio will normally distribute
substantially all of its net investment income quarterly. Any realized net
capital gains will be distributed annually. All distributions are recorded
on ex-dividend date.
The amount and character of income and capital gain distributions to be
paid are determined in accordance with Federal income tax regulations which
may differ from generally accepted accounting principles. These differences
are primarily due to differing book and tax treatments for paydown gains
(losses), post-October capital losses and the timing of the recognition of
gains or losses on investments.
Permanent book and tax basis differences relating to shareholder
distributions resulted in reclassifications of $1,016 to increase
undistributed net investment income and $962 to increase accumulated net
realized loss, with a decrease to paid in capital of $54.
Current year permanent book-tax differences, if any, are not included in
ending undistributed net investment income (loss) for the purpose of
calculating net investment income (loss) per share in the financial
highlights.
5. OTHER: Security transactions are accounted for on trade date, the date
the trade was executed. Costs used in determining realized gains and losses
on the sale of investment securities are based on the specific
identification method. Interest income is recognized on the accrual basis.
Discounts and premiums on securities purchased are amortized using the
effective yield basis over their respective lives. Most expenses of the UAM
Funds can be directly attributed to a particular portfolio. Expenses which
cannot be directly attributed are apportioned among the portfolios of the
UAM Funds based on their relative net assets. Income, expenses (other than
class specific expenses) 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 have been increased to include expense
offsets, if any, for custodian balance credits.
B. ADVISORY SERVICES: Under the terms of an investment advisory agreement,
Barrow, Hanley, Mewhinney, & Strauss, Inc. (the "Adviser"), a wholly-owned
subsidiary of United Asset Management Corporation ("UAM"), provides investment
advisory services to the Portfolio at a fee calculated at an annual rate of
0.35% of average daily net assets. Through December 31, 1997, the Adviser has
voluntarily agreed to waive a portion 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 expense offset arrangements, from
exceeding 0.55% and 0.80% of average daily net assets of the Portfolio's
Institutional Class Shares and Service Class Shares, respectively.
C. ADMINISTRATION SERVICES: UAM Fund Services, Inc. (the "Administrator"), a
wholly-owned subsidiary of UAM, provides and oversees administrative, fund
accounting, dividend disbursing and transfer agent services to the UAM Funds
under a Fund Administration Agreement (the "Agreement"). Pursuant to the
Agreement, the Administrator is entitled to receive annual fees, computed
daily and payable monthly, of 0.19% of the first $200 million of the combined
aggregate net assets; plus 0.11% of the next $800 million of the combined
aggregate net
13
<PAGE>
BHM&S TOTAL RETURN BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
assets; plus 0.07% of the next $2 billion of the combined aggregate net
assets; plus 0.05% of the combined aggregate net assets in excess of $3
billion. The fees are allocated among the portfolios of the UAM Funds on the
basis of their relative net assets and are subject to a graduated minimum fee
schedule per portfolio which rises from $2,000 per month, upon inception of a
portfolio, to $70,000 annually after two years. For portfolios with more than
one class of shares, the minimum annual fee increases to $90,000. In addition,
the Administrator receives a Portfolio-specific monthly fee at an annual rate
of 0.04% of average daily net assets of the Portfolio. The Administrator has
entered into a Mutual Funds Service Agreement with Chase Global Funds Services
Company ("CGFSC"), an affiliate of The Chase Manhattan Bank, under which CGFSC
agrees to provide certain services, including but not limited to,
administration, fund accounting, dividend disbursing and transfer agent
services. Pursuant to the Mutual Funds Service Agreement, the Administrator
pays CGFSC a monthly fee. For the year ended April 30, 1997, $82,083 was paid
to CGFSC for its services.
D. CUSTODIAN: Effective July 17, 1996, The Chase Manhattan Bank (the "Bank"),
an affiliate of CGFSC, is custodian for the Portfolio's assets held in
accordance with the custodian agreement. For the period July 17, 1996 to April
30, 1997, the amount charged to the Portfolio by the Bank aggregated $294, all
of which is unpaid at April 30, 1997.
E. DISTRIBUTION SERVICES: UAM Fund Distributors, Inc. (the "Distributor"), a
wholly-owned subsidiary of UAM, distributes the shares of the Portfolio. The
Portfolio has adopted Distribution and Service Plans (the "Plans") on behalf
of the Service Class Shares pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Under the Plans, the Portfolio may not incur distribution
and service fees which exceed an annual rate of 0.75% of the Portfolio's net
assets, however, the Board has currently limited aggregate payments under the
Plans to 0.50% per annum of the Portfolio's net assets. The Portfolio's
Service Class Shares are not currently making payments for distribution fees,
however the Portfolio does pay service fees at an annual rate of 0.25% of the
average daily value of Service Class Shares owned by clients of the Service
Agents.
F. ACCOUNT SERVICES: Effective February 28, 1997, the UAM Funds entered into
an Account Services Agreement (the "Services Agreement") with UAM Retirement
Plan Services, Inc. ("Service Provider"), a wholly-owned subsidiary of UAM.
Under the Services Agreement, the Service Provider agrees to perform certain
services for participants in a self-directed, defined contribution plan, and
for whom the Service Provider provides participant recordkeeping. Pursuant to
the Services Agreement, the Service Provider is entitled to receive, after the
end of each month, a fee at the annual rate of 0.15% of the average aggregate
daily net asset value of shares of the UAM Funds in the accounts for which
they provide services.
G. TRUSTEES' FEES: Each Trustee, who is not an officer or affiliated person,
receives $2,000 per meeting attended, 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 and reimbursement of expenses incurred in
attending Trustee meetings.
H. PURCHASES AND SALES: For the year ended April 30, 1997, the Portfolio made
purchases of $16,468,317 and sales of $8,006,875 of investment securities
other than long-term U.S. Government and short-term securities. Purchases and
sales of long-term U.S. Government securities total $11,601,109 and
$8,460,162, respectively.
14
<PAGE>
BHM&S TOTAL RETURN BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
I. LINE OF CREDIT: The Portfolio, along with certain other Portfolios of UAM
Funds, collectively entered into an agreement which enables them to
participate 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 1/8th of 1% per annum, payable at the end of
each calendar quarter, is accrued by each participating Portfolio based on its
average daily unused portion of the line of credit. During the year ended
April 30, 1997, the Portfolio had no borrowings under the agreement.
J. OTHER: At April 30, 1997, 98.1% and 84.0% of total shares outstanding were
held by 4 and 4 record shareholders of the Institutional Class Shares and the
Institutional Service Class Shares, respectively, owning more than 10% of the
aggregate total shares outstanding.
K. CAPITAL SHARE TRANSACTIONS: Transactions in capital shares for the
Portfolios, by class, were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE CLASS
INSTITUTIONAL CLASS SHARES SHARES
----------------------------- -----------------------------
YEAR NOVEMBER 1, YEAR NOVEMBER 1,
ENDED 1995* TO ENDED 1995* TO
APRIL 30, 1997 APRIL 30, 1996 APRIL 30, 1997 APRIL 30, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Shares Issued........... 1,069,573 277,892 239,518 291,359
In Lieu of Cash
Distributions.......... 46,682 3,857 15,482 2,511
Shares Redeemed......... (53,183) (33,686) (140,200) (2,007)
--------- ------- -------- -------
Net Increase (Decrease)
from Capital Share
Transactions........... 1,063,072 248,063 114,800 291,863
========= ======= ======== =======
</TABLE>
* Commencement of Operations
15
<PAGE>
PART B
UAM FUNDS
CHICAGO ASSET MANAGEMENT VALUE/CONTRARIAN
PORTFOLIO
CHICAGO ASSET MANAGEMENT INTERMEDIATE BOND
PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION -- JULY 10, 1997
This Statement of Additional Information ("SAI") is not a Prospectus but
should be read in conjunction with the Prospectuses of the UAM Funds Trust (the
"UAM Funds" or the "Fund") for the Chicago Asset Management Value/Contrarian
Portfolio Institutional Class Shares and Chicago Asset Management Intermediate
Bond Portfolio Institutional Class Shares dated July 10, 1997. To obtain the
Prospectuses, please call the UAM Funds Service Center at 1-800-638-7983.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES........................... 3
PURCHASE AND REDEMPTION OF SHARES........................... 13
SHAREHOLDER SERVICES........................................ 14
INVESTMENT LIMITATIONS...................................... 15
MANAGEMENT OF THE FUND...................................... 16
INVESTMENT ADVISER.......................................... 19
PORTFOLIO TRANSACTIONS...................................... 20
ADMINISTRATIVE SERVICES..................................... 21
PERFORMANCE CALCULATIONS.................................... 22
GENERAL INFORMATION......................................... 23
FEDERAL TAXES............................................... 25
APPENDIX A -- DESCRIPTION OF SECURITIES AND CORPORATE BOND
RATINGS.................................................... A-1
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES.. B-1
</TABLE>
FINANCIAL STATEMENTS
INVESTMENT ADVISER
Chicago Asset Management Company
DISTRIBUTOR
UAM Fund Distributor, Inc. (Distributor)
ADMINISTRATOR AND TRANSFER AGENT
1
<PAGE>
UAM Fund Services, Inc. (FSI)
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the investment objectives and policies of
the Chicago Asset Management Value/Contrarian Portfolio and Chicago Asset
Management Intermediate Bond Portfolio (the "Portfolios") as set forth in the
Portfolios' Prospectuses:
LENDING OF SECURITIES
Each Portfolio may lend its investment securities to qualified brokers,
dealers, domestic and foreign banks or other financial institutions, so long as
the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940, as amended, (the "1940
Act") or the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "SEC") thereunder, which currently require that (a) the
borrower pledge and maintain with the Portfolio collateral consisting of cash,
an irrevocable letter of credit issued by a domestic U.S. bank or securities
issued or guaranteed by the United States Government having a value at all times
not less than 100% of the value of the securities loaned, (b) the borrower add
to such collateral whenever the price of the securities loaned rises (i.e., the
borrower "marks to the market" on a daily basis), (c) the loan be made subject
to termination by the Portfolio at any time, and (d) the Portfolio receives
reasonable interest on the loan (which may include the Portfolio investing any
cash collateral in interest bearing short-term investments). As with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the securities loaned if the borrower of the securities fails
financially. These risks are similar to the ones involved with repurchase
agreements as discussed in the Prospectuses.
HEDGING STRATEGIES
Each Portfolio may engage in various portfolio strategies to hedge against
adverse movements in the equity, debt and currency markets. Each Portfolio may
buy or sell futures contracts, write (i.e., sell) covered call options on its
portfolio securities, purchase put and call options on securities and engage in
transactions in stock index options and stock index futures, and related options
on such futures. Each Portfolio may also enter into foreign currency contracts
to hedge against its foreign currency movements. Each of these portfolio
strategies is described below. Although certain risks are involved in options
and futures transactions, the Adviser believes that, because the Portfolios will
engage in options and futures transactions only for hedging purposes, the
options and futures portfolio strategies of a Portfolio will not subject it to
the risks frequently associated with the speculative use of options and futures
transactions. While each Portfolio's use of hedging strategies is intended to
reduce the volatility of the net asset value of the Portfolio shares, the
Portfolios' net asset value will fluctuate. There can be no assurance that a
Portfolio's hedging transactions will be effective. Also, a Portfolio may not
necessarily be engaging in hedging activities when movements in any particular
equity, debt or currency market occur.
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FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The U.S. dollar value of the assets of the Portfolios may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Portfolios may incur costs in connection
with conversions between various currencies. The Portfolios will conduct their
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
entering into forward contracts to purchase or sell foreign currencies. A
forward foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are traded in the interbank market and are
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for such trades.
The Portfolios may enter into forward foreign currency exchange contracts
in several circumstances. When a Portfolio enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when a
Portfolio anticipates the receipt in a foreign currency of dividends or interest
payments on a security which it holds, the Portfolio may desire to "lock-in" the
U.S. dollar price of the security or the U.S. dollar equivalent of such dividend
or interest payment, as the case may be. By entering into a forward contract for
a fixed amount of dollars, for the purchase or sale of the amount of foreign
currency involved in the underlying transactions, the Portfolio will be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the subject foreign currency during the
period between the date on which the security is purchased or sold, or on which
the dividend or interest payment is declared, and the date on which such
payments are made or received.
Additionally, when either of the Portfolios anticipates that the currency
of a particular foreign country may suffer a substantial decline against the
U.S. dollar, it may enter into a forward contract for a fixed amount of dollars
to sell the amount of foreign currency approximating the value of some or all of
such Portfolio's securities denominated in such foreign currency. The precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible since the future value of securities in
foreign currencies will change as a consequence of market movements in the value
of these securities between the date on which the forward contract is entered
into and the date it matures. The projection of short-term currency market
movement is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Neither Portfolio intends to enter into
such forward contracts to protect the value of portfolio securities on a regular
or continuous basis. The Portfolios will not enter into such forward contracts
or maintain a net exposure to such contracts where the consummation of the
contracts would obligate such Portfolio to deliver an amount of foreign currency
in excess of the value of such Portfolio's securities or other assets
denominated in that currency.
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Under normal circumstances, consideration of the prospect for currency
parities will be incorporated into the long-term investment decisions made with
regard to overall diversification strategies. However, the management of the
Fund believes that it is important to have the flexibility to enter into such
forward contracts when it determines that the best interests of the performance
of each Portfolio will thereby be served. The Fund's Custodian will place cash,
or liquid securities into a segregated account in an amount equal to the value
of such Portfolio's total assets committed to the consummation of forward
foreign currency exchange contracts. If the value of the securities placed in
the segregated account declines, additional cash or securities will be placed in
the account on a daily basis so that the value of the account will be equal to
the amount of such Portfolio's commitments with respect to such contracts.
The Portfolios generally will not enter into a forward contract with a term
of greater than one year. At the maturity of a forward contract, a Portfolio may
either sell the portfolio security and make delivery of the foreign currency, or
it may retain the security and terminate its contractual obligation to deliver
the foreign currency by purchasing an "offsetting" contract with the same
currency trader obligating it to purchase, on the same maturity date, the same
amount of the foreign currency.
It is impossible to forecast with absolute precision the market value of a
particular portfolio security at the expiration of the contract. Accordingly, it
may be necessary for a Portfolio to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency that such Portfolio is
obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency.
If a Portfolio retains the portfolio security and engages in an offsetting
transaction, such Portfolio will incur a gain or loss (as described below) to
the extent that there has been movement in forward contract prices. Should
forward prices decline during the period between a Portfolio entering into a
forward contract for the sale of a foreign currency and the date it enters into
an offsetting contract for the purchase of the foreign currency, such Portfolio
will realize a gain to the extent that the price of the currency it has agreed
to sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, such Portfolio would suffer a loss to the extent that
the price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
Each of the Portfolios' dealings in forward foreign currency exchange
contracts will be limited to the transactions described above. Of course, the
Portfolios are not required to enter into such transactions with regard to their
foreign currency-denominated securities. It also should be realized that this
method of protecting the value of portfolio securities against a decline in the
value of a currency does not eliminate fluctuations in the underlying prices of
the securities. It simply establishes a rate of exchange which one can achieve
at some future point in time. Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
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at the same time, they tend to limit any potential gain which might result
should the value of such currency increase.
FUTURES CONTRACTS
Each Portfolio may enter into futures contracts for the purposes of
hedging, remaining fully invested and reducing transactions costs. Futures
contracts provide for the future sale by one party and purchase by another party
of a specified amount of a specific security at a specified future time and at a
specified price. Futures contracts which are standardized as to maturity date
and underlying financial instrument are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"), a U.S. Government agency.
Although futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold" or "selling" a contract previously
"purchased") in an identical contract to terminate the position. Brokerage
commissions are incurred when a futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in cash or
acceptable securities with a broker or custodian to initiate and maintain open
positions in futures contracts. A margin deposit is intended to assure
completion of the contract (delivery or acceptance of the underlying security)
if it is not terminated prior to the specified delivery date. Minimal initial
margin requirements are established by the futures exchange and may be changed.
Brokers may establish deposit requirements which are higher than the exchange
minimums. Generally, margin deposits are structured as percentages (e.g., 5%) of
the market value of the contracts being traded. After a futures contract
position is opened, the value of the contract is marked to market daily. If the
futures contract price changes to the extent that the margin on deposit does not
satisfy margin requirements, payment of additional "variation" margin will be
required. Conversely, change in the contract value may reduce the required
margin, resulting in a repayment of excess margin to the contract holder.
Variation margin payments are made to and from the futures broker for as long as
the contract remains open. The Portfolios expect to earn interest income on its
margin deposits.
Traders in futures contracts may be broadly classified as either "hedgers"
or "speculators". Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade and use
futures contracts with the expectation of realizing profits from a fluctuation
in interest rates. The Portfolios intend to use futures contracts only for
hedging purposes.
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Regulations of the CFTC applicable to the Fund require that all of its
futures transactions constitute bona fide hedging positions or that the Fund's
commodity futures and option positions be for other purposes, only to the extent
that the aggregate initial margins and premiums required to establish such non-
hedging positions do not exceed five percent of the liquidation value of a
Portfolio. A Portfolio will only sell futures contracts to protect securities it
owns against price declines or purchase contracts to protect against an increase
in the price of securities it intends to purchase. As evidence of this hedging
interest, the Portfolios expect that approximately 75% of its futures contracts
purchases will be "completed", that is, equivalent amounts of related securities
will have been purchased or will be purchased by the Portfolio on the settlement
date of the futures contracts.
Although techniques other than the sale and purchase of futures contracts
could be used to control the Portfolio's exposure to market fluctuations, the
use of futures contracts may be a more effective means of hedging this exposure.
While the Portfolio will incur commission expenses in both opening and closing
out futures positions, these costs are lower than transaction costs incurred in
the purchase and sale of the underlying securities.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS
A Portfolio will not enter into futures contract transactions to the extent
that, immediately thereafter, the sum of its initial margin deposits on open
contracts exceeds 5% of the market value of its total assets. In addition, a
Portfolio will not enter into futures contracts to the extent that its
outstanding obligations to purchase securities under these contracts would
exceed 20% of its total assets.
RISK FACTORS IN FUTURES TRANSACTIONS
A Portfolio will minimize the risk that it will be unable to close out a
futures position by only entering into futures which are traded on national
futures exchanges and for which there appears to be a liquid secondary market.
However, there can be no assurance that a liquid secondary market will exist for
any particular futures contract at any specific time. Thus, it may not be
possible to close a futures position. In the event of adverse price movements, a
Portfolio would continue to be required to make daily cash payments to maintain
its required margin. In such situations, if the Portfolio has insufficient cash,
it may have to sell securities to meet daily margin requirements at a time when
it may be disadvantageous to do so. In addition, a Portfolio may be required to
make delivery of the instruments underlying futures contracts it holds. The
inability to close futures positions also could have an adverse impact on a
Portfolio's ability to effectively hedge.
The risk of loss in trading futures contracts in some strategies can be
substantial due both to the low margin deposits required and the extremely high
degree of leverage involved in futures pricing. As a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss (as well as gain) to the investor. For example, if at the time of purchase,
10% of the value of the futures contract is deposited
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as margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchase or sale of a futures contract may result in
excess of the amount invested in the contract. However, because the futures
strategies of the Portfolios are engaged in only for hedging purposes, the
Adviser does not believe that the Portfolios are subject to the risks of loss
frequently associated with futures transactions. A Portfolio would presumably
have sustained comparable losses if, instead of the futures contract, it had
invested in the underlying financial instrument and sold it after the decline.
Utilization of futures transactions by the Portfolios does involve the risk
of imperfect or no correlation where the securities underlying the futures
contracts have different maturities than the portfolio securities being hedged.
It is also possible that the Portfolio could lose money on futures contracts and
also experience a decline in value of portfolio securities. There is also the
risk of loss by the Portfolio of margin deposits in the event of bankruptcy of a
broker with whom the Portfolio has an open position in a futures contract or
related option.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and, therefore, does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days, with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting some futures
traders to substantial losses.
OPTIONS
The Portfolios may purchase and sell put and call options on securities and
futures contracts for hedging purposes. Investments in options involve some of
the same considerations that are involved in connection with investments in
futures contracts (e.g., the existence of a liquid secondary market). In
addition, the purchase of an option also entails the risk that changes in the
value of the underlying security or contract will not be fully reflected in the
value of the option purchased. Depending on the pricing of the option compared
to either the futures contract on which it is based or the price of the
securities being hedged, an option may or may not be less risky than ownership
of the futures contract or such securities. For example, there are significant
differences between the securities, futures and options markets that could
result in an imperfect correlation between these markets, causing a given
transaction not to achieve its objective. A decision as to whether, when, and
how to use options involves the exercise of skill and judgment by the Adviser,
and even a well-conceived transaction may be unsuccessful because of market
behavior or unexpected events.
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WRITING COVERED CALL OPTIONS
The principal reason for writing call options is to attempt to realize,
through the receipt of premiums, a greater return than would be realized on
securities alone. By writing covered call options, each Portfolio gives up the
opportunity, while the option is in effect, to profit from any price increase in
the underlying security above the option exercise price. In addition, each
Portfolio's ability to sell the underlying security will be limited while the
option is in effect unless the Portfolio effects a closing purchase transaction.
A closing purchase transaction cancels out the Portfolio's position as the
writer of an option by means of an offsetting purchase of an identical option
prior to the expiration of the option it has written. Covered call options serve
as a partial hedge against the price of the underlying security declining. Each
Portfolio writes only covered options, which means that so long as a Portfolio
is obligated as the writer of the option it will, in a segregated account with
its custodian, maintain cash or liquid securities denominated in U.S. dollars
with a value equal to or greater than the exercise price of the underlying
securities.
PURCHASING OPTIONS
The amount of any appreciation in the value of the underlying security
subject to a put will be partially offset by the amount of the premium paid for
the put option and any related transaction costs. Prior to its expiration, a put
option may be sold in a closing sale transaction and profit or loss from a sale
will depend on whether the amount received is more or less than the premium paid
for the put option plus the related transaction costs. A closing sale
transaction cancels out a Portfolio's position as purchaser of an option by
means of an offsetting sale of an identical option prior to the expiration of
the option it has purchased. In certain circumstances, a Portfolio may purchase
call options on securities held in its investment portfolio on which it has
written call options or on securities which it intends to purchase.
OPTIONS ON FOREIGN CURRENCIES
The Portfolios may purchase and write options on foreign currencies for
hedging purposes in a manner similar to that in which futures contracts on
foreign currencies, or forward contracts, will be utilized. For example, a
decline in the dollar value of a foreign currency in which portfolio securities
are denominated will reduce the dollar value of such securities, even if their
value in the foreign currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, the Portfolios may purchase
put options on the foreign currency. If the value of the currency does decline,
the Portfolio will have the right to sell such currency for a fixed amount in
dollars and will thereby offset, in whole or in part, the adverse effect on its
portfolio which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Portfolios may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates.
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As in the case of other types of options, however, the benefit to the Portfolios
deriving from purchases of foreign currency options will be reduced by the
amount of the premium and related transaction costs. In addition, where currency
exchange rates do not move in the direction or to the extent anticipated, a
Portfolio could sustain losses on transactions in foreign currency options which
would require it to forego a portion or all of the benefits of advantageous
changes in such rates.
Each Portfolio may write options on foreign currencies for the same types
of hedging purposes. For example, where a Portfolio anticipates a decline in the
dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the anticipated decline occurs,
the option will most likely not be exercised, and the diminution in value of
portfolio securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, a
Portfolio could write a put option on the relevant currency which, if rates move
in the manner projected, will expire unexercised and allow the Portfolio to
hedge such increased cost up to the amount of the premium. As in the case of
other types of options, however, the writing of a foreign currency option will
constitute only a partial hedge up to the amount of the premium, and only if
rates move in the expected direction. If this does not occur, the option may be
exercised and a Portfolio would be required to purchase or sell the underlying
currency at a loss which may not be offset by the amount of the premium. Through
the writing of options on foreign currencies, a Portfolio also may be required
to forego all or a portion of the benefits which might otherwise have been
obtained from favorable movements in exchange rates.
Each Portfolio intends to write covered call options on foreign currencies.
A call option written on a foreign currency by a Portfolio is "covered" if the
Portfolio owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without additional
cash consideration (or for additional cash consideration held in a segregated
account by the Custodian) upon conversion or exchange of other foreign currency
held in its portfolio. A call option is also covered if a Portfolio has a call
on the same foreign currency and in the same principal amount as the call
written where the exercise price of the call held (a) is equal to or less than
the exercise price of the call written or (b) is greater than the exercise price
of the call written if the difference is maintained by the Portfolio in cash
or liquid securities in a segregated account with the Custodian.
Each Portfolio also intends to write call options on foreign currencies
that are not covered for cross-hedging purposes. A call option on a foreign
currency is for cross-hedging purposes if it is not covered but is designed to
provide a hedge against a decline in the U.S. dollar value of a security which
the Portfolio owns or has the right to acquire and which is denominated in the
currency underlying the option due to an adverse change in the exchange rate. In
such circumstances, the Portfolio will
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collateralize the option by maintaining in a segregated account with the
Custodian, cash or liquid securities in an amount not less than the value of the
underlying foreign currency in U.S. dollars marked to market daily.
RISKS OF OPTIONS ON FUTURES CONTRACTS, FORWARD CONTRACTS AND OPTIONS ON FOREIGN
CURRENCIES
Options on foreign currencies and forward contracts are not traded on
contract markets regulated by the CFTC or (with the exception of certain foreign
currency options) by the SEC. To the contrary, such instruments are traded
through financial institutions acting as market-makers, although foreign
currency options are also traded on certain national securities exchanges, such
as the Philadelphia Stock Exchange and the Chicago Board Options Exchange,
subject to the regulation of the SEC. Similarly, options on currencies may be
traded over-the-counter. In an over-the-counter trading environment, many of the
protections afforded to exchange participants will not be available. For
example, there are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a period of time.
Although the purchaser of an option cannot lose more than the amount of the
premium plus related transaction costs, this entire amount could be lost.
Moreover, the option writer and a trader of forward contracts could lose amounts
substantially in excess of their initial investments, due to the margin and
collateral requirements associated with such positions.
Options on foreign currencies traded on national securities exchanges are
within the jurisdiction of the SEC, as are other securities traded on such
exchanges. As a result, many of the protections provided to traders on organized
exchanges will be available with respect to such transactions. In particular,
all foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the Options Clearing Corporation ("OCC"),
thereby reducing the risk of counterparty default. Furthermore, a liquid
secondary market in options traded on a national securities exchange may be more
readily available than in the over-the-counter market, potentially permitting
the Portfolios to liquidate open positions at a profit prior to exercise or
expiration, or to limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however,
is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effect of other
political and economic events. In addition, exchange-traded options of foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical
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changes in the mechanics of delivery of currency, the fixing of dollar
settlement prices or prohibitions, on exercise.
In addition, futures contracts, options on futures contracts, forward
contracts and options on foreign currencies may be traded on foreign exchanges.
Such transactions are subject to the risk of governmental actions affecting
trading in, or the prices of, foreign currencies or securities. The value of
such positions also could be adversely affected by (i) other complex foreign
political and economic factors, (ii) lesser availability than in the United
States of data on which to make a trading decision, (iii) delays in a
Portfolio's ability to act upon economic events occurring in foreign markets
during non-business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) lesser trading volume.
INTEREST RATE SWAP TRANSACTIONS
Each Portfolio may enter into swap contracts. A swap is an agreement to
exchange the return generated by one instrument for the return generated by
another instrument. The payment streams are calculated by reference to a
specific index and agreed upon notional amount. The term "specified index"
includes fixed interest rates, total return on interest rate indices and fixed
income indices, (as well as amounts derived from arithmetic operations on these
indices). For example, a Portfolio may agree to swap the return generated by a
fixed-income index for the return generated by a second fixed-income index.
The Portfolios will usually enter into swaps on a net basis, i.e., the two
payment streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with a Portfolio receiving or paying, as the case
may be, only the net amount of the two payments. A Portfolio's obligations under
a swap agreement will be accrued daily (offsetting against any amounts owing to
the Portfolio) and any accrued but unpaid net amounts owed to a swap
counterparty will be covered by the maintenance of a segregated account
consisting of cash, U.S. government securities, or high grade debt obligations,
to avoid any potential leveraging of the Portfolio. Since swaps will be entered
into for good faith hedging purposes, the Adviser and the Fund believe such
obligations do not constitute "senior securities" under the 1940 Act and,
accordingly, will not treat them as being subject to its borrowing restrictions.
Interest rate swaps do not involve the delivery of securities, other
underlying assets, or principal. Accordingly, the risk of loss with respect to
interest rate swaps is limited to the net amount of interest payments that a
Portfolio is contractually obligated to make. If the other party to the interest
rate swap defaults, a Portfolio's risk of loss consists of the net amount of
interest payments that a Portfolio is contractually entitled to receive. If
there is a default by the counterparty, the Portfolio may have contractual
remedies pursuant to the agreements related to the transaction. The swap market
has grown substantially in recent years with a large number of banks and
investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid.
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PURCHASE AND REDEMPTION OF SHARES
Shares of each Portfolio may be purchased without sales commission at the
net asset value per share next determined after an order is received in proper
form by the Fund, and payment is received by the Fund's custodian. An order
received in proper form prior to the 4:00 p.m. close of the New York Stock
Exchange (the "Exchange") will be executed at the price computed on the date of
receipt; and an order received not in proper form or after the 4:00 p.m. close
of the Exchange will be executed at the price computed on the next day the
Exchange is open after proper receipt. The Exchange will be closed on the
following days: New Year's Day, Martin Luther King, Jr.'s Birthday, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
Each Portfolio reserves the right in its sole discretion (1) to suspend the
offering of its shares, (2) to reject purchase orders when in the judgment of
management such rejection is in the best interests of the Fund, and (3) to
reduce or waive the minimum for initial and subsequent investment for certain
fiduciary accounts such as employee benefit plans or under circumstances where
certain economies can be achieved in sales of a Portfolio's shares.
Each Portfolio may suspend redemption privileges or postpone the date of
payment (1) during any period that both the Exchange and custodian bank are
closed or trading on the Exchange is restricted as determined by the SEC, (2)
during any period when an emergency exists as defined by the rules of the SEC as
a result of which it is not reasonably practicable for a Portfolio to dispose of
securities owned by it or to fairly determine the value of its assets, and (3)
for such other periods as the SEC may permit. The Fund has made an election with
the SEC to pay in cash all redemptions requested by any shareholder of record
limited in amount during any 90-day period to the lesser of $250,000 or 1% of
the net assets of the Fund at the beginning of such period. Such commitment is
irrevocable without the prior approval of the SEC. Redemptions in excess of the
above limits may be paid, in whole or in part, in investment securities or in
cash as the Board of Trustees may deem advisable; however, payment will be made
wholly in cash unless the Board of Trustees believe that economic or market
conditions exist which would make such a practice detrimental to the best
interests of the Fund. If redemptions are paid in investment securities, such
securities will be valued as set forth in the Prospectus under "How Share Prices
are Determined", and a redeeming shareholder would normally incur brokerage
expenses if those securities were converted to cash.
No charge is made by a Portfolio for redemptions. Any redemption may be
more or less than the shareholder's initial cost depending on the market value
of the securities held by the Portfolio.
SIGNATURE GUARANTEES
To protect your account, the Fund and Chase Global Funds Services Company
("CGFSC") from fraud, signature guarantees are required for (1) redemptions
where the
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proceeds are to be sent to someone other than the registered shareowner(s) or
the registered address or (2) share transfer requests.
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, and as
further described in each Portfolio's Prospectus. The signature guarantee must
appear either: (1) on the written request for redemption; (2) on a separate
instrument for assignment ("stock power") which should specify the total number
of shares to be redeemed; or (3) on all stock certificates tendered for
redemption and, if shares held by the Fund are also being redeemed, on the
letter or stock power.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of each Portfolio may be exchanged for
Institutional Class Shares of any other UAM Funds or UAM Funds, Inc. Portfolio.
Exchange requests should be made by calling the Fund (1-800-638-7983) or by
writing to UAM Funds, UAM Funds Service Center, c/o Chase Global Funds Services
Company, P.O. Box 2798, Boston, MA 02208-2798. The exchange privilege is only
available with respect to Portfolios that are qualified for sale in the
shareholder's state of residence.
Any such exchange will be based on the respective net asset values of the
shares involved. There is no sales commission or charge of any kind. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objective of the Portfolio to be purchased. You may
obtain a Prospectus for the Portfolio(s) you are interested in by calling the
UAM Funds Service Center at 1-800-638-7983.
Neither the Fund nor CGFSC will be responsible for the authenticity of the
exchange instructions received by telephone. Exchanges may also be subject to
limitations as to amounts or frequency and to other restrictions established by
the Board of Trustees to assure that such exchanges do not disadvantage the Fund
and its shareholders.
For Federal income tax purposes an exchange between Portfolios is a taxable
event, and, accordingly, a capital gain or loss may be realized. In a revenue
ruling relating to circumstances similar to the Fund's, an exchange between
series of a Fund was also deemed to be a taxable event. It is likely, therefore,
that a capital gain or loss would be realized on an exchange between Portfolios;
you may want to consult your tax adviser for further information in this regard.
The exchange privilege may be modified or terminated at any time.
TRANSFER OF SHARES
Shareholders may transfer shares to another person by making a written
request to the Fund. The request should clearly identify the account and number
of shares to be transferred, and include the signature of all registered owners
and all stock certificates,
14
<PAGE>
if any, which are subject to the transfer. The signature on the letter of
request, the stock certificate or any stock power must be guaranteed in the same
manner as described under "Purchase and Redemption of Shares." As in the case of
redemptions, the written request must be received in good order before any
transfer can be made.
INVESTMENT LIMITATIONS
The following limitations supplement those set forth in the Prospectuses.
Whenever an investment limitation sets forth a percentage limitation on
investment or utilization of assets, such limitation shall be determined
immediately after and as a result of a Portfolio's acquisition of such security
or other asset. Accordingly, any later increase or decrease resulting from a
change in values, net assets or other circumstances will not be considered when
determining whether the investment complies with a Portfolio's investment
limitations. Investment limitations (1), (2), (3), (4) and (6) are classified as
fundamental. A Portfolio's fundamental investment limitations cannot be changed
without approval by a "majority of the outstanding shares" (as defined in the
1940 Act) of the Portfolio. Each Portfolio will not:
(1) invest in physical commodities or contracts on physical commodities;
(2) purchase or sell real estate or real estate limited partnerships,
although it may purchase and sell securities of companies which deal
in real estate and may purchase and sell securities which are secured
by interests in real estate;
(3) make loans except (i) by purchasing debt securities in accordance with
its investment objectives and (ii) by lending its portfolio securities
to banks, brokers, dealers and other financial institutions so long as
such loans are not inconsistent with the 1940 Act, or the rules and
regulations or interpretations of the SEC thereunder;
(4) underwrite the securities of other issuers;
(5) invest in stock, bond or interest rate futures and/or options on
futures unless (i) not more than 5% of the Portfolio's assets are
required as deposit to secure obligations under such futures and/or
options on futures contracts provided, however, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money
amount may be excluded in computing such 5% and (ii) not more than 20%
of the Portfolio's assets are invested in stock or bond futures and
options;
(6) issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit a Portfolio from (i)
making any permitted borrowings, mortgages or pledges, or (ii)
entering into options, futures or repurchase transactions;
(7) purchase on margin or sell short except as specified in (5) above;
15
<PAGE>
(8) invest more than an aggregate of 15% of the net assets of the
Portfolio, determined at the time of investment, in securities subject
to legal or contractual restrictions on resale or securities for which
there are no readily available markets; and
(9) invest for the purpose of exercising control over management of any
company.
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The Officers of the Fund manage its day-to-day operations and are
responsible to the Fund's Board of Trustees. The Trustees set broad policies for
the Fund and elect its Officers. The following is a list of the Trustees and
Officers of the Fund and a brief statement of their present positions, date of
birth, address and principal occupations during the past five years. Those
people who are "interested persons" of the Fund as that term is defined by the
1940 Act are indicated by an asterisk (*).
JOHN T. BENNETT, JR. (1/26/29), Trustee; College Road--RFD 3, Meredith, NH
03253; President of Squam Investment Management Company, Inc. and Great Island
Investment Company, Inc.; President of Bennett Management Company from 1988 to
1993.
NANCY J. DUNN (8/14/51), Trustee; 10 Garden Street, Cambridge, MA 02138; Vice
President for Finance and Administration and Treasurer of Radcliffe College
since 1991.
PHILIP D. ENGLISH (8/5/48), Trustee; 16 West Madison Street, Baltimore, MD
21201; President and Chief Executive Officer of Broventure Company, Inc.;
Chairman of the Board of Chektec Corporation and Cyber Scientific, Inc.
WILLIAM A. HUMENUK (4/21/42), Trustee; 4000 Bell Atlantic Tower, 1717 Arch
Street, Philadelphia, PA 19103; Partner in the Philadelphia office of the law
firm Dechert Price & Rhoads; Director, Hofler Corp.
NORTON H. REAMER* (3/21/35), Trustee; One International Place, Boston, MA 02110;
President and Chairman of the Fund; President, Chief Executive Officer and a
Director of United Asset Management Corporation; Director, Partner or Trustee of
each of the Investment Companies of the Eaton Vance Group of Mutual Funds.
CHARLES H. SALISBURY, JR.* (8/24/40), Trustee; One International Place, Boston,
MA 02110; Executive Vice President of United Asset Management Corporation;
formerly an executive officer and Director of T. Rowe Price and President and
Chief Investment Officer of T. Rowe Price Trust Company.
PETER M. WHITMAN, JR.* (7/1/43), Trustee; One Financial Center, Boston, MA
02111; President and Chief Investment Officer of Dewey Square Investors
Corporation ("DSI") since 1988; Director and Chief Executive Officer of H. T.
Investors, Inc., formerly a subsidiary of DSI.
WILLIAM H. PARK* (9/19/47), Vice President; One International Place, Boston, MA
02110; Executive Vice President and Chief Financial Officer of United Asset
Management Corporation.
16
<PAGE>
GARY L. FRENCH* (7/4/51), Treasurer; 211 Congress Street, Boston, MA 02110;
President of UAM Fund Services, Inc. and UAM Fund Distributors, Inc.; formerly
Vice President of Operations, Development and Control of Fidelity Investment in
1995; Treasurer of the Fidelity Group of Mutual Funds from 1991 to 1995.
MICHAEL E. DEFAO* (2/28/68), Secretary; 211 Congress Street, Boston, MA 02110;
Vice President and General Counsel of UAM Fund Services, Inc. and UAM Fund
Distributors, Inc.; Associate Attorney of Ropes & Gray (a law firm) from 1993 to
1995.
ROBERT R. FLAHERTY* (9/18/63), Assistant Treasurer; 211 Congress Street, Boston,
MA 02110; Vice President of UAM Fund Services, Inc.; formerly Manager of Fund
Administration and Compliance of Chase Global Fund Services Company from 1995 to
1996; Deloitte & Touche LLP from 1985 to 1995, Senior Manager.
KARL O. HARTMANN* (3/7/55), Assistant Secretary; 73 Tremont Street, Boston, MA
02108; Senior Vice President and General Counsel of Chase Global Funds Services
Company.
GORDON M. SHONE* (7/30/56), Assistant Treasurer; 73 Tremont Street, Boston, MA
02108; Vice President of Fund Administration and Compliance of Chase Global
Funds Services Company; formerly Senior Audit Manager of Coopers & Lybrand LLP
(1983-1996).
REMUNERATION OF TRUSTEES AND OFFICERS
The Fund pays each Trustee, who is not also an officer or affiliated
person, a $150 quarterly retainer fee per active Portfolio which currently
amounts to $1,050 per quarter. In addition, each unaffiliated Trustee receives a
$2,000 meeting fee which is aggregated for all the Trustees and allocated
proportionately among the Portfolios of the Fund and UAM Funds, Inc., and
reimbursement for travel and other expenses incurred while attending Board
meetings. Trustees who are also officers or affiliated persons receive no
remuneration for their service as Trustees. The Fund's officers and employees
are paid by either the Adviser, United Asset Management Corporation ("UAM"), FSI
or CGFSC and receive no compensation from the Fund. As of June 30, 1997, the
Trustees and officers of the Fund owned less than 1% of the Fund's outstanding
shares.
The following table shows aggregate compensation paid to each of the Fund's
Trustees by the Fund and total compensation paid by the Fund and UAM Funds, Inc.
(collectively the "Fund Complex") in the fiscal year ended April 30, 1997.
17
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
TOTAL
PENSION OR COMPENSATION
RETIREMENT ESTIMATED FROM REGISTRANT
AGGREGATE BENEFITS ACCRUED ANNUAL AND
NAME OF PERSON, COMPENSATION AS PART OF BENEFITS UPON FUND COMPLEX
POSITION FROM REGISTRANT FUND EXPENSES RETIREMENT PAID TO TRUSTEES
- ---------------------- --------------------- ----------------- ------------- ----------------
<S> <C> <C> <C> <C>
John T. Bennett, Jr.
Trustee............. $4,874 0 0 $31,700
J. Edward Day
Former Trustee...... $2,168 0 0 $15,550
Philip D. English
Trustee............. $4,874 0 0 $31,700
William A. Humenuk
Trustee............. $4,874 0 0 $31,700
Nancy J. Dunn
Trustee............. $ 0 0 0 $ 0
</TABLE>
PRINCIPAL HOLDERS OF SECURITIES
As of June 16, 1997, the following persons or organizations held of record
or beneficially 5% or more of the shares of a Portfolio:
Chicago Asset Management Value/Contrarian Portfolio Institutional Class
Shares: UMBSC & Co, FBO Interstate Brands Conserv. Growth, P.O. Box 419260,
Kansas City, MO, 55.6%*; UMBSC & Co., FBO Interstate Brands Moderate Growth,
P.O. Box 419260, Kansas City, MO, 23.8%*; UMBSC & Co., FBO Interstate Brands
Aggressive Growth, P.O. Box 419260, Kansas City, MO, 9.5%*; and United Asset
Management Corp., Profit Sharing and 401K Plan Trustees, P.O. Box 1443, Chicago,
IL, 5.2%*.
Chicago Asset Management Intermediate Bond Portfolio Institutional Class
Shares: Edward Usher and Francis McCartin Trustees FBO Pipe Fitters Pension
Fund Local 597, c/o Chicago Asset Management Company, 70 W. Madison, 56th Floor,
Chicago, IL, 90.4%*; and Hartnat & Co., American Eurocopter, P.O. Box 92800,
Rochester, NY, 5.9%*.
The person(s) or organization(s) listed above as owning 25% or more of the
outstanding shares of the Portfolio may be presumed to "control" (as that term
is defined in the 1940 Act) such Portfolio. As a result, those persons or
organizations could have the ability to vote a majority of the shares of the
Portfolio on any matter requiring the approval of shareholders of such
Portfolio.
________
* Denotes shares held by a trustee or other fiduciary for which beneficial
ownership is disclaimed or presumed disclaimed.
18
<PAGE>
INVESTMENT ADVISER
CONTROL OF ADVISER
The Adviser is a wholly-owned subsidiary of UAM, a holding company
incorporated in Delaware in December 1980 for the purpose of acquiring and
owning firms engaged primarily in institutional investment management. Since its
first acquisition in August 1983, UAM has acquired or organized over 45 such
wholly-owned affiliated firms (the "UAM Affiliated Firms"). UAM believes that
permitting UAM Affiliated Firms to retain control over their investment advisory
decisions is necessary to allow them to continue to provide investment
management services that are intended to meet the particular needs of their
respective clients.
Accordingly, after acquisition by UAM, UAM Affiliated Firms continue to
operate under their own firm name, with their own leadership and individual
investment philosophy and approach. Each UAM Affiliated Firm manages its own
business independently on a day-to-day basis. Investment strategies employed and
securities selected by UAM Affiliated Firms are separately chosen by each of
them. Several UAM Affiliated Firms also act as investment advisers to separate
series or Portfolios of UAM Funds, Inc., a registered investment company.
PHILOSOPHY AND STYLE
Chicago Asset Management Value/Contrarian Portfolio. The Adviser views
itself as an equity manager who, by combining value judgment and contrarian
opinion, strives to outperform the market and other money managers not by market
timing, but by focusing on the selection of individual securities. Categorized
as a large cap, bottom-up, value/contrarian, the Adviser's philosophy and
strategy are qualitative and have remained the same since the inception of the
firm.
Chicago Asset Management Intermediate Bond Portfolio. The Adviser's
approach is predicated on a controlled risk strategy that avoids dependence on
interest rate anticipation while emphasizing value added through sector rotation
and yield curve analysis. The firm seeks to add value by improving the odds in a
risk/reward equation. The Adviser focuses on the more traditional aspects of
active portfolio management by scrutinizing sectors, coupons, call features, and
the shape of the yield curve. Portfolios are constructed for income and safety.
ADVISORY FEES
As compensation for services rendered by the Adviser under the Investment
Advisory Agreements, the Portfolio pays the Adviser an annual fee in monthly
installments, calculated by applying the following annual percentage rates to
each Portfolio's average daily net assets for the month:
<TABLE>
<S> <C>
Chicago Asset Management Value/Contrarian Portfolio... 0.625%
Chicago Asset Management Intermediate Bond Portfolio.. 0.48%
</TABLE>
19
<PAGE>
From December 16, 1994 (date of commencement) to April 30, 1995, the
Chicago Asset Management Value/Contrarian Portfolio paid advisory fees of $0.
During this period, the Adviser voluntarily waived advisory fees of $1,261. For
the fiscal years ended April 30, 1996 and April 30, 1997, the Chicago Asset
Management Value/Contrarian Portfolio paid advisory fees of $0. During these
periods, the Adviser voluntarily waived advisory fees of $5,000 and $13,652,
respectively. Until further notice, the Adviser has voluntarily agreed to waive
its advisory fee and to assume as the Adviser's own expense certain operating
expenses payable by the Portfolio (excluding interest, taxes and extraordinary
expenses), if necessary, in order to keep the Portfolio's total annual operating
expenses from exceeding 0.95%.
For the period from January 24, 1995 (date of commencement) to April 30,
1995, the Chicago Asset Management Intermediate Bond Portfolio paid advisory
fees of $0. During this period, the Adviser voluntarily waived advisory fees of
$6,578. For the fiscal years ended April 30, 1996 and April 30, 1997, the
Chicago Asset Management Intermediate Bond Portfolio paid advisory fees of $0.
During these periods, the Adviser voluntarily waived advisory fees of $31,000
and $41,438, respectively. Until further notice, the Adviser has voluntarily
agreed to waive its advisory fee and to assume as the Adviser's own expense
certain operating expenses payable by the Portfolio, if necessary, in order to
keep the Portfolio's total annual operating expenses from exceeding 0.80%.
PORTFOLIO TRANSACTIONS
The Investment Advisory Agreements authorize the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolios and directs the Adviser to use its best efforts to
obtain the best execution with respect to all transactions for the Portfolios.
The Adviser may, however, consistent with the interests of the Portfolios,
select brokers on the basis of the research, statistical and pricing services
they provide to the Portfolios. Information and research received from such
brokers will be in addition to, and not in lieu of, the services required to be
performed by the Adviser under the Investment Advisory Agreements. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided that such
commissions are paid in compliance with the Securities Exchange Act of 1934, as
amended, and that the Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Adviser to the Portfolios and the Adviser's other clients.
It is not the Fund's practice to allocate brokerage or effect principal
transactions with dealers on the basis of sales of Fund shares which may be made
through broker-dealer firms. However, the Adviser may place portfolio orders
with qualified broker-dealers who refer clients to the Adviser. During the
fiscal years ended April 30, 1995, April 30, 1996, and April 30, 1997, Chicago
Asset Management Value/Contrarian Portfolio paid aggregate brokerage commissions
of $556, $892, and $20,946, respectively.
20
<PAGE>
Some securities considered for investment by the Portfolios may also be
appropriate for other clients served by the Adviser. If purchases or sales of
securities consistent with the investment policies of a Portfolio and one or
more of these other clients served by the Adviser is considered at or about the
same time, transactions in such securities will be allocated among the Portfolio
and clients in a manner deemed fair and reasonable by the Adviser. Although
there is no specified formula for allocating such transactions, the various
allocation methods used by the Adviser, and the results of such allocations, are
subject to periodic review by the Fund's Board of Trustees.
ADMINISTRATIVE SERVICES
As stated in the Prospectus, the Board of Trustees of the Fund approved a
new Fund Administration Agreement between FSI, a wholly-owned subsidiary of UAM,
and the Fund. The Fund's Trustees also approved a Mutual Fund Services Agreement
between FSI and CGFSC. The services provided by FSI and CGFSC and the basis of
the fees payable by the Fund under the Fund Administration Agreement are
described in the Portfolios' Prospectus. Prior to April 15, 1996, CGFSC or its
predecessor, Mutual Funds Service Company, provided certain administrative
services to the Fund under an Administration Agreement between the Fund and U.S.
Trust Company of New York.
The basis of the fees paid to CGFSC for the 1995 fiscal year was as
follows: the Fund paid a monthly fee for its services which on an annualized
basis equaled 0.20% of the first $200 million in combined assets; plus 0.12% of
the next $800 million in combined assets; plus 0.08% on assets over $1 billion
but less than $3 billion; plus 0.06% on assets over $3 billion. The fees were
allocated among the Portfolios on the basis of their relative assets and were
subject to a designated minimum fee schedule per Portfolio, which ranged from
$2,000 per month upon inception of a Portfolio to $70,000 annually after two
years. The services currently provided by FSI as Administrator to the Fund and
CGFSC as Sub-Administrator and the basis of the current fees payable are
described in the Portfolios' Prospectuses.
The following table shows administrative fees paid by each Portfolio to FSI
and CGFSC during the last three fiscal years:
<TABLE>
<CAPTION>
FSI CGFSC
--------------------- ----------------------------------------
PERIOD
FROM YEAR INCEPTION YEAR YEAR
4/15/96 TO ENDED TO ENDED ENDED INCEPTION
4/30/96 4/30/97 4/30/95 4/30/96 4/30/97 DATE
<S> <C> <C> <C> <C> <C> <C>
Chicago Asset Management
Value/Contrarian Portfolio $2,523 $1,287 $12,304 $49,477 $74,076 12/16/94
Chicago Asset Management
Intermediate Bond Portfolio $2,640 $3,427 $ 9,785 $48,360 $76,798 1/24/95
</TABLE>
21
<PAGE>
PERFORMANCE CALCULATIONS
PERFORMANCE
The Portfolios may from time to time quote various performance figures to
illustrate past performance. Performance quotations by investment companies are
subject to rules adopted by the SEC, which require the use of standardized
performance quotations or, alternatively, that every non-standardized
performance quotation furnished by the Fund be accompanied by certain
standardized performance information computed as required by the SEC. Current
yield and average annual compounded total return quotations used by the Fund are
based on the standardized methods of computing performance mandated by the SEC.
An explanation of those methods used to compute or express performance follows.
YIELD
Current yield reflects the income per share earned by a Portfolio's
investment. The current yield of a Portfolio is determined by dividing the net
investment income per share earned during a 30-day base period by the maximum
offering price per share on the last day of the period and annualizing the
result. Expenses accrued for the period include any fees charged to all
shareholders during the base period. The yield for the Intermediate Bond
Portfolio for the 30-day period ended on April 30, 1997 was 5.88%.
A yield figure is obtained using the following formula:
Yield = 2[(a - b + 1)/6/ - 1]
-----
cd
where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that
were entitled to receive income distributions
d = the maximum offering price per share on the last day of the period.
TOTAL RETURN
The average annual total return of a Portfolio is determined by finding the
average annual compounded rates of return over 1, 5 and 10 year periods that
would equate an initial hypothetical $1,000 investment to its ending redeemable
value. The calculation assumes that all dividends and distributions are
reinvested when paid. The quotation assumes the amount was completely redeemed
at the end of each 1, 5 and 10 year period and the deduction of all applicable
Fund expenses on an annual basis.
The average annual total return for the Chicago Asset Management
Intermediate Bond Portfolio and Chicago Asset Management Value/Contrarian
Portfolio from inception and for the
22
<PAGE>
one year period ended on the date of the Financial Statements included herein
are as follows:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
SINCE INCEPTION
ONE YEAR THROUGH
ENDED YEAR ENDED
APRIL 30, APRIL 30, INCEPTION
1997 1997 DATE
---------- ---------------- ---------
<S> <C> <C> <C>
Intermediate Bond Portfolio.. 5.53% 7.78% 1/24/95
Value/Contrarian Portfolio... 3.72% 18.19% 12/16/94
</TABLE>
These figures are calculated according to the following formula:
P(1 + T)/n/ = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10 year periods at the end of the 1, 5 or 10
year periods (or fractional portion thereof).
COMPARISONS
To help investors better evaluate how an investment in either Portfolio of
the Fund might satisfy their investment objective, advertisements regarding the
Fund may discuss various measures of Fund performance as reported by various
financial publications. Advertisements may also compare performance (as
calculated above) to performance as reported by other investments, indices and
averages. Please see Appendix B for publications, indices and averages which may
be used.
In assessing such comparisons of performance, an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the composition of investments in a Portfolio, that
the averages are generally unmanaged, and that the items included in the
calculations of such averages may not be identical to the formula used by the
Portfolio to calculate its performance. In addition, there can be no assurance
that the Portfolio will continue this performance as compared to such other
averages.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized under the name The Regis Fund II as a Delaware
business trust on May 18, 1994. On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust". The Fund's principal executive office is located
at One
23
<PAGE>
International Place, 44th Floor, Boston, MA 02110; however, all investor
correspondence should be directed to the Fund at UAM Funds Service Center, c/o
Chase Global Funds Services Company, P.O. Box 2798, Boston, MA 02208-2798. The
Fund's Agreement and Declaration of Trust permits the Fund to issue an unlimited
number of shares of beneficial interest, without par value. The Trustees have
the power to designate one or more series ("Portfolios") or classes of shares of
beneficial interest without further action by shareholders.
On each matter submitted to a vote of the shareholders, each holder of a
share shall be entitled to one vote for each whole share and a fractional vote
for each fractional share standing in his or her name on the books of the Fund.
In the event of liquidation of the Fund, the holders of the shares of each
Portfolio or any class thereof that has been established and designated shall be
entitled to receive, when and as declared by the Trustees, the excess of the
assets belonging to that Portfolio, or in the case of a class, belonging to that
Portfolio and allocable to that class, over the liabilities belonging to that
Portfolio or class. The assets so distributable to the holders of shares of any
particular Portfolio or class thereof shall be distributed to the holders in
proportion to the number of shares of that Portfolio or class thereof held by
them and recorded on the books of the Fund. The liquidation of any Portfolio or
class thereof may be authorized at any time by vote of a majority of the
Trustees then in office.
Shareholders of both Classes of the Fund's Portfolios have no pre-emptive
or other rights to subscribe to any additional shares or other securities issued
by the Fund or any Portfolio, except as the Trustees in their sole discretion
shall have determined by vote. Both Institutional Class and Service Class Shares
represent an interest in the same assets of a Portfolio and are identical in all
respects except that the Service Class 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.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund's policy is to distribute substantially all of each Portfolio's
net investment income, if any, together with any net realized capital gains
annually in the amount and at the times that will avoid both income (including
capital gains) taxes incurred and the imposition of the Federal excise tax on
undistributed income and capital gains. The amounts of any income dividends or
capital gains distributions cannot be predicted. See discussion under
"Dividends, Capital Gains Distributions and Taxes" in the Prospectuses.
Any dividend or distribution paid shortly after the purchase of shares of a
Portfolio by an investor may have the effect of reducing the per share net asset
value of the Portfolio by the per share amount of the dividend or distribution.
Furthermore, such dividends or distributions, although in effect a return of
capital, are subject to income taxes as set forth in the Prospectuses.
24
<PAGE>
As set forth in the Prospectuses, unless the shareholder elects otherwise
in writing, all dividend and capital gains distributions are automatically
received in additional shares of the respective Portfolio of the Fund at net
asset value (as of the business day following the record date). This will remain
in effect until the Fund is notified by the shareholder in writing at least
three days prior to the record date that either the Income Option (income
dividends in cash and capital gains distributions in additional shares at net
asset value) or the Cash Option (both income dividends and capital gains
distributions in cash) has been elected. An account statement is sent to
shareholders whenever an income dividend or capital gains distribution is paid.
Each Portfolio of the Fund will be treated as a separate entity (and hence
as a separate "regulated investment company") for Federal tax purposes. Any net
capital gains recognized by a Portfolio will be distributed to its investors
without need to offset (for Federal income tax purposes) such gains against any
net capital losses realized by another Portfolio.
CODE OF ETHICS
The Fund has adopted a Code of Ethics which restricts to a certain extent
personal transactions by access persons of the Fund and imposes certain
disclosure and reporting obligations.
FEDERAL TAXES
In order for each Portfolio to continue to qualify for Federal income tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), at least 90% of each Portfolio's gross income for
a taxable year must be derived from certain qualifying income, i.e., dividends,
interest, income derived from loans of securities and gains from the sale or
other disposition of stock, securities or foreign currencies, or other related
income, including gains from options, futures and forward contracts, derived
with respect to its business investing in stock, securities or currencies. Any
net gain realized from the closing out of futures contracts will, therefore,
generally be qualifying income for purposes of the 90% requirement.
Qualification as a regulated investment company also requires that less than 30%
of a Portfolio's gross income be derived from the sale or other disposition of
stock, securities, options, futures or forward contracts (including certain
foreign currencies not directly related to the Fund's business of investing in
stock or securities) held less than three months. In order to avoid realizing
excessive gains on securities held for less than three months, the Portfolio may
be required to defer the closing out of futures contracts beyond the time when
it would otherwise be advantageous to do so. It is anticipated that unrealized
gains on futures contracts which have been open for less than three months as of
the end of a Portfolio's taxable year, and which are recognized for tax
purposes, will not be considered gains on securities held for less than three
months for the purposes of the 30% test.
Except for transactions the Portfolios have identified as hedging
transactions, in general each Portfolio is required for Federal income tax
purposes to recognize as income
25
<PAGE>
for each taxable year its net unrealized gains and losses on some forward
currency and some futures contracts as of the end of each taxable year as well
as those actually realized during the year. In most cases, any such gain or loss
recognized with respect to a regulated futures contract is considered to be 60%
long-term capital gain or loss and 40% short-term capital gain or loss without
regard to the holding period of the contract. Recognized gain or loss
attributable to a foreign currency forward contract is treated as 100% ordinary
income. Furthermore, foreign currency futures contracts which are intended to
hedge against a change in the value of securities held by a Portfolio may affect
the holding period of such securities and, consequently, the nature of the gain
or loss on such securities upon disposition.
Each Portfolio will distribute to shareholders annually any net capital
gains which have been recognized for Federal income tax purposes (including
unrealized gains at the end of the Portfolio's taxable year on futures
transactions). Such distribution will be combined with distributions of capital
gains realized on the Portfolio's other investments, and shareholders will be
advised as to the character of the payment.
FINANCIAL STATEMENTS
The Financial Statements of the Chicago Asset Management Value/Contrarian
and Intermediate Bond Portfolios for the fiscal years ended April 30, 1996 and
April 30, 1997, and the Financial Highlights for the respective periods
presented and the report thereon of Price Waterhouse LLP, the Fund's independent
accountant which appear in the Portfolio's 1997 Financial Statements, are
attached to this SAI.
26
<PAGE>
APPENDIX A -- DESCRIPTION OF SECURITIES AND CORPORATE BOND RATINGS
I. DESCRIPTION OF CORPORATE BOND RATINGS
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA -- Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
AA -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
Moody's Investors Service, Inc. ("Moody's") applies numerical modifiers 1,
2 and 3 in the Aa and A rating categories. The modifier 1 indicates that the
security ranks at a higher end of the rating category, modifier 2 indicates a
mid-range rating and the modifier 3 indicates that the issue ranks at the lower
end of the rating category.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
BAA -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
CAA -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
CA -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
A-1
<PAGE>
STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA -- Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation and indicate an extremely strong capacity to pay
principal and interest.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only to a small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher rated categories.
BB, B, CCC, CC -- Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
C -- The rating C is reserved for income bonds on which no interest is
being paid.
D -- Debt rated D is in default, and payment of interest and/or repayment
of principal is in arrears.
II. DESCRIPTION OF U.S. GOVERNMENT SECURITIES
The term "U.S. Government Securities" refers to a variety of securities
which are issued or guaranteed by the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government.
U.S. Treasury securities are backed by the "full faith and credit" of the
United States. Securities issued or guaranteed by Federal agencies and U.S.
Government sponsored instrumentalities may or may not be backed by the full
faith and credit of the United States.
In the case of securities not backed by the full faith and credit of the
United States, the investor must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for ultimate repayment,
and may not be able to assess a claim against the United States itself in the
event the agency or instrumentality does not meet its commitment. Agencies which
are backed by the full faith and credit of the United States include the Export-
Import Bank, Farmers Home Administration, Federal Financing Bank, and others.
Certain agencies and instrumentalities, such as the GNMA are, in effect, backed
by the full faith and credit of the United States through provisions in their
charters that they may make "indefinite and unlimited" drawings on the U.S.
Treasury, if needed to service its debt. Debt from certain other agencies and
instrumentalities, including the Federal Home Loan Bank and FNMA, is not
guaranteed by the United States, but those institutions are protected by the
discretionary authority of the U.S. Treasury to purchase certain amounts of
their securities to assist the institution in meeting its debt
A-2
<PAGE>
obligations. Finally, other agencies and instrumentalities, such as the Farm
Credit System and the FHLMC, are federally chartered institutions under
Government supervision, but their debt securities are backed only by the credit
worthiness of those institutions, not the U.S. Government.
Some of the U.S. Government agencies that issue or guarantee securities
include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and the Tennessee Valley Authority.
III. DESCRIPTION OF COMMERCIAL PAPER
The Portfolios may invest in commercial paper (including variable amount
master demand notes) rated A-1 or better by Standard & Poor's Corporation
("S&P") or Prime-1 by Moody's or by S&P. Commercial paper refers to short-term,
unsecured promissory notes issued by corporations to finance short-term credit
needs. Commercial paper is usually sold on a discount basis and has a maturity
at the time of issuance not exceeding nine months. Variable amount master demand
notes are demand obligations that permit the investment of fluctuating amounts
at varying market rates of interest pursuant to arrangement between the issuer
and a commercial bank acting as agent for the payees of such notes whereby both
parties have the right to vary the amount of the outstanding indebtedness on the
notes. As variable amount master demand notes are direct lending arrangements
between a lender and a borrower, it is not generally contemplated that such
instruments will be traded, and there is no secondary market for these notes,
although they are redeemable (and thus immediately repayable by the borrower) at
face value, plus accrued interest, at any time. In connection with the
Portfolio's investment in variable amount master demand notes, the Adviser's
investment management staff will monitor, on an ongoing basis, the earning
power, cash flow and other liquidity ratios of the issuer and the borrower's
ability to pay principal and interest on demand.
Commercial paper rated A-1 by S&P has the following characteristics: (1)
liquidity ratios are adequate to meet cash requirements; (2) long-term senior
debt is rated "A" or better; (3) the issuer has access to at least two
additional channels of borrowing; (4) basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; (5) typically, the
issuer's industry is well established, and the issuer has a strong position
within the industry; and (6) the reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determine
whether the issuer's commercial paper is A-1, A-2 or A-3. The rating Prime-1 is
the highest commercial paper rating assigned by Moody's. Among the factors
considered by Moody's in assigning ratings are the following: (1) evaluation of
the management of the issuer; (2) economic evaluation of the issuer's industry
or industries and the appraisal of speculative-type risks which may be inherent
in certain areas; (3) evaluation of the issuer's products in relation to
completion and customer acceptance; (4) liquidity; (5) amount and quality of
long term debt; (6) trend of earnings over a period of ten years; (7) financial
strength of a parent company and the relationships which exist with the issuer;
and (8) recognition by the management of issuer of obligations which may be
present or may arise as a result of public interest questions and preparations
to meet such obligations.
IV. DESCRIPTION OF BANK OBLIGATIONS
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Certificates of deposit are negotiable short-term obligations of commercial
banks. Variable rate certificates of deposit are certificates of deposit on
which the interest rate is periodically adjusted prior to their stated maturity
based upon a specified market rate. As a result of these adjustments, the
interest rate on these obligations may increase or decrease periodically.
Frequently, dealers selling variable rate certificates of deposit to the
Portfolio will agree to repurchase such instruments, at the Portfolio's option,
at par on or near the coupon
A-3
<PAGE>
dates. The dealers' obligations to repurchase these instruments are subject to
conditions imposed by various dealers. Such conditions typically are the
continued credit standing of the issuer and the existence of reasonably orderly
market conditions. The Portfolio is also able to sell variable rate certificates
of deposit in the secondary market. Variable rate certificates of deposit
normally carry a higher interest rate than comparable fixed rate certificates of
deposit. A banker's acceptance is a time draft drawn on a commercial bank by a
borrower usually in connection with an international commercial transaction to
finance the import, export, transfer or storage of goods. The borrower is liable
for payment as well as the bank which unconditionally guarantees to pay the
draft at its face amount on the maturity date. Most acceptances have maturities
of six months or less and are traded in the secondary markets prior to maturity.
A-4
<PAGE>
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES
With respect to the comparative measures of performance for equity
securities described herein, comparisons of performance assume
reinvestment of dividends, except as otherwise stated below.
(a) Dow Jones Composite Average or its component averages -- an unmanaged
index composed of 30 blue-chip industrial corporation stocks (Dow
Jones Industrial Average), 15 utilities company stocks and 20
transportation stocks.
(b) Standard & Poor's 500 Stock Index or its component indices -- an
unmanaged index composed of 400 industrial stocks, 40 financial
stocks, 40 utilities stocks and 20 transportation stocks.
(c) Standard & Poor's 400 Mid Cap Index - consists of 400 domestic stocks
chosen for market size, liquidity, and industry group representation.
It is also a market-value weighted index and was the first benchmark
of mid cap stock price movement.
(d) The New York Stock Exchange composite or component indices --
unmanaged indices of all industrial, utilities, transportation and
finance stocks listed on the New York Stock Exchange.
(e) Wilshire 5000 Equity Index or its component indices -- represents the
return on the market value of all common equity securities for which
daily pricing is available.
(f) Lipper -- Mutual Fund Performance Analysis and Lipper -- Fixed Income
Fund Performance Analysis -- measure total return and average current
yield for the mutual fund industry. Rank individual mutual fund
performance over specified time periods, assuming reinvestment of all
distributions, exclusive of any applicable sales charges.
(g) Lipper Capital Appreciation Funds Index - a fund that aims at maximum
capital appreciation, frequently by means of 100% or more portfolio
turnover, leveraging, purchasing unregistered securities, purchasing
options, etc. The fund may take large cash positions.
(h) Lipper Small Cap Funds Index- a fund that by prospectus or portfolio
practice invests primarily in companies with market capitalizations
of less than $1 billion at the time of purchase.
(i) Morgan Stanley Capital International EAFE Index and World Index --
respectively, arithmetic, market value-weighted averages of the
performance of over 900 securities listed on the stock exchanges of
countries in Europe, Australia and the Far East, and over 1,400
securities listed on the stock exchanges of these continents,
including North America.
(j) Goldman Sachs 100 Convertible Bond Index -- currently includes 67
bonds and 33 preferred. The original list of names was generated by
screening for convertible issues of 100 million or greater in market
capitalization. The index is priced monthly.
(k) Salomon Brothers GNMA Index -- includes pools of mortgages originated
by private lenders and guaranteed by the mortgage pools of the
Government National Mortgage Association.
B-1
<PAGE>
(l) Salomon Brothers High Grade Corporate Bond Index -- consists of
publicly issued, non-convertible corporate bonds rated AA or AAA. It
is a value-weighted, total return index, including approximately 800
issues with maturities of 12 years or greater.
(m) Salomon Brothers Broad Investment Grade Bond Index -- is a market-
weighted index that contains approximately 4,700 individually priced
investment grade corporate bonds rated BBB or better, U.S.
Treasury/agency issues and mortgage pass through securities.
(n) Lehman Brothers Long-Term Treasury Bond Index -- is composed of all
bonds covered by the Lehman Brothers Treasury Bond Index with
maturities of 10 years or greater.
(o) Lehman Brothers Government/Corporate Index -- is a
combination of the Government and Corporate Bond Indices. The
Government Index includes public obligations of the U.S. Treasury,
issues of Government agencies, and corporate debt backed by the U.S.
Government. The Corporate Bond Index includes fixed-rate
nonconvertible corporate debt. Also included are Yankee Bonds and
nonconvertible debt issued by or guaranteed by foreign or
international governments and agencies. All issues are investment
grade (BBB) or higher, with maturities of at least one year and an
outstanding par value of at least $100 million for U.S. Government
issues and $25 million for others. Any security downgraded during the
month is held in the index until month-end and then removed. All
returns are market value weighted inclusive of accrued income.
(p) NASDAQ Industrial Index -- is composed of more than 3,000 industrial
issues. It is a value-weighted index calculated on price change only
and does not include income.
(q) Value Line -- composed of over 1,600 stocks in the Value Line
Investment Survey.
(r) Russell 2000 Index -- composed of the 2,000 smallest stocks in the
Russell 3000, a market value-weighted index of the 3,000 largest U.S.
publicly-traded companies.
(s) Salomon Brothers 3 Month T-Bill Average - the average return for all
Treasury bills for the previous three month period.
(t) Composite Indices -- 60% Standard & Poor's 500 Stock Index, 30%
Lehman Brothers Long-Term Treasury Bond and 10% U.S. Treasury Bills;
70% Standard & Poor's 500 Stock Index and 30% NASDAQ Industrial
Index; 35% Standard & Poor's 500 Stock Index and 65% Salomon Brothers
High Grade Bond Index; all stocks on the NASDAQ system exclusive of
those traded on an exchange, and 65% Standard & Poor's 500 Stock
Index and 35% Salomon Brothers High Grade Bond Index.
(u) CDA Mutual Fund Report published by CDA Investment Technologies, Inc.
-- analyzes price, current yield, risk, total return and average rate
of return (average compounded growth rate) over specified time
periods for the mutual fund industry.
(v) Mutual Fund Source Book published by Morningstar, Inc. -- analyzes
price, yield, risk and total return for equity funds.
B-2
<PAGE>
(w) Financial publications: Business Week, Changing Times, Financial
World, Forbes, Fortune, Money, Barron's, Consumer's Digest, Financial
Times, Global Investor, Wall Street Journal and Weisenberger
Investment Companies Service -- publications that rate fund
performance over specified time periods.
(x) Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics -- a statistical measure of change over
time in the price of goods and services in major expenditure groups.
(y) Stocks, Bonds, Bills and Inflation, published by Ibbotson Associates
-- historical measure of yield, price and total return for common and
small company stock, long-term government bonds, U.S. Treasury bills
and inflation.
(z) Savings and Loan Historical Interest Rates -- as published by the
U.S. Savings & Loan League Fact Book.
(aa) Historical data supplied by the research departments of First Boston
Corporation; the J.P. Morgan companies; Salomon Brothers; Merrill
Lynch, Pierce, Fenner & Smith; Lehman Brothers, Inc.; and Bloomberg
L.P.
B-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
UAM Funds Trust and Shareholders of
Chicago Asset Management Value/Contrarian Portfolio
Chicago Asset Management Intermediate Bond Portfolio
In our opinion, the accompanying statements of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Chicago Asset
Management Value/Contrarian Portfolio and the Chicago Asset Management
Intermediate Bond Portfolio (the "Portfolios"), Portfolios of UAM Funds Trust,
at April 30, 1997, and the results of each of their operations, the changes in
each of their net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Portfolios' management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at April 30, 1997 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
Price Waterhouse LLP
Boston, Massachusetts
June 9, 1997
- -------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED):
For the year ended April 30, 1997, the percentage of dividends paid from
investment company taxable income that qualify for the 70% dividend received
deduction for corporate shareholders is 55.86% for Chicago Asset Management
Value/Contrarian Portfolio.
The percentage of income earned from direct treasury obligations was 28.06%
for Chicago Asset Management Intermediate Bond Portfolio.
Chicago Asset Management Value/Contrarian Portfolio and Chicago Asset
Management Intermediate Bond Portfolio hereby designate approximately $54,000
and $8,000, respectively, as long-term capital gain dividends for the purpose
of the dividend paid deduction on its federal income tax returns.
22
<PAGE>
The accompanying notes are an integral part of the financial statements.
CHICAGO ASSET MANAGEMENT VALUE/CONTRARIAN PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE+
- --------------------------------------------------------------------------------
COMMON STOCKS (96.5%)
- --------------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE & DEFENSE (3.0%)
Raytheon Co............................................... 9,475 $ 413,347
- --------------------------------------------------------------------------------
AUTOMOTIVE (6.8%)
Ford Motor Co............................................. 13,450 467,388
General Motors Corp....................................... 8,125 470,234
-----------
937,622
- --------------------------------------------------------------------------------
BANKS (6.5%)
Banc One Corp............................................. 9,825 416,334
BankAmerica Corp.......................................... 4,075 476,266
-----------
892,600
- --------------------------------------------------------------------------------
BEVERAGES, FOOD & TOBACCO (6.7%)
IBP, Inc.................................................. 19,125 454,219
Sysco Corp................................................ 13,050 463,275
-----------
917,494
- --------------------------------------------------------------------------------
BROADCASTING & PUBLISHING (3.4%)
Deluxe Corp............................................... 15,375 470,859
- --------------------------------------------------------------------------------
CHEMICALS (6.2%)
Dow Chemical Co........................................... 5,550 471,056
Ethyl Corp................................................ 42,300 385,988
-----------
857,044
- --------------------------------------------------------------------------------
CONSUMER DURABLES (2.3%)
Goodyear Tire & Rubber Co................................. 5,975 314,434
- --------------------------------------------------------------------------------
ELECTRONICS (3.1%)
AMP, Inc.................................................. 11,775 422,428
- --------------------------------------------------------------------------------
ENERGY (3.2%)
Mobil Corp................................................ 3,400 442,000
- --------------------------------------------------------------------------------
HEALTH CARE (9.5%)
Aetna Inc................................................. 5,150 469,294
Columbia/HCA Healthcare Corp.............................. 12,075 422,625
United Healthcare Corp.................................... 8,700 423,037
-----------
1,314,956
- --------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
CHICAGO ASSET MANAGEMENT VALUE/CONTRARIAN PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- -------------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- -------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE (3.5%)
Chubb Corp.................................................. 8,475 $ 489,431
- -------------------------------------------------------------------------------
LODGING & RESTAURANTS (3.2%)
Darden Restaurants, Inc..................................... 57,225 443,494
- -------------------------------------------------------------------------------
MANUFACTURING (9.9%)
Eastman Kodak Co............................................ 5,550 463,425
Tenneco, Inc................................................ 11,100 442,612
Whitman Corp................................................ 19,900 460,188
----------
1,366,225
- -------------------------------------------------------------------------------
PAPER & PACKAGING (6.5%)
International Paper Co...................................... 11,075 467,919
Weyerhaeuser Co............................................. 9,475 433,481
----------
901,400
- -------------------------------------------------------------------------------
PHARMACEUTICALS (2.9%)
Pharmacia & Upjohn, Inc..................................... 13,400 396,975
- -------------------------------------------------------------------------------
RETAIL (6.9%)
Nordstrom, Inc.............................................. 12,250 480,813
The Limited, Inc............................................ 26,250 475,781
----------
956,594
- -------------------------------------------------------------------------------
TECHNOLOGY (6.6%)
*Apple Computer, Inc........................................ 24,175 410,975
International Business Machines Corp........................ 3,150 506,363
----------
917,338
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS (6.3%)
AT&T Corp................................................... 12,550 420,425
Bell Atlantic Corp.......................................... 6,675 452,231
----------
872,656
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $12,918,760)....................... 13,326,897
- -------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
CHICAGO ASSET MANAGEMENT VALUE/CONTRARIAN PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENT (3.1%)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Chase Securities, Inc., 5.20%, dated 04/30/97, due
05/01/97, to be repurchased at $424,061, collateralized
by $426,428 of various U.S. Treasury Notes, 4.75%-
6.125%, due from 08/31/98-10/31/98, valued at $424,341
(COST $424,000)......................................... $424,000 $ 424,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.6%) (COST $13,342,760)(a)........... 13,750,897
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (NET) (0.4%)................. 53,509
- -------------------------------------------------------------------------------
NET ASSETS (100%)......................................... $13,804,406
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
(a) The cost for federal income tax purposes was $13,342,997. At April 30,
1997, net unrealized appreciation for all securities based on tax cost was
$407,900. This consisted of aggregate gross unrealized appreciation for
all securities of $637,018 and aggregated gross unrealized depreciation
for all securities of $229,118.
8
<PAGE>
The accompanying notes are an integral part of the financial statements.
CHICAGO ASSET MANAGEMENT INTERMEDIATE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1997
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
- -------------------------------------------------------------------------------
CORPORATE BONDS & NOTES (56.1%)
- -------------------------------------------------------------------------------
<S> <C> <C>
BANKS (13.5%)
BankAmerica Corp. 7.625%, 06/15/04....................... $250,000 $ 255,273
Northern Trust Co. 6.50%, 05/01/03....................... 250,000 241,455
Norwest Corp. 7.70%, 11/15/97............................ 250,000 252,010
State Street Boston Corp. 7.35%, 06/15/26................ 250,000 255,612
SunTrust Banks, Inc. 6.00%, 02/15/26..................... 275,000 254,163
Wachovia Corp. 6.625%, 11/15/06.......................... 100,000 96,357
-----------
1,354,870
- -------------------------------------------------------------------------------
FINANCIAL SERVICES (15.3%)
Associates Corp. of North America 7.75%, 02/15/05........ 250,000 261,082
Chrysler Financial Corp. 5.93%, 12/08/98................. 250,000 248,335
CIT Group Holdings, Inc. 6.25%, 10/25/99................. 200,000 198,226
Exxon Capital Corp.
7.875%, 08/15/97........................................ 105,000 105,599
6.625%, 08/15/02........................................ 9,000 8,861
Ford Motor Credit Co.--Global Bond 6.25%, 11/08/00....... 250,000 245,460
General Motors Acceptance Corp. 8.00%, 05/02/97.......... 250,000 249,990
General Motors Acceptance Corp.--Global Bond 6.75%,
02/07/02................................................ 100,000 98,858
IBM Credit Corp. 6.375%, 11/01/97........................ 125,000 125,160
-----------
1,541,571
- -------------------------------------------------------------------------------
INDUSTRIAL (12.7%)
Heinz (H.J.) Co. 5.50%, 09/15/97......................... 278,000 277,497
Hertz Corp. 8.30%, 02/02/98.............................. 250,000 253,722
PepsiCo, Inc. 6.25%, 09/01/99............................ 250,000 247,622
Shell Oil Co. 6.625%, 07/01/99........................... 250,000 250,148
WMX Technologies, Inc. 6.25%, 10/15/00................... 250,000 244,895
-----------
1,273,884
- -------------------------------------------------------------------------------
RETAIL (6.8%)
J.C. Penney & Co.
5.375%, 11/15/98........................................ 53,000 52,166
6.90%, 08/15/26......................................... 200,000 198,764
Motorola, Inc. 6.50%, 09/01/25........................... 300,000 292,302
Wal-Mart Stores, Inc. 6.375%, 03/01/03................... 140,000 135,839
-----------
679,071
- -------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
CHICAGO ASSET MANAGEMENT INTERMEDIATE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
- --------------------------------------------------------------------------------
CORPORATE BONDS & NOTES--(CONTINUED)
- --------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES (7.8%)
Florida Power & Light Co. 5.50%, 07/01/99................. $150,000 $ 146,876
National Rural Utilities 5.95%, 01/15/03.................. 250,000 237,110
Pennsylvania Power & Light Co. 5.50%, 04/01/98............ 150,000 148,998
Virginia Electric Power Co. 6.25%, 08/01/98............... 250,000 249,470
-----------
782,454
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS & NOTES (COST $5,620,631)............ 5,631,850
- --------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES (33.6%)
- --------------------------------------------------------------------------------
U.S. TREASURY NOTES
6.125%, 05/31/97.......................................... 550,000 550,170
5.625%, 08/31/97.......................................... 500,000 499,845
5.875%, 02/28/99.......................................... 250,000 248,438
7.75%, 01/31/00........................................... 500,000 516,560
5.875%, 06/30/00.......................................... 250,000 245,977
5.25%, 01/31/01........................................... 250,000 239,882
7.50%, 11/15/01........................................... 250,000 259,023
6.125%, 12/31/01.......................................... 300,000 294,798
7.50%, 05/15/02........................................... 50,000 51,985
6.50%, 10/15/06........................................... 475,000 467,205
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES (COST $3,360,980)......... 3,373,883
- --------------------------------------------------------------------------------
AGENCY SECURITIES (6.6%)
- --------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
5.37%, 02/07/01........................................... 250,000 239,218
6.40%, 09/27/05........................................... 200,000 192,718
5.875%, 02/02/06.......................................... 250,000 232,655
- --------------------------------------------------------------------------------
TOTAL AGENCY SECURITIES (COST $692,351).................... 664,591
- --------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
CHICAGO ASSET MANAGEMENT INTERMEDIATE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENT (2.1%)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Chase Securities, Inc. 5.20%, dated 04/30/97, due
05/01/97, to be repurchased at $212,031, collateralized
by $213,214 of various U.S. Treasury Notes,
4.75%-6.125%, due from 08/31/98-10/31/98, valued at
$212,170 (COST $212,000)................................ $212,000 $ 212,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (98.4%)(COST $9,885,962)(a)............. 9,882,324
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (NET) (1.6%)................. 161,853
- -------------------------------------------------------------------------------
NET ASSETS (100%)......................................... $10,044,177
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
+ See Note A to Financial Statements.
(a) The cost for federal income tax purposes was $9,887,684. At April 30,
1997, net unrealized depreciation for all securities based on tax cost was
$5,360. This consisted of aggregate gross unrealized appreciation for all
securities of $103,374 and aggregate gross unrealized depreciation for all
securities of $108,734.
11
<PAGE>
CHICAGO ASSET MANAGEMENT PORTFOLIOS
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
CHICAGO ASSET CHICAGO ASSET
MANAGEMENT MANAGEMENT
VALUE/ INTERMEDIATE
CONTRARIAN BOND
PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at Cost.............................. $13,342,760 $ 9,885,962
=========== ===========
Investments, at Value............................. $13,750,897 $ 9,882,324
Cash.............................................. 569 961
Deferred Organization Costs--Note A............... 11,701 12,254
Receivable due from Investment Adviser--Note B.... 13,427 19,471
Dividends Receivable.............................. 21,598 --
Receivable for Investments Sold................... 18,623 --
Receivable for Portfolio Shares Sold.............. 57,176 1,078
Interest Receivable............................... 61 171,999
Other Assets...................................... 10 90
- -------------------------------------------------------------------------------
Total Assets..................................... 13,874,062 10,088,177
- -------------------------------------------------------------------------------
LIABILITIES
Payable for Investments Purchased................. 22,573 --
Payable for Administrative Fees--Note C........... 7,652 8,274
Payable for Account Services Fees--Note F......... 83 203
Payable for Trustees' Fees--Note G................ 454 462
Other Liabilities................................. 38,894 35,061
- -------------------------------------------------------------------------------
Total Liabilities................................ 69,656 44,000
- -------------------------------------------------------------------------------
NET ASSETS......................................... $13,804,406 $10,044,177
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid in Capital................................... $13,283,788 $ 9,985,585
Undistributed Net Investment Income............... 30,593 60,816
Accumulated Net Realized Gain..................... 81,888 1,414
Unrealized Appreciation (Depreciation)............ 408,137 (3,638)
- -------------------------------------------------------------------------------
NET ASSETS......................................... $13,804,406 $10,044,177
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
Shares Issued and Outstanding (Unlimited
authorization, no par value)..................... 1,056,131 975,130
Net Asset Value, Offering and Redemption Price Per
Share............................................ $ 13.07 $ 10.30
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
CHICAGO ASSET MANAGEMENT PORTFOLIOS
STATEMENT OF OPERATIONS
For the Year Ended April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
CHICAGO ASSET CHICAGO ASSET
MANAGEMENT MANAGEMENT
VALUE/ INTERMEDIATE
CONTRARIAN BOND
PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends....................... $ 50,048 $ --
Interest........................ 11,752 577,376
- ----------------------------------------------------------------------------------
Total Income................... 61,800 577,376
- ----------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees--Note B
Basic Fees..................... $ 13,652 $ 41,438
Less: Fees Waived.............. (13,652) -- (41,438) --
-------- --------
Administrative Fees--Note C..... 75,363 80,225
Custodian Fees--Note D.......... 5,081 21
Audit Fees...................... 12,460 12,443
Printing Fees................... 22,559 23,245
Account Services Fees--Note F... 83 203
Trustees' Fees--Note G.......... 1,986 2,089
Filing and Registration Fees.... 21,978 18,723
Amortization of Organization
Expense--Note A................ 4,449 4,372
Other Expenses.................. 1,416 6,063
Fees Assumed by Adviser--Note B. (124,633) (78,563)
- ----------------------------------------------------------------------------------
Total Expenses................. 20,742 68,821
Expense Offset--Note A.......... (259) (21)
- ----------------------------------------------------------------------------------
Net Expenses................... 20,483 68,800
- ----------------------------------------------------------------------------------
NET INVESTMENT INCOME............ 41,317 508,576
- ----------------------------------------------------------------------------------
NET REALIZED GAIN ON INVESTMENTS. 126,824 8,536
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION OF
INVESTMENTS..................... 219,469 (57,181)
- ----------------------------------------------------------------------------------
NET GAIN (LOSS) ON INVESTMENTS... 346,293 (48,645)
- ----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....... $ 387,610 $459,931
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
CHICAGO ASSET MANAGEMENT VALUE/CONTRARIAN PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income.................................. $ 41,317 $ 12,039
Net Realized Gain...................................... 126,824 52,560
Net Change in Unrealized Appreciation/Depreciation..... 219,469 130,882
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations.. 387,610 195,481
- --------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income.................................. (20,547) (14,741)
Net Realized Gain...................................... (80,161) (19,147)
- --------------------------------------------------------------------------------
Total Distributions................................... (100,708) (33,888)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued--Regular........................................ 12,634,715 79,245
--In Lieu of Cash Distributions........................ 96,713 31,757
Redeemed............................................... (105,728) (76,406)
- --------------------------------------------------------------------------------
Net Increase from Capital Share Transactions.......... 12,625,700 34,596
- --------------------------------------------------------------------------------
Total Increase......................................... 12,912,602 196,189
Net Assets:
Beginning of Year...................................... 891,804 695,615
- --------------------------------------------------------------------------------
End of Year (including undistributed net investment
income of $30,593 and $5,374, respectively)........... $13,804,406 $891,804
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1)Shares Issued and Redeemed:
Shares Issued......................................... 991,693 6,326
In Lieu of Cash Distributions......................... 7,527 2,606
Redeemed.............................................. (8,321) (6,135)
- --------------------------------------------------------------------------------
990,899 2,797
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
CHICAGO ASSET MANAGEMENT INTERMEDIATE BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income................................. $ 508,576 $ 404,686
Net Realized Gain..................................... 8,536 60,194
Net Change in Unrealized Appreciation/Depreciation.... (57,181) (78,098)
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations. 459,931 386,782
- --------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income................................. (506,282) (388,730)
Net Realized Gain..................................... (22,948) (48,388)
- --------------------------------------------------------------------------------
Total Distributions.................................. (529,230) (437,118)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued--Regular....................................... 1,826,542 2,481,207
--In Lieu of Cash Distributions....................... 528,662 435,292
Redeemed.............................................. (222,819) (151,965)
- --------------------------------------------------------------------------------
Net Increase from Capital Share Transactions......... 2,132,385 2,764,534
- --------------------------------------------------------------------------------
Total Increase........................................ 2,063,086 2,714,198
Net Assets:
Beginning of Year..................................... 7,981,091 5,266,893
- --------------------------------------------------------------------------------
End of Year (including undistributed net investment
income of $60,816 and $58,170, respectively)......... $10,044,177 $7,981,091
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1)Shares Issued and Redeemed:
Shares Issued........................................ 176,865 231,545
In Lieu of Cash Distributions........................ 51,334 41,292
Redeemed............................................. (21,434) (14,328)
- --------------------------------------------------------------------------------
206,765 258,509
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
The accompanying notes are an integral part of the financial statements.
CHICAGO ASSET MANAGEMENT VALUE/CONTRARIAN PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
DECEMBER 16,
YEAR ENDED YEAR ENDED 1994*** TO
APRIL 30, APRIL 30, APRIL 30,
1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 13.67 $ 11.14 $10.00
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income...................... 0.18 0.19 0.05
Net Realized and Unrealized Gain on
Investments............................... 0.30 2.86 1.13
- -------------------------------------------------------------------------------
Total from Investment Operations.......... 0.48 3.05 1.18
- -------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income...................... (0.24) (0.23) (0.04)
Net Realized Gain.......................... (0.84) (0.29) --
- -------------------------------------------------------------------------------
Total Distributions....................... (1.08) (0.52) (0.04)
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.............. $ 13.07 $ 13.67 $11.14
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL RETURN+............................... 3.72% 28.00% 11.81%**
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)...... $13,804 $ 892 $ 696
Ratio of Expenses to Average Net Assets.... 0.95% 1.06% 0.95%*
Ratio of Net Investment Income to Average
Net Assets................................ 1.89% 1.51% 1.54%*
Portfolio Turnover Rate.................... 21% 33% 4%
Average Commission Rate#................... $0.0574 $0.0600 N/A
- -------------------------------------------------------------------------------
Voluntarily Waived Fees and Expenses
Assumed by the Adviser Per Share.......... $ 0.60 $ 1.50 $ 0.58
Ratio of Expenses to Average Net Assets
Including Expense Offsets................. 0.95% 0.95% 0.95%*
- -------------------------------------------------------------------------------
</TABLE>
* Annualized
** Not Annualized
*** Commencement of Operations
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser during the periods indicated.
# Beginning with fiscal year 1996, the Portfolio is required to disclose the
average commission rate per share it paid for portfolio trades, on which
commissions were charged, during the period.
16
<PAGE>
The accompanying notes are an integral part of the financial statements.
CHICAGO ASSET MANAGEMENT INTERMEDIATE BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
JANUARY 24,
YEAR ENDED YEAR ENDED 1995*** TO
APRIL 30, APRIL 30, APRIL 30,
1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $ 10.39 $10.33 $10.00
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income....................... 0.61 0.64 0.17
Net Realized and Unrealized Gain on
Investments................................ (0.05) 0.14++ 0.26
- -------------------------------------------------------------------------------
Total from Investment Operations........... 0.56 0.78 0.43
- -------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income....................... (0.62) (0.64) (0.10)
Net Realized Gain........................... (0.03) (0.08) --
- -------------------------------------------------------------------------------
Total Distributions........................ (0.65) (0.72) (0.10)
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD............... $ 10.30 $10.39 $10.33
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL RETURN+................................ 5.53% 7.62% 4.31%**
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)....... $10,044 $7,981 $5,267
Ratio of Expenses to Average Net Assets..... 0.80% 0.84% 0.80%*
Ratio of Net Investment Income to Average
Net Assets................................. 5.88% 6.17% 6.20%*
Portfolio Turnover Rate..................... 31% 24% 0%
- -------------------------------------------------------------------------------
Voluntarily Waived Fees and Expenses Assumed
by the Adviser Per Share................... $ 0.14 $ 0.12 $ 0.08
Ratio of Expenses to Average Net Assets
Including Expense Offsets.................. 0.80% 0.80% 0.80%*
- -------------------------------------------------------------------------------
</TABLE>
* Annualized
** Not Annualized
*** Commencement of Operations
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser for the periods indicated.
++ The amount shown for a share outstanding throughout the year does not
accord with the aggregate net losses on investments for that year because
of the timing of sales and repurchases of the Portfolio shares in relation
to fluctuating market value of the investments of the Portfolio.
17
<PAGE>
CHICAGO ASSET MANAGEMENT COMPANY PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS
UAM Funds Trust and UAM Funds, Inc. (collectively the "UAM Funds") are
registered under the Investment Company Act of 1940, as amended. The Chicago
Asset Management Value/Contrarian Portfolio and Chicago Asset Management
Intermediate Bond Portfolio (the "Portfolios"), portfolios of UAM Funds Trust,
are diversified, open-end management investment companies. At April 30, 1997,
the UAM Funds were composed of forty-two active portfolios. The financial
statements of the remaining portfolios are presented separately. The objective
of the Chicago Asset Management Value/Contrarian Portfolio is to provide
capital appreciation by investing primarily in the common stock of large
companies. The objective of the Chicago Asset Management Intermediate Bond
Portfolio is to provide a high level of current income consistent with
moderate interest rate exposure by investing primarily in investment grade
bonds with an average weighted maturity between 3 and 10 years.
A. SIGNIFICANT ACCOUNTING POLICIES: The following significant accounting
policies are in conformity with generally accepted accounting principles. Such
policies are consistently followed by the Portfolios in the preparation of
their financial statements. Generally accepted accounting principles may
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: Securities listed on a securities exchange for which
market quotations are readily available are valued at the last quoted sales
price as of the close of the exchange on the day the valuation is made or,
if no sale occurred on such day, at the bid price on such day. Price
information on listed securities is taken from the exchange where the
security is primarily traded. Over-the-counter and unlisted securities are
valued at the current bid price. Fixed income securities are stated on the
basis of valuations provided by brokers and/or a pricing service which uses
information with respect to transactions in fixed income securities,
quotations from dealers, market transactions in comparable securities and
various relationships between securities in determining value. Short-term
investments that have remaining maturities of sixty days or less at time of
purchase are valued at amortized cost, if it approximates market value. The
value of other assets and securities for which no quotations are readily
available is determined in good faith at fair value using methods
determined by the Board of Trustees.
2. FEDERAL INCOME TAXES: It is each Portfolio's intention to qualify as a
regulated investment company under Subchapter M of the Internal Revenue
Code and to distribute all of its taxable income. Accordingly, no provision
for Federal income taxes is required in the financial statements.
3. REPURCHASE AGREEMENTS: In connection with transactions involving
repurchase agreements, the Portfolios' custodian bank takes possession of
the underlying securities, the value of which exceeds the principal amount
of the repurchase transaction, including accrued interest. To the extent
that any repurchase transaction exceeds one business day, the value of the
collateral is monitored on a daily basis to determine the adequacy of the
collateral. In the event of default on the obligation to repurchase, the
Portfolios have the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. In the event of default or
bankruptcy by the other party to the agreement, realization 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 balances
into a joint trading account which invests in one or more
18
<PAGE>
CHICAGO ASSET MANAGEMENT COMPANY PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
repurchase agreements. This joint repurchase agreement is covered by the
same collateral requirements as discussed above.
4. DISTRIBUTIONS TO SHAREHOLDERS: Each Portfolio will normally distribute
substantially all of its net investment income quarterly. Any realized net
capital gains will be distributed annually. All distributions are recorded
on ex-dividend date.
The amount and character of income and capital gain distributions to be
paid are determined in accordance with Federal income tax regulations which
may differ from generally accepted accounting principles. These differences
are primarily due to differing book and tax treatments in the timing of the
recognition of gains or losses on investments and in-kind transactions.
Permanent book and tax basis differences relating to shareholder
distributions resulted in reclassifications as follows:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED NET
CHICAGO ASSET MANAGEMENT COMPANY NET INVESTMENT REALIZED PAID IN
PORTFOLIOS INCOME GAIN (LOSS) CAPITAL
-------------------------------- -------------- ----------- -------
<S> <C> <C> <C>
Value/Contrarian....................... 4,449 -- (4,449)
Intermediate Bond...................... 352 4,020 (4,372)
</TABLE>
Current year permanent book-tax differences, if any, are not included in
ending undistributed net investment income (loss) for the purpose of
calculating net investment income (loss) per share in the financial
highlights.
5. ORGANIZATION COST: Costs incurred by each Portfolio in connection with
its organization have been deferred and are being amortized on a straight-
line basis over a five year period.
6. OTHER: Security transactions are accounted for on trade date, the date
the trade was executed. Costs used in determining realized gains and losses
on the sale of investment securities are based on the specific
identification method. Dividend income is recorded on the ex-dividend date.
Interest income is recognized on the accrual basis. Discounts and premiums
on securities purchased are amortized using the effective yield basis over
their respective lives. Most expenses of the UAM Funds can be directly
attributed to a particular portfolio. Expenses which cannot be directly
attributed are apportioned among the portfolios of the UAM Funds based on
their relative net assets. Custodian fees for the Portfolios have been
increased to include expense offsets, if any, for custodian balance
credits.
B. ADVISORY SERVICES: Under the terms of an investment advisory agreement,
Chicago Asset Management Company (the "Adviser"), a wholly-owned subsidiary of
United Asset Management Corporation ("UAM"), provides investment advisory
services to the Portfolios at a fee calculated at an annual rate of average
daily net assets, as follows:
<TABLE>
<CAPTION>
CHICAGO ASSET MANAGEMENT COMPANY PORTFOLIOS RATE
- ------------------------------------------- ------
<S> <C>
Value/Contrarian......................................................... 0.625%
Intermediate Bond........................................................ 0.48%
</TABLE>
19
<PAGE>
CHICAGO ASSET MANAGEMENT COMPANY PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Until further notice, the Adviser has voluntarily agreed to waive a portion of
its advisory fees and to assume expenses, if necessary, in order to keep the
Portfolios' total annual operating expenses (excluding interest, taxes and
extraordinary expenses), after the effect of expense offset arrangements, from
exceeding 0.95% and 0.80% of average daily net assets, respectively.
C. ADMINISTRATION SERVICES: UAM Fund Services, Inc. (the "Administrator"), a
wholly-owned subsidiary of UAM, provides and oversees administrative, fund
accounting, dividend disbursing and transfer agent services to the UAM Funds
under a Fund Administration Agreement (the "Agreement"). Pursuant to the
Agreement, the Administrator is entitled to receive annual fees, computed
daily and payable monthly, of 0.19% of the first $200 million of the combined
aggregate net assets; plus 0.11% of the next $800 million of the combined
aggregate net assets; plus 0.07% of the next $2 billion of the combined
aggregate net assets; plus 0.05% of the combined aggregate net assets in
excess of $3 billion. The fees are allocated among the portfolios of the UAM
Funds on the basis of their relative net assets and are subject to a graduated
minimum fee schedule per portfolio which rises from $2,000 per month, upon
inception of a portfolio, to $70,000 annually after two years. For portfolios
with more than one class of shares, the minimum annual fee increases to
$90,000. In addition, the Administrator receives a Portfolio-specific monthly
fee at an annual rate of 0.06% of average daily net assets of the Chicago
Asset Management Value/Contrarian Portfolio and 0.04% of average daily net
assets for Chicago Asset Management Intermediate Bond Portfolio. The
Administrator has entered into a Mutual Funds Service Agreement with Chase
Global Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan
Bank, under which CGFSC agrees to provide certain services, including but not
limited to, administration, fund accounting, dividend disbursing and transfer
agent services. Pursuant to the Mutual Funds Service Agreement, the
Administrator pays CGFSC a monthly fee.
For the year ended April 30, 1997, CGFSC was paid the following amounts by the
Administrator:
<TABLE>
<CAPTION>
CHICAGO ASSET MANAGEMENT COMPANY PORTFOLIOS
- -------------------------------------------
<S> <C>
Value/Contrarian....................................................... $74,076
Intermediate Bond...................................................... 76,798
</TABLE>
D. CUSTODIAN: Effective July 17, 1996, The Chase Manhattan Bank (the "Bank"),
an affiliate of CGFSC, is custodian for the Portfolios' assets held in
accordance with the custodian agreement. For the period July 17, 1996 to April
30, 1997, the amount charged to the Portfolios by the Bank is as follows:
<TABLE>
<CAPTION>
CHICAGO ASSET MANAGEMENT COMPANY PORTFOLIOS
- -------------------------------------------
<S> <C>
Value/Contrarian........................................................ $4,101
Intermediate Bond....................................................... --
</TABLE>
As of April 30, 1997, $3,469 remains unpaid for the Chicago Asset Management
Value/Contrarian Portfolio.
E. DISTRIBUTION SERVICES: UAM Fund Distributors, Inc. (the "Distributor"), a
wholly-owned subsidiary of UAM, distributes the shares of the Portfolios. The
Distributor does not receive any fee or other compensation with respect to the
Portfolios.
20
<PAGE>
CHICAGO ASSET MANAGEMENT COMPANY PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
F. ACCOUNT SERVICES: Effective February 28, 1997, the UAM Funds entered into
an Account Services Agreement (the "Services Agreement") with UAM Retirement
Plan Services, Inc. ("Service Provider"), a wholly-owned subsidiary of UAM.
Under the Services Agreement, the Service Provider agrees to perform certain
services for participants in a self-directed, defined contribution plan, and
for whom the Service Provider provides participant recordkeeping. Pursuant to
the Services Agreement, the Service Provider is entitled to receive, after the
end of each month, a fee at the annual rate of 0.15% of the average aggregate
daily net asset value of shares of the UAM Funds in the accounts for which
they provide services.
G. TRUSTEES' FEES: Each Trustee, who is not an officer or affiliated person,
receives $2,000 per meeting attended, 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, and reimbursement of expenses incurred in
attending Trustee meetings.
H. PURCHASES AND SALES: For the year ended April 30, 1997, the Portfolios'
purchases and sales of investment securities other than long-term U.S.
Government and agency securities and short-term securities were:
<TABLE>
<CAPTION>
CHICAGO ASSET MANAGEMENT COMPANY PORTFOLIOS PURCHASES SALES
- ------------------------------------------- ----------- --------
<S> <C> <C>
Value/Contrarian Portfolio................................ $12,538,797 $436,440
Intermediate Bond Portfolio............................... 2,438,160 992,612
</TABLE>
Purchases and sales of long-term U.S. Government securities were $1,710,941
and $1,558,551 respectively, for Chicago Asset Management Intermediate Bond
Portfolio. There were no purchases and sales of long-term U.S. Government
securities for Chicago Asset Management Value/Contrarian Portfolio.
I. LINE OF CREDIT: The Chicago Asset Management Intermediate Bond Portfolio,
along with certain other Portfolios of UAM Funds, collectively entered into an
agreement which enables them to participate 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 1/8th of
1% per annum, payable at the end of each calendar quarter, is accrued by each
participating Portfolio based on its average daily unused portion of the line
of credit. During the year ended April 30, 1997, the Chicago Asset Management
Intermediate Bond Portfolio had no borrowings under the agreement.
J. OTHER: At April 30, 1997, the percentage of total shares outstanding held
by record shareholders owning 10% or greater of the aggregate total shares
outstanding for each Portfolio was as follows:
<TABLE>
<CAPTION>
NO. OF %
CHICAGO ASSET MANAGEMENT COMPANY PORTFOLIOS SHAREHOLDERS OWNERSHIP
- ------------------------------------------- ------------ ---------
<S> <C> <C>
Value/Contrarian......................................... 2 78.5
Intermediate Bond........................................ 1 90.2
</TABLE>
21
<PAGE>
PART B
UAM FUNDS
FPA CRESCENT PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION -- JULY 10, 1997
This Statement of Additional Information ("SAI") is not a Prospectus but
should be read in conjunction with UAM Funds Trust's Prospectuses relating to
the FPA Crescent Portfolio's Institutional Class Shares and Institutional
Service Class Shares dated July 10, 1997. To obtain the Prospectuses, please
call the UAM Funds Service Center at 1-800-638-7983.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES........................... 2
PURCHASE AND REDEMPTION OF SHARES........................... 7
SHAREHOLDER SERVICES........................................ 8
MANAGEMENT OF THE FUND...................................... 9
INVESTMENT ADVISER.......................................... 11
SERVICE AND DISTRIBUTION PLANS.............................. 13
PORTFOLIO TRANSACTIONS...................................... 15
ADMINISTRATIVE SERVICES..................................... 15
PERFORMANCE CALCULATIONS.................................... 15
GENERAL INFORMATION......................................... 16
APPENDIX A -- DESCRIPTION OF SECURITIES AND RATINGS......... A-1
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES.. B-1
</TABLE>
FINANCIAL STATEMENTS
INVESTMENT ADVISER
First Pacific Advisors, Inc.
DISTRIBUTOR
UAM Fund Distributors, Inc. (Distributor)
ADMINISTRATOR AND TRANSFER AGENT
UAM Fund Services, Inc. (FSI)
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INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the FPA Crescent Portfolio (the "Portfolio") is
to provide, through a combination of income and capital appreciation, a total
return consistent with reasonable investment risk. The following discussion
supplements the discussion of the Portfolio's investment objective and policies
as set forth in the Portfolio's Prospectuses. There can be no assurance the
objective of the Portfolio will be attained.
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified brokers,
dealers, domestic and foreign banks or other financial institutions, so long as
the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940, as amended, (the "1940
Act") or the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "SEC") thereunder, which currently require that (a) the
borrower pledge and maintain with the Portfolio collateral consisting of cash,
an irrevocable letter of credit issued by a domestic U.S. bank or securities
issued or guaranteed by the United States Government having a value at all times
not less than 100% of the value of the securities loaned, (b) the borrower add
to such collateral whenever the price of the securities loaned rises (i.e., the
borrower "marks to the market" on a daily basis), (c) the loan be made subject
to termination by the Portfolio at any time, and (d) the Portfolio receives
reasonable interest on the loan (which may include the Portfolio investing any
cash collateral in interest-bearing short-term investments). As with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the securities loaned if the borrower of the securities fails
financially. These risks are similar to the ones involved with repurchase
agreements as discussed in the Prospectuses.
REPURCHASE AGREEMENTS
The Portfolio may enter into repurchase agreements as discussed in the
Prospectuses. Under such agreements, the seller of the security agrees to
repurchase it at a mutually agreed upon time and price. The repurchase price may
be higher than the purchase price, the difference being income to the Portfolio,
or the purchase and repurchase prices may be the same, with interest at a stated
rate due to the Portfolio together with the repurchase price on repurchase. In
either case, the income to the Portfolio is unrelated to the interest rate on
the security itself. The Portfolio will generally enter into repurchase
agreements of short durations, from overnight to one week, although the
underlying securities generally have longer maturities. The Portfolio may not
enter into a repurchase agreement with more than seven days to maturity if, as a
result, more than 15% of the value of the Portfolio's total assets would be
invested in illiquid securities including such repurchase agreements.
For purposes of the 1940 Act, a repurchase agreement is deemed to be a loan
from the Portfolio to the seller of the U.S. Government security subject to the
repurchase agreement. It is not clear whether a court would consider the U.S.
Government security acquired by the Portfolio subject to a repurchase agreement
as being owned by the Portfolio or as being collateral for a loan by the
Portfolio to the seller. In the event of the commencement of bankruptcy or
insolvency proceedings with respect to the seller of the U.S. Government
security before its repurchase under a repurchase agreement, the Portfolio may
encounter delays and incur costs before being able to sell the security. Delays
may involve loss of interest or a decline in price of the U.S. Government
security. If a court characterizes the transaction as a loan and the Portfolio
has not perfected a security interest in the U.S. Government security, the
Portfolio may be required to return the security to the seller's estate and be
treated as an unsecured creditor of the seller. As an unsecured creditor, the
Portfolio would be at the risk of losing some or all of the principal and income
involved in the transaction. As with any unsecured debt instrument purchased for
the Portfolio, the investment manager seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligor, in this
case the seller of the security.
Apart from the risk of bankruptcy or insolvency proceedings, there is also
the risk that the seller may fail to repurchase the security. However, the
Portfolio will always receive as collateral for any repurchase agreement
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securities acceptable to it, the market value of which is equal to at least 100%
of the amount invested by the Portfolio plus accrued interest, and the Portfolio
will make payment against such securities only upon physical delivery or
evidence of book entry transfer to the account of its Custodian. If the market
value of the U.S. Government security subject to the repurchase agreement
becomes less than the repurchase price (including interest), the Portfolio will
direct the seller of the U.S. Government security to deliver additional
securities so that the market value of all securities subject to the repurchase
agreement will equal or exceed the repurchase price. It is possible that the
Portfolio will be unsuccessful in seeking to impose on the seller a contractual
obligation to deliver additional securities.
WHEN-ISSUED SECURITIES
The Portfolio may from time to time purchase securities on a "when-issued"
basis. The price of such securities, which may be expressed in yield terms, is
fixed at the time the commitment to purchase is made, but delivery and payment
for the when-issued securities take place at a later date. Normally, the
settlement date occurs within one month of the purchase; during the period
between purchase and settlement, no payment is made by the Portfolio to the
issuer and no interest accrues to the Portfolio. To the extent that assets of
the Portfolio are held in cash pending the settlement of a purchase of
securities, the Portfolio would earn no income; however, it is the Portfolio's
intention to be fully invested to the extent practicable and subject to the
policies stated above. While when-issued securities may be sold prior to the
settlement date, the Portfolio intends to purchase such securities with the
purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Portfolio makes the commitment to purchase a
security on a when-issued basis, it will record the transaction and reflect the
value of the security in determining its net asset value. The market value of
the when-issued securities may be more or less than the purchase price. The
Portfolio does not believe that its net asset value or income will be adversely
affected by its purchase of securities on a when-issued basis. The Portfolio
will establish a segregated account with its Custodian in which it will maintain
cash or liquid securities equal in value to commitments for when-issued
securities. Such segregated securities either will mature or, if necessary, be
sold on or before the settlement date.
FOREIGN SECURITIES
Among the means through which the Portfolio may invest in foreign
securities is the purchase of American Depository Receipts ("ADRs") or European
Depository Receipts ("EDRs"). Generally, ADRs, in registered form, are
denominated in U.S. dollars and are designed for use in the U.S. securities
markets, while EDRs, in bearer form, may be denominated in other currencies and
are designed for use in European securities markets. ADRs are receipts typically
issued by a U.S. bank or trust company evidencing ownership of the underlying
securities. EDRs are European receipts evidencing a similar arrangement. For
purposes of the Portfolios' investment policies, ADRs and EDRs are deemed to
have the same classification as the underlying securities they represent. Thus
an ADR or EDR representing ownership of common stock will be treated as common
stock.
DEBT SECURITIES AND RATINGS
Ratings of debt securities represent the rating agencies' opinions
regarding their quality, are not a guarantee of quality and may be reduced after
the Portfolio has acquired the security. The Advisor will consider whether the
Portfolio should continue to hold the security but is not required to dispose of
it. Credit ratings attempt to evaluate the safety of principal and interest
payments and do not evaluate the risks of fluctuations in market value. Also,
rating agencies may fail to make timely changes in credit ratings in response to
subsequent events, so that an issuer's current financial conditions may be
better or worse than the rating indicates.
The Portfolio reserves the right to invest up to 30% of its total assets in
securities rated lower than BBB by S & P or lower than Baa by Moody's Investors
Service, Inc. Lower rated securities generally offer a higher current yield than
that available for higher grade issues. However, lower rated securities involve
higher risks, in that they are especially subject to adverse changes in general
economic conditions and in the industries in which the
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issuers are engaged, to changes in the financial condition of the issuers and to
price fluctuations in response to changes in interest rates. During periods of
economic downturn or rising interest rates, highly leveraged issuers may
experience financial stress which could adversely affect their ability to make
payments of interest and principal and increase the possibility of default. In
addition, the market for lower rated debt securities has expanded rapidly in
recent years, and its growth paralleled a long economic expansion. At times in
recent years, the prices of many lower rated debt securities have declined
substantially, reflecting an expectation that many issuers of such securities
might experience financial difficulties. As a result, the yields on lower rated
debt securities rose dramatically, but such higher yields did not reflect the
value of the income stream that holders of such securities expected, but rather,
the risk that holders of such securities could lose a substantial portion of
their value as a result of the issuers' financial restructuring or default.
There can be no assurance that such declines will not recur. The market for
lower-rated debt issues generally is thinner and less active than that for
higher quality securities, which may limit the Portfolio's ability to sell such
securities at fair value in response to changes in the economy or financial
markets. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may also decrease the values and liquidity of lower rated
securities, especially in a thinly traded market.
SHORT SALES
The Portfolio may seek to hedge investments or realize additional gains
through short sales. The Portfolio may make short sales, which are transactions
in which the Portfolio sells a security it does not own, in anticipation of a
decline in the market value of that security. To complete such a transaction,
the Portfolio must borrow the security to make delivery to the buyer. The
Portfolio then is obligated to replace the security borrowed by purchasing it at
the market price at or prior to the time of replacement. The price at such time
may be more or less than the price at which the security was sold by the
Portfolio. Until the security is replaced, the Portfolio is required to repay
the lender any dividends or interest that accrue during the period of the loan.
To borrow the security, the Portfolio also may be required to pay a premium,
which would increase the cost of the security sold. The net proceeds of the
short sale will be retained by the broker, to the extent necessary to meet
margin requirements, until the short position is closed out. The Portfolio also
will incur transaction costs in effecting short sales.
The Portfolio will incur a loss as a result of the short sale if the price
of the security increases between the date of the short sale and the date on
which the Portfolio replaces the borrowed security. The Portfolio will realize a
gain if the security declines in price between those dates. The amount of any
gain will be decreased, and the amount of any loss increased by the amount of
the premium, dividends, interest, or expenses the Portfolio may be required to
pay in connection with a short sale.
No securities will be sold short if, after effect is given to any such
short sale, the total market value of all securities sold short would exceed 25%
of the value of the Portfolio's net equity. The Portfolio similarly will limit
its short sales of the securities of any single issuer if the market value of
the securities that have been sold short by the Portfolio would exceed the two
percent (2%) of the value of the Portfolio's net equity or if such securities
would constitute more than two percent (2%) of any class of the issuer's
securities.
Whenever the Portfolio engages in short sales, its custodian segregates an
amount of cash or liquid securities equal to the difference between (a) the
market value of the securities sold short at the time they were sold short and
(b) any cash or U.S. Government securities required to be deposited with the
broker in connection with the short sale (not including the proceeds from the
short sale). The segregated assets are marked to market daily, provided that at
no time will the amount deposited in the segregated account plus the amount
deposited with the broker be less than the market value of the securities at the
time they were sold short.
In addition, the Portfolio may make short sales "against the box," i.e.
when a security identical to one owned by the Portfolio is borrowed and sold
short. If the Portfolio enters into a short sale against the box, it is required
to segregate securities equivalent in kind and amount to the securities sold
short (or securities convertible or exchangeable into such securities) and is
required to hold such securities while the short sale is outstanding. The
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Portfolio will incur transaction costs, in connection with opening, maintaining,
and closing short sales against the box.
OPTIONS AND FUTURES TRANSACTIONS
As indicated in the Prospectuses, to the extent consistent with its
investment objectives and policies, the Portfolio may purchase and write call
and put options on securities, securities indexes and on foreign currencies and
enter into futures contracts and use options on futures contracts, to the extent
of up to 5% of its assets.
Transactions in options on securities and on indexes involve certain risks.
For example, there are significant differences between the securities and
options markets that could result in an imperfect correlation between these
markets, causing a given transaction not to achieve its objectives. A decision
as to whether, when and how to use options involves the exercise of skill and
judgment, and even a well-conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events.
There can be no assurance that a liquid market will exist when the
Portfolio seeks to close out an option position. If the Portfolio were unable to
close out an option that it had purchased on a security, it would have to
exercise the option in order to realize any profit or the option may expire
worthless. If the Portfolio were unable to close out a covered call option that
it had written on a security, it would not be able to sell the underlying
security unless the option expired without exercise. As the writer of a covered
call option, the Portfolio forgoes, during the option's life, the opportunity to
profit from increases in the market value of the security covering the call
option above the sum of the premium and the exercise price of the call.
If trading were suspended in an option purchased by the Portfolio, the
Portfolio would not be able to close out the option. If restrictions on exercise
were imposed, the Portfolio might be unable to exercise an option it has
purchased. Except to the extent that a call option on an index written by the
Portfolio is covered by an option on the same index purchased by the Portfolio,
movements in the index may result in a loss to the Portfolio; such losses may be
mitigated or exacerbated by changes in the value of the Portfolio's securities
during the period the option was outstanding.
Use of futures contracts and options thereon also involves certain risks.
The variable degree of correlation between price movements of futures contracts
and price movements in the related portfolio positions of the Portfolio creates
the possibility that losses on the hedging instrument may be greater than gains
in the value of the Portfolio's position. Also, futures and options markets may
not be liquid in all circumstances and certain over-the-counter options may have
no markets. As a result, in certain markets, the Portfolio might not be able to
close out a transaction at all or without incurring losses. Although the use of
options and futures transactions for hedging should minimize the risk of loss
due to a decline in the value of the hedged position, at the same time it tends
to limit any potential gain which might result from an increase in the value of
such position. If losses were to result from the use of such transactions, they
could reduce net asset value and possibly income. The Portfolio may use these
techniques to hedge against changes in interest rates or securities prices or as
part of its overall investment strategy. The Portfolio will maintain segregated
accounts consisting of cash, or liquid securities (or, as permitted by
applicable regulation, enter into certain offsetting positions) to cover its
obligations under options and futures contracts to avoid leveraging of the
Portfolio.
FEDERAL TAX TREATMENT OF FORWARD CURRENCY AND FUTURES CONTRACTS
Except for transactions the Portfolio has identified as hedging
transactions, the Portfolio is required for Federal income tax purposes to
recognize as income for each taxable year its net unrealized gains and losses on
regulated futures contracts as of the end of each taxable year as well as those
actually realized during the year. In most cases, any such gain or loss
recognized with respect to a regulated futures contract is considered to be 60%
long-term capital gain or loss and 40% short-term capital gain or loss without
regard to the holding period of the contract.
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In order for the Portfolio to continue to qualify for Federal income tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), at least 90% of its gross income for a taxable
year must be derived from certain qualifying income, i.e., dividends, interest,
income derived from loans of securities and gains from the sale or other
disposition of stock, securities or foreign currencies, or other related income,
including gains from options, futures and forward contracts, derived with
respect to its business investing in stock, securities or currencies. Any net
gain realized from the closing out of futures contracts will, therefore,
generally be qualifying income for purposes of the 90% requirement.
Qualification as a regulated investment company also requires that less than 30%
of the Portfolio's gross income be derived from the sale or other disposition of
stock, securities, options, futures or forward contracts (including certain
foreign currencies not directly related to the Fund's business of investing in
stock or securities) held less than three months. In order to avoid realizing
excessive gains on securities held for less than three months, the Portfolio may
be required to defer the closing out of futures contracts beyond the time when
it would otherwise be advantageous to do so. It is anticipated that unrealized
gains on futures contracts which have been open for less than three months as of
the end of the Portfolio's taxable year, and which are recognized for tax
purposes, will not be considered gains on securities held for less than three
months for the purposes of the 30% test.
The Portfolio will distribute to shareholders annually, or more often, if
necessary, any net capital gains which have been recognized for Federal income
tax purposes (including unrealized gains at the end of the Portfolio's taxable
year) on futures transactions. Such distribution will be combined with
distributions of capital gains realized on the Portfolio's other investments,
and shareholders will be advised on the nature of the payment.
INVESTMENT RESTRICTIONS
The following policies and investment restrictions have been adopted by the
Portfolio and (unless otherwise noted) are fundamental and cannot be changed
without the affirmative vote of a majority of the Portfolio's outstanding voting
securities as defined in the 1940 Act. The Portfolio may not:
(1) make loans to others, except (i) through the purchase of debt
securities in accordance with its investment objective and policies,
and (ii) to the extent the entry into a repurchase agreement is deemed
to be a loan;
(2) (i) borrow money, except as stated in the Prospectuses and this SAI.
Any such borrowing will be made only if immediately thereafter there
is an asset coverage of at least 300% of all borrowings;
(ii) mortgage, pledge or hypothecate any of its assets except in
connection with any such borrowings;
(3) purchase securities on margin, participate on a joint or joint and
several basis in any securities trading account, or underwrite
securities (does not preclude the Portfolio from obtaining such short-
term credit as may be necessary for the clearance of purchases and
sales of its portfolio securities);
(4) purchase or sell commodities or commodity contracts (other than
futures transactions for the purposes and under the conditions
described in the Prospectuses and in this SAI);
(5) invest more than 25% of the market value of its assets in the
securities of companies engaged in any one industry (does not apply to
investment in the securities of the U.S. Government, its agencies or
instrumentalities);
(6) issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Portfolio from (i)
making any permitted borrowings, mortgages or pledges, or (ii)
entering into options, futures or repurchase transactions;
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(7) purchase the securities of any issuer, if as a result more than 5% of
the total assets of the Portfolio would be invested in the securities
of that issuer, other than obligations of the U.S. Government, its
agencies or instrumentalities, provided that up to 25% of the value of
the Portfolio's assets may be invested without regard to this
limitation;
(8) purchase or sell real estate; however, the Portfolio may invest in
debt securities secured by real estate or interests therein or issued
by companies which invest in real estate or interests therein,
including real estate investment trusts;
(9) with respect to 75% of its assets, own more than 5% of the securities
of any single issuer (other than investments issued or guaranteed by
the U.S. Government or any of its agencies or instrumentalities); and
(10) with respect to 75% of its assets, own more than 10% of the
outstanding voting securities of any one issuer.
For the purposes of (2) above, the Portfolio may not borrow except from
banks for temporary or emergency purposes and in connection with short sales of
securities. In these situations, the Portfolio will limit borrowings to no more
than 33/1//\\3\\% of the Portfolio's assets, and the Portfolio may not purchase
additional securities when borrowings exceed 5% of its total assets.
Investment restriction (6) above shall not be deemed to prohibit the
Portfolio from engaging in short sales of securities as described in the
Prospectuses under "Additional Investment Policies" and in this SAI under
"Investment Objective and Policies."
The Portfolio observes the following policies, which are not deemed
fundamental and which may be changed without shareholder vote. The Portfolio may
not:
(11) purchase any security if as a result the Portfolio would then hold
more than 10% of any class of securities of an issuer (taking all
common stock issues of an issuer as a single class, all preferred
stock issues as a single class, and all debt issues as a single class)
or more than 10% of the outstanding voting securities of an issuer;
(12) invest in any issuer for purposes of exercising control or management;
(13) invest in securities of other investment companies which would result
in the Portfolio owning more than 3% of the outstanding voting
securities of any one such investment company, the Portfolio owning
securities of another investment company having an aggregate value in
excess of 5% of the value of the Portfolio's total assets, or the
Portfolio owning securities of investment companies in the aggregate
which would exceed 10% of the value of the Portfolio's total assets;
and
(14) invest, in the aggregate, more than 15% of its net assets in
securities which are not readily marketable or are illiquid.
If a percentage restriction is adhered to at the time of investment, a
subsequent increase or decrease in a percentage resulting from a change in the
values of assets will not constitute a violation of that restriction, except as
otherwise noted.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Portfolio may be purchased without a sales commission at the
net asset value per share next determined after an order is received in proper
form by the Fund and payment is received by the Fund's Custodian.
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An order received in proper form prior to the 4:00 p.m. close of the New York
Stock Exchange ("NYSE") will be executed at the price computed on the date of
receipt; and an order received not in proper form or after the 4:00 p.m. close
of the NYSE will be executed at the price computed on the next day the NYSE is
open after proper receipt. The NYSE will be closed on the following days: New
Year's Day, Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Portfolio reserves the right in its sole discretion (1) to suspend the
offering of its shares, (2) to reject purchase orders when in the judgment of
management such rejection is in the best interests of the Fund, and (3) to
reduce or waive the minimum for initial and subsequent investment for certain
fiduciary accounts such as employee benefit plans or under circumstances where
certain economies can be achieved in sales of a Portfolio's shares.
The Portfolio may suspend redemption privileges or postpone the date of
payment (1) during any period that both the NYSE and custodian bank are closed
or trading on the NYSE is restricted as determined by the SEC, (2) during any
period when an emergency exists as defined by the rules of the SEC as a result
of which it is not reasonably practicable for the Portfolio to dispose of
securities owned by it or to fairly determine the value of its assets, and (3)
for such other periods as the SEC may permit. The Fund has made an election with
the SEC to pay in cash all redemptions requested by any shareholder of record
limited in amount during any 90-day period to the lesser of $250,000 or 1% of
the net assets of the Fund at the beginning of such period. Such commitment is
irrevocable without the prior approval of the SEC. Redemptions in excess of the
above limits may be paid, in whole or in part, in investment securities or in
cash as the Directors may deem advisable; however, payment will be made wholly
in cash unless the Directors believe that economic or market conditions exist
which would make such a practice detrimental to the best interests of the Fund.
If redemptions are paid in investment securities, such securities will be valued
as set forth in the Prospectuses under "How Share Prices are Determined" and a
redeeming shareholder would normally incur brokerage expenses if these
securities were converted to cash.
No charge is made by the Portfolio for redemptions. Any redemption may be
more or less than the shareholder's initial cost depending on the market value
of the securities held by the Portfolio.
SIGNATURE GUARANTEES
To protect an account, the Fund and Chase Global Funds Services Company
("CGFSC") from fraud, signature guarantees are required for (1) redemptions
where the proceeds are to be sent to someone other than the registered
shareowner(s) or the registered address or (2) share transfer requests.
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, and as
further described in the Institutional Class Shares' and Service Class Shares'
Prospectus. The signature guarantee must appear either: (1) on the written
request for redemption; (2) on a separate instrument for assignment ("stock
power") which should specify the total number of shares to be redeemed; or (3)
on all stock certificates tendered for redemption and, if shares held by the
Fund are also being redeemed, on the letter or stock power.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for any other
Institutional Class Shares of any other UAM Funds or UAM Funds, Inc. Portfolio.
Similarly, Service Class Shares of the Portfolio may be exchanged for shares of
other UAM Funds or UAM Funds, Inc. Portfolios' Service Class Shares. Exchange
requests should be made by calling the Fund (1-800-638-7983) or by writing to
UAM Funds, UAM Funds Service Center, c/o Chase Global Funds Services
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Company, P.O. Box 2798, Boston, MA 02208-2798. The exchange privilege is only
available with respect to Portfolios that are qualified for sale in the
shareholder's state of residence.
Any such exchange will be based on the respective net asset values of the
shares involved. There is no sales commission or charge of any kind. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. You may
obtain a Prospectus for the Portfolio(s) you are interested in by calling the
UAM Funds Service Center at 1-800-638-7983.
Neither the Fund nor CGFSC will be responsible for the authenticity of the
exchange instructions received by telephone. Exchanges may also be subject to
limitations as to amounts or frequency and to other restrictions established by
the Board of Directors to assure that such exchanges do not disadvantage the
Fund and its shareholders.
For Federal income tax purposes an exchange between Portfolios is a taxable
event, and, accordingly, a capital gain or loss may be realized. In a revenue
ruling relating to circumstances similar to the Fund's, an exchange
between series of a Fund was also deemed to be a taxable event. It is likely,
therefore, that a capital gain or loss would be realized on an exchange between
Portfolios; you may want to consult your tax adviser for further information in
this regard. The exchange privilege may be modified or terminated at any time.
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The Officers of the Fund manage its day-to-day operations and are
responsible to the Fund's Board of Trustees. The Trustees set broad policies for
the Fund and elect its Officers. The following is a list of the Trustees and
Officers of the Fund and a brief statement of their present positions, date of
birth, address and principal occupations during the past five years. Those
people who are "interested persons" of the Fund as that term is defined in the
1940 Act are indicated by an asterisk (*).
JOHN T. BENNETT, JR. (1/26/29), Trustee; College Road--RFD 3, Meredith, NH
03253; President of Squam Investment Management Company, Inc. and Great Island
Investment Company, Inc.; President of Bennett Management Company from 1988 to
1993.
NANCY J. DUNN (8/14/51), Trustee; 10 Garden Street, Cambridge, MA 02138; Vice
President for Finance and Administration and Treasurer of Radcliffe College
since 1991.
PHILIP D. ENGLISH (8/5/48), Trustee; 16 West Madison Street, Baltimore, MD
21201; President and Chief Executive Officer of Broventure Company, Inc.;
Chairman of the Board of Chektec Corporation and Cyber Scientific, Inc.
WILLIAM A. HUMENUK (4/21/42), Trustee; 4000 Bell Atlantic Tower, 1717 Arch
Street, Philadelphia, PA 19103; Partner in the Philadelphia office of the law
firm Dechert Price & Rhoads; Director, Hofler Corp.
NORTON H. REAMER* (3/21/35), Trustee; One International Place, Boston, MA 02110;
President and Chairman of the Fund; President, Chief Executive Officer and a
Director of United Asset Management Corporation; Director, Partner or Trustee of
each of the Investment Companies of the Eaton Vance Group of Mutual Funds.
CHARLES H. SALISBURY, JR.* (8/24/40), Trustee; One International Place, Boston,
MA 02110; Executive Vice President of United Asset Management Corporation;
formerly an executive officer and Director of T. Rowe Price and President and
Chief Investment Officer of T. Rowe Price Trust Company.
PETER M. WHITMAN, JR.* (7/1/43), Trustee; One Financial Center, Boston, MA
02111; President and Chief Investment Officer of Dewey Square Investors
Corporation ("DSI") since 1988; Director and Chief Executive Officer of H. T.
Investors, Inc., formerly a subsidiary of DSI.
WILLIAM H. PARK* (9/19/47), Vice President; One International Place, Boston, MA
02110; Executive Vice President and Chief Financial Officer of United Asset
Management Corporation.
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GARY L. FRENCH* (7/4/51), Treasurer; 211 Congress Street, Boston, MA 02110;
President of UAM Fund Services, Inc. and UAM Fund Distributors, Inc.; formerly
Vice President of Operations, Development and Control of Fidelity Investment in
1995; Treasurer of the Fidelity Group of Mutual Funds from 1991 to 1995.
MICHAEL E. DEFAO* (2/28/68), Secretary; 211 Congress Street, Boston, MA 02110
;Vice President and General Counsel of UAM Fund Services, Inc. and UAM Fund
Distributors, Inc.; Associate Attorney of Ropes & Gray (a law firm) from 1993 to
1995.
ROBERT R. FLAHERTY* (9/18/63), Assistant Treasurer; 211 Congress Street, Boston,
MA 02110; Vice President of UAM Fund Services, Inc.; formerly Manager of Fund
Administration and Compliance of Chase Global Fund Services Company from 1995 to
1996; Senior Manager of Deloitte & Touche LLP from 1985 to 1995.
KARL O. HARTMANN* (3/7/55), Assistant Secretary; 73 Tremont Street, Boston, MA
02108; Senior Vice President and General Counsel of Chase Global Funds Services
Company.
GORDON M. SHONE* (7/30/56), Assistant Treasurer; 73 Tremont Street, Boston, MA
02108; Vice President of Fund Administration and Compliance of Chase Global
Funds Services Company; formerly Senior Audit Manager of Coopers & Lybrand LLP
(1983-1996).
REMUNERATION OF TRUSTEES AND OFFICERS
The Fund pays each Trustee, who is not also an officer or affiliated
person, a $150 quarterly retainer fee per active Portfolio which currently
amounts to $1,050 per quarter. In addition, each unaffiliated Trustee receives a
$2,000 meeting fee which is aggregated for all of the Trustees and allocated
proportionately among the Portfolios of the Fund and UAM Funds, Inc., and
reimbursement for travel and other expenses incurred while attending Board
meetings. Trustees who are also officers or affiliated persons receive no
remuneration for their service as Trustees. The Fund's officers and employees
are paid by either the Adviser, United Asset Management Corporation ("UAM"), FSI
or CGFSC and receive no compensation from the Fund. As of June 30, 1997, the
Trustees and Officers of the Fund owned less than 1% of the Fund's outstanding
shares.
The following table shows aggregate compensation paid to each of the Fund's
Independent Trustees by the Fund, as well as total compensation from the Fund,
and UAM Funds, Inc. (collectively the "Fund Complex"), respectively, in the
fiscal year ended April 30, 1997.
10
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
TOTAL
PENSION OR COMPENSATION
RETIREMENT ESTIMATED FROM REGISTRANT
BENEFITS ACCRUED ANNUAL AND
NAME OF PERSON, AGGREGATE COMPENSATION AS PART OF BENEFITS UPON FUND COMPLEX
POSITION FROM REGISTRANT FUND EXPENSES RETIREMENT PAID TO TRUSTEES
-------- --------------- ------------- ---------- ----------------
<S> <C> <C> <C> <C>
John T. Bennett, Jr.
Trustee............. $4,874 0 0 $31,700
J. Edward Day
Former Trustee...... $2,168 0 0 $15,550
Philip D. English
Trustee............. $4,874 0 0 $31,700
William A. Humenuk
Trustee............. $4,874 0 0 $31,700
Nancy J. Dunn
Trustee............. $ 0 0 0 $ 0
</TABLE>
PRINCIPAL HOLDERS OF SECURITIES
As of June 16, 1997, the following persons or organizations held of
record or beneficially 5% or more of the shares of the Portfolio:
FPA Crescent Portfolio Institutional Class Shares: Charles Schwab &
Co., Inc., FBO Reinvest Account, 101 Montgomery St., San Francisco, CA, 39.8%*;
AMG Holdings, Inc., P.O. Box 512256, Los Angeles, CA, 6.2*%.
FPA Crescent Portfolio Institutional Service Class Shares: Grease
Grandchildren Partnership, 122 S. Phillips Ave., Sioux Falls, SD, 22.6%*; Paul
A. Schock, Grease Children's Trust, 22.5%; Fleet National Bank, FBO Continental
Homes 401K Retirement Plan, P.O. Box 92800, Rochester, NY, 16.8%*; Douglas M.
Nelson and Mary T. Nelson, 5737 NE 56th Street, Seattle, WA, 11.6%; and Fleet
National Bank, FBO Coastcast Corp., P.O. Box 92800, Rochester, NY, 11.2%*.
The persons or organizations listed above as owning 25% or more of the
outstanding shares of a Portfolio may be presumed to "control" (as that term is
defined in the 1940 Act) such Portfolio. As a result, those persons or
organizations could have the ability to vote a majority of the shares of the
Portfolio on any matter requiring the approval of shareholders of such
Portfolio.
________
* Denotes shares held by a trustee or other fiduciary for which beneficial
ownership is disclaimed or presumed disclaimed.
INVESTMENT ADVISER
PHILOSOPHY AND STYLE
EQUITY SECURITIES: The Adviser utilizes a contrarian investment style,
which often leads to investing in "what other people do not wish to own." The
Adviser searches for common stocks, preferred stocks, warrants and convertible
securities that reflect low price/earnings ratios (P/Es) and trade at discounts
to private market value. The Adviser deems the following to be important in its
stock selection process: high return on capital; solid balance sheet; meaningful
cash flow; active share repurchase program; insider buying; strong management,
seeking to add shareholder value; and projected earnings growth exceeding the
stock market average. In the Adviser's view, the stock market prices securities
efficiently in the long term, rewarding companies which successfully grow their
own
11
<PAGE>
earnings and penalizing those which do not. The investment philosophy is
based on the conviction that the market valuation of securities is often
inefficient in the short-term. The Adviser feels that hasty short-term decisions
could cause a particular security, industry group or the entire market to become
underpriced or overpriced in the short-term, thereby creating an excellent
opportunity to either buy or sell.
The Adviser's intensive research process includes looking for ideas by
reviewing stock price or industry group underperformance, insider purchasers,
management changes and corporate spin-offs. Fundamental analysis is the
foundation of the Adviser's investment approach.
FIXED INCOME OBLIGATIONS: Through fixed income investments, the Adviser
seeks a reliable and recurring stream of income for the Portfolio, while
preserving its capital. The Adviser attempts to identify the current interest
rate trends and invests funds accordingly. Usually, a defensive strategy is
employed, with investments made at different points along the yield curve in an
attempt to keep the average maturity of fixed income investments less than or
equal to ten years.
The Adviser considers yield spread relationships and their underlying
factors such as credit quality, investor perception and liquidity on a
continuous basis to determine which sector offers the best investment value.
When combined with equity securities, the ownership of fixed income securities
not only broadens the universe of opportunities, but offers additional
diversification and can help lower portfolio volatility.
REPRESENTATIVE INSTITUTIONAL CLIENTS
As of the date of this SAI, the Adviser's representative institutional
clients included: Asea Brown Boveri, General Electric, Eastman Kodak, Federated
Stores and Xerox Corporation.
In compiling this client list, the Adviser used objective criteria such as
account size, geographic location and client classification. The Adviser did
not use any performance-based criteria. It is not known whether these clients
approve or disapprove of the Adviser or the advisory services provided.
CONTROL OF ADVISER
The Adviser is an indirect wholly-owned subsidiary of UAM, a holding
company incorporated in Delaware in December 1980 for the purpose of acquiring
and owning firms engaged primarily in institutional investment management. Since
its first acquisition in August 1983, UAM has acquired or organized over 45 such
wholly-owned affiliated firms (the "UAM Affiliated Firms"). UAM believes that
permitting UAM Affiliated Firms to retain control over their investment advisory
decisions is necessary to allow them to continue to provide investment
management services that are intended to meet the particular needs of their
respective clients.
Accordingly, after acquisition by UAM, UAM Affiliated Firms continue to
operate under their own firm name, with their own leadership and individual
investment philosophy and approach. Each UAM Affiliated Firm manages its own
business independently on a day-to-day basis. Investment strategies employed and
securities selected by UAM Affiliated Firms are separately chosen by each of
them.
ADVISORY FEES
As compensation for services rendered by the Adviser under the Investment
Advisory Agreement, the Portfolio pays the Adviser an annual fee in monthly
installments, calculated by applying the following annual percentage rate to the
Portfolio's average daily net assets for the month: 1.00%.
For the fiscal years ended March 31, 1995, 1996 and 1997, the Portfolio
paid advisory fees of $132,646, $189,156 and $302,772, respectively.
12
<PAGE>
SERVICE AND DISTRIBUTION PLANS
As stated in the Portfolio's Service Class Shares Prospectus, the
Distributor may enter into agreements with broker-dealers and other financial
institutions ("Service Agents"), pursuant to which they will provide
administrative support services to Service Class shareholders who are their
customers ("Customers") in consideration of the Fund's payment of 0.25% (on an
annualized basis) of the average daily net asset value of the Service Class
Shares held by the Service Agent for the benefit of its Customers. Such services
include:
(a) acting as the sole shareholder of record and nominee for beneficial
owners;
(b) maintaining account records for such beneficial owners of the Fund's
shares;
(c) opening and closing accounts;
(d) answering questions and handling correspondence from shareholders about
their accounts;
(e) processing shareholder orders to purchase, redeem and exchange shares;
(f) handling the transmission of funds representing the purchase price or
redemption proceeds;
(g) issuing confirmations for transactions in the Fund's shares by
shareholders;
(h) distributing current copies of prospectuses, statements of additional
information and shareholder reports;
(i) assisting customers in completing application forms, selecting
dividend and other account options and opening any necessary custody
accounts;
(j) providing account maintenance and accounting support for all
transactions; and
(k) performing such additional shareholder services as may be agreed upon
by the Fund and the Service Agent, provided that any such additional
shareholder service must constitute a permissible non-banking activity
in accordance with the then current regulations of, and
interpretations thereof by, the Board of Governors of the Federal
Reserve System, if applicable.
Each agreement with a Service Agent is governed by a Shareholder Service
Plan (the "Service Plan") that has been adopted by the Fund's Board of Trustees.
Pursuant to the Service Plan, the Board of Trustees reviews, at least quarterly,
a written report of the amounts expended under each agreement with Service
Agents and the purposes for which the expenditures were made. In addition,
arrangements with Service Agents must be approved annually by a majority of the
Fund's Trustees, including a majority of the Trustees who are not "interested
persons" of the company as defined in the 1940 Act and have no direct or
indirect financial interest in such arrangements.
The Board of Trustees has approved the arrangements with Service Agents
based on information provided by the Fund's service contractors that there is a
reasonable likelihood that the arrangements will benefit the Fund
and its shareholders by affording the Fund greater flexibility in connection
with the servicing of the accounts of the beneficial owners of its shares in an
efficient manner. Any material amendment to the Fund's arrangements with Service
Agents must be approved by a majority of the Fund's Board of Trustees (including
a majority of the disinterested Trustees). So long as the arrangements with
Service Agents are in effect, the selection and nomination of the members of the
Fund's Board of Trustees who are not "interested persons" (as defined in the
1940 Act) of the Fund will be committed to the discretion of such non-interested
Trustees.
13
<PAGE>
Pursuant to Rule 12b-1 under the 1940 Act, the Fund has adopted a
Distribution Plan for the Service Class Shares of the Fund (the "Distribution
Plan"). The Distribution Plan permits the Fund to pay for certain distribution,
promotional and related expenses involved in the marketing of only the Service
Class Shares.
The Distribution Plan permits the Service Class Shares, pursuant to the
Distribution Agreement, to pay a monthly fee to the Distributor for its services
and expenses in distributing and promoting sales of the Service Class Shares.
These expenses include, among other things, preparing and distributing
advertisements, sales literature and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, and paying distribution
and maintenance fees to securities brokers and dealers who enter into agreements
with the Distributor. In addition, the Service Class Shares may make payments
directly to other unaffiliated parties, who either aid in the distribution of
their shares or provide services to the Class.
The maximum annual aggregate fee payable by the Fund under the Service and
Distribution Plans (the "Plans"), is 0.75% of the Service Class Shares' average
daily net assets for the year. The Fund's Board of Trustees may reduce this
amount at any time. Although the maximum fee payable under the 12b-1 Plan
relating to the Service Class Shares is 0.75% of average daily net assets of
such class, the Board of Trustees has determined that the annual fee, payable on
a monthly basis, under the Plans relating to the Service Class Shares, currently
cannot exceed 0.50% of the average daily net assets represented by the Service
Class. While the current fee which will be payable under the Service Plan and
Distribution Plan has been set at 0.25%, the Plans permit a full 0.75% on all
assets to be paid at any time following appropriate Board approval.
All of the distribution expenses incurred by the Distributor and others,
such as broker/dealers, in excess of the amount paid by the Service Class Shares
will be borne by such persons without any reimbursement from such Classes.
Subject to seeking best price and execution, the Fund may, from time to time,
buy or sell portfolio securities from or to firms which receive payments under
the Plans. From time to time, the Distributor may pay additional amounts from
its own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans, the Distribution Agreement and the form of dealer's and services
agreements have all been approved by the Board of Trustees of the Fund,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Fund and who have no direct or indirect
financial interest in the Plans or any related agreements, by vote cast in
person at a meeting duly called for the purpose of voting on the Plan and such
Agreements. Continuation of the Plans, the Distribution Agreement and the
related agreements must be approved annually by the Board of Trustees in the
same manner, as specified above. Fees paid to Service Agents on behalf of the
Portfolio for the fiscal year ended March 31, 1997 totaled $6.
Each year the Trustees must determine whether continuation of the Plans is
in the best interest of the shareholders of Service Class Shares and that there
is a reasonable likelihood of the Plans providing a benefit to the Class. The
Plans, the Distribution Agreement and the related agreements with any broker-
dealer or others relating to the Class may be terminated at any time without
penalty by a majority of those Trustees who are not "interested persons" or by a
majority vote of the outstanding voting securities of the Class. Any amendment
materially increasing the maximum percentage payable under the Plans must
likewise be approved by a majority vote of the relevant Class' outstanding
voting securities, as well as by a majority vote of those Trustees who are not
"interested persons." Also, any other material amendment to the Plans must be
approved by a majority vote of the Trustees including a majority of the Trustees
of the Fund having no interest in the Plans. In addition, in order for the Plans
to remain effective, the selection and nomination of Trustees who are not
"interested persons" of the Fund must be effected by the Trustees who themselves
are not "interested persons" and who have no direct or indirect financial
interest in the Plans. Persons authorized to make payments under the Plans must
provide written reports at least quarterly to the Board of Trustees for their
review. The Fund and the Distributor intend to operate in compliance with the
NASD's Conduct Rules relating to investment company sales charges.
14
<PAGE>
PORTFOLIO TRANSACTIONS
The Investment Advisory Agreement authorizes the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolio and directs the Adviser to use its best efforts to
obtain the best execution with respect to all transactions for the Portfolio. In
doing so, a Portfolio may pay higher commission rates than the lowest rate
available when the Adviser believes it is reasonable to do so in light of the
value of the research, statistical, and pricing services provided by the broker
effecting the transaction.
It is not the Fund's practice to allocate brokerage or effect
principal transactions with dealers on the basis of sales of Fund shares which
may be made through broker-dealer firms. However, the Adviser may place
portfolio orders with qualified broker-dealers who recommend the Fund's
Portfolios or who act as agents in the purchase of shares of the Portfolios for
their clients. During the fiscal years ended March 31, 1995, 1996, and 1997,
brokerage commissions paid by the Portfolio totaled $51,853, $63,938, and
$50,128, respectively.
Some securities considered for investment by the Portfolio may also be
appropriate for other clients served by the Adviser. If purchases or sales of
securities consistent with the investment policies of a Portfolio and one or
more of these other clients served by the Adviser is considered at or about the
same time, transactions in such securities will be allocated among the Portfolio
and clients in a manner deemed fair and reasonable by the Adviser. Although
there is no specified formula for allocating such transactions, the various
allocation methods used by the Adviser, and the results of such allocations, are
subject to periodic review by the Fund's Trustees.
ADMINISTRATIVE SERVICES
As stated in the Prospectus, the Board of Trustees of the Fund
approved a new Fund Administration Agreement between FSI, a wholly owned
subsidiary of UAM, and the Fund. The Fund's Trustees, also approved a Mutual
Fund Services Agreement between FSI and CGFSC. The services provided by FSI and
CGFSC and the basis of the fees payable by the Fund under the Fund
Administration Agreement are described in the Portfolios' Prospectus. Prior to
April 15, 1996, CGFSC or its predecessor, Mutual Funds Service Company, provided
certain administrative services to the Fund under an Administration Agreement
between the Fund and U.S. Trust Company of New York. The Services provided by
FSI and CGFSC and the basis of the current fees payable are described in the
Portfolio's Prospectuses.
During the fiscal year ended March 31, 1995, the Portfolio paid
administrative fees of $51,830 to its prior administrators, Southampton
Investment Management Company. During the fiscal year ended March 31, 1996, the
Portfolio paid administrative fees of $78,576 to its prior administrator,
Investment Company Administration Corporation ("ICAC"). During the fiscal year
ended March 31, 1997, the Portfolio paid total administrative fees of $14,196 to
ICAC, $20,251 to CGFSC, and $30,359 to FSI.
PERFORMANCE CALCULATIONS
PERFORMANCE
The Portfolio may from time to time quote various performance figures
to illustrate past performance. Performance quotations by investment companies
are subject to rules adopted by the SEC, which require the use of standardized
performance quotations or, alternatively, that every non-standardized
performance quotation furnished by the Fund be accompanied by certain
standardized performance information computed as required by the SEC. An
explanation of the method used to compute or express performance follows.
TOTAL RETURN
The average annual total return of the Portfolio is determined by
finding the average annual compounded rates of return over 1, 5 and 10 year
periods that would equate an initial hypothetical $1,000 investment to its
ending redeemable value. The calculation assumes that all dividends and
distributions are reinvested when paid. The quotation assumes the amount was
completely redeemed at the end of each 1, 5 and 10 year period and the deduction
of all applicable Fund expenses on an annual basis. Since Service Class Shares
of the Portfolio bear additional service and distribution expenses, the average
annual total return of the Service Class Shares of the Portfolio will generally
be lower than that of the Institutional Class Shares.
15
<PAGE>
The average annual total return for the Portfolio's Institutional
Class Shares from inception on June 2, 1993 to March 31, 1997 and for the one
year period ended March 31, 1997 are 17.10% and 20.61%, respectively. The
cumulative total return for the Portfolio's Service Class Shares from inception
on January 24, 1997 to March 31, 1997 is 2.36%.
These figures will be calculated according to the following formula:
<TABLE>
<CAPTION>
P(1 + T)/n/ = ERV
<S> <C> <C>
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning of the
1, 5 or 10 year periods at the end of the 1, 5 or 10 year
periods (or fractional portion thereof).
</TABLE>
COMPARISONS
To help investors better evaluate how an investment in the Portfolio of the
Fund might satisfy their investment objective, advertisements regarding the Fund
may discuss various measures of Fund performance as reported by various
financial publications. Advertisements may also compare performance (as
calculated above) to performance as reported by other investments, indices and
averages. Please see Appendix B for publications, indices and averages which may
be used.
In assessing such comparisons of performance, an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the composition of investments in the Portfolio,
that the averages are generally unmanaged, and that the items included in the
calculations of such averages may not be identical to the formula used by the
Portfolio to calculate its performance. In addition, there can be no assurance
that the Fund will continue this performance as compared to such other averages.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized under the name "The Regis Fund II," as a Delaware
business trust on May 18, 1994. On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust". The Fund's principal executive office is located
at One International Place, 44th Floor, Boston, MA 02110; however, all investor
correspondence should be directed to the Fund at UAM Funds Service Center, c/o
Chase Global Funds Services Company, P.O. Box 2798, Boston, MA 02208-2798. The
Fund's Agreement and Declaration of Trust permits the Fund to issue an unlimited
number of shares of beneficial interest, without par value. The Trustees have
the power to designate one or more series ("Portfolios") of shares of beneficial
interest without further action by shareholders.
On each matter submitted to a vote of the Shareholders, each holder of a
Share shall be entitled to one vote for each whole Share and a fractional vote
for each fractional Share standing in his or her name on the books of the Fund.
In the event of liquidation of the Fund, the holders of the Shares of each
Portfolio or any class thereof that has been established and designated shall be
entitled to receive, when and as declared by the Trustees, the excess of the
assets belonging to that Portfolio, or in the case of a class, belonging to that
Portfolio and allocable to that class, over the liabilities belonging to that
Portfolio or class. The assets so distributable to the holders of Shares of
16
<PAGE>
any particular Portfolio or class thereof shall be distributed to the holders in
proportion to the number of Shares of that Portfolio or class thereof held by
them and recorded on the books of the Fund. The liquidation of any Portfolio or
class thereof may be authorized at any time by vote of a majority of the
Trustees then in office.
Shareholders have no pre-emptive or other rights to subscribe to any
additional Shares or other securities issued by the Fund or any Portfolio,
except as the Trustees in their sole discretion shall have determined by vote.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund's policy is to distribute substantially all of the Portfolio's net
investment income, if any, together with any net realized capital gains in the
amount and at the times that will avoid both income (including capital gains)
taxes on it and the imposition of the Federal excise tax on undistributed income
and capital gains. (See discussion under "Dividends, Capital Gains Distributions
and Taxes" in the Prospectuses.) The amounts of any income dividends or capital
gains distributions cannot be predicted.
Any dividend or distribution paid shortly after the purchase of shares of
the Portfolio by an investor may have the effect of reducing the per share net
asset value of the Portfolio by the per share amount of the dividend or
distribution. Furthermore, such dividends or distributions, although in effect a
return of capital, are subject to income taxes as set forth in the Prospectuses.
As set forth in the Prospectuses, unless the shareholder elects otherwise
in writing, all dividend and capital gains distributions are automatically
received in additional shares of the Portfolio at net asset value (as of the
business day following the record date). This will remain in effect until the
Fund is notified by the shareholder in writing at least three days prior to the
record date that either the Income Option (income dividends in cash and capital
gains distributions in additional shares at net asset value) or the Cash Option
(both income dividends and capital gains distributions in cash) has been
elected. An account statement is sent to shareholders whenever an income
dividend or capital gains distribution is paid.
The Portfolio will be treated as a separate entity (and hence as a separate
"regulated investment company") for Federal tax purposes. Any net capital gains
recognized by the Portfolio will be distributed to its investors without need to
offset (for Federal income tax purposes) such gains against any net capital
losses of another Portfolio.
FEDERAL TAXES
In order for the Portfolio to continue to qualify for Federal income tax
treatment as a regulated investment company under the Code, at least 90% of its
gross income for a taxable year must be derived from qualifying income, i.e.,
dividends, interest, income derived from loans of securities, and gains from the
sale of securities or foreign currencies or other income derived with respect to
its business of investing in such securities or currencies. In addition, gains
realized on the sale or other disposition of securities held for less than three
months must be limited to less than 30% of the Portfolio's annual gross income.
The Portfolio will distribute to shareholders annually, or more often, if
necessary, any net capital gains which have been recognized for Federal income
tax purposes. Shareholders will be advised on the nature of the payments.
CODE OF ETHICS
The Fund has adopted a Code of Ethics which restricts to a certain extent
personal transactions by access persons of the Fund and imposes certain
disclosure and reporting obligations.
17
<PAGE>
FINANCIAL STATEMENTS
The Financial Statements and Financial Highlights of the FPA Crescent
Portfolio for the fiscal year ended March 31, 1997 and the report thereon of
Price Waterhouse LLP, the Portfolio's independent accountant, which appear in
the Portfolio's 1997 Financial Statements, are attached to this SAI.
18
<PAGE>
APPENDIX A -- DESCRIPTION OF SECURITIES AND RATINGS
I. DESCRIPTION OF CORPORATE BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATINGS:
Aaa -- Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
Moody's Investors Service, Inc. applies numerical modifiers 1, 2 and 3 in
the Aa and A rating categories. The modifier 1 indicates that the security ranks
at a higher end of the rating category, modifier 2 indicates a mid-range rating
and the modifier 3 indicates that the issue ranks at the lower end of the rating
category.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
STANDARD & POOR'S CORPORATION CORPORATE BOND RATINGS:
A-1
<PAGE>
AAA -- Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation and indicate an extremely strong capacity to pay
principal and interest.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only to a small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher rated categories.
BB, B, CCC, CC -- Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
C -- The rating C is reserved for income bonds on which no interest is
being paid.
D -- Debt rated D is in default, and payment of interest and/or repayment
of principal is in arrears.
* Ratings are generally given to securities at the time of issuance. While
the rating agencies may from time to time revise such ratings, they
undertake no obligation to do so.
II. DESCRIPTION OF U.S. GOVERNMENT SECURITIES
The term "U.S. Government Securities" refers to a variety of securities
which are issued or guaranteed by the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government.
U.S. Treasury securities are backed by the "full faith and credit" of the
United States. Securities issued or guaranteed by Federal agencies and U.S.
Government sponsored instrumentalities may or may not be backed by the full
faith and credit of the United States.
In the case of securities not backed by the full faith and credit of the
United States, the investor must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for ultimate repayment
and may not be able to assert a claim against the United States itself in the
event the agency or instrumentality does not meet its commitment. Agencies which
are backed by the full faith and credit of the United States include the Export-
Import Bank, Farmers Home Administration, Federal Financing Bank, and others.
Certain agencies and instrumentalities, such as the Government National Mortgage
Association are, in effect, backed by the full faith and credit of the United
States through provisions in their charters that they may make "indefinite and
unlimited" drawings on the U.S. Treasury, if needed to service its debt. Debt
from certain other agencies and instrumentalities, including the Federal Home
Loan Bank and Federal National Mortgage Association, is not guaranteed by the
United States, but those institutions are protected by the discretionary
authority of the U.S. Treasury to purchase certain amounts of their securities
to assist the institution in meeting its debt obligations. Finally, other
agencies and instrumentalities, such as the Farm Credit System and the Federal
Home Loan Mortgage Corporation, are federally
A-2
<PAGE>
chartered institutions under Government supervision, but their debt securities
are backed only by the creditworthiness of those institutions, not the U.S.
Government.
Some of the U.S. Government agencies that issue or guarantee securities
include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and the Tennessee Valley Authority.
A-3
<PAGE>
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES
With respect to the comparative measures of performance for equity
securities described herein, comparisons of performance assume
reinvestment of dividends, except as otherwise stated below.
(a) Dow Jones Composite Average or its component averages -- an unmanaged
index composed of 30 blue-chip industrial corporation stocks (Dow
Jones Industrial Average), 15 utilities company stocks and 20
transportation stocks.
(b) Standard & Poor's 500 Stock Index or its component indices -- an
unmanaged index composed of 400 industrial stocks, 40 financial
stocks, 40 utilities stocks and 20 transportation stocks.
(c) Standard & Poor's 400 Mid Cap Index - consists of 400 domestic stocks
chosen for market size, liquidity, and industry group representation.
It is also a market-value weighted index and was the first benchmark
of mid cap stock price movement.
(d) The New York Stock Exchange composite or component indices --
unmanaged indices of all industrial, utilities, transportation and
finance stocks listed on the New York Stock Exchange.
(e) Wilshire 5000 Equity Index or its component indices -- represents the
return on the market value of all common equity securities for which
daily pricing is available.
(f) Lipper -- Mutual Fund Performance Analysis and Lipper -- Fixed Income
Fund Performance Analysis -- measure total return and average current
yield for the mutual fund industry. Rank individual mutual fund
performance over specified time periods, assuming reinvestment of all
distributions, exclusive of any applicable sales charges.
(g) Lipper Capital Appreciation Funds Index - a fund that aims at maximum
capital appreciation, frequently by means of 100% or more portfolio
turnover, leveraging, purchasing unregistered securities, purchasing
options, etc. The fund may take large cash positions.
(h) Lipper Small Cap Funds Index- a fund that by prospectus or portfolio
practice invests primarily in companies with market capitalizations
of less than $1 billion at the time of purchase.
(i) Morgan Stanley Capital International EAFE Index and World Index --
respectively, arithmetic, market value-weighted averages of the
performance of over 900 securities listed on the stock exchanges of
countries in Europe, Australia and the Far East, and over 1,400
securities listed on the stock exchanges of these continents,
including North America.
(j) Goldman Sachs 100 Convertible Bond Index -- currently includes 67
bonds and 33 preferred. The original list of names was generated by
screening for convertible issues of 100 million or greater in market
capitalization. The index is priced monthly.
(k) Salomon Brothers GNMA Index -- includes pools of mortgages originated
by private lenders and guaranteed by the mortgage pools of the
Government National Mortgage Association.
(l) Salomon Brothers High Grade Corporate Bond Index -- consists of
publicly issued, non-convertible corporate bonds rated AA or AAA. It
is a value-weighted, total return index, including approximately 800
issues with maturities of 12 years or greater.
B-1
<PAGE>
(m) Salomon Brothers Broad Investment Grade Bond Index -- is a market-
weighted index that contains approximately 4,700 individually priced
investment grade corporate bonds rated BBB or better, U.S.
Treasury/agency issues and mortgage pass through securities.
(n) Lehman Brothers Long-Term Treasury Bond Index -- is composed of all
bonds covered by the Lehman Brothers Treasury Bond Index with
maturities of 10 years or greater.
(o) Lehman Brothers Government/Corporate Index -- is a combination of the
Government and Corporate Bond Indices. The Government Index includes
public obligations of the U.S. Treasury, issues of Government
agencies, and corporate debt backed by the U.S. Government. The
Corporate Bond Index includes fixed-rate nonconvertible corporate
debt. Also included are Yankee Bonds and nonconvertible debt issued
by or guaranteed by foreign or international governments and
agencies. All issues are investment grade (BBB) or higher, with
maturities of at least one year and an outstanding par value of at
least $100 million for U.S. Government issues and $25 million for
others. Any security downgraded during the month is held in the index
until month-end and then removed. All returns are market value
weighted inclusive of accrued income.
(p) NASDAQ Industrial Index -- is composed of more than 3,000 industrial
issues. It is a value-weighted index calculated on price change only
and does not include income.
(q) Value Line -- composed of over 1,600 stocks in the Value Line
Investment Survey.
(r) Russell 2000 Index -- composed of the 2,000 smallest stocks in the
Russell 3000, a market value-weighted index of the 3,000 largest U.S.
publicly-traded companies.
(s) Salomon Brothers 3 Month T-Bill Average - the average return for all
Treasury bills for the previous three month period.
(t) Composite Indices -- 60% Standard & Poor's 500 Stock Index, 30%
Lehman Brothers Long-Term Treasury Bond and 10% U.S. Treasury Bills;
70% Standard & Poor's 500 Stock Index and 30% NASDAQ Industrial
Index; 35% Standard & Poor's 500 Stock Index and 65% Salomon Brothers
High Grade Bond Index; all stocks on the NASDAQ system exclusive of
those traded on an exchange, and 65% Standard & Poor's 500 Stock
Index and 35% Salomon Brothers High Grade Bond Index.
(u) CDA Mutual Fund Report published by CDA Investment Technologies, Inc.
-- analyzes price, current yield, risk, total return and average rate
of return (average compounded growth rate) over specified time
periods for the mutual fund industry.
(v) Mutual Fund Source Book published by Morningstar, Inc. -- analyzes
price, yield, risk and total return for equity funds.
(w) Financial publications: Business Week, Changing Times, Financial
World, Forbes, Fortune, Money, Barron's, Consumer's Digest, Financial
Times, Global Investor, Wall Street Journal and Weisenberger
Investment Companies Service -- publications that rate fund
performance over specified time periods.
(x) Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics -- a statistical measure of change over
time in the price of goods and services in major expenditure
groups.
B-2
<PAGE>
(y) Stocks, Bonds, Bills and Inflation, published by Ibbotson Associates
-- historical measure of yield, price and total return for common and
small company stock, long-term government bonds, U.S. Treasury bills
and inflation.
(z) Savings and Loan Historical Interest Rates -- as published by the
U.S. Savings & Loan League Fact Book.
(aa) Historical data supplied by the research departments of First Boston
Corporation; the J.P. Morgan companies; Salomon Brothers; Merrill
Lynch, Pierce, Fenner & Smith; Lehman Brothers, Inc.; and Bloomberg
L.P.
B-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
UAM Funds Trust and Shareholders of
The FPA Crescent Portfolio
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the FPA Crescent
Portfolio (the "Portfolio"), a Portfolio of UAM Funds Trust, at March 31,
1997, and the results of its operations, the changes in its net assets and the
financial highlights for the year then ended and for the period January 24,
1997 (commencement of operations) through March 31, 1997 for the Institutional
Service Class shares, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the
Portfolio's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit, which included confirmation of securities at March 31, 1997 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provides a reasonable basis for the opinion expressed above. The
financial statements of the Portfolio for the year ended March 31, 1996 were
audited by other independent accountants whose report dated April 26, 1996
expressed an unqualified opinion on those statements.
Price Waterhouse LLP
Boston, Massachusetts
May 12, 1997
- -------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION (UNAUDITED)
A Special Meeting of the Shareholders of The FPA Crescent Portfolio was held
on Friday, September 6, 1996 at the offices of the Fund, 11400 West Olympic
Blvd., Los Angeles, California. The following is a summary of the proposal
presented and the total number of shares voted:
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
PROPOSAL FAVOR OF AGAINST ABSTAINED
- -------- --------- ------- ---------
<S> <C> <C> <C>
To approve a proposed Agreement and Plan of
Reorganization and the transactions contemplated
thereby, which include (a) the transfer of all
assets of the Fund to a newly-formed series--the
FPA Crescent Portfolio (the "Series") of UAM Funds
Trust, a Delaware business trust, in exchange for
shares of the Series, and the assumption by the
Series of liabilities of the Fund; and (b) the
distribution to Fund shareholders of such Series'
shares. 1,103,042 1,375 --
</TABLE>
FEDERAL INCOME TAX INFORMATION: (UNAUDITED)
The FPA Crescent Portfolio hereby designates $1,679,968 as a long-term capital
gain dividend for the purpose of the dividend paid deduction on the
Portfolio's Federal income tax return.
In 1997, 18.8% of the distributions taxable as ordinary income, as reported on
Form 1099-DIV, qualifies for the dividends received deduction for
corporations.
20
<PAGE>
FPA CRESCENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (47.8%)
- -------------------------------------------------------------------------------
BANKS (3.5%)
@ Chase Manhattan Corporation, The........................ 2,000 $ 187,250
* HF Bancorp, Inc........................................ 65,000 828,750
Santa Barbara Bancorp.................................... 19,900 597,000
**Standard Federal Bancorporation......................... 12,000 696,000
-----------
2,309,000
- -------------------------------------------------------------------------------
BEVERAGES, FOOD & TOBACCO (1.7%)
**RJR Nabisco Holdings Corp............................... 34,500 1,112,625
- -------------------------------------------------------------------------------
BROADCASTING & PUBLISHING (2.5%)
Central Newspapers, Inc., Class A........................ 12,000 601,500
* Devon Group, Inc....................................... 22,000 649,000
**News Corporation, Ltd., Spons. ADR, Pref. Ltd. Vtg. Ord.
Shares................................................... 25,000 371,875
-----------
1,622,375
- -------------------------------------------------------------------------------
CHEMICALS (0.5%)
* Scotts Company, The.................................... 15,000 345,000
- -------------------------------------------------------------------------------
CONSUMER DURABLES (0.8%)
Semi-Tech (Global) Ltd., Spons. ADR...................... 102,250 540,994
- -------------------------------------------------------------------------------
CONSUMER STAPLES (1.8%)
** Alberto-Culver Company, Class A........................ 3,000 66,750
* Day Runner, Inc........................................ 15,000 380,625
* Guest Supply, Inc...................................... 50,000 718,750
-----------
1,166,125
- -------------------------------------------------------------------------------
FINANCIAL SERVICES (3.6%)
American Express Company................................. 9,350 559,831
Associates First Capital Corporation..................... 4,100 176,300
* Dundee Bancorp, Inc., Class A.......................... 25,000 488,069
* Ocean Financial Corp................................... 16,000 443,000
Phoenix Duff & Phelps Corporation........................ 90,300 688,538
-----------
2,355,738
- -------------------------------------------------------------------------------
HEALTH CARE (1.9%)
* Medical Resources, Inc................................. 35,000 380,625
*SMT Health Services Inc................................. 100,940 857,990
-----------
1,238,615
- -------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
FPA CRESCENT PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
March 31, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
- --------------------------------------------------------------------------------
INSURANCE (2.5%)
** Foremost Corporation of America......................... 5,500 $ 319,000
US Facilities Corporation................................. 65,000 1,316,250
-----------
1,635,250
- --------------------------------------------------------------------------------
LODGING & RESTAURANTS (2.7%)
* IHOP Corp............................................... 70,000 1,767,500
- --------------------------------------------------------------------------------
MANUFACTURING (7.0%)
Coachmen Industries, Inc.................................. 75,000 1,415,625
* Littelfuse, Inc......................................... 8,500 393,125
* National R.V. Holdings, Inc............................. 145,000 1,885,000
* Recoton Corporation..................................... 70,000 918,750
-----------
4,612,500
- --------------------------------------------------------------------------------
REAL ESTATE (4.7%)
Crown American Realty Trust............................... 128,000 992,000
Price Enterprises, Inc.................................... 113,000 2,076,375
-----------
3,068,375
- --------------------------------------------------------------------------------
RETAIL (8.4%)
* Good Guys, Inc., The.................................... 80,000 550,000
* Mac Frugal's Bargains-Close-outs Inc.................... 50,000 1,325,000
* Maxim Group, Inc., The.................................. 15,000 198,750
* Michaels Stores, Inc.................................... 117,200 2,153,550
* Payless ShoeSource, Inc................................. 30,500 1,277,188
-----------
5,504,488
- --------------------------------------------------------------------------------
SERVICES (2.3%)
* Earl Scheib, Inc........................................ 16,000 100,000
* Pinkerton's, Inc........................................ 56,000 1,442,000
-----------
1,542,000
- --------------------------------------------------------------------------------
TECHNOLOGY (3.1%)
* Arrow Electronics, Inc.................................. 13,500 761,063
* NCR Corporation......................................... 28,000 987,000
* Wang Laboratories, Inc.................................. 15,000 266,250
-----------
2,014,313
- --------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
FPA CRESCENT PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
March 31, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
- -------------------------------------------------------------------------------
TEXTILES & APPAREL (0.8%)
** Reebok International Ltd............................ 12,000 $ 538,500
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $26,869,053).................. 31,373,398
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PREFERRED STOCKS (3.8%)
- -------------------------------------------------------------------------------
BEVERAGES, FOOD & TOBACCO (0.2%)
RJR Nabisco Holdings Corp., 10%, 12/31/44, Series T... 6,450 160,444
- -------------------------------------------------------------------------------
ENTERTAINMENT & LEISURE TIME (2.5%)
AMC Entertainment, Inc., $1.75, 12/31/49 Cv........... 19,000 646,000
Station Casinos, Inc., 7.0%, 12/31/49 Cv.............. 22,500 970,312
-----------
1,616,312
- -------------------------------------------------------------------------------
FINANCIAL SERVICES (0.4%)
Phoenix Duff & Phelps Corporation, $1.50, 11/1/15, Se-
ries A Cv............................................. 9,730 260,278
- -------------------------------------------------------------------------------
REAL ESTATE (0.6%)
Walden Residential Properties, Inc., 9.2%, 12/31/06... 15,000 386,250
- -------------------------------------------------------------------------------
RETAIL (0.1%)
Signet Group PLC, $1.06, 12/31/49, Cv................. 5,800 92,800
- -------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (COST $2,412,844)................ 2,516,084
- -------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT
- -------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (19.8%)
- -------------------------------------------------------------------------------
BROADCASTING & PUBLISHING (2.1%)
Busse Broadcasting Corp., 11.625%, 10/15/00........... $ 427,000 448,884
Continental Cablevision, Inc., 11.00%, 6/1/07......... 800,000 900,346
-----------
1,349,230
- -------------------------------------------------------------------------------
CONSUMER STAPLES (0.2%)
Playtex Family Products Corp., 9.00%, 12/15/03........ 150,000 149,625
- -------------------------------------------------------------------------------
CONSUMER DURABLES (0.4%)
# International Semi-Tech Microelectrics Inc.,
0.00%/11.50%, 8/15/03............................... 510,000 284,325
- -------------------------------------------------------------------------------
ENTERTAINMENT & LEISURE TIME (2.5%)
Trump Atlantic City Associates, 11.25%, 5/1/06........ 1,800,000 1,633,500
- -------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
FPA CRESCENT PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
March 31, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
- --------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS--(CONTINUED)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (0.5%)
GPA Delaware, Inc., 8.75%, 12/15/98.................... $ 300,000 $ 305,625
- --------------------------------------------------------------------------------
HEALTH CARE (0.9%)
NovaCare Inc., 5.50%, 1/15/00 Cv....................... 650,000 598,000
- --------------------------------------------------------------------------------
LODGING & RESTAURANTS (0.1%)
MGM Grand Hotels Finance Corp., 12.00%, 5/1/02......... 85,000 89,896
- --------------------------------------------------------------------------------
MANUFACTURING
(0.8%)
Fomento Economico Mexicano SA, 9.50%, 7/22/97.......... 410,000 416,663
Triangle Pacific Corp., 10.50%, 8/1/03................. 140,000 148,225
-----------
564,888
- --------------------------------------------------------------------------------
REAL ESTATE
(3.0%)
Alexander Haagen Properties, Inc., Series A, 7.50%,
1/15/01 Cv............................................. 975,000 911,625
Alexander Haagen Properties, Inc., Series B, 7.50%,
1/15/01 Cv............................................. 625,000 584,375
Rockefeller Center Properties, Inc., 0.00%, 12/31/00... 700,000 460,250
-----------
1,956,250
- --------------------------------------------------------------------------------
RETAIL
(5.5%)
Charming Shoppes, Inc., 7.50%, 7/15/06 Cv.............. 1,975,000 1,994,750
Fabri-Centers of America, Inc., 6.25%, 3/1/02 Cv....... 80,000 76,700
Genesco Inc., 10.375%, 2/1/03.......................... 350,000 355,250
Michaels Stores, Inc., 6.75%, 1/15/03 Cv............... 300,000 259,500
Michaels Stores, Inc., 10.875%, 6/15/06................ 900,000 924,750
-----------
3,610,950
- --------------------------------------------------------------------------------
SERVICES
(1.6%)
EMCOR Group, Inc., Series C, 11.00%, 12/15/01.......... 263,700 270,292
Fleming Companies, Inc., 10.625%, 12/15/01............. 750,000 751,875
-----------
1,022,167
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS
(2.2%)
Mobile Telecommunication Technologies Corp., 13.50%,
12/15/02............................................... 1,600,000 1,448,000
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS (COST $13,014,834)... 13,012,456
- --------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
FPA CRESCENT PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
March 31, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
WARRANTS (0.0%)
- -------------------------------------------------------------------------------
REAL ESTATE (0.0%)
* Walden Residential Properties, Inc., expiring
1/1/02 (COST $15,000)............................. 15,000 $ 23,437
- -------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT
- -------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENT (29.1%)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT (29.1%)
Chase Securities, Inc., 6.10%, dated 3/31/97, due
4/1/97, to be repurchased at $19,102,236,
collateralized by $19,030,000 of various U.S.
Treasury Notes and Bills, 0.0%-9.125%, due
8/28/97-11/30/99, valued at $19,591,440 (COST
$19,099,000)...................................... $19,099,000 19,099,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.5%) (COST $61,410,731)......... 66,024,375
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (NET) (-0.5%)............ (374,061)
- -------------------------------------------------------------------------------
NET ASSETS (100%)..................................... $65,650,314
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<CAPTION>
NO. OF
CONTRACTS
- -------------------------------------------------------------------------------
<S> <C> <C>
WRITTEN CALL OPTIONS
- -------------------------------------------------------------------------------
Chase Manhattan Corporation, The, expiring 4/19/97,
Strike Price $95 (Premium Received $18,439)....... 20 $ 4,250
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<CAPTION>
SHARES
- -------------------------------------------------------------------------------
<S> <C> <C>
SECURITIES SOLD SHORT
- -------------------------------------------------------------------------------
COMMON STOCKS
Alberto-Culver Company, Class B..................... 3,000 $ 78,375
Bed Bath & Beyond Inc............................... 6,000 145,125
Boston Chicken, Inc................................. 4,500 137,250
GT Interactive Software Corporation................. 12,500 89,062
News Corporation, Ltd., Spons. ADR.................. 16,500 297,000
Regal Cinemas, Inc.................................. 4,500 121,500
Nabisco Holdings Corporation, Class A............... 27,000 1,100,250
Sensormatic Electronics Corporation................. 7,000 118,125
Warnaco Group, Inc., The............................ 4,000 119,000
-----------
(Total Proceeds $2,100,923)........................ $ 2,205,687
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
** All, or a portion of these shares, were pledged to cover margin
requirements on open short sale transactions.
@ All, or a portion of these shares, cannot be sold pending expiration of
written call options.
# Step Bond--Coupon rate is low or zero for an initial period and then
increases to a higher coupon rate thereafter. Maturity date disclosed is
the ultimate maturity date.
ADRAmerican Depositary Receipt.
10
<PAGE>
FPA CRESCENT PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at Cost.............................................. $61,410,731
===========
Investments, at Value (Including a Repurchase Agreement of
$19,099,000) (Note A)............................................ $66,024,375
Cash.............................................................. 1,493,517
Receivable for Portfolio Shares Sold.............................. 412,579
Deposits with Brokers for Securities Sold Short (Note A).......... 2,511,091
Dividends and Interest Receivable................................. 374,051
Other Assets...................................................... 788
- -------------------------------------------------------------------------------
Total Assets..................................................... 70,816,401
- -------------------------------------------------------------------------------
LIABILITIES
Securities Sold Short, at Value (Proceeds $2,100,923) (Note A).... 2,205,687
Payable for Investments Purchased................................. 2,817,016
Payable for Portfolio Shares Redeemed............................. 29,537
Payable for Investment Advisory Fees (Note B)..................... 46,808
Payable for Administrative Fees (Note C).......................... 8,446
Payable for Custodian Fees (Note D)............................... 5,000
Payable for Trustees' Fees (Note F)............................... 600
Written Call Options at Value (Premium Received $18,439) (Note A). 4,250
Dividend Payable on Securities Sold Short (Note A)................ 3,575
Other Liabilities................................................. 45,168
- -------------------------------------------------------------------------------
Total Liabilities................................................ 5,166,087
- -------------------------------------------------------------------------------
NET ASSETS......................................................... $65,650,314
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid in Capital................................................... $60,384,542
Undistributed Net Investment Income............................... 339,182
Accumulated Net Realized Gain..................................... 403,521
Unrealized Appreciation........................................... 4,523,069
- -------------------------------------------------------------------------------
NET ASSETS......................................................... $65,650,314
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
Net Assets........................................................ $65,618,774
Net Asset Value, Offering and Redemption Price Per Share 4,874,819
shares outstanding (unlimited authorization, no par value)....... $ 13.46
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INSTITUTIONAL SERVICE CLASS SHARES
Net Assets........................................................ $ 31,540
Net Asset Value, Offering and Redemption Price Per Share 2,349
shares outstanding
(unlimited authorization, no par value).......................... $ 13.43
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
FPA CRESCENT PORTFOLIO
STATEMENT OF OPERATIONS
For the Year Ended March 31, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
- ----------------------------------------
<S> <C>
INVESTMENT INCOME
Interest................. $1,037,523
Dividends................ 303,170
- ----------------------------------------
Total Income............ 1,340,693
- ----------------------------------------
EXPENSES
Advisory Fees (Note B)... 302,772
Administration Fees (Note
C)...................... 64,806
Custodian Fees (Note D).. 11,394
Trustees' Fees (Note F).. 2,716
Registration and Filing
Fees.................... 25,569
Auditing Fees............ 20,563
Legal Fees............... 16,674
Reports to Shareholders.. 16,589
Short Sale Dividend Ex-
pense (Note A).......... 8,818
Amortization of Organiza-
tion Costs (Note A)..... 8,668
Miscellaneous............ 17,799
- ----------------------------------------
Total Expenses.......... 496,368
Expense Reductions (Note
A)...................... (8,662)
- ----------------------------------------
Net Expenses............ 487,706
- ----------------------------------------
NET INVESTMENT INCOME..... 852,987
- ----------------------------------------
NET REALIZED GAIN ON:
Investments.............. 1,732,993
Securities Sold Short.... 371,862
- ----------------------------------------
NET REALIZED GAIN ON IN-
VESTMENTS AND SECURITIES
SOLD SHORT............... 2,104,855
- ----------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION
ON:
Investments.............. 2,170,658
Securities Sold Short.... 5,500
Written Options.......... 14,189
- ----------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION. 2,190,347
- ----------------------------------------
NET GAIN ON INVESTMENTS,
SECURITIES SOLD SHORT AND
WRITTEN OPTIONS.......... 4,295,202
- ----------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERA-
TIONS.................... $5,148,189
- ----------------------------------------
- ----------------------------------------
</TABLE>
12
<PAGE>
FPA CRESCENT PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
The accompanying notes are an integral part of the financial statements.
<TABLE>
- ----------------------------------------------------------------------------------
<CAPTION>
YEARS ENDED MARCH 31,
1997 1996
- ----------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income................................. $852,987 $634,107
Net Realized Gain..................................... 2,104,855 2,242,920
Net Change in Unrealized Appreciation/Depreciation.... 2,190,347 1,246,238
- ----------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations. 5,148,189 4,123,265
- ----------------------------------------------------------------------------------
DISTRIBUTIONS:
INSTITUTIONAL CLASS
Net Investment Income................................. (676,369) (559,924)
Net Realized Gain..................................... (2,597,975) (1,361,813)
- ----------------------------------------------------------------------------------
Total Distributions.................................. (3,274,344) (1,921,737)
- ----------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: (A)
INSTITUTIONAL CLASS:
Issued--Regular....................................... 40,848,380 4,376,535
--In Lieu of Cash Distributions..................... 3,165,120 1,821,467
Redeemed.............................................. (2,293,356) (2,365,192)
- ----------------------------------------------------------------------------------
Net Increase from Institutional Class Shares......... 41,720,144 3,832,810
- ----------------------------------------------------------------------------------
INSTITUTIONAL SERVICE CLASS:
Issued--Regular....................................... 31,597 --
- ----------------------------------------------------------------------------------
Net Increase from Capital Share Transactions......... 41,751,741 3,832,810
- ----------------------------------------------------------------------------------
Total Increase........................................ 43,625,586 6,034,338
NET ASSETS:
Beginning of year..................................... 22,024,728 15,990,390
- ----------------------------------------------------------------------------------
End of Year (including undistributed net investment
income of $339,182 and $170,505, respectively)....... $65,650,314 $22,024,728
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
(A) SHARES ISSUED AND REDEEMED:
INSTITUTIONAL CLASS
Shares sold........................................... 3,063,181 356,056
In Lieu of Cash Distributions......................... 247,300 153,426
Shares Redeemed....................................... (174,536) (193,936)
- ----------------------------------------------------------------------------------
Net Increase from Institutional Class Shares......... 3,135,945 315,546
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
INSTITUTIONAL SERVICE CLASS
Shares sold........................................... 2,349 --
In Lieu of Cash Distributions......................... -- --
Shares Redeemed....................................... -- --
- ----------------------------------------------------------------------------------
Net Increase from Institutional Service Class Shares. 2,349 --
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
FPA CRESCENT PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL CLASS SERVICE CLASS
------------------------------------------ -----------------
YEARS ENDED MARCH 31, JUNE 2, 1993+ JANUARY 24, 1997+
-------------------------- TO TO
1997 1996 1995 MARCH 31, 1994 MARCH 31, 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD.......... $ 12.67 $ 11.23 $ 10.96 $ 10.00 $ 13.12
- ---------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income... 0.31 0.40 0.21 0.13 0.03
Net Realized and
Unrealized Gain on
Investments............ 2.16 2.29 0.77 0.99 0.28
- ---------------------------------------------------------------------------------------
Total from Investment
Operations............ 2.47 2.69 0.98 1.12 0.31
- ---------------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income... (0.34) (0.37) (0.18) (0.10) --
Net Realized Gain....... (1.34) (0.88) (0.53) (0.06) --
- ---------------------------------------------------------------------------------------
Total Distributions.... (1.68) (1.25) (0.71) (0.16) --
- ---------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD.................. $ 13.46 $ 12.67 $ 11.23 $ 10.96 $ 13.43
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
TOTAL RETURN............. 20.61% 24.71% 9.35% 11.40%** 2.36%**
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL
DATA
Net Assets, End of Period
(Thousands)............. $65,619 $22,025 $15,990 $10,174 $32
Ratio of Expenses to Average Net
Assets:
Before Expense Reduc-
tions.................. 1.60% 1.59% 1.65% 1.86%* 1.85%*
After Expense Reduc-
tions.................. 1.57% 1.59% 1.65% 1.85%* 1.85%*
Ratio of Net Investment
Income to Average Net
Assets:
Before Expense Reduc-
tions.................. 2.77% 3.35% 2.16% 1.60%* 2.56%*
After Expense Reduc-
tions.................. 2.80% 3.35% 2.16% 1.61%* 2.56%*
Portfolio Turnover Rate.. 45% 100% 101% 89% 45%
Average Commission Rate
Paid#................... $0.0521 N/A N/A N/A $0.0521
- ---------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Not Annualized.
+ Commencement of Operations.
# For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for security
trades on which commissions are charged.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
FPA CRESCENT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
UAM Funds Trust and UAM Funds, Inc. (collectively the "UAM Funds") are
registered under the Investment Company Act of 1940, as amended. The FPA
Crescent Portfolio (the "Portfolio"), a portfolio of UAM Funds Trust (formerly
The Crescent Fund, a series of Professionally Managed Portfolios) is a
diversified, open-end management investment company. The Portfolio is
authorized to offer two separate classes of shares--Institutional Class Shares
and Institutional Service Class Shares ("Service Class Shares"). On September
6, 1996, the shareholders of the Portfolio approved its reorganization from
Professionally Managed Portfolios into the UAM Funds Trust, effective October
1, 1996. At March 31, 1997, the UAM Funds were composed of 42 active
portfolios. The financial statements of the remaining portfolios are presented
separately. The primary investment objective of the FPA Crescent Portfolio is
to provide a total return consistent with reasonable investment risk through a
combination of income and capital appreciation. The Portfolio seeks to achieve
its objective by investing in a combination of equity securities and fixed
income obligations, but there are no assurances that this objective will be
achieved. The value of the Portfolio's investment portfolio will fluctuate
with market conditions and an investor's shares, when redeemed, may be worth
more or less than their original cost. The Portfolio began operations on June
2, 1993.
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: Equity securities listed on a securities exchange
for which market quotations are readily available are valued at the last
quoted sale price of the day. Price information on listed securities is
taken from the exchange where the security is primarily traded. Unlisted
equity securities and listed securities not traded on the valuation date
for which market quotations are readily available are valued neither
exceeding the current asked prices nor less than the current bid prices.
Quotations of foreign securities in a foreign currency are converted to
U.S. dollar equivalents. The converted value is based upon the bid price of
the foreign currency against U.S. dollars quoted by any major bank or by a
broker.
Bonds and other fixed income securities are valued according to the
broadest and most representative market, which will ordinarily be the over-
the-counter market. Bonds and other fixed income securities may be valued
on the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities. Securities
purchased with remaining maturities of 60 days or less are valued at
amortized cost, if it approximates market value.
The value of other assets and securities for which no quotations are
readily available is determined in good faith at fair value using methods
determined by the Trustees.
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 provision
for Federal income taxes is required in the financial statements.
The cost of securities for federal income tax purposes was $61,410,731. At
March 31, 1997, net unrealized appreciation for all securities based on tax
cost was $4,613,644. This consisted of aggregate gross unrealized
appreciation for all securities of $5,925,689 and aggregate gross
unrealized depreciation for all securities of $1,312,045.
15
<PAGE>
FPA CRESCENT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. DISTRIBUTIONS TO SHAREHOLDERS: The Portfolio will normally distribute
substantially all of its net investment income in June and December. Any
realized net capital gains will be distributed annually. All distributions
are recorded on ex-dividend date.
The amount and character of income and capital gain distributions to be
paid are determined in accordance with Federal income tax regulations which
may differ from generally accepted accounting principles. These differences
are primarily due to differing book and tax treatments of organization
costs and R.E.I.T.s.
Permanent book and tax basis differences relating to shareholder
distributions resulted in reclassifications of $7,941 to decrease
undistributed net investment income (loss) with an increase to paid in
capital of $7,941.
Current year permanent book-tax differences, if any, are not included in
ending undistributed net investment income (loss) for the purpose of
calculating net investment income (loss) per share in the financial
highlights.
4. REPURCHASE AGREEMENTS: In connection with transactions involving
repurchase agreements, the Portfolio's custodian bank takes possession of
the underlying securities, the value of which exceeds the principal amount
of the repurchase transaction, including accrued interest. To the extent
that any repurchase transaction exceeds one business day, the value of the
collateral is monitored on a daily basis to determine the adequacy of the
collateral. In the event of default on the obligation to repurchase, the
Portfolio has the right to liquidate the collateral and apply the proceeds
in satisfaction of the obligation. In the event of default or bankruptcy by
the other party to the agreement, realization 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 balances
into a joint trading account which invests in one or more repurchase
agreements. This joint repurchase agreement is covered by the same
collateral requirements as discussed above.
5. SHORT SALES: The Portfolio may engage in short sales of securities. In a
short sale, the Portfolio sells stock which it does not own, making
delivery with securities "borrowed" from a broker. The Portfolio is then
obligated to replace the security borrowed by purchasing it at the market
price at the time of replacement. This price may or may not be less than
the price at which the security was sold by the Portfolio. Until the
security is replaced, the Portfolio is required to pay to the lender any
dividends or interest which accrue during the period of the loan. In order
to borrow the security, the Portfolio may also have to pay fees which would
increase the cost of the security sold. The proceeds of the short sale will
be retained by the broker, to the extent necessary to meet margin
requirements, until the short position is closed out.
The Portfolio also must deposit in a segregated account an amount of cash
or liquid assets equal to the difference between (a) the market value of
the securities short at the time they were sold short and (b) the value of
the collateral deposited with the broker in connection with the short sale
(not including the proceeds from the short sale). While the short position
is open, the Portfolio must maintain daily the segregated
16
<PAGE>
FPA CRESCENT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
account at such a level that (1) the amount deposited in it plus the amount
deposited with the broker as collateral equals the current market value of
the securities sold short and (2) the amount deposited in it plus the
amount deposited with the broker as collateral is not less than the market
value of the securities at the time they were sold short.
The Portfolio will incur a loss as a result of the short sale if the price
of the security increases between the date of the short sale and date on
which the Portfolio replaces the borrowed security. The Portfolio will
realize a gain if the security declines in price between those dates. The
amount of any gain will be decreased and the amount of any loss will be
increased by any fees the Portfolio may be required to pay in connection
with the short sale.
6. OPTIONS AND FUTURES CONTRACTS: The Portfolio may use futures and options
contracts to hedge against changes in the values of securities the
Portfolio owns or expects to purchase. The Portfolio may also write covered
options on securities it owns or in which it may invest to increase its
current returns.
The potential risk to the Portfolio is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the value
of the underlying instruments, if there is an illiquid secondary market for
the contracts, or if the counterparty to the contract is unable to perform.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written options.
During the year ended March 31, 1997, the Portfolio participated in writing
covered call options. The Portfolio had option activity as follows:
<TABLE>
<CAPTION>
NO. OF PREMIUMS
CONTRACTS (000)
--------- --------
<S> <C> <C>
Options outstanding at March 31, 1996..................... -- $ --
Options written during the period......................... 20 18,439
--- -------
Options outstanding at March 31, 1997..................... 20 $18,439
</TABLE>
7. ORGANIZATION COST: Costs incurred by the Portfolio in connection with
its organization were deferred and were being amortized on a straight-line
basis over a five year period. In connection with the reorganization of the
Portfolio, unamortized organization expenses of $6,662 were expensed and
reimbursed by the Adviser.
8. OTHER: Security transactions are accounted for on trade date, the date
the trade was executed. Costs used in determining realized gains and losses
on the sale of investment securities are based on the specific
identification method. Dividend income is recorded on the ex-dividend date.
Interest income is recognized on the accrual basis. Discounts and premiums
on securities purchased are amortized using the effective yield basis over
their respective lives. Most expenses of the UAM Funds can be directly
attributed to a particular portfolio. Expenses which cannot be directly
attributed are apportioned among the portfolios of the UAM
17
<PAGE>
FPA CRESCENT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Funds based on their relative net assets. Additionally, certain expenses
are apportioned among the portfolios of the UAM Funds, based on their
relative net assets. Income, expenses (other than class specific expenses)
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 have been increased to include expense offsets for custodian
balance credits.
B. ADVISORY SERVICES: Under the terms of an investment advisory agreement,
First Pacific Advisors, Inc. (the "Adviser"), an indirect wholly-owned
subsidiary of United Asset Management Corporation ("UAM"), provides investment
advisory services to the Portfolio at a monthly fee calculated at an annual
rate of 1.00% of average daily net assets. The Adviser has voluntarily agreed
to waive a portion of its advisory fees and to assume expenses if necessary,
in order to keep the Portfolio's total annual operating expenses from
exceeding 1.85% and 2.10% of average daily net assets of the Portfolio's
Institutional Class Shares and Service Class Shares, respectively.
C. ADMINISTRATION SERVICES: Effective October 1, 1996, UAM Fund Services, Inc.
(the "Administrator"), a wholly-owned subsidiary of UAM, provides and oversees
administrative, fund accounting, dividend disbursing and transfer agent
services to the Portfolio under a Fund Administration Agreement (the
"Agreement") with the UAM Funds. Pursuant to the Agreement, the Administrator
is entitled to receive annual fees, computed daily and payable monthly, of
0.19% of the first $200 million of the combined aggregate net assets; plus
0.11% of the next $800 million of the combined aggregate net assets; plus
0.07% of the next $2 billion of the combined aggregate net assets; plus 0.05%
of the combined aggregate net assets in excess of $3 billion. The fees are
allocated among the portfolios of the UAM Funds on the basis of their relative
net assets and are subject to a graduated minimum fee schedule per portfolio
which rises from $2,000 per month, upon inception of a portfolio, to $70,000
annually after two years. For portfolios with more than one class of shares,
the minimum annual fee increases to $90,000. In addition, the Administrator
receives a Portfolio-specific monthly fee of 0.06% of average daily net assets
of the Portfolio. The Administrator has entered into a Mutual Funds Service
Agreement with Chase Global Funds Services Company ("CGFSC"), an affiliate of
The Chase Manhattan Bank, under which CGFSC agrees to provide certain
services, including but not limited to, administration, fund accounting,
dividend disbursing and transfer agent services. Pursuant to the Mutual Funds
Service Agreement, the Administrator pays CGFSC a monthly fee. For the period
October 1, 1996 to March 31, 1997, UAM Fund Services, Inc. earned $30,359 from
the Portfolio as Administrator of which $20,251 was paid to CGFSC for their
services as sub-Administrator.
Prior to October 1, 1996, the Investment Company Administration Corporation
acted as the Portfolio's administrator. For its services, the Investment
Company Administration Corporation was entitled to receive annual fees,
computed daily and payable monthly, of $30,000 for the Portfolio's average net
assets less than $15 million; 0.20% of average net assets between $15 to $50
million; plus 0.15% of the next $50 million of average net assets; plus 0.10%
of the next $50 million of average net assets; plus 0.05% of average net
assets in excess of $150 million.
D. CUSTODIAN: Effective October 1, 1996, The Chase Manhattan Bank ("the
Bank"), an affiliate of CGFSC, is custodian for the Portfolio's assets held in
accordance with the custodian agreement. For the period October 1, 1996 to
March 31, 1997, the amount charged to the Portfolio by the Bank aggregated
$3,536.
18
<PAGE>
FPA CRESCENT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. DISTRIBUTION SERVICES: Through September 30, 1996, First Fund Distributors,
Inc., an affiliate of the former administrator, acted as the Portfolio's
distributor. Effective October 1, 1996, 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 Portfolio may not incur distribution
and service fees which exceed an annual rate of 0.75% of the Portfolio's net
assets, however, the Board has currently limited aggregate payments under the
Plan to 0.50% per annum of the Portfolio's net assets. The Portfolio's Service
Class Shares are not currently making payments for distribution fees.
In addition, the Portfolio pays service fees at an annual rate of 0.25% of the
average daily value of Service Class Shares owned by clients of certain
Service Organizations. For the period January 24, 1997 to March 31, 1997 the
Service Class Shares paid service fees of $6.
F. TRUSTEES' FEES: Effective October 1, 1996, each Trustee, who is not an
officer or affiliated person, receives $2,000 per meeting attended, 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 and
reimbursement of expenses incurred in attending Board meetings.
G. LINE OF CREDIT: The Portfolio, along with certain other Portfolios of UAM
Funds, collectively entered into an agreement which enables them to
participate 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 1/8th of 1% per annum, payable at the end of
each calendar quarter, is accrued by each participating Portfolio based on its
average daily unused portion of the line of credit. During the year ended
March 31, 1997, the Portfolio had no borrowings under the agreement.
H. PURCHASES AND SALES: For the year ended March 31, 1997, the Portfolio made
purchases of approximately $33,567,808 and sales of approximately $11,602,781
of investment securities other than long-term U.S. Government and short-term
securities.
I. OTHER: At March 31, 1997, 34% and 82% of total shares outstanding were held
by 1 and 2 record shareholders owning more than 10% of the aggregate total
shares outstanding of the Institutional Class Shares and the Institutional
Service Class Shares, respectively.
19
<PAGE>
PART B
UAM FUNDS
HANSON EQUITY PORTFOLIO
INSTITUTIONAL CLASS SHARES
STATEMENT OF ADDITIONAL INFORMATION -- JULY 10, 1997
This Statement of Additional Information ("SAI") is not a Prospectus but
should be read in conjunction with the Prospectus of the UAM Funds Trust (the
"UAM Funds" or the "Fund") for the Hanson Equity Portfolio dated July 10, 1997.
To obtain the Prospectus, please call the UAM Funds Service Center at 1-800-638-
7983.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES.................... 2
PURCHASE AND REDEMPTION OF SHARES.................... 3
SHAREHOLDER SERVICES................................. 4
INVESTMENT LIMITATIONS............................... 5
MANAGEMENT OF THE FUND............................... 6
INVESTMENT ADVISER................................... 8
PORTFOLIO TRANSACTIONS............................... 9
ADMINISTRATIVE SERVICES.............................. 9
PERFORMANCE CALCULATIONS........ 10
GENERAL INFORMATION.................................. 11
APPENDIX A -- DESCRIPTION OF SECURITIES AND RATINGS.. A-1
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND
AVERAGES............................................ B-1
</TABLE>
FINANCIAL STATEMENTS
INVESTMENT ADVISER
Hanson Investment Management Company
DISTRIBUTOR
UAM Fund Distributors, Inc. (Distributor)
ADMINISTRATOR AND TRANSFER AGENT
<PAGE>
UAM Fund Services, Inc. (FSI)
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the investment objective and policies of
the Hanson Equity Portfolio (the "Portfolio") as set forth in the Portfolio's
Prospectus:
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified brokers,
dealers, domestic and foreign banks or other financial institutions so long as
the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940, as amended, (the "1940
Act") or the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "SEC") thereunder, which currently require that (a) the
borrower pledge and maintain with the Portfolio collateral consisting of cash,
an irrevocable letter of credit issued by a domestic U.S. bank or securities
issued or guaranteed by the United States Government having a value at all times
not less than 100% of the value of the securities loaned, (b) the borrower add
to such collateral whenever the price of the securities loaned rises (i.e., the
borrower "marks to the market" on a daily basis), (c) the loan be made subject
to termination by the Portfolio at any time, and (d) the Portfolio receives
reasonable interest on the loan (which may include the Portfolio investing any
cash collateral in interest bearing short-term investments). As with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the securities loaned if the borrower of the securities fails
financially. These risks are similar to the ones involved with repurchase
agreements as discussed in the Prospectus.
FOREIGN SECURITIES
Investors in the Portfolio should recognize that investing in foreign
companies through the purchase of American Depositary Receipts ("ADRs") involves
certain special considerations which are not typically associated with investing
in U.S. companies. Since the securities of foreign companies are frequently
denominated in foreign currencies, investments may be affected favorably or
unfavorably by changes in currency rates and in exchange control regulations,
and may incur costs in connection with conversions between various currencies.
As foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards and they may have policies that are
not comparable to those of domestic companies, there may be less information
available about certain foreign companies than about domestic companies.
Securities of some foreign companies are generally less liquid and more volatile
than securities of comparable domestic companies. There is generally less
government supervision and regulation of stock exchanges, brokers and listed
companies than in the U.S. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
U.S. investments in those countries.
3
<PAGE>
Certain foreign governments levy withholding taxes on dividend and interest
income. Although in some countries a portion of these taxes are recoverable, the
non-recoverable portion of foreign withholding taxes will reduce the income
received from the companies comprising the Portfolio's investments. However,
these foreign withholding taxes are not expected to have a significant impact.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Portfolio may be purchased without sales commission at the
net asset value per share next determined after an order is received in proper
form by the Fund, and payment is received by the Fund's custodian. An order
received in proper form prior to the 4:00 p.m. close of the New York Stock
Exchange (the "Exchange") will be executed at the price computed on the date of
receipt; and an order received not in proper form or after the 4:00 p.m. close
of the Exchange will be executed at the price computed on the next day the
Exchange is open after proper receipt. The Exchange will be closed on the
following days: New Year's Day, Martin Luther King, Jr.'s Birthday, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
The Portfolio reserves the right in its sole discretion (1) to suspend the
offering of its shares, (2) to reject purchase orders when in the judgment of
management such rejection is in the best interests of the Fund, and (3) to
reduce or waive the minimum for initial and subsequent investment for certain
fiduciary accounts such as employee benefit plans or under circumstances where
certain economies can be achieved in sales of the Portfolio's shares.
The Portfolio may suspend redemption privileges or postpone the date of
payment (1) during any period that both the Exchange or custodian bank are
closed or trading on the Exchange is restricted as determined by the SEC, (2)
during any period when an emergency exists as defined by the rules of the SEC as
a result of which it is not reasonably practicable for the Portfolio to dispose
of securities owned by it or to fairly determine the value of its assets, and
(3) for such other periods as the SEC may permit. The Fund has made an election
with the SEC to pay in cash all redemptions requested by any shareholder of
record limited in amount during any 90-day period to the lesser of $250,000 or
1% of the net assets of the Fund at the beginning of such period. Such
commitment is irrevocable without the prior approval of the SEC. Redemptions in
excess of the above limits may be paid, in whole or in part, in investment
securities or in cash as the Board of Trustees may deem advisable; however,
payment will be made wholly in cash unless the Board of Trustees believe that
economic or market conditions exist which would make such a practice detrimental
to the best interests of the Fund. If redemptions are paid in investment
securities, such securities will be valued as set forth in the Prospectus under
"How Share Prices are Determined", and a redeeming shareholder would normally
incur brokerage expenses if those securities were converted to cash.
4
<PAGE>
No charge is made by the Portfolio for redemptions. Any redemption may be
more or less than the shareholder's initial cost depending on the market value
of the securities held by the Portfolio.
SIGNATURE GUARANTEES
To protect your account, the Fund and Chase Global Funds Services Company
("CGFSC") from fraud, signature guarantees are required for (1) redemptions
where the proceeds are to be sent to someone other than the registered
shareowner(s) or the registered address or (2) share transfer requests.
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934 and further
described in the Portfolio's Prospectus. The signature guarantee must appear
either: (1) on the written request for redemption; (2) on a separate instrument
for assignment ("stock power") which should specify the total number of shares
to be redeemed; or (3) on all stock certificates tendered for redemption and, if
shares held by the Fund are also being redeemed, on the letter or stock power.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for
Institutional Class Shares of any other UAM Funds or UAM Funds, Inc. Portfolio.
Exchange requests should be made by calling the Fund (1-800-638-7983) or by
writing to UAM Funds Trust, UAM Funds Service Center, c/o Chase Global Funds
Services Company, P.O. Box 2798, Boston, MA 02208-2798. The exchange privilege
is only available with respect to Portfolios that are qualified for sale in the
shareholder's state of residence.
Any such exchange will be based on the respective net asset values of the
shares involved. There is no sales commission or charge of any kind. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. You may
obtain a Prospectus for the Portfolio(s) you are interested in by calling the
UAM Funds Service Center at 1-800-638-7983.
Neither the Fund nor CGFSC will be responsible for the authenticity of the
exchange instructions received by telephone. Exchanges may also be subject to
limitations as to amounts or frequency and to other restrictions established by
the Fund's Board of Trustees to assure that such exchanges do not disadvantage
the Fund and its shareholders.
For Federal income tax purposes an exchange between Funds is a taxable
event, and, accordingly, a capital gain or loss may be realized. In a revenue
ruling relating to circumstances similar to the Fund's, an exchange between
series of a Fund was also deemed to be a taxable event. It is likely, therefore,
that a capital gain or loss would be realized on an exchange between Portfolios.
You may want to consult your tax adviser
5
<PAGE>
for further information in this regard. The exchange privilege may be modified
or terminated at any time.
TRANSFER OF SHARES
Shareholders may transfer shares of the Portfolio to another person by
making a written request to the Fund. The request should clearly identify the
account and number of shares to be transferred, and include the signature of all
registered owners and all stock certificates, if any, which are subject to the
transfer. The signature on the letter of request, the stock certificate or any
stock power must be guaranteed in the same manner as described under "Redemption
of Shares." As in the case of redemptions, the written request must be received
in good order before any transfer can be made.
INVESTMENT LIMITATIONS
The following limitations supplement those set forth in the Prospectus.
Whenever an investment limitation sets forth a percentage limitation on
investment or utilization of assets, such limitation shall be determined
immediately after and as a result of the Portfolio's acquisition of such
security or other asset. Accordingly, any later increase or decrease resulting
from a change in values, net assets or other circumstances will not be
considered when determining whether the investment complies with the Portfolio's
investment limitations. Investment limitations (1), (2), (3), (4) and (5) are
classified as fundamental. The Portfolio's fundamental investment limitations
cannot be changed without approval by a "majority of the outstanding shares" (as
defined in the 1940 Act) of the Portfolio. The Portfolio will not:
(1) invest in physical commodities or contracts on physical commodities;
(2) purchase or sell real estate or real estate limited partnerships,
although it may purchase and sell securities of companies which deal
in real estate and may purchase and sell securities which are secured
by interests in real estate;
(3) make loans except (i) by purchasing debt securities in accordance with
its investment objectives and (ii) by lending its portfolio securities
to banks, brokers, dealers and other financial institutions so long as
such loans are not inconsistent with the 1940 Act, or the rules and
regulations or interpretations of the SEC thereunder;
(4) underwrite the securities of other issuers;
(5) issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Portfolio from (i)
making any permitted borrowings, mortgages or pledges, or (ii)
entering into repurchase transactions;
(6) purchase on margin or sell short;
6
<PAGE>
(7) invest more than an aggregate of 15% of the net assets of the
Portfolio, determined at the time of investment, in securities subject
to legal or contractual restrictions on resale or securities for which
there are no readily available markets; and
(8) invest for the purpose of exercising control over management of any
company.
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The Officers of the Fund manage its day-to-day operations and are
responsible to the Fund's Board of Trustees. The Trustees set broad policies for
the Fund and elect its Officers. The following is a list of the Trustees and
Officers of the Fund and a brief statement of their present positions, date of
birth, address and principal occupations during the past five years. These
people who are "interested persons" of the Fund as that term is defined in the
1940 Act are indicated by an asterisk (*).
JOHN T. BENNETT, JR. (1/26/29), Trustee; College Road--RFD 3, Meredith, NH
03253; President of Squam Investment Management Company, Inc. and Great Island
Investment Company, Inc.; President of Bennett Management Company from 1988 to
1993.
NANCY J. DUNN (8/14/51), Trustee; 10 Garden Street, Cambridge, MA 02138; Vice
President for Finance and Administration and Treasurer of Radcliffe College
since 1991.
PHILIP D. ENGLISH (8/5/48), Trustee; 16 West Madison Street, Baltimore, MD
21201; President and Chief Executive Officer of Broventure Company, Inc.;
Chairman of the Board of Chektec Corporation and Cyber Scientific, Inc.
WILLIAM A. HUMENUK (4/21/42), Trustee; 4000 Bell Atlantic Tower, 1717 Arch
Street, Philadelphia, PA 19103; Partner in the Philadelphia office of the law
firm Dechert Price & Rhoads; Director, Hofler Corp.
NORTON H. REAMER* (3/21/35), Trustee; One International Place, Boston, MA 02110;
President and Chairman of the Fund; President, Chief Executive Officer and a
Director of United Asset Management Corporation; Director, Partner or Trustee of
each of the Investment Companies of the Eaton Vance Group of Mutual Funds.
CHARLES H. SALISBURY, JR.* (8/24/40), Trustee; One International Place, Boston,
MA 02110; Executive Vice President of United Asset Management Corporation;
formerly an executive officer and Director of T. Rowe Price and President and
Chief Investment Officer of T. Rowe Price Trust Company.
PETER M. WHITMAN, JR.* (7/1/43), Trustee; One Financial Center, Boston, MA
02111; President and Chief Investment Officer of Dewey Square Investors
Corporation ("DSI") since 1988; Director and Chief Executive Officer of H. T.
Investors, Inc., formerly a subsidiary of DSI.
WILLIAM H. PARK* (9/19/47), Vice President; One International Place, Boston, MA
02110; Executive Vice President and Chief Financial Officer of United Asset
Management Corporation.
7
<PAGE>
GARY L. FRENCH* (7/4/51), Treasurer; 211 Congress Street, Boston, MA 02110;
President of UAM Fund Services, Inc. and UAM Fund Distributors, Inc.; formerly
Vice President of Operations, Development and Control of Fidelity Investment in
1995; Treasurer of the Fidelity Group of Mutual Funds from 1991 to 1995.
MICHAEL E. DEFAO* (2/28/68), Secretary; 211 Congress Street, Boston, MA 02110;
Vice President and General Counsel of UAM Fund Services, Inc. and UAM Fund
Distributors, Inc.; Associate Attorney of Ropes & Gray (a law firm) from 1993 to
1995.
ROBERT R. FLAHERTY* (9/18/63), Assistant Treasurer; 211 Congress Street, Boston,
MA 02110; Vice President of UAM Fund Services, Inc.; formerly Manager of Fund
Administration and Compliance of Chase Global Fund Services Company from 1995 to
1996; Deloitte & Touche LLP from 1985 to 1995, Senior Manager.
KARL O. HARTMANN* (3/7/55), Assistant Secretary; 73 Tremont Street, Boston, MA
02108; Senior Vice President and General Counsel of Chase Global Funds Services
Company.
GORDON M. SHONE* (7/30/56), Assistant Treasurer; 73 Tremont Street, Boston, MA
02108; Vice President of Fund Administration and Compliance of Chase Global
Funds Services Company; formerly Senior Audit Manager of Coopers & Lybrand LLP
(1983-1996).
REMUNERATION OF TRUSTEES AND OFFICERS
The Fund pays each Trustee, who is not also an officer or affiliated
person, a $150 quarterly retainer fee per active Portfolio which currently
amounts to $1,050 per quarter. In addition, each unaffiliated Trustee receives a
$2,000 meeting fee which is aggregated for all the Trustees allocated
proportionately among the Portfolio of the Fund and UAM Funds, Inc. and
reimbursement for travel and other expenses incurred while attending Board
meetings. Trustees who are also officers or affiliated persons receive no
remuneration for their service as Trustees. The Fund's officers and employees
are paid by either the Adviser, United Asset Management Corporation ("UAM"), FSI
or CGFSC and receive no compensation from the Fund. As of June 30, 1997, the
Trustees and officers of the Fund owned less than 1% of the Fund's outstanding
shares.
The following table shows aggregate compensation paid to each of the Fund's
Trustees by the Fund and total compensation paid by the Fund, and UAM Funds,
Inc. (collectively the "Fund Complex") in the fiscal year ended April 30, 1997.
8
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE
(1) (2) (3) (4) (5)
TOTAL
PENSION OR COMPENSATION
AGGREGATE RETIREMENT ESTIMATED FROM REGISTRANT
COMPENSATION BENEFITS ACCRUED ANNUAL AND
NAME OF PERSON, FROM AS PART OF BENEFITS UPON FUND COMPLEX
POSITION REGISTRANT FUND EXPENSES RETIREMENT PAID TO TRUSTEES
- ---------------- ------------- ----------------- ------------- ----------------
<S> <C> <C> <C> <C>
John T. Bennett, Jr... $4,874 0 0 $31,700
Trustee
J. Edward Day......... $2,168 0 0 $15,550
Former Trustee
Philip D. English..... $4,874 0 0 $31,700
Trustee
William A. Humenuk.... $4,874 0 0 $31,700
Trustee
Nancy J. Dunn......... $ 0 0 0 $ 0
Trustee
</TABLE>
INVESTMENT ADVISER
CONTROL OF ADVISER
The Adviser is a wholly-owned subsidiary of UAM, a holding company
incorporated in Delaware in December 1980 for the purpose of acquiring and
owning firms engaged primarily in institutional investment management. Since its
first acquisition in August 1983, UAM has acquired or organized over 45 such
wholly-owned affiliated firms (the "UAM Affiliated Firms"). UAM believes that
permitting UAM Affiliated Firms to retain control over their investment advisory
decisions is necessary to allow them to continue to provide investment
management services that are intended to meet the particular needs of their
respective clients.
Accordingly, after acquisition by UAM, UAM Affiliated Firms continue to
operate under their own firm name, with their own leadership and individual
investment philosophy and approach. Each UAM Affiliated Firm manages its own
business independently on a day-to-day basis. Investment strategies employed and
securities selected by UAM Affiliated Firms are separately chosen by each of
them. Several UAM Affiliated Firms also act as investment advisers to separate
series or Portfolios of UAM Funds, Inc., a registered investment company.
ADVISORY FEES
As compensation for services rendered by the Adviser under the Investment
Advisory Agreement, the Portfolio pays the Adviser an annual fee in monthly
installments, calculated by applying the following annual percentage rates to
the Portfolio's average daily net assets for the month:
Hanson Equity Portfolio................... 0.70%
9
<PAGE>
PORTFOLIO TRANSACTIONS
The Investment Advisory Agreement authorizes the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolio and directs the Adviser to use its best efforts to
obtain the best execution with respect to all transactions for the Portfolio.
The Adviser may, however, consistent with the interests of the Portfolio, select
brokers on the basis of the research, statistical and pricing services they
provide to the Portfolio. Information and research received from such brokers
will be in addition to, and not in lieu of, the services required to be
performed by the Adviser under the Investment Advisory Agreement. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided that such
commissions are paid in compliance with the Securities Exchange Act of 1934, as
amended, and that the Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Adviser to the Portfolio and the Adviser's other clients.
It is not the Fund's practice to allocate brokerage or effect principal
transactions with dealers on the basis of sales of Fund shares which may be made
through broker-dealer firms. However, the Adviser may place portfolio orders
with qualified broker-dealers who refer clients to the Adviser.
Some securities considered for investment by the Portfolio may also be
appropriate for other clients served by the Adviser. If purchases or sales of
securities consistent with the investment policies of the Portfolio and one or
more of these other clients served by the Adviser is considered at or about the
same time, transactions in such securities will be allocated among the Portfolio
and clients in a manner deemed fair and reasonable by the Adviser. Although
there is no specified formula for allocating such transactions, the various
allocation methods used by the Adviser, and the results of such allocations, are
subject to periodic review by the Fund's Board of Trustees.
ADMINISTRATIVE SERVICES
As stated in the Prospectus, the Board of Trustees of the Fund approved a
new Fund Administration Agreement between FSI, a wholly owned subsidiary of UAM,
and the Fund. The Fund's Trustees, also approved a Mutual Fund Services
Agreement between FSI and CGFSC. The services provided by FSI and CGFSC and the
basis of the fees payable by the Fund under the Fund Administration Agreement
are described in the Portfolios' Prospectus. Prior to April 15, 1996, CGFSC or
its predecessor, Mutual Funds Service Company, provided certain administrative
services to the Fund under an Administration Agreement between the Fund and U.S.
Trust Company of New York. The services provided by FSI and CGFSC and the basis
of the current fees payable are described in the Portfolio's Prospectus.
10
<PAGE>
PERFORMANCE CALCULATIONS
PERFORMANCE
The Portfolio may from time to time quote various performance figures to
illustrate past performance. Performance quotations by investment companies are
subject to rules adopted by the SEC, which require the use of standardized
performance quotations or, alternatively, that every non-standardized
performance quotation furnished by the Fund be accompanied by certain
standardized performance information computed as required by the SEC. Average
annual compounded total return quotations used by the Fund are based on the
standardized methods of computing performance mandated by the SEC. An
explanation of the method used to compute or express performance follows.
TOTAL RETURN
The average annual total return of the Portfolio is determined by finding
the average annual compounded rates of return over 1, 5 and 10 year periods that
would equate an initial hypothetical $1,000 investment to its ending redeemable
value. The calculation assumes that all dividends and distributions are
reinvested when paid. The quotation assumes the amount was completely redeemed
at the end of each 1, 5 and 10 year period and the deduction of all applicable
Fund expenses on an annual basis.
These figures are calculated according to the following formula:
P(1 + T)/n/ = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10 year periods at the end of the 1,
5 or 10 year periods (or fractional portion thereof).
COMPARISONS
To help investors better evaluate how an investment in the Portfolio might
satisfy their investment objective, advertisements regarding the Fund may
discuss various measures of Fund performance as reported by various financial
publications. Advertisements may also compare performance (as calculated above)
to performance as reported by other investments, indices and averages. Please
see Appendix B for publications, indices and averages which may be used.
In assessing such comparisons of performance, an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not
11
<PAGE>
identical to the composition of investments in the Portfolio, that the averages
are generally unmanaged, and that the items included in the calculations of such
averages may not be identical to the formula used by the Portfolio to calculate
its performance. In addition, there can be no assurance that the Portfolio will
continue this performance as compared to such other averages.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized under the name The Regis Fund II as a Delaware
business trust on May 18, 1994. On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust". The Fund's principal executive office is located
at One International Place, 44th Floor, Boston, MA 02110; however, all investor
correspondence should be directed to the Fund at UAM Funds Service Center, c/o
Chase Global Funds Services Company, P.O. Box 2798, Boston, MA 02208-2798. The
Fund's Agreement and Declaration of Trust permits the Fund to issue an unlimited
number of shares of beneficial interest, without par value. The Trustees have
the power to designate one or more series ("Portfolios") or classes of shares of
beneficial interest without further action by shareholders.
On each matter submitted to a vote of the shareholders, each holder of a
share shall be entitled to one vote for each whole share and a fractional vote
for each fractional share standing in his/her name on the books of the Fund.
In the event of liquidation of the Fund, the holders of the shares of each
Portfolio or any class thereof that has been established and designated shall be
entitled to receive, when and as declared by the Trustees, the excess of the
assets belonging to that Portfolio, or in the case of a class, belonging to that
Portfolio and allocable to that class, over the liabilities belonging to that
Portfolio or class. The assets so distributable to the holders of shares of any
particular Portfolio or class thereof shall be distributed to the holders in
proportion to the number of shares of that Portfolio or class thereof held by
them and recorded on the books of the Fund. The liquidation of any Portfolio or
class thereof may be authorized at any time by vote of a majority of the
Trustees then in office.
Shareholders of both Classes of the Fund's Portfolios have no pre-emptive
or other rights to subscribe to any additional shares or other securities issued
by the Fund or any Portfolio, except as the Trustees in their sole discretion
shall have determined by vote. Both Institutional Class and Service Class Shares
represent an interest in the same assets of a Portfolio and are identical in all
respects except that the Service Class 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.
12
<PAGE>
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund's policy is to distribute substantially all of the Portfolio's net
investment income, if any, together with any net realized capital gains annually
in the amount and at the times that will avoid both income (including capital
gains) taxes incurred and the imposition of the Federal excise tax on
undistributed income and capital gains. The amounts of any income dividends or
capital gains distributions cannot be predicted. See discussion under
"Dividends, Capital Gains Distributions and Taxes" in the Prospectus.
Any dividend or distribution paid shortly after the purchase of shares of
the Portfolio by an investor may have the effect of reducing the per share net
asset value of the Portfolio by the per share amount of the dividend or
distribution. Furthermore, such dividends or distributions, although in effect a
return of capital, are subject to income taxes as set forth in the Prospectus.
As set forth in the Prospectus, unless the shareholder elects otherwise in
writing, all dividend and capital gains distributions are automatically received
in additional shares of the respective Portfolio of the Fund at net asset value
(as of the business day following the record date). This will remain in effect
until the Fund is notified by the shareholder in writing at least three days
prior to the record date that either the Income Option (income dividends in cash
and capital gains distributions in additional shares at net asset value) or the
Cash Option (both income dividends and capital gains distributions in cash) has
been elected. An account statement is sent to shareholders whenever an income
dividend or capital gains distribution is paid.
Each Portfolio of the Fund will be treated as a separate entity (and hence
as a separate "regulated investment company") for Federal tax purposes. Any net
capital gains recognized by the Portfolio will be distributed to its investors
without need to offset (for Federal income tax purposes) such gains against any
net capital losses of another Portfolio.
FEDERAL TAXES
In order for the Portfolio to continue to qualify for Federal income tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), at least 90% of the Portfolio's gross income for
a taxable year must be derived from certain qualifying income, i.e., dividends,
interest, income derived from loans of securities and gains from the sale or
other disposition of stock or securities, or other related income, derived with
respect to its business investing in stock or securities. Any net gain realized
from the closing out of futures contracts will, therefore, generally be
qualifying income for purposes of the 90% requirement. Qualification as a
regulated investment company also requires that less than 30% of the Portfolio's
gross income be derived from the sale or other disposition of stock or
securities held for 3 months or less.
13
<PAGE>
The Portfolio will distribute to shareholders annually any net capital
gains which have been recognized for Federal income tax purposes (including
unrealized gains at the end of the Portfolio's taxable year) on futures
transactions. Such distribution will be combined with distributions of capital
gains realized on the Portfolio's other investments, and shareholders will be
advised on the character of the payment.
CODE OF ETHICS
The Fund has adopted a Code of Ethics which restricts, to a certain extent,
personal transactions by access persons of the Fund and imposes certain
disclosure and reporting obligations.
14
<PAGE>
$$/NOFOLIO
APPENDIX A -- DESCRIPTION OF SECURITIES AND RATINGS
I. DESCRIPTION OF BOND RATINGS
Excerpts from Moody's Investors Service, Inc. ("Moody's") description of
its highest bond ratings:
Aaa -- judged to be the best quality; carry the smallest degree of
investment risk;
Aa -- judged to be of high quality by all standards;
A -- possess many favorable investment attributes and are to be considered
as higher medium grade obligations;
Baa -- considered as lower medium grade obligations, i.e., they are neither
highly protected nor poorly secured.
Excerpts from Standard & Poor's Corporation ("S&P") description of its
highest bond ratings:
AAA -- highest grade obligations; possess the ultimate degree of protection
as to principal and interest;
AA -- also qualify as high grade obligations, and in the majority of
instances differs from AAA issues only in small degree;
A -- regarded as upper medium grade; have considerable investment strength
but are not entirely free from adverse effects of changes in economic and trade
conditions. Interest and principal are regarded as safe;
BBB -- regarded as borderline between definitely sound obligations and
those where the speculative element begins to predominate;
this group is the lowest which qualifies for commercial bank investment.
II. DESCRIPTION OF U.S. GOVERNMENT SECURITIES
The term "U.S. Government Securities" refers to a variety of securities
which are issued or guaranteed by the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government.
U.S. Treasury securities are backed by the "full faith and credit" of the
United States. Securities issued or guaranteed by Federal agencies and U.S.
Government sponsored instrumentalities may or may not be backed by the full
faith and credit of the United States.
A-1
<PAGE>
$$/NOFOLIO
In the case of securities not backed by the full faith and credit of the
United States, the investor must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for ultimate repayment,
and may not be able to assess a claim against the United States itself in the
event the agency or instrumentality does not meet its commitment. Agencies which
are backed by the full faith and credit of the United States include the Export-
Import Bank, Farmers Home Administration, Federal Financing Bank, and others.
Certain agencies and instrumentalities, such as the GNMA are, in effect, backed
by the full faith and credit of the United States through provisions in their
charters that they may make "indefinite and unlimited" drawings on the U.S.
Treasury, if needed to service its debt. Debt from certain other agencies and
instrumentalities, including the Federal Home Loan Bank and FNMA, is not
guaranteed by the United States, but those institutions are protected by the
discretionary authority of the U.S. Treasury to purchase certain amounts of
their securities to assist the institution in meeting its debt obligations.
Finally, other agencies and instrumentalities, such as the Farm Credit System
and the FHLMC, are federally chartered institutions under Government
supervision, but their debt securities are backed only by the credit worthiness
of those institutions, not the U.S. Government.
Some of the U.S. Government agencies that issue or guarantee securities
include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and the Tennessee Valley Authority.
III. DESCRIPTION OF COMMERCIAL PAPER
The Portfolio may invest in commercial paper (including variable amount
master demand notes) rated A-1 or better by S&P or Prime-1 by Moody's or by S&P.
Commercial paper refers to short-term, unsecured promissory notes issued by
corporations to finance short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. Variable amount master demand notes are demand
obligations that permit the investment of fluctuating amounts at varying market
rates of interest pursuant to arrangement between the issuer and a commercial
bank acting as agent for the payees of such notes whereby both parties have the
right to vary the amount of the outstanding indebtedness on the notes. As
variable amount master demand notes are direct lending arrangements between a
lender and a borrower, it is not generally contemplated that such instruments
will be traded, and there is no secondary market for these notes, although they
are redeemable (and thus immediately repayable by the borrower) at face value,
plus accrued interest, at any time. In connection with the Portfolio's
investment in variable amount master demand notes, the Adviser's investment
management staff will monitor, on an ongoing basis, the earning power, cash flow
and other liquidity ratios of the issuer and the borrower's ability to pay
principal and interest on demand.
Commercial paper rated A-1 by S&P has the following characteristics: (1)
liquidity ratios are adequate to meet cash requirements; (2) long-term senior
debt is rated "A" or better; (3) the issuer has access to at least two
additional channels of borrowing; (4) basic earnings and cash flow have an
upward trend with allowance made for unusual
A-2
<PAGE>
$$/NOFOLIO
circumstances; (5) typically, the issuer's industry is well established, and the
issuer has a strong position within the industry; and (6) the reliability and
quality of management are unquestioned. Relative strength or weakness of the
above factors determine whether the issuer's commercial paper is A-1, A-2 or A-
3. The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and the appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to completion and customer acceptance; (4)
liquidity; (5) amount and quality of long term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the management
of issuer of obligations which may be present or may arise as a result of public
interest questions and preparations to meet such obligations.
IV. DESCRIPTION OF BANK OBLIGATIONS
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Certificates of deposit are negotiable short-term obligations of commercial
banks. Variable rate certificates of deposit are certificates of deposit on
which the interest rate is periodically adjusted prior to their stated maturity
based upon a specified market rate. As a result of these adjustments, the
interest rate on these obligations may increase or decrease periodically.
Frequently, dealers selling variable rate certificates of deposit to the
Portfolio will agree to repurchase such instruments, at the Portfolio's option,
at par on or near the coupon dates. The dealers' obligations to repurchase these
instruments are subject to conditions imposed by various dealers. Such
conditions typically are the continued credit standing of the issuer and the
existence of reasonably orderly market conditions. The Portfolio is also able to
sell variable rate certificates of deposit in the secondary market. Variable
rate certificates of deposit normally carry a higher interest rate than
comparable fixed rate certificates of deposit. A banker's acceptance is a time
draft drawn on a commercial bank by a borrower usually in connection with an
international commercial transaction to finance the import, export, transfer or
storage of goods. The borrower is liable for payment as well as the bank which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
the secondary markets prior to maturity.
V. DESCRIPTION OF FOREIGN INVESTMENTS
Investors should recognize that investing in foreign companies involves
certain special considerations which are not typically associated with investing
in U.S. companies. Since the securities of foreign companies are frequently
denominated in foreign currencies, a Portfolio may be affected favorably or
unfavorably by changes in currency rates and in exchange control regulations,
and may incur costs in connection with conversions between various currencies.
A-3
<PAGE>
$$/NOFOLIO
As foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards and they may have policies that are
not comparable to those of domestic companies, there may be less information
available about certain foreign companies than about domestic companies.
Securities of some foreign companies are generally less liquid and more volatile
than securities of comparable domestic companies. There is generally less
government supervision and regulation of stock exchanges, brokers and listed
companies than in the U.S. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
U.S. investments in those countries.
Although the Fund will endeavor to achieve the most favorable execution
costs in its portfolio transactions, fixed commissions on many foreign stock
exchanges are generally higher than negotiated commissions on U.S. exchanges.
Certain foreign governments levy withholding taxes on dividend and
interest income. Although in some countries a portion of these taxes are
recoverable, the non-recoverable portion of foreign withholding taxes will
reduce the income received from the companies comprising the Fund's Portfolios.
However, these foreign withholding taxes are not expected to have a significant
impact.
A-4
<PAGE>
$$/NOFOLIO
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES
With respect to the comparative measures of performance for equity
securities described herein, comparisons of performance assume reinvestment
of dividends, except as otherwise stated below.
(a) Dow Jones Composite Average or its component averages -- an unmanaged
index composed of 30 blue-chip industrial corporation stocks (Dow
Jones Industrial Average), 15 utilities company stocks and 20
transportation stocks.
(b) Standard & Poor's 500 Stock Index or its component indices -- an
unmanaged index composed of 400 industrial stocks, 40 financial
stocks, 40 utilities stocks and 20 transportation stocks.
(c) Standard & Poor's 400 Mid Cap Index - consists of 400 domestic stocks
chosen for market size, liquidity, and industry group representation.
It is also a market-value weighted index and was the first benchmark
of mid cap stock price movement.
(d) The New York Stock Exchange composite or component indices --
unmanaged indices of all industrial, utilities, transportation and
finance stocks listed on the New York Stock Exchange.
(e) Wilshire 5000 Equity Index or its component indices -- represents the
return on the market value of all common equity securities for which
daily pricing is available.
(f) Lipper -- Mutual Fund Performance Analysis and Lipper -- Fixed Income
Fund Performance Analysis -- measure total return and average current
yield for the mutual fund industry. Rank individual mutual fund
performance over specified time periods, assuming reinvestment of all
distributions, exclusive of any applicable sales charges.
(g) Lipper Capital Appreciation Funds Index - a fund that aims at maximum
capital appreciation, frequently by means of 100% or more portfolio
turnover, leveraging, purchasing unregistered securities, purchasing
options, etc. The fund may take large cash positions.
(h) Lipper Small Cap Funds Index- a fund that by prospectus or portfolio
practice invests primarily in companies with market capitalizations of
less than $1 billion at the time of purchase.
(i) Morgan Stanley Capital International EAFE Index and World Index --
respectively, arithmetic, market value-weighted averages of the
performance of over 900 securities listed on the stock exchanges of
countries in Europe, Australia and the Far East, and over 1,400
B-1
<PAGE>
$$/NOFOLIO
securities listed on the stock exchanges of these continents,
including North America.
(j) Goldman Sachs 100 Convertible Bond Index -- currently includes 67
bonds and 33 preferred. The original list of names was generated by
screening for convertible issues of 100 million or greater in market
capitalization. The index is priced monthly.
(k) Salomon Brothers GNMA Index -- includes pools of mortgages originated
by private lenders and guaranteed by the mortgage pools of the
Government National Mortgage Association.
(l) Salomon Brothers High Grade Corporate Bond Index -- consists of
publicly issued, non-convertible corporate bonds rated AA or AAA. It
is a value-weighted, total return index, including approximately 800
issues with maturities of 12 years or greater.
(m) Salomon Brothers Broad Investment Grade Bond Index -- is a market-
weighted index that contains approximately 4,700 individually priced
investment grade corporate bonds rated BBB or better, U.S.
Treasury/agency issues and mortgage pass through securities.
(n) Lehman Brothers Long-Term Treasury Bond Index -- is composed of all
bonds covered by the Lehman Brothers Treasury Bond Index with
maturities of 10 years or greater.
(o) Lehman Brothers Government/Corporate Index -- is a combination of the
Government and Corporate Bond Indices. The Government Index includes
public obligations of the U.S. Treasury, issues of Government
agencies, and corporate debt backed by the U.S. Government. The
Corporate Bond Index includes fixed-rate nonconvertible corporate
debt. Also included are Yankee Bonds and nonconvertible debt issued by
or guaranteed by foreign or international governments and agencies.
All issues are investment grade (BBB) or higher, with maturities of at
least one year and an outstanding par value of at least $100 million
for U.S. Government issues and $25 million for others. Any security
downgraded during the month is held in the index until month-end and
then removed. All returns are market value weighted inclusive of
accrued income.
(p) NASDAQ Industrial Index -- is composed of more than 3,000 industrial
issues. It is a value-weighted index calculated on price change only
and does not include income.
(q) Value Line -- composed of over 1,600 stocks in the Value Line
Investment Survey.
B-2
<PAGE>
$$/NOFOlIO
(r) Russell 2000 Index -- composed of the 2,000 smallest stocks in the
Russell 3000, a market value-weighted index of the 3,000 largest U.S.
publicly-traded companies.
(s) Salomon Brothers 3 Month T-Bill Average - the average return for all
Treasury bills for the previous three month period.
(t) Composite Indices -- 60% Standard & Poor's 500 Stock Index, 30% Lehman
Brothers Long-Term Treasury Bond and 10% U.S. Treasury Bills; 70%
Standard & Poor's 500 Stock Index and 30% NASDAQ Industrial Index; 35%
Standard & Poor's 500 Stock Index and 65% Salomon Brothers High Grade
Bond Index; all stocks on the NASDAQ system exclusive of those traded
on an exchange, and 65% Standard & Poor's 500 Stock Index and 35%
Salomon Brothers High Grade Bond Index.
(u) CDA Mutual Fund Report published by CDA Investment Technologies, Inc.
-- analyzes price, current yield, risk, total return and average rate
of return (average compounded growth rate) over specified time periods
for the mutual fund industry.
(v) Mutual Fund Source Book published by Morningstar, Inc. -- analyzes
price, yield, risk and total return for equity funds.
(w) Financial publications: Business Week, Changing Times, Financial
World, Forbes, Fortune, Money, Barron's, Consumer's Digest, Financial
Times, Global Investor, Wall Street Journal and Weisenberger
Investment Companies Service -- publications that rate fund
performance over specified time periods.
(x) Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics -- a statistical measure of change over
time in the price of goods and services in major expenditure groups.
(y) Stocks, Bonds, Bills and Inflation, published by Ibbotson Associates -
- historical measure of yield, price and total return for common and
small company stock, long-term government bonds, U.S. Treasury bills
and inflation.
(z) Savings and Loan Historical Interest Rates -- as published by the U.S.
Savings & Loan League Fact Book.
(aa) Historical data supplied by the research departments of First Boston
Corporation; the J.P. Morgan companies; Salomon Brothers; Merrill
Lynch, Pierce, Fenner & Smith; Lehman Brothers, Inc.; and Bloomberg
L.P.
B-3
<PAGE>
PART B
UAM FUNDS
IRC ENHANCED INDEX PORTFOLIO
STATEMENT ADDITIONAL INFORMATION -- JULY 10, 1997
This Statement of Additional Information ("SAI") is not a Prospectus but
should be read in conjunction with the Prospectus of the UAM Funds Trust (the
"UAM Funds" or the "Fund") for the IRC Enhanced Index Portfolio (the
"Portfolio") Institutional Class Shares dated July 10, 1997. To obtain the
Prospectus, please call the UAM Funds Service Center at 1-800-638-7983.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES.................. 2
PURCHASE AND REDEMPTION OF SHARES.................. 2
SHAREHOLDER SERVICES............................... 3
INVESTMENT LIMITATIONS............................. 4
MANAGEMENT OF THE FUND............................. 5
INVESTMENT ADVISER................................. 8
PORTFOLIO TRANSACTIONS............................. 9
ADMINISTRATIVE SERVICES............................ 10
PERFORMANCE CALCULATIONS........................... 10
GENERAL INFORMATION................................ 11
APPENDIX A - COMPARISON PUBLICATIONS, INDICES AND
AVERAGES.......................................... A-1
</TABLE>
FINANCIAL STATEMENTS
INVESTMENT ADVISER
Investment Research Company
DISTRIBUTOR
UAM Fund Distributors, Inc. (Distributor)
<PAGE>
ADMINISTRATOR AND TRANSFER AGENT
UAM Fund Services, Inc. (FSI)
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the investment objective and policies of
the IRC Enhanced Index Portfolio (the "Portfolio") as set forth in the
Portfolio's Prospectus:
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified brokers,
dealers, domestic and foreign banks or other financial institutions, so long as
the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940, as amended, (the "1940
Act") or the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "SEC") thereunder, which currently require that (a) the
borrower pledge and maintain with the Portfolio collateral consisting of cash,
an irrevocable letter of credit issued by a domestic U.S. bank or securities
issued or guaranteed by the United States Government having a value at all times
not less than 100% of the value of the securities loaned, (b) the borrower add
to such collateral whenever the price of the securities loaned rises (i.e., the
borrower "marks to the market" on a daily basis), (c) the loan be made subject
to termination by the Portfolio at any time, and (d) the Portfolio receives
reasonable interest on the loan (which may include the Portfolio investing any
cash collateral in interest bearing short-term investments). As with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the securities loaned if the borrower of the securities fails
financially. These risks are similar to the ones involved with repurchase
agreements as discussed in the Prospectus.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Portfolio may be purchased without sales commission at the
net asset value per share next determined after an order is received in proper
form by the Fund, and payment is received by the Fund's custodian. An order
received in proper form prior to the 4:00 p.m. close of the New York Stock
Exchange (the "Exchange") will be executed at the price computed on the date of
receipt; and an order received not in proper form or after the 4:00 p.m. close
of the Exchange will be executed at the price computed on the next day the
Exchange is open after proper receipt. The Exchange will be closed on the
following days: New Year's Day, Martin Luther King, Jr.'s Birthday, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
The Portfolio reserves the right in its sole discretion (1) to suspend the
offering of its shares, (2) to reject purchase orders when in the judgment of
management such rejection is in the best interests of the Fund, and (3) to
reduce or waive the minimum for initial and subsequent investment for certain
fiduciary accounts such as employee benefit plans or under circumstances where
certain economies can be achieved in sales of the Portfolio's shares.
3
<PAGE>
The Portfolio may suspend redemption privileges or postpone the date of
payment (1) during any period that both the Exchange and custodian bank are
closed or trading on the Exchange is restricted as determined by the SEC, (2)
during any period when an emergency exists as defined by the rules of the SEC as
a result of which it is not reasonably practicable for the Portfolio to dispose
of securities owned by it or to fairly determine the value of its assets, and
(3) for such other periods as the SEC may permit. The Fund has made an election
with the SEC to pay in cash all redemptions requested by any shareholder of
record limited in amount during any 90-day period to the lesser of $250,000 or
1% of the net assets of the Fund at the beginning of such period. Such
commitment is irrevocable without the prior approval of the SEC. Redemptions in
excess of the above limits may be paid, in whole or in part, in investment
securities or in cash as the Board of Trustees may deem advisable; however,
payment will be made wholly in cash unless the Trustees believe that economic or
market conditions exist which would make such a practice detrimental to the best
interests of the Fund. If redemptions are paid in investment securities, such
securities will be valued as set forth in the Prospectus under "Valuation of
Shares", and a redeeming shareholder would normally incur brokerage expenses if
those securities were converted to cash.
No charge is made by the Portfolio for redemptions. Any redemption may be
more or less than the shareholder's initial cost depending on the market value
of the securities held by the Portfolio.
SIGNATURE GUARANTEES
To protect your account, the Fund and Chase Global Funds Services Company
("CGFSC") from fraud, signature guarantees are required for (1) redemptions
where the proceeds are to be sent to someone other than the registered
shareowner(s) or the registered address or (2) share transfer requests.
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, and as
further described in the Portfolio's Prospectus. The signature guarantee must
appear either: (1) on the written request for redemption; (2) on a separate
instrument for assignment ("stock power") which should specify the total number
of shares to be redeemed; or (3) on all stock certificates tendered for
4
<PAGE>
redemption and, if shares held by the Fund are also being redeemed, on the
letter or stock power.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for any other
Institutional Class Shares of any UAM Funds or UAM Funds, Inc. Portfolio.
Exchange requests should be made by calling the Fund (1-800-638-7983) or by
writing to UAM Funds Trust, UAM Funds Service Center, c/o Chase Global Funds
Services Company, P.O. Box 2798, Boston, MA 02208-2798. The exchange privilege
is only available with respect to Portfolios that are qualified for sale in the
shareholder's state of residence.
Any such exchange will be based on the respective net asset values of the
shares involved. There is no sales commission or charge of any kind. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. You may
obtain a Prospectus for the Portfolio(s) you are interested in by calling the
UAM Funds Service Center at 1-800-638-7983.
Neither the Fund nor CGFSC will be responsible for the authenticity of the
exchange instructions received by telephone. Exchanges may also be subject to
limitations as to amounts or frequency and to other restrictions established by
the Fund's Board of Trustees to assure that such exchanges do not disadvantage
the Fund and its shareholders.
For Federal income tax purposes an exchange between Funds is a taxable
event, and, accordingly, a capital gain or loss may be realized. In a revenue
ruling relating to circumstances similar to the Fund's, an exchange between
series of a Fund was also deemed to be a taxable event. It is likely, therefore,
that a capital gain or loss would be realized on an exchange between Portfolios.
You may want to consult your tax adviser for further information in this regard.
The exchange privilege may be modified or terminated at any time.
TRANSFER OF SHARES
5
<PAGE>
Shareholders may transfer shares of the Portfolio to another person by
making a written request to the Fund. The request should clearly identify the
account and number of shares to be transferred, and include the signature of all
registered owners and all stock certificates, if any, which are subject to the
transfer. The signature on the letter of request, the stock certificate or any
stock power must be guaranteed in the same manner as described under "Purchase
and Redemption of Shares." As in the case of redemptions, the written request
must be received in good order before any transfer can be made.
INVESTMENT LIMITATIONS
The following limitations supplement those set forth in the Prospectus.
Whenever an investment limitation sets forth a percentage limitation on
investment or utilization of assets, such limitation shall be determined
immediately after and as a result of the Portfolio's acquisition of such
security or other asset. Accordingly, any later increase or decrease resulting
from a change in values, net assets or other circumstances will not be
considered when determining whether the investment complies with the Portfolio's
investment limitations. Investment limitations (1), (2), (3), (4) and (5) are
classified as fundamental. The Portfolio's fundamental investment limitations
cannot be changed without approval by a "majority of the outstanding shares" (as
defined in the Investment Company Act of 1940, as amended, (the "1940 Act")) of
the Portfolio. The Portfolio will not:
(1) invest in physical commodities or contracts on physical commodities;
(2) purchase or sell real estate or real estate limited partnerships,
although it may purchase and sell securities of companies which deal
in real estate and may purchase and sell securities which are secured
by interests in real estate;
(3) make loans except (i) by purchasing debt securities in accordance with
its investment objectives and (ii) by lending its portfolio securities
to banks, brokers, dealers and other financial institutions so long as
such loans are not inconsistent with the 1940 Act, or the rules and
regulations or interpretations of the SEC thereunder;
(4) underwrite the securities of other issuers;
(5) issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Portfolio from making
any permitted borrowings, mortgages or pledges;
(6) purchase on margin or sell short;
(7) invest more than an aggregate of 15% of the net assets of the
Portfolio, determined at the time of investment, in securities subject
6
<PAGE>
to legal or contractual restrictions on resale or securities for which
there are no readily available markets; and
(8) invest for the purpose of exercising control over management of any
company.
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The Officers of the Fund manage its day-to-day operations and are
responsible to the Fund's Board of Trustees. The Trustees set broad policies
for the Fund and elect its Officers. The following is a list of the Trustees
and Officers of the Fund and a brief statement of their present positions, date
of birth, address and principal occupations during the past five years. Those
people who are "interested persons" of the Fund as that term is defined in the
1940 Act are indicated by an asterisk (*).
JOHN T. BENNETT, JR. (1/26/29), Trustee; College Road--RFD 3, Meredith, NH
03253; President of Squam Investment Management Company, Inc. and Great Island
Investment Company, Inc.; President of Bennett Management Company from 1988 to
1993.
NANCY J. DUNN (8/14/51), Trustee; 10 Garden Street, Cambridge, MA 02138; Vice
President for Finance and Administration and Treasurer of Radcliffe College
since 1991.
PHILIP D. ENGLISH (8/5/48), Trustee; 16 West Madison Street, Baltimore, MD
21201; President and Chief Executive Officer of Broventure Company, Inc.;
Chairman of the Board of Chektec Corporation and Cyber Scientific, Inc.
WILLIAM A. HUMENUK (4/21/42), Trustee; 4000 Bell Atlantic Tower, 1717 Arch
Street, Philadelphia, PA 19103; Partner in the Philadelphia office of the law
firm Dechert Price & Rhoads; Director, Hofler Corp.
NORTON H. REAMER* (3/21/35), Trustee; One International Place, Boston, MA 02110;
President and Chairman of the Fund; President, Chief Executive Officer and a
Director of United Asset Management Corporation; Director, Partner or Trustee of
each of the Investment Companies of the Eaton Vance Group of Mutual Funds.
CHARLES H. SALISBURY, JR.* (8/24/40), Trustee; One International Place, Boston,
MA 02110; Executive Vice President of United Asset Management Corporation;
formerly an executive officer and Director of T. Rowe Price and President and
Chief Investment Officer of T. Rowe Price Trust Company.
PETER M. WHITMAN, JR.* (7/1/43), Trustee; One Financial Center, Boston, MA
02111; President and Chief Investment Officer of Dewey Square Investors
Corporation ("DSI") since 1988; Director and Chief Executive Officer of H. T.
Investors, Inc., formerly a subsidiary of DSI.
WILLIAM H. PARK* (9/19/47), Vice President; One International Place, Boston, MA
7
<PAGE>
02110; Executive Vice President and Chief Financial Officer of United Asset
Management Corporation.
GARY L. FRENCH* (7/4/51), Treasurer; 211 Congress Street, Boston, MA 02110;
President of UAM Fund Services, Inc. and UAM Fund Distributors, Inc.; formerly
Vice President of Operations, Development and Control of Fidelity Investment in
1995; Treasurer of the Fidelity Group of Mutual Funds from 1991 to 1995.
MICHAEL E. DEFAO* (2/28/68), Secretary; 211 Congress Street, Boston, MA 02110;
Vice President and General Counsel of UAM Fund Services, Inc. and UAM Fund
Distributors, Inc.; Associate Attorney of Ropes & Gray (a law firm) from 1993 to
1995.
ROBERT R. FLAHERTY* (9/18/63), Assistant Treasurer; 211 Congress Street, Boston,
MA 02110; Vice President of UAM Fund Services, Inc.; formerly Manager of Fund
Administration and Compliance of Chase Global Fund Services Company from 1995 to
1996; Deloitte & Touche LLP from 1985 to 1995, Senior Manager.
KARL O. HARTMANN* (3/7/55), Assistant Secretary; 73 Tremont Street, Boston, MA
02108; Senior Vice President and General Counsel of Chase Global Funds Services
Company.
GORDON M. SHONE* (7/30/56), Assistant Treasurer; 73 Tremont Street, Boston, MA
02108; Vice President of Fund Administration and Compliance of Chase Global
Funds Services Company; formerly Senior Audit Manager of Coopers & Lybrand LLP
(1983-1996).
REMUNERATION OF TRUSTEES AND OFFICERS
The Fund pays each Trustee, who is not also an officer or affiliated
person, a $150 quarterly retainer fee per active Portfolio which currently
amounts to $1,050 per quarter. In addition, each unaffiliated Trustee receives a
$2,000 meeting fee which is aggregated for all the Trustees and allocated
proportionately among the Portfolios of the
Fund, and UAM Funds, Inc., and reimbursement for travel and other expenses
incurred while attending Board meetings. Trustees who are also officers or
affiliated persons receive no remuneration for their service as Trustees. The
8
<PAGE>
Fund's officers and employees are paid by either the Adviser, United Asset
Management Corporation ("UAM"), FSI or CGFSC and receive no compensation from
the Fund. As of June 30, 1997, the Trustees and officers of the Fund owned less
than 1% of the Fund's outstanding shares.
The following table shows aggregate compensation paid to each of the Fund's
Trustees by the Fund and total compensation paid by the Fund and UAM Funds, Inc.
(collectively the "Fund Complex") in the fiscal year ended April 30, 1997.
COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
TOTAL
PENSION OR COMPENSATION
RETIREMENT ESTIMATED FROM REGISTRANT
BENEFITS ACCRUED ANNUAL AND
NAME OF PERSON, AGGREGATE COMPENSATION AS PART OF BENEFITS UPON FUND COMPLEX
POSITION FROM REGISTRANT FUND EXPENSES RETIREMENT PAID TO TRUSTEES
- --------------- ---------------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
John T. Bennett, Jr.
Trustee............. $4,874 0 0 $31,700
J. Edward Day
Former Trustee...... $2,168 0 0 $15,550
Philip D. English
Trustee............. $4,874 0 0 $31,700
William A. Humenuk....
Trustee............. $4,874 0 0 $31,700
Nancy J. Dunn
Trustee............. $ 0 0 0 $ 0
</TABLE>
PRINCIPAL HOLDERS OF SECURITIES
As of June 16, 1997, the following persons or organizations held of record
or beneficially 5% or more of the shares of the Portfolio:
IRC Enhanced Index Portfolio Institutional Class Shares: Hartnat & Co.,
NANA Regional, P.O. Box 92800, Rochester, NY, 33.9%*; Hartnat & Co., Coca Cola,
P.O. Box 92800, Rochester, NY, 25.6%*; Hartnat & Co., NANA Marriott, P.O. Box
92800, Rochester, NY, 14.1%*; Hartnat & Co., NANA Corporate, P.O. Box 92800,
Rochester, NY, 7.3%*; and Hartnat & Co., NANA Aggressive, P.O. Box 92800,
Rochester, NY 6.9%*.
9
<PAGE>
The person(s) or organization(s) listed above as owning 25% or more of the
outstanding shares of the Portfolio may be presumed to "control" (as that term
is defined in the 1940 Act) such Portfolio. As a result, those persons or
organizations could have the ability to vote a majority of the shares of the
Portfolio on any matter requiring the approval of shareholders of such
Portfolio.
______
* Denotes shares held by a trustee or other fiduciary for which beneficial
ownership is disclaimed or presumed disclaimed.
INVESTMENT ADVISER
INVESTMENT PHILOSOPHY
IRC specializes in the development of proprietary and often customized
analytical strategies for long-term "benchmark-plus" equity investment. To
select stocks within each of the 19 sectors, IRC uses a mathematical model
developed during a combined total of 40 years of research by two of IRC's
principals when they were professors in the Graduate School of Business at the
University of Chicago. Its performance record in the engineering and
implementation of structured investment products is based on the rigor and
discipline resulting from serious academic careers coupled with broad financial
market experience.
IRC believes in a substantial devotion of resources to research staff as it
provides the backbone for the proprietary and cutting edge quantitative tools
used to implement various components of the IRC investment philosophy. In
previous academic careers, the principals of IRC published their research in
over 150 papers in scholarly journals. These principals now work full-time on
the development, evaluation, and application of proprietary investment
strategies.
CONTROL OF ADVISER
The Adviser is a wholly-owned subsidiary of UAM, a holding company
incorporated in Delaware in December 1980 for the purpose of acquiring and
owning firms engaged primarily in institutional investment management. Since its
first acquisition in August 1983, UAM has acquired or organized approximately 45
such wholly-owned affiliated firms (the "UAM Affiliated Firms"). UAM believes
that permitting UAM Affiliated Firms to retain control over their investment
advisory decisions is necessary to allow them to continue to provide investment
management services that are intended to meet the particular needs of their
respective clients.
Accordingly, after acquisition by UAM, UAM Affiliated Firms continue to
operate under their own firm name, with their own leadership and individual
investment philosophy and approach. Each UAM Affiliated Firm manages its own
business independently on a day-to-day basis. Investment strategies employed and
securities selected by UAM Affiliated Firms are separately chosen by each of
10
<PAGE>
them. Several UAM Affiliated Firms also act as investment advisers to separate
series or Portfolios of UAM Funds, Inc., a registered investment company.
ADVISORY FEES
As compensation for services rendered by the Adviser under the Investment
Advisory Agreement, the Portfolio pays the Adviser an annual fee in monthly
installments, calculated by applying the following annual percentage rates to
the Portfolio's average daily net assets for the month:
<TABLE>
<S> <C>
IRC Enhanced Index Portfolio.............................. 0.70%
</TABLE>
From January 23, 1996 (date of commencement) to April 30, 1996, and
for the fiscal year ended April 30, 1997, the IRC Enhanced Index Portfolio paid
advisory fees of $0 and $6,832, respectively. The Adviser voluntarily waived
advisory fees of $9,000 for the period ended April 30, 1996, and $27,167 for the
fiscal year ended April 30, 1997. The Adviser has agreed to waive all or a
portion of its advisory fees and to assume operating expenses otherwise payable
by the Portfolio, if necessary, in order to keep the Portfolio's total annual
operating expenses from exceeding 2.50% of average daily net assets.
PORTFOLIO TRANSACTIONS
The Investment Advisory Agreement authorizes the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolio and directs the Adviser to use its best efforts to
obtain the best execution with respect to all transactions for the Portfolio.
The Adviser may, however, consistent with the interests of the Portfolio, select
brokers on the basis of the research, statistical and pricing services they
provide to the Portfolio. Information and research received from such brokers
will be in addition to, and not in lieu of, the services required to be
performed by the Adviser under the Investment Advisory Agreement. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided that such
commissions are paid in compliance with the Securities Exchange Act of 1934, as
amended, and that the Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Adviser to the Portfolio and the Adviser's other clients.
It is not the Fund's practice to allocate brokerage or effect principal
transactions with dealers on the basis of sales of Fund shares which may be made
through broker-dealer firms. However, the Adviser may place portfolio orders
with qualified broker-dealers who refer clients to the Adviser. During the
period from inception on January 23, 1996 to April 30 1996, and for the fiscal
11
<PAGE>
year ended April 30, 1997, the Portfolio paid aggregate brokerage commissions of
$2,891 and $4,904, respectively.
Some securities considered for investment by the Portfolio may also be
appropriate for other clients served by the Adviser. If a purchase or sale of
securities is consistent with the investment policies of the Portfolio and one
or more of these other clients served by the Adviser is considered at or about
the same time, transactions in such securities will be allocated among the
Portfolio and clients in a manner deemed fair and reasonable by the Adviser.
Although there is no specified formula for allocating such transactions, the
various allocation methods used by the Adviser, and the results of such
allocations, are subject to periodic review by the Fund's Board of Trustees.
ADMINISTRATIVE SERVICES
As stated in the Prospectus, the Board of Trustees of the Fund approved a
new Fund Administration Agreement between FSI, a wholly owned subsidiary of UAM,
and the Fund. The Fund's Trustees also approved a Mutual Fund Services Agreement
between FSI and CGFSC. The services provided by FSI and CGFSC and the basis of
the fees payable by the Fund under the Fund Administration Agreement are
described in the Portfolios' Prospectus. Prior to April 15, 1996, CGFSC or its
predecessor, Mutual Funds Service Company, provided certain administrative
services to the Fund under an Administration Agreement between the Fund and U.S.
Trust Company of New York.
The basis of the fees paid to CGFSC for the period January 23, 1996 to
April 14, 1996 was as follows: the Fund paid a monthly fee for its services
which on an annualized basis equaled 0.20% of the first $200 million in combined
assets; plus 0.12% of the next $800 million in combined assets; plus 0.08% on
assets over $1 billion but less than $3 billion; plus 0.06% on assets over $3
billion. The fees were allocated among the Portfolios on the basis of their
relative assets and were subject to a designated minimum fee schedule per
Portfolio, which ranged from $2,000 per month upon inception of a Portfolio to
$70,000 annually after two years. For the period ended April 30, 1996, and for
the fiscal year ended April 30, 1997, administrative services fees paid to CGFSC
by the IRC Enhanced Index Portfolio totaled $7,929 and $50,857, respectively.
For the period April 15, 1996 to April 30, 1996, and for the fiscal year ended
April 30, 1997, FSI earned $1,071 and $1,929, respectively from the IRC Enhanced
Index Portfolio as Administrator. The services provided by FSI and CGFSC and the
basis of the current fees payable are described in the Portfolio's Prospectus.
12
<PAGE>
PERFORMANCE CALCULATIONS
PERFORMANCE
The Portfolio may from time to time quote various performance figures to
illustrate past performance. Performance quotations by investment companies are
subject to rules adopted by the SEC, which require the use of standardized
performance quotations or, alternatively, that every non-standardized
performance quotation furnished by the Fund be accompanied by certain
standardized performance information computed as required by the SEC. Average
annual compounded total return quotations used by the fund are based on the
standardized methods of computing performance mandated by the SEC. An
explanation of the method used to compute or express performance follows.
TOTAL RETURN
The average annual total return of the Portfolio is determined by finding
the average annual compounded rates of return over 1, 5 and 10 year periods that
would equate an initial hypothetical $1,000 investment to its ending redeemable
value. The calculation assumes that all dividends and distributions are
reinvested when paid. The quotation assumes the amount was completely redeemed
at the end of each 1, 5 and 10 year period and the deduction of all applicable
Fund expenses on an annual basis.
These figures are calculated according to the following formula:
P(1 + T)/n/ = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10 year periods at the end of the 1, 5
or 10 year periods (or fractional portion thereof).
The average annual total return for the IRC Enhanced Index Portfolio from
inception on January 23, 1996 to April 30, 1997 is 19.46%. The total return for
the Portfolio for the one-year period ended April 30, 1997 is 21.48%.
COMPARISONS
To help investors better evaluate how an investment in the Portfolio might
satisfy their investment objective, advertisements regarding the Fund may
discuss various measures of Fund performance as reported by various financial
publications. Advertisements may also compare performance (as calculated above)
13
<PAGE>
to performance as reported by other investments, indices and averages. Please
see Appendix A for publications, indices and averages which may be used.
In assessing such comparisons of performance, an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the composition of investments in the Portfolio,
that the averages are generally unmanaged, and that the items included in the
calculations of such averages may not be identical to the formula used by the
Portfolio to calculate its performance. In addition, there can be no assurance
that the Portfolio will continue this performance as compared to such other
averages.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized under the name The Regis Fund II as a Delaware
business trust on May 18, 1994. On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust". The Fund's principal executive office is located
at One International Place, 44th Floor, Boston, MA 02110; however, all investor
correspondence should be directed to the Fund at UAM Funds Service Center, c/o
Chase Global Funds Services Company, P.O. Box 2798, Boston, MA 02208-2798. The
Fund's Agreement and Declaration of Trust permits the Fund to issue an unlimited
number of shares of beneficial interest, without par value. The Trustees have
the power to designate one or
more series ("Portfolios") or classes of shares of beneficial interest without
further action by shareholders.
On each matter submitted to a vote of the shareholders, each holder of a
share shall be entitled to one vote for each whole share and a fractional vote
for each fractional share standing in his or her name on the books of the Fund.
In the event of liquidation of the Fund, the holders of the shares of each
Portfolio or any class thereof that has been established and designated shall be
entitled to receive, when and as declared by the Trustees, the excess of the
assets belonging to that Portfolio, or in the case of a class, belonging to that
Portfolio and allocable to that class, over the liabilities belonging to that
Portfolio or class. The assets so distributable to the holders of shares of any
particular Portfolio or class thereof shall be distributed to the holders in
proportion to the number of shares of that Portfolio or class thereof held by
them and recorded on the books of the Fund. The liquidation of any Portfolio or
class thereof may be authorized at any time by vote of a majority of the
Trustees then in office.
Shareholders of both Classes of the Fund's Portfolios have no pre-emptive
or other rights to subscribe to any additional shares or other securities issued
by the Fund or any Portfolio, except as the Trustees in their sole discretion
shall have determined by vote. Both Institutional Class and Service Class Shares
represent an interest in the same assets of a Portfolio and are identical in all
respects except that the Service Class Shares bear certain expenses related to
shareholder servicing and the distribution of such shares, and have exclusive
14
<PAGE>
voting rights with respect to matters relating to such distribution
expenditures.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund's policy is to distribute substantially all of the Portfolio's net
investment income, if any, together with any net realized capital gains in the
amount and at the times that will avoid both income (including capital gains)
taxes incurred on it and the imposition of the Federal excise tax on
undistributed income and capital gains. The amounts of any income dividends or
capital gains distributions cannot be predicted. See the discussion under
"Dividends, Capital Gains Distributions and Taxes" in the Prospectus.
Any dividend or distribution paid shortly after the purchase of shares of
the Portfolio by an investor may have the effect of reducing the per share net
asset value of the Portfolio by the per share amount of the dividend or
distribution. Furthermore, such dividends or distributions, although in effect a
return of capital, are subject to income taxes as set forth in the Prospectus.
As set forth in the Prospectus, unless the shareholder elects otherwise in
writing, all dividend and capital gains distributions are automatically received
in additional shares of the Portfolio at net asset value (as of the business day
following the record date). This will remain in effect until the Fund is
notified by the shareholder in writing at least three
days prior to the record date that either the Income Option (income dividends in
cash and capital gains distributions in additional shares at net asset value) or
the Cash Option (both income dividends and capital gains distributions in cash)
has been elected. An account statement is sent to shareholders whenever an
income dividend or capital gains distribution is paid.
Each Portfolio of the Fund will be treated as a separate entity (and hence
as a separate "regulated investment company") for Federal tax purposes. Any net
capital gains recognized by the Portfolio will be distributed to its investors
without need to offset (for Federal income tax purposes) such gains against any
net capital losses of another Portfolio.
CODE OF ETHICS
The Fund has adopted a Code of Ethics which restricts to a certain extent
personal transactions by access persons of the Fund and imposes certain
disclosure and reporting obligations.
FEDERAL TAXES
In order for the Portfolio to qualify for Federal income tax treatment as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"), at least 90% of its gross income for a taxable year must be
derived from certain qualifying income, i.e., dividends, interest, income
derived from loans of securities and gains from the sale or other disposition of
15
<PAGE>
stock or securities or other related income derived with respect to its
investing in stock or securities. Qualification as a regulated investment
company also requires that less than 30% of the Portfolio's gross income be
derived from the sale or other disposition of stock or securities held less than
three months.
The Portfolio will distribute to shareholders annually any net capital
gains which have been recognized for Federal income tax purposes. Shareholders
will be advised as to the character of the payments.
FINANCIAL STATEMENTS
The Financial Statements of the IRC Enhanced Index Portfolio for the
fiscal year ended April 30, 1997, and the Financial Highlights for the
respective periods presented and the report thereon of Price Waterhouse LLP, the
Fund's independent accountant, which appear in the Portfolio's 1997 Financial
Statements, are attached to this SAI.
16
<PAGE>
APPENDIX A - COMPARISON PUBLICATIONS, INDICES AND AVERAGES
With respect to the comparative measures of performance for equity
securities described herein, comparisons of performance assume reinvestment
of dividends, except as otherwise stated below.
(a) Dow Jones Composite Average or its component averages -- an unmanaged
index composed of 30 blue-chip industrial corporation stocks (Dow
Jones Industrial Average), 15 utilities company stocks and 20
transportation stocks.
(b) Standard & Poor's 500 Stock Index or its component indices -- an
unmanaged index composed of 400 industrial stocks, 40 financial
stocks, 40 utilities stocks and 20 transportation stocks.
(c) Standard & Poor's 400 Mid Cap Index - consists of 400 domestic stocks
chosen for market size, liquidity, and industry group representation.
It is also a market-value weighted index and was the first benchmark
of mid cap stock price movement.
(d) The New York Stock Exchange composite or component indices --
unmanaged indices of all industrial, utilities, transportation and
finance stocks listed on the New York Stock Exchange.
(e) Wilshire 5000 Equity Index or its component indices -- represents the
return on the market value of all common equity securities for which
daily pricing is available.
(f) Lipper -- Mutual Fund Performance Analysis and Lipper -- Fixed Income
Fund Performance Analysis -- measure total return and average current
yield for the mutual fund industry. Rank individual mutual fund
performance over specified time periods, assuming reinvestment of all
distributions, exclusive of any applicable sales charges.
(g) Lipper Capital Appreciation Funds Index - a fund that aims at maximum
capital appreciation, frequently by means of 100% or more portfolio
turnover, leveraging, purchasing unregistered securities, purchasing
options, etc. The fund may take large cash positions.
A-1
<PAGE>
(h) Lipper Small Cap Funds Index- a fund that by prospectus or portfolio
practice invests primarily in companies with market capitalizations
of less than $1 billion at the time of purchase.
(i) Morgan Stanley Capital International EAFE Index and World Index --
respectively, arithmetic, market value-weighted averages of the
performance of over 900 securities listed on the stock exchanges of
countries in Europe, Australia and the Far East, and over 1,400
securities listed on the stock exchanges of these continents,
including North America.
(j) Goldman Sachs 100 Convertible Bond Index -- currently includes 67
bonds and 33 preferred. The original list of names was generated by
screening for convertible issues of 100 million or greater in market
capitalization. The index is priced monthly.
(k) Salomon Brothers GNMA Index -- includes pools of mortgages originated
by private lenders and guaranteed by the mortgage pools of the
Government National Mortgage Association.
(l) Salomon Brothers High Grade Corporate Bond Index -- consists of
publicly issued, non-convertible corporate bonds rated AA or AAA. It
is a value-weighted, total return index, including approximately 800
issues with maturities of 12 years or greater.
(m) Salomon Brothers Broad Investment Grade Bond -- is a market-weighted
index that contains approximately 4,700 individually priced
investment grade corporate bonds rated BBB or better, U.S.
Treasury/agency issues and mortgage pass through securities.
(n) Lehman Brothers Long-Term Treasury Bond -- is composed of all bonds
covered by the Lehman Brothers Treasury Bond Index with maturities of
10 years or greater.
(o) Lehman Brothers Government/Corporate Index -- is a combination of the
Government and Corporate Bond Indices. The Government Index includes
public obligations of the U.S. Treasury, issues of Government
agencies, and corporate debt backed by the U.S. Government. The
Corporate Bond Index includes fixed-rate nonconvertible corporate
debt. Also included are Yankee Bonds and nonconvertible debt issued
by or guaranteed by foreign or international governments and
agencies. All issues are investment grade (BBB) or higher, with
maturities of at least one year and an outstanding par value of at
least $100 million for U.S. Government issues and $25 million for
others. Any security downgraded during the month is held in the index
until month-end and then removed. All returns are market value
weighted inclusive of accrued income.
A-2
<PAGE>
(p) NASDAQ Industrial Index -- is composed of more than 3,000 industrial
issues. It is a value-weighted index calculated on price change only
and does not include income.
(q) Value Line -- composed of over 1,600 stocks in the Value Line
Investment Survey.
(r) Russell 2000 Index -- composed of the 2,000 smallest stocks in the
Russell 3000, a market value-weighted index of the 3,000 largest U.S.
publicly-traded companies.
(s) Salomon Brothers 3 Month T-Bill Average - the average return for all
Treasury bills for the previous three month period.
(t) Composite Indices -- 60% Standard & Poor's 500 Stock Index, 30%
Lehman Brothers Long-Term Treasury Bond and 10% U.S. Treasury Bills;
70% Standard & Poor's 500 Stock Index and 30% NASDAQ Industrial
Index; 35% Standard & Poor's 500 Stock Index and 65% Salomon Brothers
High Grade Bond Index; all stocks on the NASDAQ system exclusive of
those traded on an exchange, and 65% Standard & Poor's 500 Stock
Index and 35% Salomon Brothers High Grade Bond Index.
(u) The S&P BARRA-Growth and the S&P BARRA-Value split the S&P 500 into
two mutually exclusive groups in such a way that each encompasses
half of the S&P 500 total market capitalization. The S&P BARRA-
Growth tracks the performance of those stocks in the S&P 500 with
higher price-to-book ratios. A cap-weighted index, it is rebalanced
semi-annually on January 1 and July 1, based on its price-to-book
ratios and market capitalizations at the close of trading one month
prior. The index is adjusted each month to reflect changes in the
S&P 500. Turnover has averaged about 20% per year (on a cap-weighted
basis). This index tends to be heavily weighted in the Consumer
Staple sector, which includes Food Retailing, Drugs and Health Care,
Tobacco and Liquor.
(v) The S&P BARRA-Value and the S&P BARRA-Growth split the S&P 500 into
two mutually exclusive groups in such a way that each encompasses
half of the S&P 500 total market capitalization. The S&P BARRA-Value
tracks the performance of those stocks in the S&P 500 with lower
price-to-book ratios. A cap-weighted index, it is rebalanced semi-
annually on January 1 and July 1, based on its price-to-book ratios.
A cap-weighted index, it is rebalanced semi-annually on January 1 and
July 1, based on its price-to-book ratios and market capitalizations
at the close of trading one month prior. The index is adjusted each
month to reflect changes in the S&P 500. Turnover has averaged about
A-3
<PAGE>
20% per year (on a cap-weighted basis). This index tends to be
heavily concentrated in the Energy, Utility, and Financial sectors.
(w) CDA Mutual Fund Report published by CDA Investment Technologies, Inc.
-- analyzes price, current yield, risk, total return and average rate
of return (average compounded growth rate) over specified time
periods for the mutual fund industry.
(x) Mutual Fund Source Book published by Morningstar, Inc. -- analyzes
price, yield, risk and total return for equity funds.
(y) Financial publications: Business Week, Changing Times, Financial
World, Forbes, Fortune, Money, Barron's, Consumer's Digest, Financial
Times, Global Investor, Wall Street Journal and Weisenberger
Investment Companies Service -- publications that rate fund
performance over specified time periods.
(z) Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics -- a statistical measure of change over
time in the price of goods and services in major expenditure groups.
(aa) Stocks, Bonds, Bills and Inflation, published by Ibbotson Associates
-- historical measure of yield, price and total return for common and
small company stock, long-term government bonds, U.S. Treasury bills
and inflation.
(ab) Savings and Loan Historical Interest Rates -- as published by the
U.S. Savings & Loan League Fact Book.
(ac) Historical data supplied by the research departments of First Boston
Corporation; the J.P. Morgan companies; Salomon Brothers; Merrill
Lynch, Pierce, Fenner & Smith; Lehman Brothers, Inc.; and Bloomberg
L.P.
A-4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
UAM Funds Trust and Shareholders of
IRC Enhanced Index Portfolio
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the IRC Enhanced
Index Portfolio (the "Portfolio"), a Portfolio of UAM Funds Trust, at April
30, 1997, and the results of its operations, the changes in its net assets and
the financial highlights for the periods, indicated in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Portfolio's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at April 30, 1997 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 9, 1997
- -------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED):
For the year ended April 30, 1997, the percentage of dividends paid from
investment company taxable income that qualify for the 70% dividend received
deduction for Corporation shareholders for the IRC Enhanced Index Portfolio is
90.64%.
16
<PAGE>
IRC ENHANCED INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (91.0%)
- -------------------------------------------------------------------------------
BASIC INDUSTRIES (0.8%)
Aluminum Company of America................................. 700 $ 48,912
- -------------------------------------------------------------------------------
CAPITAL GOODS (5.5%)
AlliedSignal, Inc........................................... 1,700 122,825
Boeing Co. ................................................. 1,300 128,212
Honeywell, Inc. ............................................ 700 49,437
McDermott International, Inc. .............................. 100 1,850
Perkin-Elmer Corp. ......................................... 100 7,263
Tyco International Ltd. .................................... 500 30,500
----------
340,087
- -------------------------------------------------------------------------------
COMMUNICATIONS (8.1%)
Ameritech Corp.............................................. 1,900 116,137
AT&T Corp................................................... 2,200 73,700
BellSouth Corp. ............................................ 1,300 57,850
GTE Corp. .................................................. 1,300 59,637
McGraw-Hill Cos., Inc....................................... 100 5,088
SBC Communications, Inc..................................... 800 44,400
Sprint Corp. ............................................... 600 26,325
Time Warner, Inc. .......................................... 1,600 72,000
US West Communications Group................................ 600 21,075
Westinghouse Electric Corp. ................................ 1,200 20,400
----------
496,612
- -------------------------------------------------------------------------------
COMPUTERS & OFFICE EQUIPMENT (8.1%)
Automatic Data Processing, Inc. ............................ 2,900 131,225
Hewlett-Packard Co. ........................................ 200 10,500
International Business Machines Corp........................ 1,300 208,975
Pitney Bowes, Inc........................................... 2,100 134,400
Shared Medical Systems Corp................................. 400 16,850
----------
501,950
- -------------------------------------------------------------------------------
CONSTRUCTION (0.4%)
Kaufman & Broad Home Corp................................... 1,600 22,200
Louisiana-Pacific Corp...................................... 200 3,725
----------
25,925
- -------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
IRC ENHANCED INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
- --------------------------------------------------------------------------------
CONSUMER DURABLES (0.5%)
TRW Inc. .................................................... 600 $ 31,275
- --------------------------------------------------------------------------------
CONSUMER FOODS (8.6%)
American Brands, Inc......................................... 900 48,375
Brown-Forman Corp., Class B.................................. 1,000 50,500
Coca Cola Co. ............................................... 1,000 63,625
ConAgra, Inc................................................. 600 34,575
Heinz (H.J.) Co.............................................. 400 16,600
Philip Morris Cos., Inc...................................... 5,100 200,812
Unilever N.V.--New York Shares............................... 600 117,750
----------
532,237
- --------------------------------------------------------------------------------
CONSUMER NON-DURABLES (5.5%)
Bemis Co., Inc............................................... 1,200 45,750
Clorox Co. .................................................. 100 12,737
Colgate-Palmolive Co. ....................................... 200 22,200
Georgia-Pacific Corp. ....................................... 100 7,800
International Paper Co. ..................................... 1,600 67,600
Minnesota Mining & Manufacturing Co. ........................ 1,400 121,800
Temple-Inland, Inc. ......................................... 100 5,550
Union Camp Corp.............................................. 500 24,313
VF Corp...................................................... 400 28,850
----------
336,600
- --------------------------------------------------------------------------------
DEPOSITORY INSTITUTIONS (7.2%)
Ahmanson (H.F.) & Co. ....................................... 200 7,625
BankAmerica Corp............................................. 800 93,500
BankBoston Corp. ............................................ 400 29,100
Citicorp..................................................... 1,400 157,675
Fifth Third Bancorp.......................................... 600 44,775
MBNA Corp. .................................................. 2,450 80,850
SunTrust Banks, Inc.......................................... 600 30,450
----------
443,975
- --------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
IRC ENHANCED INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
- --------------------------------------------------------------------------------
ELECTRONICS (6.5%)
Cooper Industries, Inc. ..................................... 600 $ 27,600
General Electric Co. ........................................ 700 77,613
Intel Corp. ................................................. 800 122,400
Lucent Technologies, Inc..................................... 888 52,503
Motorola, Inc................................................ 500 28,625
National Service Industries, Inc. ........................... 600 25,275
Northern Telecom Ltd. ....................................... 300 21,788
Whirlpool Corp............................................... 900 42,075
----------
397,879
- --------------------------------------------------------------------------------
FABRICATED PRODUCTS (3.8%)
Armstrong World Industries, Inc.............................. 200 13,150
Dow Chemical Co. ............................................ 400 33,950
Du Pont (E.I.) de Nemours & Co............................... 1,500 159,187
Eastman Chemical Co. ........................................ 100 5,100
PPG Industries, Inc.......................................... 300 16,313
Rohm & Haas Co. ............................................. 100 8,325
----------
236,025
- --------------------------------------------------------------------------------
HEALTH CARE (9.3%)
*Beverly Enterprises......................................... 400 5,800
*Boston Scientific Corp. .................................... 1,800 86,850
Bristol-Myers Squibb Co...................................... 200 13,100
Johnson & Johnson............................................ 3,100 189,875
Medtronic, Inc............................................... 1,500 103,875
Pfizer, Inc.................................................. 1,000 96,000
US Surgical Corp. ........................................... 1,400 47,950
Warner Lambert Co. .......................................... 300 29,400
----------
572,850
- --------------------------------------------------------------------------------
MINING (0.5%)
Freeport-McMoRan Copper & Gold, Inc., Class B................ 500 14,562
Newmont Mining Corp. ........................................ 400 13,850
----------
28,412
- --------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
IRC ENHANCED INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
- --------------------------------------------------------------------------------
OIL (8.1%)
Ashland Inc. ................................................ 1,000 $ 44,625
Atlantic Richfield Co. ...................................... 1,000 136,125
Exxon Corp. ................................................. 1,200 67,950
Kerr-McGee Corp.............................................. 900 54,337
Occidental Petroleum Corp. .................................. 1,100 24,338
Phillips Petroleum Co........................................ 1,300 51,187
Texaco, Inc. ................................................ 900 94,950
USX-Marathon Group........................................... 900 24,863
----------
498,375
- --------------------------------------------------------------------------------
OTHER FINANCIAL (6.2%)
Allstate Corp................................................ 500 32,750
Dean Witter Discover & Co. .................................. 1,600 61,200
General Re Corp.............................................. 400 66,900
Loews Corp................................................... 700 64,312
Merrill Lynch & Co., Inc..................................... 200 19,050
Morgan Stanley Group, Inc.................................... 200 12,625
Salomon, Inc. ............................................... 1,100 55,000
Travelers Group, Inc......................................... 1,266 70,105
USF&G Corp. ................................................. 100 2,000
----------
383,942
- --------------------------------------------------------------------------------
RETAIL SERVICES (4.1%)
Albertson's, Inc............................................. 700 23,100
American Stores Co. ......................................... 400 18,200
CVS Corp. ................................................... 1,100 54,587
Dayton Hudson Corp. ......................................... 1,300 58,500
Gap, Inc..................................................... 700 22,313
Harcourt General, Inc........................................ 400 18,500
Longs Drug Stores, Inc....................................... 100 2,525
Rite Aid Corp. .............................................. 200 9,200
Walgreen Co. ................................................ 1,000 46,000
----------
252,925
- --------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
IRC ENHANCED INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
- -------------------------------------------------------------------------------
SERVICES (3.8%)
Crane Co. .................................................. 550 $ 20,556
EG&G, Inc. ................................................. 500 9,438
Ryder System, Inc. ......................................... 800 24,900
Safety-Kleen Corp. ......................................... 700 10,413
Service Corp. International................................. 300 10,275
Sysco Corp. ................................................ 2,100 74,550
W.W. Grainger, Inc. ........................................ 1,100 82,913
----------
233,045
- -------------------------------------------------------------------------------
TRANSPORTATION (1.2%)
CSX Corp. .................................................. 1,100 51,287
Union Pacific Corp. ........................................ 400 25,500
----------
76,787
- -------------------------------------------------------------------------------
UTILITIES (2.8%)
Consolidated Edison Co. of New York, Inc. .................. 2,100 58,275
Peco Energy Co. ............................................ 2,000 39,500
People's Energy Corp. ...................................... 100 3,375
PP&L Resources, Inc. ....................................... 400 7,850
Public Service Enterprise Group, Inc. ...................... 500 12,063
Northern States Power Co. .................................. 200 9,100
Ohio Edison Co. ............................................ 500 10,000
Southern Co. ............................................... 1,500 30,563
----------
170,726
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (91.0%) (COST $5,276,951) (a).............. 5,608,539
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (NET) (9.0%).................... 552,983
- -------------------------------------------------------------------------------
NET ASSETS (100%)............................................ $6,161,522
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
(a) The cost for federal income tax purposes was $5,276,951. At April 30,
1997, net unrealized appreciation for all securities based on tax cost was
$331,588. This consisted of aggregate gross unrealized appreciation for
all securities of $454,543 and aggregate gross unrealized depreciation for
all securities of $122,955.
8
<PAGE>
IRC ENHANCED INDEX PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997
<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at Cost............................................... $5,276,951
==========
Investments, at Value.............................................. $5,608,539
Cash............................................................... 573,637
Receivable for Portfolio Shares Sold............................... 1,144
Dividends Receivable............................................... 5,622
Receivable from Investment Advisor--Note B......................... 10,210
- -------------------------------------------------------------------------------
Total Assets...................................................... 6,199,152
- -------------------------------------------------------------------------------
LIABILITIES
Payable for Administrative Fees--Note C............................ 6,306
Payable for Account Services Fees--Note F.......................... 1,481
Payable for Trustees' Fees--Note G................................. 459
Other Liabilities.................................................. 29,384
- -------------------------------------------------------------------------------
Total Liabilities................................................. 37,630
- -------------------------------------------------------------------------------
NET ASSETS.......................................................... $6,161,522
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid in Capital.................................................... $5,090,406
Accumulated Net Realized Gain...................................... 739,528
Unrealized Appreciation............................................ 331,588
- -------------------------------------------------------------------------------
NET ASSETS.......................................................... $6,161,522
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
Shares Issued and Outstanding (Unlimited authorization, no par val-
ue)............................................................... 501,777
Net Asset Value, Offering and Redemption Price Per Share........... $ 12.28
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
IRC ENHANCED INDEX PORTFOLIO
STATEMENT OF OPERATIONS
For the Year Ended April 30, 1997
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends.................................................. $113,515
- --------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees--Note B
Basic Fees................................................ $ 33,999
Less: Fees Waived......................................... (27,167) 6,832
--------
Administrative Fees--Note C................................ 52,786
Audit Fees................................................. 10,355
Printing Fees.............................................. 22,027
Filing and Registration Fees............................... 20,359
Custodian Fees--Note D..................................... 4,890
Account Services Fees--Note F.............................. 1,481
Trustees' Fees--Note G..................................... 2,043
Other Expenses............................................. 3,599
- --------------------------------------------------------------------------------
Total Expenses............................................ 124,372
Expense Offset--Note A..................................... (2,929)
- --------------------------------------------------------------------------------
Net Expenses.............................................. 121,443
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS......................................... (7,928)
- --------------------------------------------------------------------------------
NET REALIZED GAIN ON INVESTMENTS............................ 825,307
NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON IN-
VESTMENTS.................................................. 172,032
- --------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS..................................... 997,339
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $989,411
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
IRC ENHANCED INDEX PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR JANUARY 23,
ENDED 1996* TO
APRIL 30, APRIL 30,
1997 1996
- ----------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income (Loss).......................... $ (7,928) $ 8,478
Net Realized Gain..................................... 825,307 14,166
Net Change in Unrealized Appreciation/Depreciation.... 172,032 159,556
- ----------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Opera-
tions............................................... 989,411 182,200
- ----------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income................................. (6,339) (8,122)
Net Realized Gain..................................... (86,034) --
- ----------------------------------------------------------------------------------
Total Distributions.................................. (92,373) (8,122)
- ----------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued--Regular....................................... 3,610,570 6,001,748
--In Lieu of Cash Distributions..................... 92,115 8,122
Redeemed.............................................. (2,370,940) (2,251,209)
- ----------------------------------------------------------------------------------
Net Increase from Capital Share Transactions......... 1,331,745 3,758,661
- ----------------------------------------------------------------------------------
Total Increase........................................ 2,228,783 3,932,739
Net Assets:
Beginning of Period................................... 3,932,739 --
- ----------------------------------------------------------------------------------
End of Period (including undistributed net investment
income of $0 and $356, respectively)................. $ 6,161,522 $ 3,932,739
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
(1)Shares Issued and Redeemed:
Shares Issued........................................ 329,667 597,185
In Lieu of Cash Distributions........................ 8,282 779
Redeemed............................................. (217,949) (216,187)
- ----------------------------------------------------------------------------------
120,000 381,777
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
IRC ENHANCED INDEX PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR JANUARY 23,
ENDED 1996* TO
APRIL 30, APRIL 30,
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $ 10.30 $ 10.00
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)......................... (0.01) 0.02
Net Realized and Unrealized Gain on Investments...... 2.20 0.30
- -------------------------------------------------------------------------------
Total from Investment Operations.................... 2.19 0.32
- -------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income................................ (0.02) (0.02)
Net Realized Gain.................................... (0.19) --
- -------------------------------------------------------------------------------
Total Distributions................................. (0.21) (0.02)
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD........................ $ 12.28 $ 10.30
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL RETURN+......................................... 21.48% 3.20%***
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)................ $ 6,162 $ 3,933
Ratio of Expenses to Average Net Assets.............. 2.56% 2.52%**
Ratio of Net Investment Income (Loss) to Average Net
Assets.............................................. (0.16)% 0.67%**
Portfolio Turnover Rate.............................. 117% 31%
Average Commission Rate.............................. $0.0227 $0.0205
- -------------------------------------------------------------------------------
Voluntarily Waived Fees and Expenses Assumed by the
Adviser Per Share................................... $ 0.03 $ 0.03
Ratio of Expenses to Average Net Assets Including Ex-
pense Offsets....................................... 2.50% 2.50%**
- -------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
** Annualized
*** Not Annualized
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser.
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
IRC ENHANCED INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
UAM Funds Trust and UAM Funds, Inc. (collectively the "UAM Funds") are
registered under the Investment Company Act of 1940, as amended. The IRC
Enhanced Index Portfolio (the "Portfolio"), a portfolio of UAM Funds Trust, is
a diversified, open-end management investment company. At April 30, 1997, the
UAM Funds were comprised of forty-two active portfolios. The financial
statements of the remaining portfolios are presented separately. The objective
of the IRC Enhanced Index Portfolio is to provide a total return exceeding
that of the S&P 500 Index.
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: Securities listed on a securities exchange for which
market quotations are readily available are valued at the last quoted sales
price as of the close of the exchange on the day the valuation is made or,
if no sale occurred on such day, at the bid price on such day. Price
information on listed securities is taken from the exchange where the
security is primarily traded. Over-the-counter and unlisted securities are
valued at the current bid price. Short-term investments that have remaining
maturities of sixty days or less at time of purchase are valued at
amortized cost, if it approximates market value. The value of other assets
and securities for which no quotations are readily available is determined
in good faith at fair value using methods determined by the Board of
Trustees.
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 provision
for Federal income taxes is required in the financial statements.
3. DISTRIBUTIONS TO SHAREHOLDERS: The Portfolio will normally distribute
substantially all of its net investment income quarterly. Any realized net
capital gains will be distributed annually. All distributions are recorded
on ex-dividend date.
The amount and character of income and capital gain distributions to be
paid are determined in accordance with Federal income tax regulations which
may differ from generally accepted accounting principles.
Permanent book and tax basis differences relating to shareholder
distributions resulted in reclassifications of $13,911 to increase
undistributed net investment income and $13,911 to decrease accumulated net
realized gain.
Current year permanent book-tax differences, if any, are not included in
ending undistributed net investment income (loss) for the purpose of
calculating net investment income (loss) per share in the financial
highlights.
4. OTHER: Security transactions are accounted for on trade date, the date
the trade was executed. Costs used in determining realized gains and losses
on the sale of investment securities are based on the specific
identification method. Dividend income is recorded on the ex-dividend date.
Most expenses of the UAM Funds can be directly attributed to a particular
portfolio. Expenses which cannot be directly attributed are apportioned
among the portfolios of the UAM Funds based on their relative net assets.
Custodian fees for the Portfolio have been increased to include expense
offsets, if any, for custodian balance credits.
13
<PAGE>
IRC ENHANCED INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
B. ADVISORY SERVICES: Under the terms of an investment advisory agreement,
Investment Research Company (the "Adviser"), a wholly-owned subsidiary of
United Asset Management Corporation ("UAM"), provides investment advisory
services to the Portfolio at a fee calculated at an annual rate of 0.70% of
average daily net assets. The Adviser has voluntarily agreed to waive a
portion 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
expense offset arrangements, from exceeding 2.50% of average daily net assets.
C. ADMINISTRATION SERVICES: UAM Fund Services, Inc. (the "Administrator"), a
wholly-owned subsidiary of UAM, provides and oversees administrative, fund
accounting, dividend disbursing and transfer agent services to the UAM Funds
under a Fund Administration Agreement (the "Agreement"). Pursuant to the
Agreement, the Administrator is entitled to receive annual fees, computed
daily and payable monthly, of 0.19% of the first $200 million of the combined
aggregate net assets; plus 0.11% of the next $800 million of the combined
aggregate net assets; plus 0.07% of the next $2 billion of the combined
aggregate net assets; plus 0.05% of the combined aggregate net assets in
excess of $3 billion. The fees are allocated among the portfolios of the UAM
Funds on the basis of their relative net assets and are subject to a graduated
minimum fee schedule per portfolio which rises from $2,000 per month, upon
inception of a portfolio, to $70,000 annually after two years. For portfolios
with more than one class of shares, the minimum annual fee increases to
$90,000. In addition, the Administrator receives a Portfolio-specific monthly
fee at an annual rate of 0.04% of average daily net assets of the Portfolio.
The Administrator has entered into a Mutual Funds Service Agreement with Chase
Global Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan
Bank, under which CGFSC agrees to provide certain services, including but not
limited to, administration, fund accounting, dividend disbursing and transfer
agent services. Pursuant to the Mutual Funds Service Agreement, the
Administrator pays CGFSC a monthly fee. For the year ended April 30, 1997,
$50,857 was paid to CGFSC for its services.
D. CUSTODIAN: Effective July 17, 1996, The Chase Manhattan Bank (the "Bank"),
an affiliate of CGFSC, is custodian for the Portfolio's assets held in
accordance with the custodian agreement. For the period July 17, 1996 to April
30, 1997, the amount charged to the Portfolio by the Bank aggregated $1,173,
all of which is unpaid at April 30, 1997.
E. DISTRIBUTION SERVICES: UAM Fund Distributors, Inc. (the "Distributor"), a
wholly-owned subsidiary of UAM, distributes the shares of the Portfolio. The
Distributor does not receive any fee or other compensation with respect to the
Portfolio.
F. ACCOUNT SERVICES: Effective February 28, 1997, the UAM Funds entered into
an Account Services Agreement (the "Services Agreement") with UAM Retirement
Plan Services, Inc. ("Service Provider"), a wholly-owned subsidiary of UAM.
Under the Services Agreement, the Service Provider agrees to perform certain
services for participants in a self-directed, defined contribution plan, and
for whom the Service Provider provides participant recordkeeping. Pursuant to
the Services Agreement, the Service Provider is entitled to receive, after the
end of each month, a fee at the annual rate of 0.15% of the average aggregate
daily net asset value of shares of the UAM Funds in the accounts for which
they provide services.
14
<PAGE>
IRC ENHANCED INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
G. TRUSTEES' FEES: Each Trustee, who is not an officer or affiliated person,
receives $2,000 per meeting attended, 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, and reimbursement of expenses incurred in
attending Trustee meetings.
H. PURCHASES AND SALES: For the year ended April 30, 1997, the Portfolio made
purchases of $6,133,981 and sales of $5,484,269 of investment securities 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
participate 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 1/8th of 1% per annum, payable at the end of
each calendar quarter, is accrued by each participating Portfolio based on its
average daily unused portion of the line of credit. During the year ended
April 30, 1997, the Portfolio had no borrowings under the agreement.
J. OTHER: At April 30, 1997, 73.5% of total shares outstanding were held by 3
record shareholders owning more than 10% of the aggregate total shares
outstanding.
15
<PAGE>
PART B
UAM FUNDS
JACOBS INTERNATIONAL OCTAGON PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION -- JULY 10, 1997
This Statement of Additional Information ("SAI") is not a Prospectus but
should be read in conjunction with the Prospectus of the UAM Funds Trust (the
"UAM Funds" or the "Fund") for the Jacobs International Octagon Portfolio
Institutional Class Shares dated July 10, 1997. To obtain the Prospectus, please
call the UAM Funds Service Center at 1-800-638-7983.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES............................ 2
PURCHASE AND REDEMPTION OF SHARES............................ 4
SHAREHOLDER SERVICES......................................... 5
INVESTMENT LIMITATIONS....................................... 6
MANAGEMENT OF THE FUND....................................... 7
INVESTMENT ADVISER........................................... 9
PORTFOLIO TRANSACTIONS....................................... 9
ADMINISTRATIVE SERVICES...................................... 10
PERFORMANCE CALCULATIONS..................................... 10
GENERAL INFORMATION.......................................... 11
APPENDIX A - COMPARISON PUBLICATIONS, INDICES, AND AVERAGES.. A-1
</TABLE>
FINANCIAL STATEMENTS
INVESTMENT ADVISER
Jacobs Asset Management
DISTRIBUTOR
UAM Funds Distributors, Inc. (Distributor)
ADMINISTRATOR AND TRANSFER AGENT
UAM Funds Services, Inc. (FSI)
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the investment objective and policies of
the Jacobs International Octagon Portfolio (the "Portfolio") as set forth in the
Portfolio's Prospectus:
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified brokers,
dealers, domestic and foreign banks or other financial institutions, so long as
the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940, as amended, (the "1940
Act") or the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "SEC") thereunder, which currently require that (a) the
borrower pledge and maintain with the Portfolio collateral consisting of cash,
an irrevocable letter of credit issued by a domestic U.S. bank or securities
issued or guaranteed by the United States Government having a value at all times
not less than 100% of the value of the securities loaned, (b) the borrower add
to such collateral whenever the price of the securities loaned rises (i.e., the
borrower "marks to the market" on a daily basis), (c) the loan be made subject
to termination by the Portfolio at any time, and (d) the Portfolio receives
reasonable interest on the loan (which may include the Portfolio investing any
cash collateral in interest bearing short-term investments). As with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the securities loaned if the borrower of the securities fails
financially. These risks are similar to the ones involved with repurchase
agreements as in the Prospectus.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The U.S. dollar value of the assets of the Portfolio may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Portfolio may incur costs in connection
with conversions between various currencies. The Portfolio will conduct its
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
entering into forward contracts to purchase or sell foreign currencies. A
forward foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for such trades.
The Portfolio may enter into forward currency exchange contracts in several
circumstances. When the Portfolio enters into a contract for the purchase or
sale of a security denominated in a foreign currency, or when the Portfolio
anticipates the receipt in a foreign currency of dividends or interest payments
on a security which it holds, the Portfolio may desire to "lock-in" the U.S.
dollar price of the security or the U.S. dollar equivalent of such dividend or
interest payment, as the case may be. By entering into a forward contract for a
fixed amount of dollars for the purchase or sale of the amount of foreign
currency involved in the underlying transactions, the Portfolio will be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the subject foreign currency during the
period between the date on which the security is purchased or sold, or on which
the dividend or interest payment is declared, and the date on which such
payments are made or received.
Additionally, when the Portfolio anticipates that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract for a fixed amount of dollars, to
sell the amount of foreign currency approximating the value of some or all of
the Portfolio's securities denominated in such foreign currency. The precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible since the future value of securities in
foreign currencies will change as a
2
<PAGE>
consequence of market movements in the value of these securities between the
date on which the forward contract is entered into and the date it matures. The
projection of short-term currency market movement is extremely difficult, and
the successful execution of a short-term hedging strategy is highly uncertain.
From time to time, the Portfolio may enter into forward contracts to protect the
value of portfolio securities and enhance Portfolio performance. The Portfolio
will not enter into such forward contracts or maintain a net exposure to such
contracts where the consummation of the contracts would obligate the Portfolio
to deliver an amount of foreign currency in excess of the value of the Portfolio
securities or other assets denominated in that currency.
Under normal circumstances, consideration of the prospect for currency
parities will be incorporated into the long-term investment decisions made with
regard to overall diversification strategies. However, the Adviser believes that
it is important to have the flexibility to enter into such forward contracts
when it determines that the best interests of the performance of the Portfolio
will thereby be served. Except when the Portfolio enters into a forward contract
for the purchase or sale of a security denominated in a foreign currency, which
requires no segregation, a forward contract which obligates the Portfolio to buy
or sell currency will generally require the Fund's Custodian to hold an amount
of that currency or liquid securities denominated in that currency equal to the
Portfolio's obligations, or to segregate liquid assets equal to the amount of
the Portfolio's obligation. If the value of the segregated assets declines,
additional liquid assets will be segregated on a daily basis so that the value
of the segregated assets will be equal to the amount of the Portfolio's
commitments with respect to such contracts.
If the Portfolio retains the portfolio security and engages in an
offsetting transaction, the Portfolio will incur a gain or loss (as described
below) to the extent that there has been movement in forward contract prices.
Should forward prices decline during the period between the Portfolio entering
into a forward contract for the sale of a foreign currency and the date it
enters into an offsetting contract for the purchase of the foreign currency, the
Portfolio will realize a gain to the extent that the price of the currency it
has agreed to sell exceeds the price of the currency it has agreed to purchase.
Should forward prices increase, the Portfolio would suffer a loss to the extent
that the price of the currency it has agreed to purchase exceeds the price of
the currency it has agreed to sell.
The Portfolio's dealings in forward foreign currency exchange contracts
will be limited to the transactions described above. Of course, the Portfolio is
not required to enter into such transactions with regard to their foreign
currency-denominated securities. It also should be realized that this method of
protecting the value of portfolio securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of the
securities. It simply establishes a rate of exchange which one can achieve at
some future point in time. Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time, they tend to limit any potential gain which might result
should the value of such currency increase.
RISKS OF FORWARD CONTRACTS
Forward contracts are not traded on contract markets regulated by the CFTC
or by the SEC. To the contrary, such instruments are traded through financial
institutions acting as market-makers. Moreover, a trader of forward contracts
could lose amounts substantially in excess of their initial investments, due to
the margin and collateral requirements associated with such positions.
In addition, forward contracts may be traded on foreign exchanges. Such
transactions are subject to the risk of governmental actions affecting trading
in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by (i) other complex foreign
political and economic factors, (ii) lesser availability than in the United
States of data on which to make trading decisions, (iii) delays in a Portfolio's
ability to act upon economic events occurring in foreign markets during
nonbusiness hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) lesser trading volume.
3
<PAGE>
FEDERAL TAX TREATMENT OF FORWARD CURRENCY CONTRACTS
The Portfolio is required for Federal income tax purposes to recognize as
income for each taxable year its net unrealized gains and losses on forward
currency contracts as of the end of each taxable year as well as those actually
realized during the year. Realized gain or loss attributable to a foreign
currency forward contract is treated as 100% ordinary income.
In order for the Portfolio to continue to qualify for Federal income tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), at least 90% of the Portfolio's gross income for
a taxable year must be derived from certain qualifying income, i.e., dividends,
interest, income derived from loans of securities and gains from the sale or
other disposition of stock, securities or foreign currencies, or other related
income, including gains from forward contracts, derived with respect to its
business investing in stock, securities or currencies. Qualification as a
regulated investment company also requires that less than 30% of the Portfolio's
gross income be derived from the sale or other disposition of stock, securities,
or forward contracts (including certain foreign currencies not directly related
to the Fund's business of investing in stock or securities) held less than three
months.
The Portfolio will distribute to shareholders annually any net capital
gains which have been recognized for Federal income tax purposes. Shareholders
will be advised of the nature of the payment.
DEPOSITARY RECEIPTS
ADRs are depositary receipts typically used by a U.S. bank or trust company
which evidence ownership of underlying securities issued by a foreign
corporation. EDRs and GDRs are typically issued by foreign banks or trust
companies, although they also may be issued by U.S. banks or trust companies,
and evidence ownership of underlying securities issued by either a foreign or a
United States corporation. Generally, depositary receipts in registered form are
designed for use in the U.S. securities market and depositary receipts in bearer
form are designed for use in securities markets outside the United States.
Depositary receipts may not necessarily be denominated in the same currency as
the underlying securities into which they may be converted. Depositary receipts
may be issued pursuant to sponsored or unsponsored programs. In sponsored
programs, an issuer has made arrangements to have its securities traded in the
form of depositary receipts. In unsponsored programs, the issuer may not be
directly involved in the creation of the program. Although regulatory
requirements with respect to sponsored and unsponsored programs are generally
similar, in some cases it may be easier to obtain financial information from an
issuer that has participated in the creation of a sponsored program.
Accordingly, there may be less information available regarding issuers of
securities underlying unsponsored programs and there may not be a correlation
between such information and the market value of the depositary receipts.
Depositary receipts also involve the risks of other investments in foreign
securities, as discussed in the Prospectus. For purposes of the Portfolio's
investment policies, the Portfolio's investments in depositary receipts will be
deemed to be investments in the underlying securities.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Portfolio may be purchased without sales commission at the
net asset value per share next determined after an order is received in proper
form by the Fund, and payment is received by the Fund's custodian. An order
received in proper form prior to the 4:00 p.m. close of the New York Stock
Exchange (the "Exchange") will be executed at the price computed on the date of
receipt; and an order received not in proper form or after the 4:00 p.m. close
of the Exchange will be executed at the price computed on the next day the
Exchange is open after proper receipt. The Exchange will be closed on the
following days: New Year's Day, Martin Luther King, Jr.'s Birthday, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Thanksgiving Day and Christmas
Day.
4
<PAGE>
The Portfolio reserves the right in its sole discretion (1) to suspend the
offering of its shares, (2) to reject purchase orders when in the judgment of
management such rejection is in the best interests of the Fund, and (3) to
reduce or waive the minimum for initial and subsequent investment for certain
fiduciary accounts such as employee benefit plans or under circumstances where
certain economies can be achieved in sales of the Portfolio's shares.
The Portfolio may suspend redemption privileges or postpone the date of
payment (1) during any period that both the Exchange and custodian bank are
closed or trading on the Exchange is restricted as determined by the SEC, (2)
during any period when an emergency exists as defined by the rules of the SEC as
a result of which it is not reasonably practicable for the Portfolio to dispose
of securities owned by it or to fairly determine the value of its assets, and
(3) for such other periods as the SEC may permit. The Fund has made an election
with the SEC to pay in cash all redemptions requested by any shareholder of
record limited in amount during any 90-day period to the lesser of $250,000 or
1% of the net assets of the Fund at the beginning of such period. Such
commitment is irrevocable without the prior approval of the SEC. Redemptions in
excess of the above limits may be paid, in whole or in part, in investment
securities or in cash as the Board of Trustees may deem advisable; however,
payment will be made wholly in cash unless the Board of Trustees believes that
economic or market conditions exist which would make such a practice detrimental
to the best interests of the Fund. If redemptions are paid in investment
securities, such securities will be valued as set forth in the Prospectus under
"VALUATION OF SHARES," and a redeeming shareholder would normally incur
brokerage expenses if those securities were converted to cash.
No charge is made by the Portfolio for redemptions. Any redemption may be
more or less than the shareholder's initial cost depending on the market value
of the securities held by the Portfolio.
SIGNATURE GUARANTEES
To protect your account, the Fund and Chase Global Funds Services Company
("CGFSC") from fraud, signature guarantees are required for certain redemptions.
Signature guarantees are required for (1) redemptions where the proceeds are to
be sent to someone other than the registered shareowner(s) or the registered
address or (2) share transfer requests.
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, and as
further described in the Portfolio's Prospectus. The signature guarantee must
appear either: (1) on the written request for redemption; (2) on a separate
instrument for assignment ("stock power") which should specify the total number
of shares to be redeemed; or (3) on all stock certificates tendered for
redemption and, if shares held by the Fund are also being redeemed, on the
letter or stock power.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for
Institutional Class Shares of any UAM Funds or UAM Funds, Inc. Portfolio.
Exchange requests should be made by calling the Fund (1-800-638-7983) or by
writing to UAM Funds, UAM Funds Service Center, c/o Chase Global Funds Services
Company, P.O. Box 2798, Boston, MA 02208-2798. The exchange privilege is only
available with respect to Portfolios that are qualified for sale in the
shareholder's state of residence.
Any such exchange will be based on the respective net asset values of the
shares involved. There is no sales commission or charge of any kind. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objective of the Portfolio to be purchased. You may
obtain a Prospectus for the Portfolio(s) you are interested in by calling the
UAM Funds Service Center at 1-800-638-7983.
5
<PAGE>
Neither the Fund nor the Sub-Administrator will be responsible for the
authenticity of the exchange instructions received by telephone. Exchanges may
also be subject to limitations as to amounts or frequency, and to other
restrictions established by the Board of Trustees to assure that such exchanges
do not disadvantage the Fund and its shareholders.
For Federal income tax purposes an exchange between Funds is a taxable
event, and, accordingly, a capital gain or loss may be realized. In a revenue
ruling relating to circumstances similar to the Fund's, an exchange between
series of a Fund was also deemed to be a taxable event. It is likely, therefore,
that a capital gain or loss would be realized on an exchange between Portfolios;
you may want to consult your tax adviser for further information in this regard.
The exchange privilege may be modified or terminated at any time.
TRANSFER OF SHARES
Shareholders may transfer shares of the Portfolio to another person by
making a written request to the Fund. The request should clearly identify the
account and number of shares to be transferred, and include the signature of all
registered owners and all stock certificates, if any, which are subject to the
transfer. The signature on the letter of request, the stock certificate or any
stock power must be guaranteed in the same manner as described under "PURCHASE
AND REDEMPTION OF SHARES." As in the case of redemptions, the written request
must be received in good order before any transfer can be made.
INVESTMENT LIMITATIONS
The following limitations supplement those set forth in the Prospectus.
Whenever an investment limitation sets forth a percentage limitation on
investment or utilization of assets, such limitation shall be determined
immediately after and as a result of the Portfolio's acquisition of such
security or other asset. Accordingly, any later increase or decrease resulting
from a change in values, net assets or other circumstances will not be
considered when determining whether the investment complies with the Portfolio's
investment limitations. Investment limitations (1), (2), (3), and (4) are
classified as fundamental. The Portfolio's fundamental investment limitations
cannot be changed without approval by a "majority of the outstanding shares" (as
defined in the 1940 Act) of the Portfolio. The Portfolio will not:
(1) invest in physical commodities or contracts on physical commodities;
(2) purchase or sell real estate limited partnerships, although it may
purchase and sell securities of companies which deal in real estate
and may purchase and sell securities which are secured by interests in
real estate;
(3) make loans except (i) by purchasing debt securities in accordance with
its investment objectives and (ii) by lending its portfolio securities
in banks, brokers, dealers and other financial institutions so long as
such loans are not inconsistent with the 1940 Act or the rules and
regulations or interpretations of the SEC thereunder;
(4) underwrite the securities of other issuers;
(5) invest in futures and/or options on futures;
(6) purchase on margin or sell short;
(7) invest more than an aggregate of 15% of the net assets of the
Portfolio, determined at the time of investment, in securities subject
to legal or contractual restrictions on resale or securities for which
there are no readily available markets;
6
<PAGE>
(8) invest for the purpose of exercising control over management of any
company; and
(9) issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Portfolio from (i)
making any permitted borrowings, mortgages or pledges, or (ii)
entering into repurchase transactions.
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The Officers of the Fund manage its day-to-day operations and are
responsible to the Fund's Board of Trustees. The Trustees set broad policies for
the Fund and elect its Officers. The following is a list of the Trustees and
Officers of the Fund and a brief statement of their present positions, date of
birth, address and principal occupations during the past five years. Those
people who are "interested persons" of the Fund as that term is defined in the
1940 Act are indicated by an asterisk (*).
JOHN T. BENNETT, JR. (1/26/29), Trustee; College Road--RFD 3, Meredith, NH
03253; President of Squam Investment Management Company, Inc. and Great Island
Investment Company, Inc.; President of Bennett Management Company from 1988 to
1993.
NANCY J. DUNN (8/14/51), Trustee; 10 Garden Street, Cambridge, MA 02138; Vice
President for Finance and Administration and Treasurer of Radcliffe College
since 1991.
PHILIP D. ENGLISH (8/5/48), Trustee; 16 West Madison Street, Baltimore, MD
21201; President and Chief Executive Officer of Broventure Company, Inc.;
Chairman of the Board of Chektec Corporation and Cyber Scientific, Inc.
WILLIAM A. HUMENUK (4/21/42), Trustee; 4000 Bell Atlantic Tower, 1717 Arch
Street, Philadelphia, PA 19103; Partner in the Philadelphia office of the law
firm Dechert Price & Rhoads; Director, Hofler Corp.
NORTON H. REAMER* (3/21/35), Trustee; One International Place, Boston, MA 02110;
President and Chairman of the Fund; President, Chief Executive Officer and a
Director of United Asset Management Corporation; Director, Partner or Trustee of
each of the Investment Companies of the Eaton Vance Group of Mutual Funds.
CHARLES H. SALISBURY, JR.* (8/24/40), Trustee; One International Place, Boston,
MA 02110; Executive Vice President of United Asset Management Corporation;
formerly an executive officer and Director of T. Rowe Price and President and
Chief Investment Officer of T. Rowe Price Trust Company.
PETER M. WHITMAN, JR.* (7/1/43), Trustee; One Financial Center, Boston, MA
02111; President and Chief Investment Officer of Dewey Square Investors
Corporation ("DSI") since 1988; Director and Chief Executive Officer of H. T.
Investors, Inc., formerly a subsidiary of DSI.
WILLIAM H. PARK* (9/19/47), Vice President; One International Place, Boston, MA
02110; Executive Vice President and Chief Financial Officer of United Asset
Management Corporation.
GARY L. FRENCH* (7/4/51), Treasurer; 211 Congress Street, Boston, MA 02110;
President of UAM Fund Services, Inc. and UAM Fund Distributors, Inc.; formerly
Vice President of Operations, Development and Control of Fidelity Investment in
1995; Treasurer of the Fidelity Group of Mutual Funds from 1991 to 1995.
MICHAEL E. DEFAO* (2/28/68), Secretary; 211 Congress Street, Boston, MA 02110;
Vice President and General Counsel of UAM Fund Services, Inc. and UAM Fund
Distributors, Inc.; Associate Attorney of Ropes & Gray (a law firm) from 1993 to
1995.
ROBERT R. FLAHERTY* (9/18/63), Assistant Treasurer; 211 Congress Street, Boston,
MA 02110; Vice President of UAM Fund Services, Inc.; formerly Manager of Fund
Administration and Compliance of Chase Global Fund Services Company from 1995 to
1996; Deloitte & Touche LLP from 1985 to 1995, Senior Manager.
KARL O. HARTMANN* (3/7/55), Assistant Secretary; 73 Tremont Street, Boston, MA
02108; Senior Vice President and General Counsel of Chase Global Funds Services
Company.
7
<PAGE>
GORDON M. SHONE* (7/30/56), Assistant Treasurer; 73 Tremont Street, Boston, MA
02108; Vice President of Fund Administration and Compliance of Chase Global
Funds Services Company; formerly Senior Audit Manager of Coopers & Lybrand LLP
(1983-1996).
REMUNERATION OF TRUSTEES AND OFFICERS
The Fund pays each Trustee, who is not also an officer or affiliated
person, a $150 quarterly retainer fee per active Portfolio which currently
amounts to $1,050 per quarter. In addition, each unaffiliated Trustee receives a
$2,000 meeting fee which is aggregated for all the Trustees and allocated
proportionately among the Portfolios of the Fund and UAM Funds, Inc. and
reimbursement for travel and other expenses incurred while attending Board
meetings. Trustees who are also officers or affiliated persons receive no
remuneration for their service as Trustees. The Fund's officers and employees
are paid by either the Adviser, United Asset Management Corporation ("UAM"), FSI
or CGFSC and receive no compensation from the Fund. As of June 30, 1997, the
Trustees and Officers of the Fund owned less than 1% of the Fund's outstanding
shares.
The following table shows aggregate compensation to be paid to each of the
Fund's unaffiliated Trustees by the Fund and total compensation paid by the
Fund, UAM Funds, Inc. (collectively the "Fund Complex") in the fiscal year ended
April 30, 1997.
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
PENSION OR
RETIREMENT TOTAL COMPENSATION
AGGREGATE BENEFITS ESTIMATED ANNUAL FROM REGISTRANT AND
NAME OF PERSON, COMPENSATION ACCRUED AS PART OF BENEFITS UPON FUND COMPLEX
POSITION FROM REGISTRANT FUND EXPENSES RETIREMENT PAID TO TRUSTEES
- -------------------- ----------------------- ------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
John T. Bennett, Jr.
Trustee............. $4,874 0 0 $31,700
J. Edward Day
Former Trustee...... $2,168 0 0 $15,550
Philip D. English
Trustee............. $4,874 0 0 $31,700
William A. Humenuk
Trustee............. $4,874 0 0 $31,700
Nancy J. Dunn
Trustee............. $ 0 0 0 $ 0
</TABLE>
PRINCIPAL HOLDERS OF SECURITIES
As of June 16, 1997, the following persons or organizations held of
record or beneficially 5% or more of the shares of the Portfolio:
Jacobs International Octagon Portfolio Institutional Class Shares:
Michigan State University Foundation, 4700 S. Hagadorn Rd., Suite 220, E.
Lansing, MI, 30.2%*; Chembaco, FBO H. H. & Grace A. Dow Foundation, c/o Chemical
Bank & Trust, 333 E. Bank St., Midland, MI, 16.6%*; Charles Schwab & Co., Inc.,
FBO Reinvest Account, Attn: Mutual Funds, 101 Montgomery St., San Francisco, CA,
15.1%*; and Miami University Foundation, 202 Roudebush Hall, Oxford OH, 6.5%*.
The person(s) or organization(s) listed above as owning 25% or more of
the outstanding shares of the Portfolio may be presumed to "control" (as that
term is defined in the 1940 Act) such Portfolio. As a result, those persons or
organizations could have the ability to vote a majority of the shares of the
Portfolio on any matter requiring the approval of shareholders of such
Portfolio.
_______
* Denotes shares held by a trustee or other fiduciary for which beneficial
ownership is disclaimed or presumed disclaimed.
8
<PAGE>
INVESTMENT ADVISER
CONTROL OF ADVISER
The Adviser is a Florida limited partnership organized in July 1995.
UAM is a limited partner of the Adviser and owns a controlling interest in the
Adviser. UAM is a holding company incorporated in Delaware in December 1980 for
the purpose of acquiring and owning firms engaged primarily in institutional
investment management. Since its first acquisition in August 1983, UAM has
acquired or organized over 45 wholly-owned affiliated firms (the "UAM Affiliated
Firms"). UAM believes that permitting UAM Affiliated Firms to retain control
over their investment advisory decisions is necessary to allow them to continue
to provide investment management services that are intended to meet the
particular needs of their respective clients.
Accordingly, after acquisition by UAM, UAM Affiliated Firms continue
to operate under their own firm name, with their own leadership and individual
investment philosophy and approach. Each UAM Affiliated Firm manages its own
business independently on a day-to-day basis. Investment strategies employed and
securities selected by UAM Affiliated Firms are separately chosen by each of
them. Several UAM Affiliated Firms also act as investment advisers to separate
series or Portfolios of UAM Funds, Inc. a registered investment company.
ADVISORY FEES
As compensation for services rendered by the Adviser under the
Investment Advisory Agreement, the Portfolio pays the Adviser an annual fee in
monthly installments, calculated by applying the following annual percentage
rates to the Portfolio's average daily net assets for the month:
<TABLE>
<S> <C>
Jacobs International Octagon Portfolio........... 1.00%
</TABLE>
For the period from January 2, 1997 (commencement of operations) to April
30, 1997, Jacobs International Octagon Portfolio paid advisory fees of $35,743.
During this period, the Adviser voluntarily waived advisory fees of $23,838.
Until further notice, the Adviser has agreed voluntarily to waive all or a
portion of its advisory fees and to assume operating expenses otherwise payable
by the Portfolio, if necessary, to keep the Portfolio's total annual operating
expenses from exceeding 1.75% of average daily net assets.
PORTFOLIO TRANSACTIONS
The Investment Advisory Agreement authorizes the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolio and directs the Adviser to use its best efforts to
obtain the best execution with respect to all transactions for the Portfolio.
The Adviser may, however, consistent with the interests of the Portfolio, select
brokers on the basis of the research, statistical and pricing services they
provide to the Portfolio. Information and research received from such brokers
will be in addition to, and not in lieu of, the services required to be
performed by the Adviser under the Investment Advisory Agreement. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided that such
commissions are paid in compliance with the Securities Exchange Act of 1934, as
amended, and that the Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Adviser to the Portfolio and the Adviser's other clients.
It is not the Fund's practice to allocate brokerage or effect principal
transactions with dealers on the basis of sales of shares which may be made
through broker-dealer firms. However, the Adviser may place portfolio orders
with qualified broker-dealers who refer clients to the Adviser. During the
period from inception on January 2, 1997 to April 30, 1997, the Portfolio paid
aggregate brokerage commissions of $74,683.
Some securities considered for investment by the Portfolio may also be
appropriate for other clients served by the Adviser. If purchases or sales of
securities consistent with the investment policies of the Portfolio and one
9
<PAGE>
or more of these other clients served by the Adviser is considered at or about
the same time, transactions in such securities will be allocated among the
Portfolio and clients in a manner deemed fair and reasonable by the Adviser.
Although there is no specified formula for allocating such transactions, the
various allocation methods used by the Adviser, and the results of such
allocations, are subject to periodic review by the Fund's Board of Trustees.
ADMINISTRATIVE SERVICES
As stated in the Prospectus, the Board of Trustees of the Fund approved a
new Fund Administration Agreement between FSI, a wholly-owned subsidiary of UAM,
and the Fund. The Fund's Trustees also approved a Mutual Fund Services Agreement
between FSI and CGFSC. The services provided by FSI and CGFSC and the basis of
the fees payable by the Fund under the Fund Administration Agreement are
described in the Portfolio Prospectus. Prior to April 15, 1996, FSI, or its
predecessor Mutual Funds Services Company, provided certain administrative
services to the Fund under an Administration Agreement between the Fund and U.S.
Trust Company of New York. For the period January 2, 1997 (date of commencement)
to April 30, 1997, administrative service fees paid to CGFSC by the Jacobs
International Octagon Portfolio totaled $11,212. FSI earned $2,339 from the
Jacobs International Octagon Portfolio as Administrator.
PERFORMANCE CALCULATIONS
PERFORMANCE
The Portfolio may from time to time quote various performance figures to
illustrate past performance. Performance quotations by investment companies are
subject to rules adopted by the SEC, which require the use of standardized
performance quotations or, alternatively, that every non-standardized
performance quotation furnished by the Fund be accompanied by certain
standardized performance information computed as required by the SEC. Average
annual compounded total return quotations used by the Fund are based on the
standardized methods of computing performance mandated by the SEC. An
explanation of the method used to compute or express performance follows.
YIELD
Current yield reflects the income per share earned by a Portfolio's
investment. The current yield of a Portfolio is determined by dividing the net
investment income per share earned during a 30-day base period by the maximum
offering price per share on the last day of the period and annualizing the
result. Expenses accrued for the period include any fees charged to all
shareholders during the base period. Since Service Class Shares of a Portfolio
bear additional service and distribution expenses, the yield of the Service
Class Shares of a Portfolio will generally be lower than that of the
Institutional Class Shares of the same Portfolio.
A yield figure is obtained using the following formula:
<TABLE>
<CAPTION>
Yield = 2[(a - b + 1)/6/ - 1]
-----
cd
<S> <C>
where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period
that were entitled to receive income distributions
d = the maximum offering price per share on the last day of the period.
</TABLE>
10
<PAGE>
TOTAL RETURN
The average annual total return of the Portfolio is determined by finding
the average annual compounded rates of return over 1, 5 and 10 year periods that
would equate an initial hypothetical $1,000 investment to its ending redeemable
value. The calculation assumes that all dividends and distributions are
reinvested when paid. The quotation assumes the amount was completely redeemed
at the end of each 1, 5 and 10 year period and the deduction of all applicable
Fund expenses on an annual basis.
The total return for the Jacobs International Octagon Portfolio from
inception on January 2, 1997 to April 30, 1997 is 1.70%.
These figures are calculated according to the following formula:
<TABLE>
<CAPTION>
P(1 + T)/n/ = ERV
<S> <C>
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5 or 10 year periods at the
end of the 1, 5 or 10 year periods (of fractional portion
thereof).
</TABLE>
COMPARISONS
To help investors better evaluate how an investment in the Portfolio might
satisfy their investment objective, advertisements regarding the Fund may
discuss various measures of Fund performance as reported by various financial
publications. Advertisements may also compare performance (as calculated above)
to performance as reported by other investments, indices and averages. Please
see Appendix A for publications, indices and averages which may be used.
In assessing such comparisons of performance, an investor should keep in mind
that the composition of the investments in the reported indices and averages is
not identical to the composition of investments in the Portfolio, that the
averages are generally unmanaged, and that the items included in the
calculations of such averages may not be identical to the formula used by the
Portfolio to calculate its performance. In addition, there can be no assurance
that the Portfolio will continue this performance as compared to such other
averages.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized under the name "The Regis Fund II" as a Delaware
business trust on May 18, 1994. On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's principal executive office is located
at One International Place, 44th Floor, Boston, MA 02110; however all investor
correspondence should be directed to the Fund at UAM Funds Service Center, c/o
Chase Global Funds Services Company, P.O. Box 2798, Boston, MA 02208-2798. The
Fund's Agreement and Declaration of Trust permits the Fund to issue an unlimited
number of shares of beneficial interest, without par value. The Trustees have
the power to designate one or more series ("Portfolios") or classes of shares of
beneficial interest without further action by shareholders.
On each matter submitted to a vote of the shareholders, each holder of a share
shall be entitled to one vote for each whole share and a fractional vote for
each fractional share standing in his or her name on the books of the Fund.
11
<PAGE>
In the event of liquidation of the Fund, the holders of the shares of each
Portfolio or any class thereof that has been established and designated shall be
entitled to receive, when and as declared by the Trustees, the excess of the
assets belonging to that Portfolio, or in the case of a class, belonging to that
Portfolio and allocable to that class, over the liabilities belonging to that
Portfolio or class. The assets so distributable to the holders of shares of any
particular Portfolio or class thereof shall be distributed to the holders in
proportion to the number of shares of that Portfolio or class thereof held by
them and recorded on the books of the Fund. The liquidation of any Portfolio or
class thereof may be authorized at any time by vote of a majority of the
Trustees then in office.
Shareholders of both Classes of the Fund's Portfolios have no pre-emptive or
other rights to subscribe to any additional shares or other securities issued by
the Fund or any Portfolio, except as the Trustees in their sole discretion shall
have determined by vote. Both Institutional Class and Service Class Shares
represent an interest in the same assets of a Portfolio and are identical in all
respects except that the Service Class 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.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund's policy is to distribute substantially all of the Portfolio's net
investment income, if any, together with any net realized capital gains annually
in the amount and at the times that will avoid both income (including capital
gains) taxes incurred and the imposition of the Federal excise tax on
undistributed income and capital gains. The amounts of any income dividends or
capital gains distributions cannot be predicted. See discussion under
"DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES" in the Prospectus.
Any dividend or distribution paid shortly after the purchase of shares of the
Portfolio by an investor may have the effect of reducing the per share net asset
value of the Portfolio by the per share amount of the dividend or distribution.
Furthermore, such dividends or distributions, although in effect a return of
capital, are subject to income taxes as set forth in the Prospectus.
As set forth in the Prospectus, unless the shareholder elects otherwise in
writing, all dividend and capital gains distributions are automatically received
in additional shares of the respective Portfolio of the Fund at net asset value
(as of the business day following the record date). This will remain in effect
until the Fund is notified by the shareholder in writing at least three days
prior to the record date that either the Income Option (income dividends in cash
and capital gains distributions in additional shares at net asset value) or the
Cash Option (both income dividends and capital gains distributions in cash) has
been elected. An account statement is sent to shareholders whenever an income
dividend or capital gains distribution is paid.
Each Portfolio of the Fund will be treated as a separate entity (and hence as
a separate "regulated investment company") for Federal tax purposes. Any net
capital gains recognized by the Portfolio will be distributed to its investors
without need to offset (for Federal income tax purposes) such gains against any
net capital losses of another Portfolio.
CODE OF ETHICS
The Fund has adopted a Code of Ethics which restricts to a certain extent
personal transactions by access persons of the Fund and imposes certain
disclosure and reporting obligations.
FEDERAL TAXES
In order for the Portfolio to continue to qualify for Federal income tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), at least 90% of the Portfolio's gross income for
a taxable year must be derived from certain qualifying income, i.e., dividends,
interest, income derived from loans of securities and gains from the sale or
other disposition of stock, securities or foreign currencies, or
12
<PAGE>
other related income, including gains from forward contracts, derived with
respect to its business investing in stock, securities or currencies.
Qualification as a regulated investment company also requires that less than 30%
of the Portfolio's gross income be derived from the sale or other disposition of
stock, securities, or forward contracts (including certain foreign currencies
not directly related to the Fund's business of investing in stock or securities)
held less than three months.
The Portfolio is required for Federal income tax purposes to recognize as
income for the taxable year its net unrealized gains and losses on forward
currency contracts as of the end of the taxable year as well as those actually
realized during the year. Recognized gain or loss attributable to a foreign
currency forward contract is treated as 100% ordinary income.
The Portfolio will distribute to shareholders annually any net capital gains
which have been recognized for Federal income tax purposes. Shareholders will be
advised on the character of the payment.
FINANCIAL STATEMENTS
The Financial Statements of the Jacobs International Octagon Portfolio
for the period from inception on January 2, 1997 to April 30, 1997 and the
Financial Highlights for the period presented, and the report thereon of Price
Waterhouse LLP, the Fund's independent accountant, which appear in the
Portfolio's 1997 Financial Statements are attached to this SAI.
13
<PAGE>
$$/NOFOLIO
APPENDIX A - COMPARISON PUBLICATIONS, INDICES, AND AVERAGES
With respect to the comparative measures of performance for equity
securities described herein, comparisons of performance assume
reinvestment of dividends, except as otherwise stated below.
(a) Dow Jones Composite Average or its component averages -- an unmanaged
index composed of 30 blue-chip industrial corporation stocks (Dow Jones
Industrial Average), 15 utilities company stocks and 20 transportation
stocks.
(b) Standard & Poor's 500 Stock Index or its component indices -- an unmanaged
index composed of 400 industrial stocks, 40 financial stocks, 40 utilities
stocks and 20 transportation stocks.
(c) Standard & Poor's 400 Mid Cap Index - consists of 400 domestic stocks
chosen for market size, liquidity, and industry group representation. It
is also a market-value weighted index and was the first benchmark of mid
cap stock price movement.
(d) The New York Stock Exchange composite or component indices -- unmanaged
indices of all industrial, utilities, transportation and finance stocks
listed on the New York Stock Exchange.
(e) Wilshire 5000 Equity Index or its component indices -- represents the
return on the market value of all common equity securities for which daily
pricing is available.
(f) Lipper -- Mutual Fund Performance Analysis and Lipper -- Fixed Income Fund
Performance Analysis -- measure total return and average current yield for
the mutual fund industry. Rank individual mutual fund performance over
specified time periods, assuming reinvestment of all distributions,
exclusive of any applicable sales charges.
(g) Lipper Capital Appreciation Funds Index - a fund that aims at maximum
capital appreciation, frequently by means of 100% or more portfolio
turnover, leveraging, purchasing unregistered securities, purchasing
options, etc. The fund may take large cash positions.
(h) Lipper Small Cap Funds Index- a fund that by prospectus or portfolio
practice invests primarily in companies with market capitalizations of
less than $1 billion at the time of purchase.
(i) Morgan Stanley Capital International EAFE Index and World Index --
respectively, arithmetic, market value-weighted averages of the
performance of over 900 securities listed on the stock exchanges of
countries in Europe, Australia and the Far East, and over 1,400 securities
listed on the stock exchanges of these continents, including North
America.
(j) Goldman Sachs 100 Convertible Bond Index -- currently includes 67 bonds
and 33 preferred. The original list of names was generated by screening
for convertible issues of 100 million or greater in market capitalization.
The index is priced monthly.
(k) Salomon Brothers GNMA Index -- includes pools of mortgages originated by
private lenders and guaranteed by the mortgage pools of the Government
National Mortgage Association.
(l) Salomon Brothers High Grade Corporate Bond Index -- consists of publicly
issued, non-convertible corporate bonds rated AA or AAA. It is a value-
weighted, total return index, including approximately 800 issues with
maturities of 12 years or greater.
A-1
<PAGE>
$$/NOFOLIO
(m) Salomon Brothers Broad Investment Grade Bond Index -- is a market-weighted
index that contains approximately 4,700 individually priced investment
grade corporate bonds rated BBB or better, U.S. Treasury/agency issues and
mortgage pass through securities.
(n) Lehman Brothers Long-Term Treasury Bond Index -- is composed of all bonds
covered by the Lehman Brothers Treasury Bond Index with maturities of 10
years or greater.
(o) Lehman Brothers Government/Corporate Index -- is a combination of the
Government and Corporate Bond Indices. The Government Index includes
public obligations of the U.S. Treasury, issues of Government agencies,
and corporate debt backed by the U.S. Government. The Corporate Bond Index
includes fixed-rate nonconvertible corporate debt. Also included are
Yankee Bonds and nonconvertible debt issued by or guaranteed by foreign or
international governments and agencies. All issues are investment grade
(BBB) or higher, with maturities of at least one year and an outstanding
par value of at least $100 million for U.S. Government issues and $25
million for others. Any security downgraded during the month is held in
the index until month-end and then removed. All returns are market value
weighted inclusive of accrued income.
(p) NASDAQ Industrial Index -- is composed of more than 3,000 industrial
issues. It is a value-weighted index calculated on price change only and
does not include income.
(q) Value Line -- composed of over 1,600 stocks in the Value Line Investment
Survey.
(r) Russell 2000 Index -- composed of the 2,000 smallest stocks in the Russell
3000, a market value-weighted index of the 3,000 largest U.S. publicly-
traded companies.
(s) Salomon Brothers 3 Month T-Bill Average - the average return for all
Treasury bills for the previous three month period.
(t) Composite Indices -- 60% Standard & Poor's 500 Stock Index, 30% Lehman
Brothers Long-Term Treasury Bond and 10% U.S. Treasury Bills; 70% Standard
& Poor's 500 Stock Index and 30% NASDAQ Industrial Index; 35% Standard &
Poor's 500 Stock Index and 65% Salomon Brothers High Grade Bond Index; all
stocks on the NASDAQ system exclusive of those traded on an exchange, and
65% Standard & Poor's 500 Stock Index and 35% Salomon Brothers High Grade
Bond Index.
(u) CDA Mutual Fund Report published by CDA Investment Technologies, Inc. --
analyzes price, current yield, risk, total return and average rate of
return (average compounded growth rate) over specified time periods for
the mutual fund industry.
(v) Mutual Fund Source Book published by Morningstar, Inc. -- analyzes price,
yield, risk and total return for equity funds.
(w) Financial publications: Business Week, Changing Times, Financial World,
Forbes, Fortune, Money, Barron's, Consumer's Digest, Financial Times,
Global Investor, Wall Street Journal and Weisenberger Investment Companies
Service -- publications that rate fund performance over specified time
periods.
(x) Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics -- a statistical measure of change over time in
the price of goods and services in major expenditure groups.
(y) Stocks, Bonds, Bills and Inflation, published by Ibbotson Associates --
historical measure of yield, price and total return for common and small
company stock, long-term government bonds, U.S. Treasury bills and
inflation.
A-2
<PAGE>
$$/NOFOLIO
(z) Savings and Loan Historical Interest Rates -- as published by the U.S.
Savings & Loan League Fact Book.
(aa) Historical data supplied by the research departments of First Boston
Corporation; the J.P. Morgan companies; Salomon Brothers; Merrill Lynch,
Pierce, Fenner & Smith; Lehman Brothers, Inc.; and Bloomberg L.P.
A-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
UAM Funds Trust and Shareholders of
Jacobs International Octagon Portfolio
In our opinion, the accompanying statement of assets and liabilities including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Jacobs International Octagon
Portfolio (the "Portfolio"), a Portfolio of UAM Funds Trust, at April 30,
1997, and the results of its operations, the changes in its net assets and the
financial highlights for the period January 2, 1997 (commencement of
operations) through April 30, 1997, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of
the Portfolio's management; our responsibility is to express an opinion on
these financial statements based on our audit. We conducted our audit of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit, which included confirmation of securities at April 30, 1997 by
correspondence with the custodian, provides a reasonable basis for the opinion
expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 9, 1997
- -------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED):
Foreign taxes during the fiscal year ended April 30, 1997 amounting to
approximately $25,000 are expected to be passed through to the shareholders as
foreign tax credits on Form 1099-DIV for the year ending December 31, 1997
which shareholders of this Portfolio will receive in late January, 1998.
For the fiscal year ended April 30, 1997, gross income derived from sources
within foreign countries amounted to approximately $307,000 for the Portfolio.
18
<PAGE>
JACOBS INTERNATIONAL OCTAGON PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS (84.6%)
- ----------------------------------------------------------------------------
ARGENTINA (3.6%)
Central Costanera S.A., Class B..................... 64,300 $ 225,084
S.A. Importadora y Exportadora de la Patagonia...... 44,160 552,083
Transportadora de Gas del Sur S.A. ADR.............. 13,800 172,500
YPF S.A. ADR........................................ 11,900 328,738
-----------
1,278,405
- ----------------------------------------------------------------------------
AUSTRALIA (1.8%)
News Corp., Ltd. ADR................................ 43,000 650,375
- ----------------------------------------------------------------------------
BRAZIL (6.2%)
*#Bompreco GDR....................................... 13,900 326,739
*CELESC ADR, Class B................................ 500 70,528
*CELESC GDR......................................... 600 86,880
*COELBA............................................. 1,480,000 117,604
Companhia Brasileira de Distribuicao Grupo Pao de
Acucar ADR......................................... 1,100 22,134
Companhia Siderurgica Nacional ADR.................. 4,800 169,201
Copel ADR........................................... 15,500 238,899
Electrobras ADR..................................... 12,100 272,481
Telebras............................................ 2,810,000 302,563
Telebras ADR........................................ 3,600 413,100
Unibanco............................................ 5,500,000 191,367
-----------
2,211,496
- ----------------------------------------------------------------------------
CHINA (3.1%)
*Beijing Datang Power Generation Co., Ltd. ......... 422,000 219,281
Guangdong Electric Power Development Co., Ltd. ..... 267,600 300,903
Shandong Huaneng Power Co., Ltd. ADR................ 51,900 603,338
-----------
1,123,522
- ----------------------------------------------------------------------------
DENMARK (0.7%)
Unidanmark A/S, Class A (Registered)................ 5,180 256,043
- ----------------------------------------------------------------------------
FINLAND (1.3%)
Enso Oy............................................. 54,600 451,430
- ----------------------------------------------------------------------------
</TABLE>
3
<PAGE>
JACOBS INTERNATIONAL OCTAGON PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- ----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
- ----------------------------------------------------------------------------
FRANCE (7.6%)
Assurances Generales de France...................... 15,795 $ 514,295
Cardif S.A.......................................... 4,397 550,360
Ile de France Pharmaceutique........................ 1,105 208,412
Lafarge S.A. ....................................... 3,200 210,034
Scor................................................ 8,605 336,398
Sommer-Allibert Industrie AG........................ 10,960 394,636
Sylea............................................... 6,060 518,490
-----------
2,732,625
- ----------------------------------------------------------------------------
GERMANY (1.6%)
Volkswagen AG....................................... 878 556,479
- ----------------------------------------------------------------------------
GREECE (1.0%)
Sarantis S.A........................................ 26,650 360,789
- ----------------------------------------------------------------------------
HONG KONG (8.5%)
Cheung Kong Holdings, Ltd........................... 59,000 517,945
China Light and Power Co., Ltd. .................... 104,500 470,830
Dah Sing Financial Group............................ 32,300 134,270
HKR International Ltd............................... 87,520 107,903
HSBC Holdings plc................................... 24,000 607,281
International Bank of Asia.......................... 705,100 400,521
*Tingyi Holding Co.................................. 2,074,000 506,050
Union Bank of Hong Kong Ltd......................... 215,000 312,258
-----------
3,057,058
- ----------------------------------------------------------------------------
INDIA (0.7%)
#*Videsh Sanchar Nigam Ltd. GDR..................... 13,600 268,532
- ----------------------------------------------------------------------------
INDONESIA (4.4%)
Bank Nisp (Foreign)................................. 1,206,600 521,585
Bimantara Citra (Foreign)........................... 368,000 499,959
Indosat ADR......................................... 14,800 407,000
PT Bank Tiara Asia (Foreign)........................ 132,500 160,920
-----------
1,589,464
- ----------------------------------------------------------------------------
IRELAND (0.6%)
Irish Life plc...................................... 44,380 218,970
- ----------------------------------------------------------------------------
</TABLE>
4
<PAGE>
JACOBS INTERNATIONAL OCTAGON PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- -----------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- -----------------------------------------------------------------------------
ISRAEL (1.7%)
ECI Telecommunications Ltd. ADR...................... 27,400 $ 599,375
- -----------------------------------------------------------------------------
ITALY (0.8%)
Fila Holding S.p.A. ADR.............................. 6,500 281,125
- -----------------------------------------------------------------------------
JAPAN (5.7%)
Laox................................................. 18,000 214,100
Marukyo.............................................. 21,000 210,083
Matsumotokiyoshi..................................... 9,500 295,589
Nintendo Corp., Ltd.................................. 600 43,860
Paris Miki, Inc...................................... 3,080 90,981
Sankyo Co., Ltd...................................... 23,000 615,990
Sony Corp............................................ 7,000 509,492
Sony Corp. ADR....................................... 700 51,362
-----------
2,031,457
- -----------------------------------------------------------------------------
MEXICO (6.6%)
ALFA, S.A. de C.V., Class A.......................... 34,400 188,849
*Banacci, Class B.................................... 167,900 359,816
Controladora Comercial Mexicana S.A. de C.V. GDR..... 11,900 181,475
*Empaques Ponderosa S.A., Class B.................... 822,800 514,897
Fomenta Economico Mexicano S.A. de C.V., Class B..... 79,000 373,017
*Grupo Elektra S.A. GDR.............................. 500 9,375
*Grupo Financiero Banorte S.A., Class B.............. 148,000 145,354
*Grupo Industrial Camesa S.A. ....................... 473,200 256,202
Hylsamex ADR......................................... 7,000 182,206
Sistema Argos S.A., Class B.......................... 128,200 155,932
-----------
2,367,123
- -----------------------------------------------------------------------------
NETHERLANDS (3.0%)
Akzo Noble N.V. ADR.................................. 9,100 589,225
Apothekers Cooperatie OPG............................ 6,700 194,995
Furgo N.V............................................ 13,030 296,957
-----------
1,081,177
- -----------------------------------------------------------------------------
</TABLE>
5
<PAGE>
JACOBS INTERNATIONAL OCTAGON PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- ----------------------------------------------------------------------------
NORWAY (4.1%)
Gresvig ASA......................................... 22,940 $ 362,429
Nycomed ASA, Class A................................ 19,230 294,363
*Nycomed ASA, Class B............................... 12,140 174,751
SAS Norske ASA, Class B............................. 35,645 360,420
*Storebrand ASA..................................... 47,000 289,101
-----------
1,481,064
- ----------------------------------------------------------------------------
PERU (1.3%)
Credicorp Ltd. ADR.................................. 12,610 264,802
Telefonica del Peru S.A. ADR........................ 7,000 168,000
Telefonica del Peru S.A., Class B................... 12,000 28,840
-----------
461,642
- ----------------------------------------------------------------------------
PHILIPPINES (1.4%)
*Bankard, Inc....................................... 1,233,000 248,004
Marsman & Company, Inc., Class B.................... 1,171,500 266,755
-----------
514,759
- ----------------------------------------------------------------------------
SINGAPORE (1.4%)
Jardine Matheson Holdings, Ltd...................... 60,000 330,000
Mandarin Oriental International Ltd................. 137,498 159,498
-----------
489,498
- ----------------------------------------------------------------------------
SPAIN (2.3%)
Banco de Valencia S.A............................... 33,410 617,645
Electricas Reunidas de Zaragoza, S.A................ 5,087 174,153
Gas y Electricidad, S.A............................. 500 24,649
-----------
816,447
- ----------------------------------------------------------------------------
SWEDEN (5.3%)
Althin Medical AB, Class B.......................... 15,195 248,971
Electrolux AB....................................... 9,896 567,829
Finnveden Invest AB, Class B........................ 8,300 147,109
*Frontec AB, Class B................................ 31,708 242,586
Investment AB Bure.................................. 35,100 443,086
Marieberg Tidnings, Class A Fria.................... 10,185 237,661
-----------
1,887,242
- ----------------------------------------------------------------------------
</TABLE>
6
<PAGE>
JACOBS INTERNATIONAL OCTAGON PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- ----------------------------------------------------------------------------
TAIWAN (0.6%)
*Macronix International Co., Ltd. ADR............... 10,400 $ 201,500
- ----------------------------------------------------------------------------
THAILAND (0.6%)
Dhipaya Insurance plc............................... 100,100 206,945
- ----------------------------------------------------------------------------
UNITED KINGDOM (8.7%)
British Telecommunications plc...................... 44,870 328,595
BTR plc............................................. 79,900 326,223
Glaxo Wellcome plc ADR.............................. 9,330 367,369
National Power plc.................................. 38,085 328,271
National Westminster Bank plc....................... 58,805 695,511
Somerfield plc...................................... 116,940 341,038
United Utilities plc................................ 68,295 748,002
-----------
3,135,009
- ----------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $30,387,326)............... 30,309,551
- ----------------------------------------------------------------------------
PREFERRED STOCKS (3.9%)
- ----------------------------------------------------------------------------
BRAZIL (3.9%)
Companhia Brasileira de Distribuicao Grupo Pao de
Acucar............................................. 800,000 16,174
Confeccoes Guararapes S.A........................... 112,200 517,002
Itausa Investimentos Itau S.A....................... 469,000 396,934
Telepar............................................. 531,130 364,609
Telerj.............................................. 350,000 58,256
Unibanco............................................ 1,510,000 55,791
- ----------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (COST $1,430,482)............. 1,408,766
- ----------------------------------------------------------------------------
</TABLE>
7
<PAGE>
JACOBS INTERNATIONAL OCTAGON PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
<S> <C> <C>
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENT (10.9%)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Chase Securities, Inc. 5.20%, dated 04/30/97, due
05/01/97, to be repurchased at $3,888,562,
collateralized by $3,910,260 of various U.S. Treasury
Notes, 4.75%-6.125%, due 08/31/98-10/31/98, valued at
$3,891,124 (COST $3,888,000).......................... $3,888,000 $ 3,888,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.4%) (COST $35,705,808) (a)........ 35,606,317
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (NET) (0.6%)............... 226,473
- -------------------------------------------------------------------------------
NET ASSETS (100%)....................................... $35,832,790
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
# 144A Security--Certain conditions for public resale may exist.
ADR American Depositary Receipt.
GDR Global Depositary Receipt.
(a) The cost for federal income tax purposes was $35,705,808. At April 30,
1997, net unrealized depreciation for all securities based on tax cost was
$99,491. This consisted of aggregate gross unrealized appreciation for all
securities of $1,412,907 and aggregate gross unrealized depreciation for
all securities of $1,512,398.
8
<PAGE>
JACOBS INTERNATIONAL OCTAGON PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
At April 30, 1997 sector diversification of the Portfolio was as follows:
<TABLE>
<CAPTION>
SECTOR DIVERSIFICATION (UNAUDITED) % OF NET ASSETS VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
Automotive........................................... 4.1% $ 1,469,606
Banks................................................ 11.8 4,217,995
Basic Resources...................................... 0.5 182,206
Beverages, Food & Tobacco............................ 1.5 528,949
Building Materials................................... 0.6 210,034
Computers............................................ 1.2 444,086
Construction......................................... 0.8 272,481
Consumer Durables.................................... 2.5 887,593
Consumer Non-Durables................................ 1.0 360,790
Environment Controls................................. 0.8 296,957
Financial Services................................... 3.3 1,196,259
Food................................................. 4.0 1,421,304
Industrial........................................... 0.7 256,202
Insurance............................................ 5.9 2,116,068
Iron and Steel....................................... 0.5 169,201
Lodging & Restaurants................................ 0.4 159,498
Manufacturing........................................ 0.1 43,860
Metals............................................... 0.4 147,109
Multi-Industry....................................... 5.1 1,831,231
Oil and Gas.......................................... 0.9 328,737
Paper & Packaging.................................... 2.7 966,328
Pharmaceuticals...................................... 6.9 2,462,588
Print and Publishing................................. 0.7 237,661
Real Estate.......................................... 1.7 625,848
Repurchase Agreement................................. 10.9 3,888,000
Retail............................................... 5.2 1,857,054
Technology........................................... 1.4 499,959
Telecommunications................................... 10.0 3,589,245
Textiles & Apparel................................... 2.2 798,127
Transportation....................................... 1.5 532,920
Utilities............................................ 10.1 3,608,421
- ---------------------------------------------------------------------------------
Total Investments.................................. 99.4% $35,606,317
Other Assets and Liabilities......................... 0.6 226,473
- ---------------------------------------------------------------------------------
Net Assets......................................... 100.0% $35,832,790
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
JACOB'S INTERNATIONAL OCTAGON PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997
<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments (including repurchase agreement), at Cost............ $35,705,808
===========
Investments, at Value............................................ $31,718,317
Repurchase Agreement, at Value................................... 3,888,000
Cash............................................................. 982
Dividends Receivable............................................. 199,173
Receivable for Portfolio Shares Sold............................. 73,432
Foreign Withholding Tax Reclaim Receivable....................... 16,549
Interest Receivable.............................................. 562
- -------------------------------------------------------------------------------
Total Assets.................................................... 35,897,015
- -------------------------------------------------------------------------------
LIABILITIES
Payable for Investment Advisory Fees--Note B..................... 9,190
Payable for Administrative Fees--Note C.......................... 5,205
Payable for Account Services Fees--Note F........................ 95
Payable for Trustees' Fees--Note G............................... 475
Other Liabilities................................................ 49,260
- -------------------------------------------------------------------------------
Total Liabilities............................................... 64,225
- -------------------------------------------------------------------------------
NET ASSETS........................................................ $35,832,790
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET ASSETS CONSISTS OF:
Paid in Capital.................................................. $35,760,026
Undistributed Net Investment Income.............................. 193,316
Accumulated Net Realized Loss.................................... (20,508)
Unrealized Depreciation.......................................... (100,044)
- -------------------------------------------------------------------------------
NET ASSETS........................................................ $35,832,790
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
Shares Issued and Outstanding (Unlimited authorization, no par
value).......................................................... 3,524,602
Net Asset Value, Offering and Redemption Price Per Share......... $ 10.17
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
JACOB'S INTERNATIONAL OCTAGON PORTFOLIO
STATEMENT OF OPERATIONS
For the Period January 2, 1997* to April 30, 1997
<TABLE>
- ---------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends.................................................. $ 306,387
Interest................................................... 40,870
Less Foreign Taxes Withheld................................ (24,065)
- ---------------------------------------------------------------------------------
Total Income.............................................. 323,192
- ---------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees--Note B
Basic Fees................................................ $ 59,581
Less: Fees Waived......................................... (23,838) 35,743
--------
Filing and Registration Fees............................... 14,117
Administrative Fees--Note C................................ 13,551
Custodian Fees--Note D..................................... 13,333
Audit Fees................................................. 12,000
Printing Fees.............................................. 11,321
Account Services Fees--Note F.............................. 95
Trustees' Fees--Note G..................................... 950
Other Expenses............................................. 3,312
- ---------------------------------------------------------------------------------
Total Expenses............................................ 104,422
Expense Offset--Note A..................................... --
- ---------------------------------------------------------------------------------
Net Expenses.............................................. 104,422
- ---------------------------------------------------------------------------------
NET INVESTMENT INCOME....................................... 218,770
- ---------------------------------------------------------------------------------
NET REALIZED LOSS:
Investments............................................... (20,509)
Foreign Currency Transactions............................. (25,453)
- ---------------------------------------------------------------------------------
TOTAL NET REALIZED LOSS ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS............................................... (45,962)
- ---------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON:
Investments............................................... (99,491)
Foreign Currency Translations............................. (553)
- ---------------------------------------------------------------------------------
TOTAL NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION.... (100,044)
- ---------------------------------------------------------------------------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY................ (146,006)
- ---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 72,764
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
JACOB'S INTERNATIONAL OCTAGON PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
JANUARY 2,
1997* TO
APRIL 30, 1997
- --------------------------------------------------------------------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income........................................... $ 218,770
Net Realized Loss............................................... (45,962)
Net Change in Unrealized Appreciation/Depreciation.............. (100,044)
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations........... 72,764
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued--Regular................................................. 35,936,680
Redeemed........................................................ (176,654)
- --------------------------------------------------------------------------------
Net Increase from Capital Share Transactions................... 35,760,026
- --------------------------------------------------------------------------------
Total Increase.................................................. 35,832,790
Net Assets:
Beginning of Period............................................. --
- --------------------------------------------------------------------------------
End of Period (including undistributed net investment income of
$193,316)...................................................... $35,832,790
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1)Shares Issued and Redeemed:
Shares Issued.................................................. 3,542,188
Shares Redeemed................................................ (17,586)
- --------------------------------------------------------------------------------
3,524,602
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
JACOB'S INTERNATIONAL OCTAGON PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
JANUARY 2,
1997* TO
APRIL 30, 1997
- -------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 10.00
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.......................................... 0.06
Net Realized and Unrealized Gain on Investments................ 0.11++
- -------------------------------------------------------------------------------
Total from Investment Operations.............................. 0.17
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.................................. $ 10.17
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL RETURN+................................................... 1.70%***
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)........................... $35,833
Ratio of Expenses to Average Net Assets......................... 1.75%**
Ratio of Net Investment Income to Average Net Assets............ 3.67%**
Portfolio Turnover Rate......................................... 7%
Average Commission Rate......................................... $0.0037
- -------------------------------------------------------------------------------
Voluntarily Waived Fees and Expenses Assumed by the Adviser Per
Share.......................................................... $ 0.01
Ratio of Expenses to Average Net Assets Including Expense Off-
sets........................................................... 1.75%**
- -------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
** Annualized
*** Not Annualized
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser.
++ The amount shown for a share outstanding throughout the period does not
accord with the aggregate net loss on investments for that period because
of the timing of sales and repurchases of the Portfolio shares in relation
to fluctuating market value of the investments of the Portfolio.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
JACOBS INTERNATIONAL OCTAGON PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
UAM Funds Trust and UAM Funds, Inc. (collectively the "UAM Funds") are
registered under the Investment Company Act of 1940, as amended. The Jacobs
International Octagon Portfolio (the "Portfolio"), a portfolio of UAM Funds
Trust, is a diversified, open-end management investment company. At April 30,
1997, the UAM Funds were comprised of forty-two active portfolios. The
financial statements of the remaining portfolios are presented separately. The
objective of the Jacobs International Octagon Portfolio is to provide long-
term capital appreciation by investing in equity securities of companies in
developed and emerging markets.
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: Securities listed on a securities exchange for which
market quotations are readily available are valued at the last quoted sales
price as of the close of the exchange on the day the valuation is made or,
if no sale occurred on such day, at the bid price on such day. Price
information on listed securities is taken from the exchange where the
security is primarily traded. Over-the-counter and unlisted securities are
valued at the current bid price. Quotations of foreign securities and other
assets in a foreign currency are converted to U.S. dollar equivalents. The
converted value is based upon the bid price of the foreign currency against
U.S. dollars quoted by any major bank or by a broker. Short-term
investments that have remaining maturities of sixty days or less at time of
purchase are valued at amortized cost, if it approximates market value. The
value of other assets and securities for which no quotations are readily
available is determined in good faith at fair value using methods
determined by the Board of Trustees.
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 provision
for Federal income taxes is required in the financial statements.
The Portfolio may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on either income or gains earned or
repatriated. The Portfolio accrues such taxes when the related income or
gains are earned.
For the period January 2, 1997 to April 30, 1997, the Portfolio expects to
defer to May 1, 1997 for Federal income tax purposes, post-October capital
and currency losses of approximately $21,000 and $25,000, respectively.
3. REPURCHASE AGREEMENTS: In connection with transactions involving
repurchase agreements, the Portfolio's custodian bank takes possession of
the underlying securities, the value of which exceeds the principal amount
of the repurchase transaction, including accrued interest. To the extent
that any repurchase transaction exceeds one business day, the value of the
collateral is monitored on a daily basis to determine the adequacy of the
collateral. In the event of default on the obligation to repurchase, the
Portfolio has the right to liquidate the collateral and apply the proceeds
in satisfaction of the obligation. In the event of default or bankruptcy by
the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
14
<PAGE>
JACOBS INTERNATIONAL OCTAGON PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission, the UAM Funds may transfer their daily uninvested cash balances
into a joint trading account which invests in one or more repurchase
agreements. This joint repurchase agreement is covered by the same
collateral requirements as discussed above.
4. FOREIGN CURRENCY TRANSLATION: The books and records of the Portfolio are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars on the date of valuation. The Portfolio does not isolate that
portion of realized or unrealized gains and losses resulting from changes
in the foreign exchange rate from fluctuations arising from changes in the
market prices of the securities. These gains and losses are included in net
realized and unrealized gain and loss on investments on the statement of
operations. Net realized and unrealized gains and losses on foreign
currency transactions represent net foreign exchange gains or losses from
disposition of foreign currencies, currency gains or losses realized
between trade and settlement dates on securities transactions and the
difference between the amount of the investment income and foreign
withholding taxes recorded on the Portfolio's books and the U.S. dollar
equivalent amounts actually received or paid.
5. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The Portfolio may enter
into forward foreign currency exchange contracts to protect the value of
securities held and related receivables and payables against changes in
future foreign exchange rates. A forward currency contract is an agreement
between two parties to buy and sell currency at a set price on a future
date. The market value of the contract will fluctuate with changes in
currency exchange rates. The contract is marked-to-market daily using the
current forward rate and the change in market value is recorded by the
Portfolio as unrealized gain or loss. The Portfolio recognizes realized
gain or loss when the contract is closed, equal to the difference between
the value of the contract at the time it was opened and the value at the
time it was closed. Risks may arise upon entering into these contracts from
the potential inability of counterparties to meet the terms of their
contracts and are generally limited to the amount of unrealized gain on the
contracts, if any, at the date of default. Risks may also arise from the
unanticipated movements in the value of a foreign currency relative to the
U.S. dollar.
6. DISTRIBUTIONS TO SHAREHOLDERS: The Portfolio will normally distribute
substantially all of its net investment income quarterly. Any realized net
capital gains will be distributed annually. All distributions are recorded
on ex-dividend date.
The amount and character of income and capital gain distributions to be
paid are determined in accordance with Federal income tax regulations which
may differ from generally accepted accounting principles. These differences
are primarily due to differing book and tax treatments for foreign currency
transactions.
Permanent book and tax basis differences relating to shareholder
distributions resulted in reclassifications of $25,454 to decrease
undistributed net investment income and $25,454 to decrease accumulated net
realized loss.
Current year permanent book-tax differences, if any, are not included in
ending undistributed net investment income (loss) for the purpose of
calculating net investment income (loss) per share in the financial
highlights.
15
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JACOBS INTERNATIONAL OCTAGON PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
7. OTHER: Security transactions are accounted for on trade date, the date
the trade was executed. Costs used in determining realized gains and losses
on the sale of investment securities are based on the specific
identification method. Dividend income is recorded on the ex-dividend date,
except that certain dividends from foreign securities are recorded as soon
as the Portfolio is informed of the ex-dividend date. Interest income is
recognized on the accrual basis. Most expenses of the UAM Funds can be
directly attributed to a particular portfolio. Expenses which cannot be
directly attributed are apportioned among the portfolios of the UAM Funds
based on their relative net assets. Custodian fees for the Portfolio have
been increased to include expense offsets, if any, for custodian balance
credits.
B. ADVISORY SERVICES: Under the terms of an investment advisory agreement,
Jacobs Asset Management (the "Adviser"), provides investment advisory services
to the Portfolio at a fee calculated at an annual rate of 1.00% of average
daily net assets. The Adviser has voluntarily agreed to waive a portion 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 expense
offset arrangements, from exceeding 1.75% of average daily net assets. United
Asset Management Corporation ("UAM") is a limited partner of the Adviser.
C. ADMINISTRATION SERVICES: UAM Fund Services, Inc. (the "Administrator"), a
wholly-owned subsidiary of UAM, provides and oversees administrative, fund
accounting, dividend disbursing and transfer agent services to the UAM Funds
under a Fund Administration Agreement (the "Agreement"). Pursuant to the
Agreement, the Administrator is entitled to receive annual fees, computed
daily and payable monthly, of 0.19% of the first $200 million of the combined
aggregate net assets; plus 0.11% of the next $800 million of the combined
aggregate net assets; plus 0.07% of the next $2 billion of the combined
aggregate net assets; plus 0.05% of the combined aggregate net assets in
excess of $3 billion. The fees are allocated among the portfolios of the UAM
Funds on the basis of their relative net assets and are subject to a graduated
minimum fee schedule per portfolio which rises from $2,000 per month, upon
inception of a portfolio, to $70,000 annually after two years. For portfolios
with more than one class of shares, the minimum annual fee increases to
$90,000. In addition, the Administrator receives a Portfolio-specific monthly
fee at an annual rate of 0.04% of average daily net assets of the Portfolio.
The Administrator has entered into a Mutual Funds Service Agreement with Chase
Global Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan
Bank, under which CGFSC agrees to provide certain services, including but not
limited to, administration, fund accounting, dividend disbursing and transfer
agent services. Pursuant to the Mutual Funds Service Agreement, the
Administrator pays CGFSC a monthly fee. For the period January 2, 1997 to
April 30, 1997, $11,212 was paid to CGFSC for its services.
D. CUSTODIAN: The Chase Manhattan Bank (the "Bank"), an affiliate of CGFSC, is
custodian for the Portfolio's assets 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.
F. ACCOUNT SERVICES: Effective February 28, 1997, the UAM Funds entered into
an Account Services Agreement (the "Services Agreement") with UAM Retirement
Plan Services, Inc. ("Service Provider"), a
16
<PAGE>
JACOBS INTERNATIONAL OCTAGON PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
wholly-owned subsidiary of UAM. Under the Services Agreement, the Service
Provider agrees to perform certain services for participants in a self-
directed, defined contribution plan, and for whom the Service Provider
provides participant recordkeeping. Pursuant to the Services Agreement, the
Service Provider is entitled to receive, after the end of each month, a fee at
the annual rate of 0.15% of the average aggregate daily net asset value of
shares of the UAM Funds in the accounts for which they provide services.
G. TRUSTEES' FEES: Each Trustee, who is not an officer or affiliated person,
receives $2,000 per meeting attended, 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 and reimbursement of expenses incurred in
attending Trustee meetings.
H. PURCHASES AND SALES: For the period January 2, 1997 to April 30, 1997, the
Portfolio made purchases of $32,247,812 and sales of $413,587 of investment
securities other than long-term U.S. Government and short- term securities.
There were no purchases or sales of long-term U.S. Government securities.
Purchases include in-kind transactions of securities with a value of
$12,207,759.
I. LINE OF CREDIT: The Portfolio, along with certain other Portfolios of UAM
Funds, collectively entered into an agreement which enables them to
participate 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 1/8th of 1% per annum, payable at the end of
each calendar quarter, is accrued by each participating Portfolio based on its
average daily unused portion of the line of credit. During the period January
2, 1997 to April 30, 1997, the Portfolio had no borrowings under the
agreement.
J. OTHER: At April 30, 1997, 70.1% of total shares outstanding were held by 3
record shareholders owning more than 10% of the aggregate total shares
outstanding.
At April 30, 1997, the net assets of the Portfolio were substantially
comprised of foreign denominated securities. Changes in currency exchange
rates will affect the value of and investment income from such securities.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the possibly lower level of
governmental supervision and regulation of foreign securities markets and the
possibility of political or economic instability.
17
<PAGE>
PART B
UAM FUNDS
MJI INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION -- JULY 10, 1997
This Statement of Additional Information ("SAI") is not a Prospectus but
should be read in conjunction with the Prospectuses of the UAM Funds Trust (the
"UAM Funds" or the "Fund") for the MJI International Equity Portfolio dated
January 3, 1997 relating to the Institutional Class Shares, and the Prospectus
dated July 10, 1997 relating to the Institutional Service Class Shares (the
"Service Class Shares"). To obtain a Prospectus, please call UAM Funds Service
Center at 1-800-638-7983.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES........................... 2
PURCHASE AND REDEMPTION OF SHARES........................... 9
SHAREHOLDER SERVICES........................................ 10
INVESTMENT LIMITATIONS...................................... 10
MANAGEMENT OF THE FUND...................................... 11
INVESTMENT ADVISER.......................................... 13
SERVICE AND DISTRIBUTION PLANS.............................. 14
PORTFOLIO TRANSACTIONS...................................... 16
ADMINISTRATIVE SERVICES..................................... 17
PERFORMANCE CALCULATIONS.................................... 17
GENERAL INFORMATION......................................... 18
APPENDIX A -- DESCRIPTION OF SECURITIES AND RATINGS......... A-1
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES.. B-1
</TABLE>
FINANCIAL STATEMENTS
<PAGE>
INVESTMENT ADVISER
Murray Johnstone International Ltd.
DISTRIBUTOR
UAM Fund Distributors, Inc. (Distributor)
ADMINISTRATOR AND TRANSFER AGENT
UAM Fund Services, Inc. (FSI)
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the investment objective and policies of
the MJI International Equity Portfolio (the "Portfolio") as set forth in the
Prospectuses for the Institutional Class Shares and Service Class Shares of the
Portfolio:
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified brokers,
dealers, domestic and foreign banks or other financial institutions, so long as
the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940, as amended, (the "1940
Act") or the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "SEC") thereunder, which currently require that (a) the
borrower pledge and maintain with the Portfolio collateral consisting of cash,
an irrevocable letter of credit issued by a domestic U.S. bank or securities
issued or guaranteed by the United States Government having a value at all times
not less than 100% of the value of the securities loaned, (b) the borrower add
to such collateral whenever the price of the securities loaned rises (i.e., the
borrower "marks to the market" on a daily basis), (c) the loan be made subject
to termination by the Portfolio at any time, and (d) the Portfolio receives
reasonable interest on the loan (which may include the Portfolio investing any
cash collateral in interest bearing short-term investments). As with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the securities loaned if the borrower of the securities fails
financially. These risks are similar to the ones involved with repurchase
agreements as discussed in the Prospectuses.
HEDGING STRATEGIES
The Portfolio may engage in various portfolio strategies to hedge against
adverse movements in the equity, debt and currency markets. The Portfolio may
buy or sell futures contracts, write (i.e., sell) covered call options on its
portfolio securities, purchase put and call options on securities and engage in
transactions in stock index options and stock index futures, and related options
on such futures. The Portfolio may also enter into forward foreign currency
exchange contracts to hedge against its foreign currency movements. These
portfolio strategies are commonly referred to as derivative investments. Each of
these portfolio strategies is described below. Although certain risks are
involved in options and futures transactions, the Adviser believes that, because
the Portfolio will engage in options and futures transactions only for hedging
purposes, the options and futures portfolio strategies of the Portfolio will not
subject it to the risks frequently associated with the speculative use of
options and futures transactions. While the Portfolio's use of hedging
strategies is intended to reduce the volatility of the net asset value of the
Portfolio shares, the Portfolio's net asset value will fluctuate. There can be
no assurance that the Portfolio's hedging transactions will be effective. Also,
the Portfolio may not necessarily be engaging in hedging activities when
movements in any particular equity, debt or currency market occur.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The U.S. dollar value of the assets of the Portfolio may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Portfolio may incur costs in connection
with conversions between various currencies. The Portfolio will conduct its
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
entering into forward contracts to purchase or sell foreign currencies. A
forward foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are traded in the interbank market and are
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for such trades.
3
<PAGE>
The Portfolio may enter into forward foreign currency exchange contracts in
several circumstances. When the Portfolio enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when the
Portfolio anticipates the receipt in a foreign currency of dividends or interest
payments on a security which it holds, the Portfolio may desire to "lock-in" the
U.S. dollar price of the security or the U.S. dollar equivalent of such dividend
or interest payment, as the case may be. By entering into a forward contract for
a fixed amount of dollars, for the purchase or sale of the amount of foreign
currency involved in the underlying transactions, the Portfolio will be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the subject foreign currency during the
period between the date on which the security is purchased or sold, or on which
the dividend or interest payment is declared, and the date on which such
payments are made or received.
Additionally, when the Portfolio anticipates that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract for a fixed amount of dollars to
sell the amount of foreign currency approximating the value of some or all of
the Portfolio's securities denominated in such foreign currency. The precise
matching of the forward contract amounts and the value of the securities
involved generally will not be possible since the future value of securities in
foreign currencies will change as a consequence of market movements in the value
of these securities between the date on which the forward contract is entered
into and the date it matures. The projection of short-term currency market
movement is extremely difficult and the successful execution of a short-term
hedging strategy is highly uncertain. The Portfolio does not intend to enter
into such forward contracts to protect the value of portfolio securities on a
regular or continuous basis. The Portfolio will not enter into such forward
contracts or maintain a net exposure to such contracts where the consummation of
the contracts would obligate the Portfolio to deliver an amount of foreign
currency in excess of the value of the Portfolio's securities or other assets
denominated in that currency.
Under normal circumstances, consideration of the prospect for currency
parities will be incorporated into the long-term investment decisions made with
regard to overall diversification strategies. However, the management of the
Fund believes that it is important to have the flexibility to enter into such
forward contracts when it determines that the best interests of the performance
of the Portfolio will thereby be served. The Fund's Custodian will place cash or
liquid securities into a segregated account in an amount equal to the value of
the Portfolio's total assets committed to the consummation of forward foreign
currency exchange contracts. If the value of the securities placed in the
segregated account declines, additional cash or securities will be placed in the
account on a daily basis so that the value of the account will be equal to the
amount of the Portfolio's commitments with respect to such contracts.
The Portfolio generally will not enter into a forward contract with a term
of greater than one year. At the maturity of a forward contract, the Portfolio
may either sell the portfolio security and make delivery of the foreign
currency, or it may retain the security and terminate its contractual obligation
to deliver the foreign currency by purchasing an "offsetting" contract with the
same currency trader obligating it to purchase, on the same maturity date, the
same amount of the foreign currency.
It is impossible to forecast with absolute precision the market value of a
particular portfolio security at the expiration of the contract. Accordingly, it
may be necessary for the Portfolio to purchase additional foreign currency on
the spot market (and bear the expense of such purchase) if the market value of
the security is less than the amount of foreign currency that the Portfolio is
obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency.
If the Portfolio retains the portfolio security and engages in an
offsetting transaction, the Portfolio will incur a gain or loss (as described
below) to the extent that there has been movement in forward contract prices.
Should forward prices decline during the period between the Portfolio entering
into a forward contract for the sale of a foreign currency and the date it
enters into an offsetting contract for the purchase of the foreign currency, the
Portfolio will realize a gain to the extent that the price of the currency it
has agreed to sell exceeds the price of the currency it has agreed to purchase.
Should forward prices increase, the Portfolio would suffer a loss to the extent
4
<PAGE>
that the price of the currency it has agreed to purchase exceeds the price of
the currency it has agreed to sell.
The Portfolio's dealings in forward foreign currency exchange contracts
will be limited to the transactions described above. Of course, the Portfolio is
not required to enter into such transactions with regard to their foreign
currency-denominated securities. It also should be realized that this method of
protecting the value of portfolio securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of the
securities. It simply establishes a rate of exchange which one can achieve at
some future point in time. Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time, they tend to limit any potential gain which might result
should the value of such currency increase.
FUTURES CONTRACTS
The Portfolio may enter into futures contracts for the purposes of hedging,
remaining fully invested and reducing transactions costs. Futures contracts
provide for the future sale by one party and purchase by another party of a
specified amount of a specific security at a specified future time and at a
specified price. Futures contracts which are standardized as to maturity date
and underlying financial instrument are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"), a U.S. Government agency.
Although futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold" or "selling" a contract previously
"purchased") in an identical contract to terminate the position. Brokerage
commissions are incurred when a futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in cash or
acceptable securities with a broker or custodian to initiate and maintain open
positions in futures contracts. A margin deposit is intended to assure
completion of the contract (delivery or acceptance of the underlying security)
if it is not terminated prior to the specified delivery date. Minimal initial
margin requirements are established by the futures exchange and may be changed.
Brokers may establish deposit requirements which are higher than the exchange
minimums. Generally, margin deposits are structured as percentages (e.g., 5%) of
the market value of the contracts being traded. After a futures contract
position is opened, the value of the contract is marked to market daily. If the
futures contract price changes to the extent that the margin on deposit does not
satisfy margin requirements, payment of additional "variation" margin will be
required. Conversely, change in the contract value may reduce the required
margin, resulting in a repayment of excess margin to the contract holder.
Variation margin payments are made to and from the futures broker for as long as
the contract remains open. The Portfolio expects to earn interest income on its
margin deposits.
Traders in futures contracts may be broadly classified as either "hedgers"
or "speculators". Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade and use
futures contracts with the expectation of realizing profits from a fluctuation
in interest rates. The Portfolio intends to use futures contracts only for
hedging purposes.
Regulations of the CFTC applicable to the Fund require that all of its
futures transactions constitute bona fide straddles or that the Fund's commodity
futures and option positions be for other purposes, to the extent that the
aggregate initial margins and premiums required to establish such non-hedging
positions do not exceed five percent of the liquidation value of the Portfolio.
The Portfolio will only sell futures contracts to protect securities it owns
against price declines or purchase contracts to protect against an increase in
the price of securities it intends to purchase. As evidence of this hedging
interest, the Portfolio expects that approximately 75% of its futures contracts
purchases will be "completed", that is, equivalent amounts of related securities
will have been purchased or will be purchased by the Portfolio on the settlement
date of the futures contracts.
5
<PAGE>
Although techniques other than the sale and purchase of futures contracts
could be used to control the Portfolio's exposure to market fluctuations, the
use of futures contracts may be a more effective means of hedging this exposure.
While the Portfolio will incur commission expenses in both opening and closing
out futures positions, these costs are lower than transaction costs incurred in
the purchase and sale of the underlying securities.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS
The Portfolio will not enter into futures contract transactions to the
extent that, immediately thereafter, the sum of its initial margin deposits on
open contracts exceeds 5% of the market value of its total assets. In addition,
the Portfolio will not enter into futures contracts to the extent that its
outstanding obligations to purchase securities under these contracts would
exceed 20% of its total assets.
RISK FACTORS IN FUTURES TRANSACTIONS
The Portfolio will minimize the risk that it will be unable to close out a
futures position by only entering into futures which are traded on national
futures exchanges and for which there appears to be a liquid secondary market.
However, there can be no assurance that a liquid secondary market will exist for
any particular futures contract at any specific time. Thus, it may not be
possible to close a futures position. In the event of adverse price movements,
the Portfolio would continue to be required to make daily cash payments to
maintain its required margin. In such situations, if the Portfolio has
insufficient cash, it may have to sell securities to meet daily margin
requirements at a time when it may be disadvantageous to do so. In addition, the
Portfolio may be required to make delivery of the instruments underlying futures
contracts it holds. The inability to close futures positions also could have an
adverse impact on the Portfolio's ability to effectively hedge.
The risk of loss in trading futures contracts in some strategies can be
substantial due both to the low margin deposits required and the extremely high
degree of leverage involved in futures pricing. As a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss (as well as gain) to the investor. For example, if at the time of purchase,
10% of the value of the futures contract is deposited as margin, a subsequent
10% decrease in the value of the futures contract would result in a total loss
of the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in excess of the amount
invested in the contract. However, because the futures strategies of the
Portfolio are engaged in only for hedging purposes, the Adviser does not believe
that the Portfolio is subject to the risks of loss frequently associated with
futures transactions. The Portfolio would presumably have sustained comparable
losses if, instead of the futures contract, it had invested in the underlying
financial instrument and sold it after the decline.
Utilization of futures transactions by the Portfolio does involve the risk
of imperfect or no correlation where the securities underlying the futures
contracts have different maturities than the portfolio securities being hedged.
It is also possible that the Portfolio could lose money on futures contracts and
also experience a decline in value of portfolio securities. There is also the
risk of loss by the Portfolio of margin deposits in the event of bankruptcy of a
broker with whom the Portfolio has an open position in a futures contract or
related option.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and, therefore, does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days, with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting some futures
traders to substantial losses.
6
<PAGE>
OPTIONS
The Portfolio may purchase and sell put and call options on securities and
futures contracts for hedging purposes. Investments in options involve some of
the same considerations that are involved in connection with investments in
futures contracts (e.g., the existence of a liquid secondary market). In
addition, the purchase of an option also entails the risk that changes in the
value of the underlying security or contract will not be fully reflected in the
value of the option purchased. Depending on the pricing of the option compared
to either the futures contract on which it is based or the price of the
securities being hedged, an option may or may not be less risky than ownership
of the futures contract or such securities. For example, there are significant
differences between the securities, futures and options markets that could
result in an imperfect correlation between these markets, causing a given
transaction not to achieve its objective. A decision as to whether, when, and
how to use options involves the exercise of skill and judgment by the Adviser,
and even a well-conceived transaction may be unsuccessful because of market
behavior or unexpected events.
WRITING COVERED CALL OPTIONS
The principal reason for writing call options is to attempt to realize,
through the receipt of premiums, a greater return than would be realized on
securities alone. By writing covered call options, the Portfolio gives up the
opportunity, while the option is in effect, to profit from any price increase in
the underlying security above the option exercise price. In addition, the
Portfolio's ability to sell the underlying security will be limited while the
option is in effect unless the Portfolio effects a closing purchase transaction.
A closing purchase transaction cancels out the Portfolio's position as the
writer of an option by means of an offsetting purchase of an identical option
prior to the expiration of the option it has written. Covered call options serve
as a partial hedge against the price of the underlying security declining. The
Portfolio writes only covered options, which means that so long as the Portfolio
is obligated as the writer of the option it will, in a segregated account with
its custodian, maintain cash, or liquid securities denominated in U.S. dollars
with a value equal to or greater than the exercise price of the underlying
securities.
PURCHASING OPTIONS
The amount of any appreciation in the value of the underlying security
subject to a put will be partially offset by the amount of the premium paid for
the put option and any related transaction costs. Prior to its expiration, a put
option may be sold in a closing sale transaction and profit or loss from a sale
will depend on whether the amount received is more or less than the premium paid
for the put option plus the related transaction costs. A closing sale
transaction cancels out the Portfolio's position as purchaser of an option by
means of an offsetting sale of an identical option prior to the expiration of
the option it has purchased. In certain circumstances, the Portfolio may
purchase call options on securities held in its investment portfolio on which it
has written call options or on securities which it intends to purchase.
OPTIONS ON FOREIGN CURRENCIES
The Portfolio may purchase and write options on foreign currencies for
hedging purposes in a manner similar to that in which futures contracts on
foreign currencies, or forward contracts, will be utilized. For example, a
decline in the dollar value of a foreign currency in which portfolio securities
are denominated will reduce the dollar value of such securities, even if their
value in the foreign currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, the Portfolio may purchase put
options on the foreign currency. If the value of the currency does decline, the
Portfolio will have the right to sell such currency for a fixed amount in
dollars and will thereby offset, in whole or in part, the adverse effect on its
portfolio which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Portfolio may purchase call options
7
<PAGE>
thereon. The purchase of such options could offset, at least partially, the
effects of the adverse movements in exchange rates. As in the case of other
types of options, however, the benefit to the Portfolio deriving from purchases
of foreign currency options will be reduced by the amount of the premium and
related transaction costs. In addition, where currency exchange rates do not
move in the direction or to the extent anticipated, the Portfolio could sustain
losses on transactions in foreign currency options which would require it to
forego a portion or all of the benefits of advantageous changes in such rates.
The Portfolio may write options on foreign currencies for the same types of
hedging purposes. For example, where the Portfolio anticipates a decline in the
dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the anticipated decline occurs,
the option will most likely not be exercised, and the diminution in value of
portfolio securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the
Portfolio could write a put option on the relevant currency which, if rates move
in the manner projected, will expire unexercised and allow the Portfolio to
hedge such increased cost up to the amount of the premium. As in the case of
other types of options, however, the writing of a foreign currency option will
constitute only a partial hedge up to the amount of the premium, and only if
rates move in the expected direction. If this does not occur, the option may be
exercised and the Portfolio would be required to purchase or sell the underlying
currency at a loss which may not be offset by the amount of the premium. Through
the writing of options on foreign currencies, the Portfolio also may be required
to forego all or a portion of the benefits which might otherwise have been
obtained from favorable movements in exchange rates.
The Portfolio intends to write covered call options on foreign currencies.
A call option written on a foreign currency by the Portfolio is "covered" if the
Portfolio owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without additional
cash consideration (or for additional cash consideration held in a segregated
account by the Custodian) upon conversion or exchange of other foreign currency
held in its portfolio. A call option is also covered if the Portfolio has a call
on the same foreign currency and in the same principal amount as the call
written where the exercise price of the call held (a) is equal to or less than
the exercise price of the call written or (b) is greater than the exercise price
of the call written if the difference is maintained by the Portfolio in cash or
liquid securities in a segregated account with the Custodian.
The Portfolio also intends to write call options on foreign currencies that
are not covered for cross-hedging purposes. A call option on a foreign currency
is for cross-hedging purposes if it is not covered but is designed to provide a
hedge against a decline in the U.S. dollar value of a security which the
Portfolio owns or has the right to acquire and which is denominated in the
currency underlying the option due to an adverse change in the exchange rate. In
such circumstances, the Portfolio will collateralize the option by maintaining
in a segregated account with the Custodian, cash or U.S. government securities
or other high grade liquid debt or equity securities in an amount not less than
the value of the underlying foreign currency in U.S. dollars marked to market
daily.
RISKS OF OPTIONS ON FUTURES CONTRACTS, FORWARD CONTRACTS AND OPTIONS ON FOREIGN
CURRENCIES
Options on foreign currencies and forward contracts are not traded on
contract markets regulated by the CFTC or (with the exception of certain foreign
currency options) by the Commission. To the contrary, such instruments are
traded through financial institutions acting as market-makers, although foreign
currency options are also traded on certain national securities exchanges, such
as the Philadelphia Stock Exchange and the Chicago Board Options Exchange,
subject to the regulation of the Commission. Similarly, options on currencies
may be traded over-the-counter. In an over-the-counter trading environment, many
of the protections afforded to exchange participants will not be available. For
example, there are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a period of time.
Although the purchaser of an
8
<PAGE>
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, the option writer and a
trader of forward contracts could lose amounts substantially in excess of their
initial investments, due to the margin and collateral requirements associated
with such positions.
Options on foreign currencies traded on national securities exchanges are
within the jurisdiction of the Commission, as are other securities traded on
such exchanges. As a result, many of the protections provided to traders on
organized exchanges will be available with respect to such transactions. In
particular, all foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the Options Clearing
Corporation ("OCC"), thereby reducing the risk of counterparty default.
Furthermore, a liquid secondary market in options traded on a national
securities exchange may be more readily available than in the over-the-counter
market, potentially permitting the Portfolio to liquidate open positions at a
profit prior to exercise or expiration, or to limit losses in the event of
adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however,
is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effect of other
political and economic events. In addition, exchange-traded options of foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions, on exercise.
In addition, futures contracts, options on futures contracts, forward
contracts and options on foreign currencies may be traded on foreign exchanges.
Such transactions are subject to the risk of governmental actions affecting
trading in, or the prices of, foreign currencies or securities. The value of
such positions also could be adversely affected by (i) other complex foreign
political and economic factors, (ii) lesser availability than in the United
States of data on which to make a trading decision, (iii) delays in the
Portfolio's ability to act upon economic events occurring in foreign markets
during non-business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) lesser trading volume.
INTEREST RATE SWAP TRANSACTIONS
The Portfolio may enter into swap contracts which are also commonly
referred to as derivative investments. A swap is an agreement to exchange the
return generated by one instrument for the return generated by another
instrument. The payment streams are calculated by reference to a specific index
and agreed upon notional amount. The term "specified index" includes fixed
interest rates, total return on interest rate indices and fixed income indices,
(as well as amounts derived from arithmetic operations on these indices). For
example, the Portfolio may agree to swap the return generated by a fixed-income
index for the return generated by a second fixed-income index.
The Portfolio will usually enter into swaps on a net basis, i.e., the two
payment streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Portfolio receiving or paying, as the case
may be, only the net amount of the two payments. The Portfolio's obligations
under a swap agreement will be accrued daily (offsetting against any amounts
owing to the Portfolio) and any accrued but unpaid net amounts owed to a swap
counterparty will be covered by the maintenance of a segregated account
consisting of cash, U.S. government securities, or high grade debt obligations,
to avoid any potential leveraging of the Portfolio. Since swaps will be entered
into for good faith hedging purposes, the Adviser and the Fund believe such
obligations do not constitute "senior securities" under the 1940 Act and,
accordingly, will not treat them as being subject to its borrowing restrictions.
9
<PAGE>
Interest rate swaps do not involve the delivery of securities, other
underlying assets, or principal. Accordingly, the risk of loss with respect to
interest rate swaps is limited to the net amount of interest payments that the
Portfolio is contractually obligated to make. If the other party to the interest
rate swap defaults, the Portfolio's risk of loss consists of the net amount of
interest payments that the Portfolio is contractually entitled to receive. If
there is a default by the counterparty, the Portfolio may have contractual
remedies pursuant to the agreements related to the transaction. The swap market
has grown substantially in recent years with a large number of banks and
investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid.
PURCHASE AND REDEMPTION OF SHARES
Both classes of shares of the Portfolios may be purchased without sales
commission at the net asset value per share next determined after an order is
received in proper form by the Fund, and payment is received by the Fund's
custodian. An order received in proper form prior to the 4:00 p.m. close of the
New York Stock Exchange (the "Exchange") will be executed at the price computed
on the date of receipt; and an order received not in proper form or after the
4:00 p.m. close of the Exchange will be executed at the price computed on the
next day the Exchange is open after proper receipt. The Exchange will be closed
on the following days: New Year's Day, Martin Luther King, Jr.'s Birthday,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The Portfolio reserves the right in its sole discretion (1) to suspend the
offering of its shares, (2) to reject purchase orders when in the judgment of
management such rejection is in the best interests of the Fund, and (3) to
reduce or waive the minimum for initial and subsequent investment for certain
fiduciary accounts such as employee benefit plans or under circumstances where
certain economies can be achieved in sales of the Portfolio's shares.
The Adviser may compensate affiliated broker-dealer subsidiaries of United
Asset Management Corporation, out of its profits, for referring investors to the
Portfolio and, in certain instances, furnishing information liaison services
with respect to such investors. Such compensation would be based upon the
advisory fees payable (without regard to any expense limitation in effect at the
time) in respect of assets attributable to the referral. If liaison services are
included, the rate would be up to 25% in the first year and up to 15% each year
thereafter; otherwise, the rate would be up to 30% in the first year, 20% for
the second year and 10% for each remaining year up to a total of 5 years.
The Portfolio may suspend redemption privileges or postpone the date of
payment (1) during any period that both the Exchange and custodian bank are
closed or trading on the Exchange is restricted as determined by the SEC, (2)
during any period when an emergency exists as defined by the rules of the SEC as
a result of which it is not reasonably practicable for a Portfolio to dispose of
securities owned by it or to fairly determine the value of its assets, and (3)
for such other periods as the SEC may permit. The Fund has made an election with
the SEC to pay in cash all redemptions requested by any shareholder of record
limited in amount during any 90-day period to the lesser of $250,000 or 1% of
the net assets of the Fund at the beginning of such period. Such commitment is
irrevocable without the prior approval of the SEC. Redemptions in excess of the
above limits may be paid, in whole or in part, in investment securities or in
cash as the Board of Trustees may deem advisable; however, payment will be made
wholly in cash unless the Trustees believe that economic or market conditions
exist which would make such a practice detrimental to the best interests of the
Fund. If redemptions are paid in investment securities, such securities will be
valued as set forth in the Prospectus under "HOW SHARE PRICES ARE DETERMINED",
and a redeeming shareholder would normally incur brokerage expenses if those
securities were converted to cash.
No charge is made by the Portfolio for redemptions. Any redemption may be
more or less than the shareholder's initial cost depending on the market value
of the securities held by the Portfolio.
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<PAGE>
SIGNATURE GUARANTEES
To protect your account, the Fund and Chase Global Funds Services Company
("CGFSC") from fraud, signature guarantees are required for (1) redemptions
where the proceeds are to be sent to someone other than the registered
shareowner(s) or the registered address or (2) share transfer requests.
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, and as
further described in the Portfolio's Prospectus. The signature guarantee must
appear either: (1) on the written request for redemption; (2) on a separate
instrument for assignment ("stock power") which should specify the total number
of shares to be redeemed; or (3) on all stock certificates tendered for
redemption and, if shares held by the Fund are also being redeemed, on the
letter or stock power.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Portfolio may be exchanged for
Institutional Class Shares of any other UAM Funds or UAM Funds, Inc. Portfolio
and Service Class Shares of the Portfolio may be exchanged for Service Class
Shares of any other UAM Funds or UAM Funds, Inc. Portfolio. Exchange requests
should be made by calling the Fund (1-800-638-7983) or by writing to UAM Funds
Trust, UAM Funds Service Center, c/o Chase Global Funds Services Company, P.O.
Box 2798, Boston, MA 02208-2798. The exchange privilege is only available with
respect to Portfolios that are qualified for sale in the shareholder's state of
residence.
Any such exchange will be based on the respective net asset values of the
shares involved. There is no sales commission or charge of any kind. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objective of the Portfolio to be purchased. You may
obtain a Prospectus for the Portfolio(s) you are interested in by calling the
UAM Funds Service Center at 1-800-638-7983.
Neither the Fund nor CGFSC will be responsible for the authenticity of the
exchange instructions received by telephone. Exchanges may also be subject to
limitations as to amounts or frequency and to other restrictions established by
the Fund's Board of Trustees to assure that such exchanges do not disadvantage
the Fund and its shareholders.
For Federal income tax purposes an exchange between Funds is a taxable
event, and, accordingly, a capital gain or loss may be realized. In a revenue
ruling relating to circumstances similar to the Fund's, an exchange between
series of a Fund was also deemed to be a taxable event. It is likely, therefore,
that a capital gain or loss would be realized on an exchange between Portfolios.
You may want to consult your tax adviser for further information in this regard.
The exchange privilege may be modified or terminated at any time.
TRANSFER OF SHARES
Shareholders may transfer shares of the Portfolio to another person by
making a written request to the Fund. The request should clearly identify the
account and number of shares to be transferred, and include the signature of all
registered owners and all stock certificates, if any, which are subject to the
transfer. The signature on the letter of request, the stock certificate or any
stock power must be guaranteed in the same manner as described under "PURCHASE
AND REDEMPTION OF SHARES." As in the case of redemptions, the written request
must be received in good order before any transfer can be made.
INVESTMENT LIMITATIONS
The following limitations supplement those set forth in each Prospectus of
the Portfolio. Whenever an investment limitation sets forth a percentage
limitation on investment or utilization of assets, such limitation shall
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<PAGE>
be determined immediately after and as a result of the Portfolio's acquisition
of such security or other asset. Accordingly, any later increase or decrease
resulting from a change in values, net assets or other circumstances will not be
considered when determining whether the investment complies with the Portfolio's
investment limitations. Investment limitations (1), (2), (3), (4) and (6) are
classified as fundamental. The Portfolio's fundamental investment limitations
cannot be changed without approval by a "majority of the outstanding shares" (as
defined in the 1940 Act) of the Portfolio. The Portfolio will not:
(1) invest in physical commodities or contracts on physical commodities;
(2) purchase or sell real estate or real estate limited partnerships,
although it may purchase and sell securities of companies which deal
in real estate and may purchase and sell securities which are secured
by interests in real estate;
(3) make loans except (i) by purchasing debt securities in accordance with
its investment objectives and (ii) by lending its portfolio securities
to banks, brokers, dealers and other financial institutions so long as
such loans are not inconsistent with the 1940 Act, or the rules and
regulations or interpretations of the SEC thereunder;
(4) underwrite the securities of other issuers;
(5) invest in stock or bond futures and/or options on futures unless (i)
not more than 5% of the Portfolio's assets are required as deposit to
secure obligations under such futures and/or options on futures
contracts provided, however, that in the case of an option that is in-
the-money at the time of purchase, the in-the-money amount may be
excluded in computing such 5% and (ii) not more than 20% of the
Portfolio's assets are invested in stock or bond futures and options;
(6) issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Portfolio from (i)
making any permitted borrowings, mortgages or pledges, or (ii)
entering into options, futures or repurchase transactions;
(7) purchase on margin or sell short except as specified in (5) above;
(8) invest more than an aggregate of 15% of the net assets of the
Portfolio, determined at the time of investment, in securities subject
to legal or contractual restrictions on resale or securities for which
there are no readily available markets; and
(9) invest for the purpose of exercising control over management of any
company.
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The Officers of the Fund manage its day-to-day operations and are
responsible to the Fund's Board of Trustees. The Trustees set broad policies for
the Fund and elect its Officers. The following is a list of the Trustees and
Officers of the Fund and a brief statement of their present positions, date of
birth, address and principal occupations during the past five years. Those
people who are "interested persons" of the Fund as that term is defined in the
1940 Act are indicated by an asterisk (*).
JOHN T. BENNETT, JR. (1/26/29), Trustee; College Road--RFD 3, Meredith, NH
03253; President of Squam Investment Management Company, Inc. and Great Island
Investment Company, Inc.; President of Bennett Management Company from 1988 to
1993.
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<PAGE>
NANCY J. DUNN (8/14/51), Trustee; 10 Garden Street, Cambridge, MA 02138; Vice
President for Finance and Administration and Treasurer of Radcliffe College
since 1991.
PHILIP D. ENGLISH (8/5/48), Trustee; 16 West Madison Street, Baltimore, MD
21201; President and Chief Executive Officer of Broventure Company, Inc.;
Chairman of the Board of Chektec Corporation and Cyber Scientific, Inc.
WILLIAM A. HUMENUK (4/21/42), Trustee; 4000 Bell Atlantic Tower, 1717 Arch
Street, Philadelphia, PA 19103; Partner in the Philadelphia office of the law
firm Dechert Price & Rhoads; Director, Hofler Corp.
NORTON H. REAMER* (3/21/35), Trustee; One International Place, Boston, MA 02110;
President and Chairman of the Fund; President, Chief Executive Officer and a
Director of United Asset Management Corporation; Director, Partner or Trustee of
each of the Investment Companies of the Eaton Vance Group of Mutual Funds.
CHARLES H. SALISBURY, JR.* (8/24/40), Trustee; One International Place, Boston,
MA 02110; Executive Vice President of United Asset Management Corporation;
formerly an executive officer and Director of T. Rowe Price and President and
Chief Investment Officer of T. Rowe Price Trust Company.
PETER M. WHITMAN, JR.* (7/1/43), Trustee; One Financial Center, Boston, MA
02111; President and Chief Investment Officer of Dewey Square Investors
Corporation ("DSI") since 1988; Director and Chief Executive Officer of H. T.
Investors, Inc., formerly a subsidiary of DSI.
WILLIAM H. PARK* (9/19/47), Vice President; One International Place, Boston, MA
02110; Executive Vice President and Chief Financial Officer of United Asset
Management Corporation.
GARY L. FRENCH* (7/4/51), Treasurer; 211 Congress Street, Boston, MA 02110;
President of UAM Fund Services, Inc. and UAM Fund Distributors, Inc.; formerly
Vice President of Operations, Development and Control of Fidelity Investment in
1995; Treasurer of the Fidelity Group of Mutual Funds from 1991 to 1995.
MICHAEL E. DEFAO* (2/28/68), Secretary; 211 Congress Street, Boston, MA 02110;
Vice President and General Counsel of UAM Fund Services, Inc. and UAM Fund
Distributors, Inc.; Associate Attorney of Ropes & Gray (a law firm) from 1993 to
1995.
ROBERT R. FLAHERTY* (9/18/63), Assistant Treasurer; 211 Congress Street, Boston,
MA 02110; Vice President of UAM Fund Services, Inc.; formerly Manager of Fund
Administration and Compliance of Chase Global Fund Services Company from 1995 to
1996; Deloitte & Touche LLP from 1985 to 1995, Senior Manager.
KARL O. HARTMANN* (3/7/55), Assistant Secretary; 73 Tremont Street, Boston, MA
02108; Senior Vice President and General Counsel of Chase Global Funds Services
Company.
GORDON M. SHONE* (7/30/56), Assistant Treasurer; 73 Tremont Street, Boston, MA
02108; Vice President of Fund Administration and Compliance of Chase Global
Funds Services Company; formerly Senior Audit Manager of Coopers & Lybrand LLP
(1983-1996).
REMUNERATION OF TRUSTEES AND OFFICERS
The Fund pays each Trustee, who is not also an officer or affiliated
person, a $150 quarterly retainer fee per active Portfolio which currently
amounts to $1,050 per quarter. In addition each unaffiliated Trustee receives a
$2,000 meeting fee which is aggregated for all the Trustees and allocated
proportionately among the Portfolios of the Fund and UAM Funds and reimbursement
for travel and other expenses incurred while attending Board meetings. Trustees
who are also officers or affiliated persons receive no remuneration for their
service as Trustees. The Fund's officers and employees are paid by either the
Adviser, United Asset Management Corporation ("UAM"), FSI or CGFSC and receive
no compensation from the Fund. As of June 30, 1997, the Trustees and officers of
the Fund owned less than 1% of the Fund's outstanding shares.
The following table shows aggregate compensation paid to each of the Fund's
unaffiliated Trustees by the Fund and total compensation paid by the Fund and
UAM Funds, Inc. (collectively the "Fund Complex") in the fiscal year ended April
30, 1997.
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COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
TOTAL
PENSION OR COMPENSATION
RETIREMENT ESTIMATED FROM REGISTRANT
AGGREGATE BENEFITS ACCRUED ANNUAL AND
NAME OF PERSON, COMPENSATION AS PART OF BENEFITS UPON FUND COMPLEX
POSITION FROM REGISTRANT FUND EXPENSES RETIREMENT PAID TO TRUSTEES
- ---------------------- --------------- ----------------- ------------- ----------------
<S> <C> <C> <C> <C>
John T. Bennett, Jr.
Trustee............. $4,874 0 0 $31,700
J. Edward Day
Former Trustee...... $2,168 0 0 $15,550
Philip D. English
Trustee............. $4,874 0 0 $31,700
William A. Humenuk
Trustee............. $4,874 0 0 $31,700
Nancy J. Dunn
Trustee............. $ 0 0 0 $ 0
</TABLE>
PRINCIPAL HOLDERS OF SECURITIES
As of June 16, 1997, the following persons or organizations held of
record or beneficially 5% or more of the shares of the Portfolio:
MJI International Equity Portfolio Institutional Class Shares: Freya
Fanning & Company, 400 Essex St., Box 5600, Beverly Farms, MA, 29.8%*; Hartnat &
Co. VECO, P.O. Box 92800, Rochester, NY, 12.6%*; Sisters of Mercy Corp., 2300
Adeline Dr., Burlingam, CA, 11.9%*; UMBSC & Co., FBO Interstate Brands Agg. Gr.,
P.O. Box 419260, Kansas City, KS, 9.0%*; Hartnat & Co., Hoag Memorial Hospital,
P.O. Box 92800, Rochester, NH, 7.5%*; and UMBSC & Co., FBO Interstate Brands
Mod. Gr., P.O. Box 419260, Kansas City, MO, 5.4%*.
MJI International Equity Portfolio Institutional Service Class Shares:
Hartnat & Co. and Siliconix, P.O. Box 92800, Rochester, NY, 49.6%*; Fleet
National Bank, Trustee, FBO Davies Medical Pension Plan, P.O. Box 92800,
Rochester, NY, 36.8%*; and Fleet National Bank, Trustee, FBO Cherokee Nation,
P.O. Box 92800, Rochester, NY, 7.5%*.
The person(s) or organization(s) listed above as owning 25% or more of
the outstanding shares of the Portfolio may be presumed to "control" (as that
term is defined in the 1940 Act) such Portfolio. As a result, those persons or
organizations could have the ability to vote a majority of the shares of the
Portfolio on any matter requiring the approval of shareholders of such
Portfolio.
_______
* Denotes shares held by a trustee or fiduciary for which beneficial ownership
is disclaimed or presumed disclaimed.
INVESTMENT ADVISER
INVESTMENT PHILOSOPHY
A value orientation for country, currency and stock selection is key
to Murray Johnstone's investment philosophy. Murray Johnstone's management
structure centers around regional research teams which are specialized by
geography. The individuals within each team are responsible for conducting
research within each region as well
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<PAGE>
as identifying particular stocks for possible inclusion within portfolios. On-
site, fundamental research is a primary component of the evaluation process.
CONTROL OF ADVISER
The Adviser, through its parent, UAM UK Holdings, is a wholly-owned
subsidiary of UAM, a holding company incorporated in Delaware in December 1980
for the purpose of acquiring and owning firms engaged primarily in institutional
investment management. Since its first acquisition in August 1983, UAM has
acquired or organized over 45 such wholly-owned affiliated firms (the "UAM
Affiliated Firms"). UAM believes that permitting UAM Affiliated Firms to retain
control over their investment advisory decisions is necessary to allow them to
continue to provide investment management services that are intended to meet the
particular needs of their respective clients.
Accordingly, after acquisition by UAM, UAM Affiliated Firms continue
to operate under their own firm name, with their own leadership and individual
investment philosophy and approach. Each UAM Affiliated Firm manages its own
business independently on a day-to-day basis. Investment strategies employed and
securities selected by UAM Affiliated Firms are separately chosen by each of
them. Several UAM Affiliated Firms also act as investment advisers to separate
series or Portfolios of UAM Funds, a registered investment company.
REPRESENTATIVE INSTITUTIONAL CLIENTS
As of the date of this SAI, the Adviser's representative institutional
clients included: Ace Hardware, American Cancer Society, Royal Caribbean
Cruises, Siemens, Levitz, Nebraska Public Power, and Franciscan Sisters.
In compiling this client list, the Adviser used objective criteria
such as account size, geographic location and client classification. The Adviser
did not use any performance based criteria. It is not known whether these
clients approve or disapprove of the Adviser or the advisory services provided.
ADVISORY FEES
As compensation for services rendered by the Adviser under the
Investment Advisory Agreement, the Portfolio pays the Adviser an annual fee in
monthly installments, calculated by applying the following annual percentage
rates to the Portfolio's average daily net assets for the month:
MJI International Equity Portfolio.................................. 0.75%
For the period from September 16, 1994 (date of commencement) to April 30,
1995, and for the fiscal years ended April 30, 1996 and April 30, 1997, the MJI
International Equity Portfolio paid advisory fees of $0, $0 and $41,961,
respectively. The Adviser voluntarily waived advisory fees of $10,000 for the
period ended April 30, 1995, and $54,000 and $99,017 for the fiscal years ended
April 30, 1996 and April 30, 1997, respectively. Until further notice, the
Adviser has voluntarily agreed to waive its advisory fees and to assume as the
Adviser's own expense certain operating expenses payable by the Portfolio, if
necessary, in order to keep the Portfolio's total annual operating expenses from
exceeding 1.50%.
SERVICE AND DISTRIBUTION PLANS
As stated in the Portfolio's Service Class Shares Prospectus, the
"Distributor" may enter into agreements with broker-dealers and other financial
institutions ("Service Agents"), pursuant to which they will provide
administrative support services to Service Class shareholders who are their
customers ("Customers") in consideration of the Fund's payment of 0.25% (on an
annualized basis) of the average daily net asset value of the Service Class
Shares held by the Service Agent for the benefit of its Customers. Such services
include:
15
<PAGE>
acting as the sole shareholder of record and nominee for beneficial owners;
maintaining account records for such beneficial owners of the Fund's
shares;
opening and closing accounts;
answering questions and handling correspondence from shareholders about
their accounts;
handling the transmission of funds representing the purchase price or
redemption proceeds;
issuing confirmations for transactions in the Fund's shares by
shareholders;
distributing current copies of prospectuses, statements of additional
information and shareholder reports;
assisting customers in completing application forms, selecting dividend and
other account options and opening any necessary custody accounts;
providing account maintenance and accounting support for all transactions;
and
performing such additional shareholder services as may be agreed upon by
the Fund and the Service Agent, provided that any such additional
shareholder services must constitute a permissible non-banking activity in
accordance with the then current regulations of, and interpretations
thereof by, the Board of Governors of the Federal Reserve System, if
applicable.
Each agreement with a Service Agent is governed by a Shareholder Service
Plan (the "Service Plan") that has been adopted by the Fund's Board of Trustees.
Pursuant to the Service Plan, the Board of Trustees reviews, at least quarterly,
a written report of the amounts expended under each agreement with Service
Agents and the purposes for which the expenditures were made. In addition,
arrangements with Service Agents must be approved annually by a majority of the
Fund's Trustees, including a majority of the Trustees who are not "interested
persons" of the company as defined in the 1940 Act and have no direct or
indirect financial interest in such arrangements.
The Board of Trustees has approved the arrangements with Service Agents
based on information provided by the Fund's service contractors that there is a
reasonable likelihood that the arrangements will benefit the Fund and its
shareholders by affording the Fund greater flexibility in connection with the
servicing of the accounts of the beneficial owners of its shares in an efficient
manner. Any material amendment to the Fund's arrangements with Service Agents
must be approved by a majority of the Fund's Board of Trustees (including a
majority of the disinterested Trustees). So long as the arrangements with
Service Agents are in effect, the selection and nomination of the members of the
Fund's Board of Trustees who are not "interested persons" (as defined in the
1940 Act) of the Company will be committed to the discretion of such non-
interested Trustees.
Pursuant to Rule 12b-1 under the 1940 Act, the Fund has adopted a
Distribution Plan for the Service Class Shares of the Fund (the "Distribution
Plan"). The Distribution Plan permits the Fund to pay for certain distribution,
promotional and related expenses involved in the marketing of only the Service
Class Shares.
The Distribution Plan permits the Service Class Shares, pursuant to the
Distribution Agreement, to pay a monthly fee to the Distributor for its services
and expenses in distributing and promoting sales of the Service Class Shares.
These expenses include, among other things, preparing and distributing
advertisements, sales literature and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, and paying distribution
and maintenance fees to securities brokers and dealers who enter into agreements
with the Distributor. In addition, the Service Class Shares may make payments
directly to other unaffiliated parties, who either aid in the distribution of
their shares or provide services to the Class.
16
<PAGE>
The maximum annual aggregate fee payable by the Fund under the Service and
Distribution Plans (the "Plans"), is 0.75% of the Service Class Shares' average
daily net assets for the year. The Fund's Board of Trustees may reduce this
amount at any time. Although the maximum fee payable under the 12b-1 Plan
relating to the Service Class Shares is 0.75% of average daily net assets of
such class, the Board of Trustees has determined that the annual fee, payable on
a monthly basis, under the Plans relating to the Service Class Shares, currently
cannot exceed .50% of the average daily net assets represented by the Service
Class. While the current fee which will be payable under the Service Plan and
Distribution Plan has been set at .25%, the Plans permit a full 0.75% on all
assets to be paid at any time following appropriate Board approval. Fees paid to
Service Agents on behalf of the Portfolio's Service Class Shares for the fiscal
year ended April 30, 1997 totaled $1,542.
All of the distribution expenses incurred by the Distributor and others,
such as broker/dealers, in excess of the amount paid by the Service Class Shares
will be borne by such persons without any reimbursement from such Classes.
Subject to seeking best price and execution, the Fund may, from time to time,
buy or sell portfolio securities from or to firms which receive payments under
the Plans. From time to time, the Distributor may pay additional amounts from
its own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans, the Distribution Agreement and the form of dealer's and services
agreements have all been approved by the Board of Trustees of the Fund,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Fund and who have no direct or indirect
financial interest in the Plans or any related agreements, by vote cast in
person at a meeting duly called for the purpose of voting on the Plan and such
Agreements. Continuation of the Plans, the Distribution Agreement and the
related agreements must be approved annually by the Board of Trustees in the
same manner, as specified above.
Each year the Trustees must determine whether continuation of the Plans is
in the best interest of the shareholders of Service Class Shares and that there
is a reasonable likelihood of the Plans providing a benefit to the Class. The
Plans, the Distribution Agreement and the related agreements with any broker-
dealer or others relating to the Class may be terminated at any time without
penalty by a majority of those trustees who are not "interested persons" or by a
majority vote of the outstanding voting securities of the Class. Any amendment
materially increasing the maximum percentage payable under the Plans must
likewise be approved by a majority vote of the relevant Class' outstanding
voting securities, as well as by a majority vote of those Trustees who are not
"interested persons." Also, any other material amendment to the Plans must be
approved by a majority vote of the Trustees including a majority of the Trustees
of the Fund having no interest in the Plans. In addition, in order for the Plans
to remain effective, the selection and nomination of Trustees who are not
"interested persons" of the Fund must be effected by the Trustees who themselves
are not "interested persons" and who have no direct or indirect financial
interest in the Plans. Persons authorized to make payments under the Plans must
provide written reports at least quarterly to the Board of Trustees for their
review. The NASD has adopted amendments to its Conduct Rules relating to
investment company sales charges. The Fund and the Distributor intend to operate
in compliance with these rules.
PORTFOLIO TRANSACTIONS
The Investment Advisory Agreements authorize the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolio and directs the Adviser to use its best efforts to
obtain the best execution with respect to all transactions for the Portfolio.
The Adviser may, however, consistent with the interests of the Portfolio, select
brokers on the basis of the research, statistical and pricing services they
provide to the Portfolio. Information and research received from such brokers
will be in addition to, and not in lieu of, the services required to be
performed by the Adviser under the Investment Advisory Agreements. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided that such
commissions are paid in compliance with the Securities Exchange Act of 1934, as
amended, and that the Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Adviser to the Portfolio and the Adviser's other clients.
17
<PAGE>
It is not the Fund's practice to allocate brokerage or effect principal
transactions with dealers on the basis of sales of Fund shares which may be made
through broker-dealer firms. However, the Adviser may place portfolio orders
with qualified broker-dealers who refer clients to the Adviser. During the
fiscal years ended April 30, 1995, April 30, 1996, and April 30, 1997, the MJI
International Equity Portfolio paid aggregate brokerage commissions of $18,354,
$44,004 and $102,419, respectively.
Some securities considered for investment by the Portfolio may also be
appropriate for other clients served by the Adviser. If purchases or sales of
securities consistent with the investment policies of a Portfolio and one or
more of these other clients served by the Adviser is considered at or about the
same time, transactions in such securities will be allocated among the Portfolio
and clients in a manner deemed fair and reasonable by the Adviser. Although
there is no specified formula for allocating such transactions, the various
allocation methods used by the Adviser, and the results of such allocations, are
subject to periodic review by the Fund's Board of Trustees.
ADMINISTRATIVE SERVICES
As stated in the Prospectus, the Board of Trustees of the Fund approved a
new Fund Administration Agreement between FSI, a wholly owned subsidiary of UAM,
and the Fund. The Fund's Trustees also approved a Mutual Fund Services Agreement
between FSI and CGFSC. The services provided by FSI and CGFSC and the basis of
the fees payable by the Fund under the Fund Administration Agreement are
described in the Portfolios' Prospectus. Prior to April 15, 1996, CGFSC or its
predecessor, Mutual Funds Services Company, provided certain administrative
services to the Fund under an Administration Agreement between the Fund and U.S.
Trust Company of New York.
For the period September 16, 1994 to April 30, 1995, administrative
services fees paid to CGFSC by the MJI International Equity Portfolio totaled
$26,000. The basis of the fees paid to CGFSC for the 1995 fiscal year was as
follows: the Fund paid a monthly fee for its services which on an annualized
basis equaled 0.20% of the first $200 million in combined assets; plus 0.12% of
the next $800 million in combined assets; plus 0.08% on assets over $1 billion
but less than $3 billion; plus 0.06% on assets over $3 billion. The fees were
allocated among the Portfolios on the basis of their relative assets and were
subject to a designated minimum fee schedule per Portfolio, which ranged from
$2,000 per month upon inception of a Portfolio to $70,000 annually after two
years. For the fiscal years ended April 30, 1996 and April 30, 1997,
administrative services fees paid to CGFSC by the MJI International Equity
Portfolio totaled $69,866 and $96,855, respectively. For the period April 15,
1996 to April 30, 1996, and for the fiscal year ended April 30, 1997, FSI earned
$3,134 and $11,239, respectively, from the MJI International Equity Portfolio as
Administrator. The services provided by FSI and CGFSC and the basis of the
current fees payable are described in the Portfolio's Prospectuses.
PERFORMANCE CALCULATIONS
PERFORMANCE
The Portfolio may from time to time quote various performance figures to
illustrate the past performance of each class of the Portfolio. Performance
quotations by investment companies are subject to rules adopted by the SEC,
which require the use of standardized performance quotations or, alternatively,
that every non-standardized performance quotation furnished by the Fund be
accompanied by certain standardized performance information computed as required
by the SEC. Current yield and average annual compounded total return quotations
used by the Fund are based on the standardized methods of computing performance
mandated by the SEC. An explanation of the method used to compute or express
performance follows.
TOTAL RETURN
The average annual total return of a Portfolio is determined by finding the
average annual compounded rates of return over 1, 5 and 10 year periods that
would equate an initial hypothetical $1,000 investment to its ending redeemable
value.
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<PAGE>
The calculation assumes that all dividends and distributions are reinvested when
paid. The quotation assumes the amount was completely redeemed at the end of
each 1, 5 and 10 year period and the deduction of all applicable Fund expenses
on an annual basis. Since Service Class Shares of the Portfolio bear additional
service and distribution expenses, the average annual total return of the
Service Class Shares of the Portfolio will generally be lower than that of the
Institutional Class Shares.
The average annual total return for the MJI International Equity Portfolio
Institutional Class and Institutional Service Class Shares from inception to
April 30, 1997 and for the one year period ended on the date of the Financial
Statements included herein are as follows:
<TABLE>
<CAPTION>
SINCE INCEPTION
ONE YEAR THROUGH YEAR
ENDED ENDED
APRIL 30, APRIL 30 INCEPTION
1997 1997 DATE
---------- ---------------- ---------
<S> <C> <C> <C>
MJI International Equity Portfolio
Institutional Class Shares.......... 4.67% 3.00% 9/16/94
MJI International Equity Portfolio
Institutional Service Class Shares.. -- 1.14% 12/31/96
</TABLE>
These figures are calculated according to the following formula:
<TABLE>
<CAPTION>
P (1 + T)/n/ = ERV
<S> <C> <C>
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning of the
1, 5 or 10 year periods at the end of the 1, 5 or 10 year periods (or fractional portion
thereof).
</TABLE>
COMPARISONS
To help investors better evaluate how an investment in a Portfolio of the
Fund might satisfy their investment objective, advertisements regarding the Fund
may discuss various measures of Fund performance as reported by various
financial publications. Advertisements may also compare performance (as
calculated above) to performance as reported by other investments, indices and
averages. Please see Appendix B for publications, indices and averages which may
be used.
In assessing such comparisons of performance, an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the composition of investments in the Portfolio,
that the averages are generally unmanaged, and that the items included in the
calculations of such averages may not be identical to the formula used by the
Portfolio to calculate its performance. In addition, there can be no assurance
that the Portfolio will continue this performance as compared to such other
averages.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized under the name "The Regis Fund II," as a Delaware
business trust on May 18, 1994. On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust". The Fund's principal executive office is located
at One International Place, 44th Floor, Boston, MA 02110; however, all investor
19
<PAGE>
correspondence should be directed to the Fund at UAM Funds Service Center, c/o
Chase Global Funds Services Company, P.O. Box 2798, Boston, MA 02208-2798. The
Fund's Agreement and Declaration of Trust permits the Fund to issue an unlimited
number of shares of beneficial interest, without par value. The Trustees have
the power to designate one or more series ("Portfolios") of shares of beneficial
interest without further action by shareholders.
On each matter submitted to a vote of the Shareholders, each holder of a
Share shall be entitled to one vote for each whole Share and a fractional vote
for each fractional Share standing in his or her name on the books of the Fund.
In the event of liquidation of the Fund, the holders of the shares of each
Portfolio or any class thereof that has been established and designated shall be
entitled to receive, when and as declared by the Trustees, the excess of the
assets belonging to that Portfolio, or in the case of a class, belonging to that
Portfolio and allocable to that class, over the liabilities belonging to that
Portfolio or class. The assets so distributable to the holders of shares of any
particular Portfolio or class thereof shall be distributed to the holders in
proportion to the number of shares of that Portfolio or class thereof held by
them and recorded on the books of the Fund. The liquidation of any Portfolio or
class thereof may be authorized at any time by vote of a majority of the
Trustees then in office.
Shareholders of both Classes of the Fund's Portfolios have no pre-emptive
or other rights to subscribe to any additional shares or other securities issued
by the Fund or any Portfolio, except as the Trustees in their sole discretion
shall have determined by vote. Both Institutional Class and Service Class Shares
represent an interest in the same assets of a Portfolio and are identical in all
respects except that the Service Class 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.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund's policy is to distribute substantially all of each Portfolio's
net investment income, if any, together with any net realized capital gains
annually in the amount and at the times that will avoid both income (including
capital gains) taxes incurred on it and the imposition of the Federal excise tax
on undistributed income and capital gains. The amounts of any income dividends
or capital gains distributions cannot be predicted. See the discussion under
"Dividends, Capital Gains Distributions and Taxes" in the Prospectuses.
Any dividend or distribution paid shortly after the purchase of shares of a
Portfolio by an investor may have the effect of reducing the per share net asset
value of the Portfolio by the per share amount of the dividend or distribution.
Furthermore, such dividends or distributions, although in effect a return of
capital, are subject to income taxes as set forth in the Prospectuses.
As set forth in the Prospectuses, unless the shareholder elects otherwise
in writing, all dividend and capital gains distributions are automatically
received in additional shares of the respective Portfolio of the Fund at net
asset value (as of the business day following the record date). This will remain
in effect until the Fund is notified by the shareholder in writing at least
three days prior to the record date that either the Income Option (income
dividends in cash and capital gains distributions in additional shares at net
asset value) or the Cash Option (both income dividends and capital gains
distributions in cash) has been elected. An account statement is sent to
shareholders whenever an income dividend or capital gains distribution is paid.
Each Portfolio of the Fund will be treated as a separate entity (and hence
as a separate "regulated investment company") for Federal tax purposes. Any net
capital gains recognized by a Portfolio will be distributed to its investors
without need to offset (for Federal income tax purposes) such gains against any
net capital losses realized by another Portfolio.
20
<PAGE>
CODE OF ETHICS
The Fund has adopted a Code of Ethics which restricts to a certain extent
personal transactions by access persons of the Fund and imposes certain
disclosure and reporting obligations.
FEDERAL TAXES
In order for the Portfolio to continue to qualify for Federal income tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), at least 90% of its gross income for a taxable
year must be derived from certain qualifying income, i.e., dividends, interest,
income derived from loans of securities and gains from the sale or other
disposition of stock, securities or foreign currencies, or other related income,
including gains from options, futures and forward contracts, derived with
respect to its business investing in stock, securities or currencies. Any net
gain realized from the closing out of futures contracts will, therefore,
generally be qualifying income for purposes of the 90% requirement.
Qualification as a regulated investment company also requires that less than 30%
of the Portfolio's gross income be derived from the sale or other disposition of
stock, securities, options, futures or forward contracts (including certain
foreign currencies not directly related to the Fund's business of investing in
stock or securities) held less than three months. In order to avoid realizing
excessive gains on securities held for less than three months, the Portfolio may
be required to defer the closing out of futures contracts beyond the time when
it would otherwise be advantageous to do so. It is anticipated that unrealized
gains on futures contracts which have been open for less than three months as of
the end of the Portfolio's taxable year, and which are recognized for tax
purposes, will not be considered gains on securities held for less than three
months for the purposes of the 30% test.
Except for transactions the Portfolio has identified as hedging
transactions, in general each Portfolio is required for Federal income tax
purposes to recognize as income for each taxable year its net unrealized gains
and losses on some forward currency and some futures contracts as of the end of
each taxable year as well as those actually realized during the year. In most
cases, any such gain or loss recognized with respect to a regulated futures
contract is considered to be 60% long-term capital gain or loss and 40% short-
term capital gain or loss without regard to the holding period of the contract.
Recognized gain or loss attributable to a foreign currency forward contract is
treated as 100% ordinary income. Furthermore, foreign currency futures contracts
which are intended to hedge against a change in the value of securities held by
the Portfolio may affect the holding period of such securities and,
consequently, the nature of the gain or loss on such securities upon
disposition.
The Portfolio will distribute to shareholders annually any net capital
gains which have been recognized for Federal income tax purposes (including
unrealized gains at the end of the Portfolio's taxable year on futures
transactions). Such distribution will be combined with distributions of capital
gains realized on the Portfolio's other investments, and shareholders will be
advised as to the character of the payments.
FINANCIAL STATEMENTS
The Financial Statements for the MJI International Equity Portfolio for the
fiscal years ended April 30, 1996 and April 30, 1997, and the Financial
Highlights for the respective periods presented and the report thereon of Price
Waterhouse LLP, the Fund's independent accountant, which appear in the
Portfolio's 1997 Financial Statements, are attached to this SAI.
21
<PAGE>
APPENDIX A -- DESCRIPTION OF SECURITIES AND RATINGS
I. DESCRIPTION OF CORPORATE BOND RATINGS
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS
Aaa -- Bonds which are Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt-
edge." Interest payments are protected by a large or by an exceptionally stable
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Moody's Investors Service, Inc. ("Moody's") applies numerical modifiers 1,
2 and 3 in the Aa and A rating categories. The modifier 1 indicates that the
security ranks at a higher end of the rating category, modifier 2 indicates a
mid-range rating and modifier 3 indicates that the issue ranks at the lower end
of the rating category.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS
AAA -- Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation and indicate an extremely strong capacity to pay
principal and interest.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only to a small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher rated categories.
II. DESCRIPTION OF U.S. GOVERNMENT SECURITIES
The term "U.S. Government Securities" refers to a variety of securities
which are issued or guaranteed by the United States Government, and by various
instrumentalities which have been established or sponsored by the
A-1
<PAGE>
United States Government.
U.S. Treasury securities are backed by the "full faith and credit" of the
United States. Securities issued or guaranteed by Federal agencies and U.S.
Government sponsored instrumentalities may or may not be backed by the full
faith and credit of the United States.
In the case of securities not backed by the full faith and credit of the
United States, the investor must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for ultimate repayment,
and may not be able to assess a claim against the United States itself in the
event the agency or instrumentality does not meet its commitment. Agencies which
are backed by the full faith and credit of the United States include the Export-
Import Bank, Farmers Home Administration, Federal Financing Bank, and others.
Certain agencies and instrumentalities, such as the GNMA are, in effect, backed
by the full faith and credit of the United States through provisions in their
charters that they may make "indefinite and unlimited" drawings on the U.S.
Treasury, if needed to service its debt. Debt from certain other agencies and
instrumentalities, including the Federal Home Loan Bank and FNMA, is not
guaranteed by the United States, but those institutions are protected by the
discretionary authority of the U.S. Treasury to purchase certain amounts of
their securities to assist the institution in meeting its debt obligations.
Finally, other agencies and instrumentalities, such as the Farm Credit System
and the FHLMC, are federally chartered institutions under Government
supervision, but their debt securities are backed only by the credit worthiness
of those institutions, not the U.S. Government.
Some of the U.S. Government agencies that issue or guarantee securities
include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and the Tennessee Valley Authority.
III. DESCRIPTION OF COMMERCIAL PAPER
The Portfolios may invest in commercial paper (including variable amount
master demand notes) rated A-1 or better by Standard & Poor's ("S&P") or Prime-1
by Moody's or by S&P. Commercial paper refers to short-term, unsecured
promissory notes issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and has a maturity at the
time of issuance not exceeding nine months. Variable amount master demand notes
are demand obligations that permit the investment of fluctuating amounts at
varying market rates of interest pursuant to arrangement between the issuer and
a commercial bank acting as agent for the payees of such notes whereby both
parties have the right to vary the amount of the outstanding indebtedness on the
notes. As variable amount master demand notes are direct lending arrangements
between a lender and a borrower, it is not generally contemplated that such
instruments will be traded, and there is no secondary market for these notes,
although they are redeemable (and thus immediately repayable by the borrower) at
face value, plus accrued interest, at any time. In connection with the
Portfolio's investment in variable amount master demand notes, the Adviser's
investment management staff will monitor, on an ongoing basis, the earning
power, cash flow and other liquidity ratios of the issuer and the borrower's
ability to pay principal and interest on demand.
Commercial paper rated A-1 by S&P has the following characteristics:
(1) liquidity ratios are adequate to meet cash requirements; (2) long-term
senior debt is rated "A" or better; (3) the issuer has access to at least two
additional channels of borrowing; (4) basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; (5) typically, the
issuer's industry is well established, and the issuer has a strong position
within the industry; and (6) the reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determine
whether the issuer's commercial paper is A-1, A-2 or A-3. The rating Prime-1 is
the highest commercial paper rating assigned by Moody's. Among the factors
considered by Moody's in assigning ratings are the following: (1) evaluation of
the management of the issuer; (2) economic evaluation of the issuer's industry
or industries and the appraisal of speculative-type risks which may be inherent
in certain areas; (3) evaluation of the issuer's products in relation to
completion and customer acceptance; (4) liquidity; (5) amount and quality of
long term debt; (6) trend of earnings over a period of ten years; (7) financial
strength of a parent company and the relationships which exist with the issuer;
and (8) recognition by
A-2
<PAGE>
the management of issuer of obligations which may be present or may arise as a
result of public interest questions and preparations to meet such obligations.
IV. DESCRIPTION OF BANK OBLIGATIONS
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Certificates of deposit are negotiable short-term obligations of commercial
banks. Variable rate certificates of deposit are certificates of deposit on
which the interest rate is periodically adjusted prior to their stated maturity
based upon a specified market rate. As a result of these adjustments, the
interest rate on these obligations may increase or decrease periodically.
Frequently, dealers selling variable rate certificates of deposit to the
Portfolio will agree to repurchase such instruments, at the Portfolio's option,
at par on or near the coupon dates. The dealers' obligations to repurchase these
instruments are subject to conditions imposed by various dealers. Such
conditions typically are the continued credit standing of the issuer and the
existence of reasonably orderly market conditions. The Portfolio is also able to
sell variable rate certificates of deposit in the secondary market. Variable
rate certificates of deposit normally carry a higher interest rate than
comparable fixed rate certificates of deposit. A banker's acceptance is a time
draft drawn on a commercial bank by a borrower usually in connection with an
international commercial transaction to finance the import, export, transfer or
storage of goods. The borrower is liable for payment as well as the bank which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
the secondary markets prior to maturity.
V. DESCRIPTION OF FOREIGN INVESTMENTS
Investors should recognize that investing in foreign companies involves
certain special considerations which are not typically associated with investing
in U.S. companies. Since the securities of foreign companies are frequently
denominated in foreign currencies, a Portfolio may be affected favorably or
unfavorably by changes in currency rates and in exchange control regulations,
and may incur costs in connection with conversions between various currencies.
As foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards and they may have policies that are
not comparable to those of domestic companies, there may be less information
available about certain foreign companies than about domestic companies.
Securities of some foreign companies are generally less liquid and more volatile
than securities of comparable domestic companies. There is generally less
government supervision and regulation of stock exchanges, brokers and listed
companies than in the U.S. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
U.S. investments in those countries.
Although the Fund will endeavor to achieve the most favorable execution
costs in its portfolio transactions, fixed commissions on many foreign stock
exchanges are generally higher than negotiated commissions on U.S. exchanges.
Certain foreign governments levy withholding taxes on dividend and interest
income. Although in some countries a portion of these taxes are recoverable, the
non-recoverable portion of foreign withholding taxes will reduce the income
received from the companies comprising the Fund's Portfolios. However, these
foreign withholding taxes are not expected to have a significant impact.
A-3
<PAGE>
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES
With respect to the comparative measures of performance for equity
securities described herein, comparisons of performance assume reinvestment
of dividends, except as otherwise stated below.
(a) Dow Jones Composite Average or its component averages -- an unmanaged
index composed of 30 blue-chip industrial corporation stocks (Dow
Jones Industrial Average), 15 utilities company stocks and 20
transportation stocks.
(b) Standard & Poor's 500 Stock Index or its component indices -- an
unmanaged index composed of 400 industrial stocks, 40 financial
stocks, 40 utilities stocks and 20 transportation stocks.
(c) Standard & Poor's 400 Mid Cap Index - consists of 400 domestic stocks
chosen for market size, liquidity, and industry group representation.
It is also a market-value weighted index and was the first benchmark
of mid cap stock price movement.
(d) The New York Stock Exchange composite or component indices --
unmanaged indices of all industrial, utilities, transportation and
finance stocks listed on the New York Stock Exchange.
(e) Wilshire 5000 Equity Index or its component indices -- represents the
return on the market value of all common equity securities for which
daily pricing is available.
(f) Lipper -- Mutual Fund Performance Analysis and Lipper -- Fixed Income
Fund Performance Analysis -- measure total return and average current
yield for the mutual fund industry. Rank individual mutual fund
performance over specified time periods, assuming reinvestment of all
distributions, exclusive of any applicable sales charges.
(g) Lipper Capital Appreciation Funds Index - a fund that aims at maximum
capital appreciation, frequently by means of 100% or more portfolio
turnover, leveraging, purchasing unregistered securities, purchasing
options, etc. The fund may take large cash positions.
(h) Lipper Small Cap Funds Index- a fund that by prospectus or portfolio
practice invests primarily in companies with market capitalizations
of less than $1 billion at the time of purchase.
(i) Morgan Stanley Capital International EAFE Index and World Index --
respectively, arithmetic, market value-weighted averages of the
performance of over 900 securities listed on the stock exchanges of
countries in Europe, Australia and the Far East, and over 1,400
securities listed on the stock exchanges of these continents,
including North America.
(j) Goldman Sachs 100 Convertible Bond Index -- currently includes 67
bonds and 33 preferred. The original list of names was generated by
screening for convertible issues of 100 million or greater in market
capitalization. The index is priced monthly.
(k) Salomon Brothers GNMA Index -- includes pools of mortgages originated
by private lenders and guaranteed by the mortgage pools of the
Government National Mortgage Association.
(l) Salomon Brothers High Grade Corporate Bond Index -- consists of
publicly issued, non-convertible corporate bonds rated AA or AAA. It
is a value-weighted, total return index, including approximately 800
issues with maturities of 12 years or greater.
(m) Salomon Brothers Broad Investment Grade Bond Index -- is a market-
weighted index that
B-1
<PAGE>
contains approximately 4,700 individually priced investment grade
corporate bonds rated BBB or better, U.S. Treasury/agency issues and
mortgage pass through securities.
(n) Lehman Brothers Long-Term Treasury Bond Index -- is composed of all
bonds covered by the Lehman Brothers Treasury Bond Index with
maturities of 10 years or greater.
(o) Lehman Brothers Government/Corporate Index -- is a
combination of the Government and Corporate Bond
Indices. The Government Index includes public
obligations of the U.S. Treasury, issues of Government
agencies, and corporate debt backed by the U.S.
Government. The Corporate Bond Index includes fixed-
rate nonconvertible corporate debt. Also included are
Yankee Bonds and nonconvertible debt issued by or
guaranteed by foreign or international governments and
agencies. All issues are investment grade (BBB) or
higher, with maturities of at least one year and an
outstanding par value of at least $100 million for U.S.
Government issues and $25 million for others. Any
security downgraded during the month is held in the
index until month-end and then removed. All returns are
market value weighted inclusive of accrued income.
(p) NASDAQ Industrial Index -- is composed of more than 3,000 industrial
issues. It is a value-weighted index calculated on price change only
and does not include income.
(q) Value Line -- composed of over 1,600 stocks in the Value Line
Investment Survey.
(r) Russell 2000 Index -- composed of the 2,000 smallest stocks in the
Russell 3000, a market value-weighted index of the 3,000 largest U.S.
publicly-traded companies.
(s) Salomon Brothers 3 Month T-Bill Average - the average return for all
Treasury bills for the previous three month period.
(t) Composite Indices -- 60% Standard & Poor's 500 Stock Index, 30%
Lehman Brothers Long-Term Treasury Bond and 10% U.S. Treasury Bills;
70% Standard & Poor's 500 Stock Index and 30% NASDAQ Industrial
Index; 35% Standard & Poor's 500 Stock Index and 65% Salomon Brothers
High Grade Bond Index; all stocks on the NASDAQ system exclusive of
those traded on an exchange, and 65% Standard & Poor's 500 Stock
Index and 35% Salomon Brothers High Grade Bond Index.
(u) CDA Mutual Fund Report published by CDA Investment Technologies, Inc.
-- analyzes price, current yield, risk, total return and average rate
of return (average compounded growth rate) over specified time
periods for the mutual fund industry.
(v) Mutual Fund Source Book published by Morningstar, Inc. -- analyzes
price, yield, risk and total return for equity funds.
(w) Financial publications: Business Week, Changing Times, Financial
World, Forbes, Fortune, Money, Barron's, Consumer's Digest, Financial
Times, Global Investor, Wall Street Journal and Weisenberger
Investment Companies Service -- publications that rate fund
performance over specified time periods.
(x) Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics -- a statistical measure of change over
time in the price of goods and services in major expenditure groups.
(y) Stocks, Bonds, Bills and Inflation, published by Ibbotson Associates
-- historical measure of
B-2
<PAGE>
yield, price and total return for common and small company stock,
long-term government bonds, U.S. Treasury bills and inflation.
(z) Savings and Loan Historical Interest Rates -- as published by the
U.S. Savings & Loan League Fact Book.
(aa) Historical data supplied by the research departments of First Boston
Corporation; the J.P. Morgan companies; Salomon Brothers; Merrill
Lynch, Pierce, Fenner & Smith; Lehman Brothers, Inc.; and Bloomberg
L.P.
B-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
UAM Funds Trust and Shareholders of
MJI International Equity Portfolio
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the MJI
International Equity Portfolio (the "Portfolio"), a Portfolio of UAM Funds
Trust, at April 30, 1997, and the results of its operations, the changes in
its net assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at April 30, 1997 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 9, 1997
- -------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED):
Foreign taxes during the fiscal year ended April 30, 1997 amounting to
approximately $34,000 are expected to be passed through to the shareholders as
foreign tax credits on Form 1099--DIV for the year ending December 31, 1997
which shareholders of this Portfolio will receive in late January, 1998.
MJI International Equity Portfolio hereby designates approximately $38,000 as
a long-term capital gain dividend for the purpose of the dividend paid
deduction on its federal income tax return. In addition, for the fiscal year
ended April 30, 1997, gross income derived from sources within foreign
countries amounted to approximately $362,000 for the Portfolio.
19
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (96.1%)
- -------------------------------------------------------------------------------
ARGENTINA (1.9%)
Banco Frances del Rio de la Plata S.A. ADR................. 8,050 $ 244,519
*Disco S.A. ADR............................................ 2,065 64,015
Transportadora de Gas del Sur S.A. ADR..................... 4,700 58,750
YPF S.A. ADR............................................... 8,600 237,575
-----------
604,859
- -------------------------------------------------------------------------------
AUSTRALIA (6.2%)
Australia & New Zealand Banking Group, Ltd. ............... 65,000 414,968
Commonwealth Bank of Australia............................. 60,000 651,508
National Australia Bank, Ltd. ............................. 43,000 588,251
News Corp., Ltd............................................ 80,000 368,549
-----------
2,023,276
- -------------------------------------------------------------------------------
BELGIUM (2.1%)
*Fortis AG................................................. 3,840 685,868
- -------------------------------------------------------------------------------
CHILE (4.2%)
Cia. de Telecomunicaciones de Chile S.A. ADR............... 25,000 809,375
Madeco S.A. ADR............................................ 7,500 205,313
Quimica y Minera Chile S.A. ADR............................ 6,200 367,350
-----------
1,382,038
- -------------------------------------------------------------------------------
FINLAND (2.1%)
Oy Nokia AB, Series A...................................... 10,990 685,501
- -------------------------------------------------------------------------------
FRANCE (7.1%)
*Cap Gemini Sogeti S.A..................................... 5,470 331,546
Cie Generale des Eaux...................................... 3,380 471,167
Compagnie Bancaire S.A. ................................... 1,660 219,163
Lyonnaise des Eaux-Dumez................................... 1,034 93,610
Michelin, Class B.......................................... 6,940 388,041
*SGS-Thomson Microelectronics N.V. ........................ 5,400 416,652
Total S.A., Class B........................................ 4,750 394,191
-----------
2,314,370
- -------------------------------------------------------------------------------
GERMANY (8.6%)
Bayerische Motoren Werke AG................................ 940 763,981
Linde AG................................................... 960 700,993
Mannesmann AG.............................................. 1,003 394,391
Volkswagen AG.............................................. 1,515 960,211
-----------
2,819,576
- -------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
- --------------------------------------------------------------------------------
HONG KONG (6.8%)
Amoy Properties, Ltd....................................... 280,000 $ 276,530
Cheung Kong Holdings, Ltd. ................................ 70,000 614,511
Hong Kong Land Holdings, Ltd. ADR.......................... 250,000 520,000
Hutchison Whampoa, Ltd. ................................... 75,000 556,739
Swire Pacific, Ltd., Class A............................... 35,000 269,978
-----------
2,237,758
- --------------------------------------------------------------------------------
IRELAND (1.6%)
Allied Irish Banks plc..................................... 44,143 314,414
Bank of Ireland............................................ 20,770 220,740
-----------
535,154
- --------------------------------------------------------------------------------
ITALY (4.0%)
ENI S.p.A. ................................................ 24,000 121,808
Istituto Mobiliare Italiano S.p.A. ........................ 33,500 285,362
Italcementi S.p.A. ........................................ 2,650 14,843
Parmalat Finanziaria S.p.A. ............................... 148,800 216,395
*Seat S.p.A. .............................................. 17,839 5,460
Stet Societa' Finanziaria Telefonica S.p.A. ............... 72,080 340,782
Telecom Italia Mobile S.p.A................................ 97,990 308,186
-----------
1,292,836
- --------------------------------------------------------------------------------
JAPAN (12.5%)
Canon Sales Co., Inc. ..................................... 11,000 227,885
Dai-Ichi Kangyo Bank, Ltd.................................. 19,000 208,035
EISAI Co., Ltd. ........................................... 11,000 190,626
Fuji Machine Manufacturing Co. ............................ 8,000 225,601
Hitachi, Ltd............................................... 32,000 289,878
Itochu Corp................................................ 37,000 175,163
Matsumoto Kenko Co., Ltd................................... 600 13,895
Matsushita Communication Industrial........................ 9,000 232,533
Murata Manufacturing Co., Ltd. ............................ 9,000 331,784
Nippon Sanso KK Corp....................................... 18,000 63,663
Nippon Steel Co............................................ 82,000 233,824
Nissan Motor Co., Ltd...................................... 33,000 194,179
Nitto Denko Corp........................................... 16,000 231,902
Santen Pharmaceutical...................................... 15,400 276,581
Sanwa Bank, Ltd. .......................................... 20,000 214,258
Shin-Etsu Chemical Co., Ltd. .............................. 13,000 262,150
</TABLE>
5
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
- --------------------------------------------------------------------------------
JAPAN--(CONTINUED)
Shiseido Co., Ltd. ........................................ 20,000 $ 286,727
Sumitomo Electric Industries............................... 14,000 189,681
Suzuki Motor Co., Ltd...................................... 23,000 244,585
-----------
4,092,950
- --------------------------------------------------------------------------------
MALAYSIA (3.0%)
Hicom Holdings Bhd. ....................................... 150,000 331,673
Malayan Banking Bhd........................................ 33,000 328,685
Renong Bhd. ............................................... 130,000 178,168
S P Setia Bhd. ............................................ 45,000 154,183
-----------
992,709
- --------------------------------------------------------------------------------
MEXICO (2.3%)
Cifra S.A. de C.V. ADR Class B............................. 117,000 178,308
Empresas ICA S.A. de C.V. ADR.............................. 7,000 104,125
Grupo Imsa, S.A. de C.V. ADR............................... 9,000 193,500
*Grupo Industrial Durango ADR.............................. 24,000 261,000
-----------
736,933
- --------------------------------------------------------------------------------
NETHERLANDS (3.9%)
ING Groep N.V.............................................. 11,490 451,178
Vendex International N.V. BDR.............................. 8,840 419,721
VNU........................................................ 20,040 414,542
-----------
1,285,441
- --------------------------------------------------------------------------------
NEW ZEALAND (1.7%)
Carter Holt Harvey, Ltd.................................... 85,000 188,469
Lion Nathan, Ltd. ......................................... 60,000 144,262
Telecom Corp. of New Zealand, Ltd. ........................ 50,000 224,153
-----------
556,884
- --------------------------------------------------------------------------------
NORWAY (1.0%)
Norsk Hydro................................................ 6,910 336,732
- --------------------------------------------------------------------------------
SINGAPORE (4.3%)
City Developments, Ltd..................................... 70,000 566,312
Keppel Corp., Ltd.......................................... 50,000 217,812
Singapore Land, Ltd........................................ 20,000 93,348
Wing Tai Holdings, Ltd..................................... 210,000 543,078
-----------
1,420,550
- --------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
- -------------------------------------------------------------------------------
SPAIN (3.2%)
Empresa Nacional de Electricidad S.A. ..................... 6,820 $ 477,237
Telefonica de Espana S.A................................... 15,970 409,501
Vallehermoso S.A. ......................................... 6,220 153,317
-----------
1,040,055
- -------------------------------------------------------------------------------
SWITZERLAND (7.3%)
ABB AG (Bearer)............................................ 263 318,707
*Ciba Specialty Chemicals AG (Registered).................. 518 44,661
Novartis AG (Registered)................................... 688 907,058
Winterthur Schweizerische (Registered)..................... 421 302,388
Zurich Versicherungs (Registered).......................... 2,470 811,595
-----------
2,384,409
- -------------------------------------------------------------------------------
THAILAND (1.3%)
Bangkok Bank plc........................................... 47,000 435,452
- -------------------------------------------------------------------------------
UNITED KINGDOM (11.0%)
Abbey National plc......................................... 18,400 256,380
BOC Group plc.............................................. 14,100 215,826
British Aerospace plc...................................... 10,400 220,904
British Airport Authority plc.............................. 19,300 159,476
British Petroleum Co. plc.................................. 17,522 200,994
Cadbury Schweppes plc...................................... 22,600 187,476
Carlton Communications plc................................. 24,000 196,756
Commercial Union plc....................................... 16,900 186,193
Glaxo Wellcome plc......................................... 19,100 375,371
Grand Metropolitan plc..................................... 26,100 217,778
Kingfisher plc............................................. 19,000 205,635
Ladbroke Group plc......................................... 54,300 202,346
Lloyds TSB Group plc....................................... 32,720 298,462
Safeway plc................................................ 44,100 244,361
Williams Holdings plc...................................... 40,700 218,927
Wolseley plc............................................... 25,000 200,094
-----------
3,586,979
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $29,383,624)...................... 31,450,330
- -------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENT (3.5%)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Chase Securities, Inc., 5.20%, dated 04/30/97 due
05/01/97, to be repurchased at $1,137,164,
collateralized by $1,143,510 of various U.S. Treasury
Notes, 4.75%-6.125%, due from 08/31/98-10/31/98,
valued at $1,137,914 (COST $1,137,000)................ $1,137,000 $ 1,137,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.6%) (COST $30,520,624)(a)......... 32,587,330
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (NET) (0.4%)............... 150,441
- -------------------------------------------------------------------------------
NET ASSETS (100%)....................................... $32,737,771
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
ADR--American Depository Receipt.
BDR--British Depository Receipt.
(a) The cost for federal income tax purposes was $30,529,713. At April 30,
1997, net unrealized appreciation for all securities based on tax cost was
$2,057,617. This consisted of aggregate gross unrealized appreciation for
all securities of $3,293,913 and aggregate gross unrealized depreciation
for all securities of $1,236,296.
8
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
At April 30, 1997 sector diversification of the Portfolio was as follows:
<TABLE>
<CAPTION>
% OF
NET
SECTOR DIVERSIFICATION (UNAUDITED) ASSETS VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
Aerospace & Defense........................................ 0.7% $ 220,904
Agriculture................................................ 5.3 1,742,362
Automotive................................................. 6.6 2,162,955
Banks...................................................... 9.6 3,128,642
Basic Resources............................................ 0.7 233,770
Beverages, Food & Tobacco.................................. 1.7 548,133
Broadcasting & Publishing.................................. 1.9 611,299
Building Materials......................................... 0.7 213,989
Capital Equipment.......................................... 1.2 394,391
Chemicals.................................................. 3.9 1,290,383
Construction............................................... 1.1 351,918
Consumer Durables.......................................... 0.7 217,778
Consumer Non-Durables...................................... 0.9 286,727
Electronics................................................ 3.6 1,170,965
Energy..................................................... 1.5 497,319
Entertainment & Leisure.................................... 0.6 202,346
Financial Services......................................... 5.7 1,853,941
Holding Company............................................ 3.2 1,052,919
Industrial................................................. 4.5 1,479,124
Insurance.................................................. 5.1 1,683,656
Manufacturing.............................................. 2.2 719,825
Metals..................................................... 0.6 205,313
Oil & Gas.................................................. 1.6 515,999
Paper & Packaging.......................................... 1.4 449,469
Pharmaceuticals............................................ 2.0 651,953
Print & Publishing......................................... 1.1 374,008
Real Estate................................................ 6.8 2,224,018
Repurchase Agreement....................................... 3.5 1,137,000
Retail..................................................... 3.4 1,112,040
Services................................................... 2.2 734,595
Telecommunications......................................... 8.9 2,924,737
Transportation............................................. 2.0 647,266
Utilities.................................................. 4.7 1,547,586
----- -----------
Total Investments.......................................... 99.6% $32,587,330
Other Assets and Liabilities............................... 0.4 150,441
----- -----------
Net Assets................................................. 100.0% $32,737,771
===== ===========
</TABLE>
9
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at Cost............................................. $30,520,624
===========
Investments, at Value............................................ $32,587,330
Cash............................................................. 193
Foreign Currency (Cost $17,168).................................. 17,140
Receivable for Investments Sold.................................. 57,346
Dividends Receivable............................................. 78,749
Receivable for Portfolio Shares Sold............................. 93,243
Foreign Withholding Tax Reclaim Receivable....................... 13,966
Deferred Organization Costs--Note A.............................. 4,628
Interest Receivable.............................................. 164
Other Assets..................................................... 93
- -------------------------------------------------------------------------------
Total Assets.................................................... 32,852,852
- -------------------------------------------------------------------------------
LIABILITIES
Payable for Investment Advisory Fees--Note B..................... 4,883
Payable for Portfolio Shares Redeemed............................ 13,826
Payable for Administrative Fees--Note C.......................... 12,772
Payable for Distribution and Service Fees--Note E................ 1,542
Payable for Account Services Fees--Note F........................ 3,851
Payable for Trustees' Fees--Note G............................... 483
Other Liabilities................................................ 77,724
- -------------------------------------------------------------------------------
Total Liabilities............................................... 115,081
- -------------------------------------------------------------------------------
NET ASSETS........................................................ $32,737,771
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET ASSETS CONSISTS OF:
Paid in Capital.................................................. $30,707,096
Undistributed Net Investment Income.............................. 19,125
Accumulated Net Realized Loss.................................... (53,598)
Unrealized Appreciation.......................................... 2,065,148
- -------------------------------------------------------------------------------
NET ASSETS........................................................ $32,737,771
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
Net Assets....................................................... $28,818,041
Net Asset Value, Offering and Redemption Price Per Share
2,705,133 shares outstanding (Unlimited authorization, no par
value).......................................................... $ 10.65
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INSTITUTIONAL SERVICE CLASS SHARES
Net Assets....................................................... $ 3,919,730
Net Asset Value, Offering and Redemption Price Per Share 368,199
shares outstanding (Unlimited authorization, no par value)...... $ 10.65
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
For the Year ended April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
- ----------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends................................................. $ 360,664
Interest.................................................. 85,656
Less Foreign Taxes Withheld............................... (33,977)
- ----------------------------------------------------------------------------------
Total Income............................................. 412,343
- ----------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees--Note B
Basic Fees............................................... $140,978
Less: Fees Waived........................................ (99,017) 41,961
--------
Administrative Fees--Note C............................... 108,094
Custodian Fees--Note D.................................... 35,944
Printing Fees............................................. 27,618
Filing and Registration Fees.............................. 32,766
Audit Fees................................................ 16,767
Account Services Fees--Note F............................. 3,851
Trustees' Fees--Note G.................................... 2,183
Amortization of Organization Expense--Note A.............. 1,945
Distribution and Service Fees--Institutional Service Class
Shares--Note E........................................... 1,542
Other Expenses............................................ 12,425
- ----------------------------------------------------------------------------------
Total Expenses........................................... 285,096
Expense Offset--Note A.................................... (450)
- ----------------------------------------------------------------------------------
Net Expenses............................................. 284,646
- ----------------------------------------------------------------------------------
NET INVESTMENT INCOME...................................... 127,697
- ----------------------------------------------------------------------------------
NET REALIZED LOSS:
Investments............................................... (54,964)
Foreign Currency Transactions............................. (47,587)
- ----------------------------------------------------------------------------------
TOTAL NET REALIZED LOSS ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS.............................................. (102,551)
- ----------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON:
Investments............................................... 1,540,279
Foreign Currency Translations............................. (3,259)
- ----------------------------------------------------------------------------------
TOTAL NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION... 1,537,020
- ----------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY............... 1,434,469
- ----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....... $1,562,166
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1997 1996
- -----------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income.................................. $ 127,697 $ 63,397
Net Realized Gain (Loss)............................... (102,551) 142,191
Net Change in Unrealized Appreciation/Depreciation..... 1,537,020 453,055
- -----------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations. 1,562,166 658,643
- -----------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income:
Institutional Class................................... (23,511) (4,038)
In Excess of Net Investment Income:
Institutional Class................................... -- (20,271)
Net Realized Gain:
Institutional Class................................... (203,657) (16,206)
- -----------------------------------------------------------------------------------
Total Distributions.................................. (227,168) (40,515)
- -----------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE K):
Institutional Class:
Issued--Regular....................................... 25,675,829 4,553,899
--In Lieu of Cash Distributions..................... 156,098 40,436
Redeemed.............................................. (6,848,127) (2,155,730)
- -----------------------------------------------------------------------------------
Net Increase from Institutional Class Shares......... 18,983,800 2,438,605
- -----------------------------------------------------------------------------------
Institutional Service Class:
Issued--Regular....................................... 3,864,032 --
Redeemed.............................................. (37,097) --
- -----------------------------------------------------------------------------------
Net Increase from Institutional Service Class Shares. 3,826,935 --
- -----------------------------------------------------------------------------------
Net Increase from Capital Share Transactions......... 22,810,735 2,438,605
- -----------------------------------------------------------------------------------
Total Increase....................................... 24,145,733 3,056,733
Net Assets:
Beginning of Year...................................... 8,592,038 5,535,305
- -----------------------------------------------------------------------------------
End of Year (including undistributed and distributions
in excess of net investment income of $19,125 and
$(20,271), respectively).............................. $32,737,771 $ 8,592,038
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
The accompanying notes are an integral part of the financial statements.
MJI INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL CLASS SERVICE CLASS
--------------------------------- --------------
YEARS ENDED
APRIL 30, SEPTEMBER 16, DECEMBER 31,
---------------- 1994*** TO 1996*** TO
1997 1996 APRIL 30, 1995 APRIL 30, 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 10.27 $ 9.50 $10.00 $ 10.53
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERA-
TIONS
Net Investment Income........ 0.06 0.07 0.04 0.01
Net Realized and Unrealized
Gain (Loss) on Investments.. 0.42 0.75 (0.54)++ 0.11
- -------------------------------------------------------------------------------
Total from Investment Opera-
tions...................... 0.48 0.82 (0.50) 0.12
- -------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income........ (0.01) (0.00)@ -- --
In Excess of Net Investment
Income...................... (0.00) (0.03) -- --
Net Realized Gain............ (0.09) (0.02) -- --
- -------------------------------------------------------------------------------
Total Distributions......... (0.10) (0.05) -- --
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERI-
OD........................... $ 10.65 $ 10.27 $ 9.50 $ 10.65
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL RETURN+................. 4.67% 8.67% (5.00)%** 1.14%**
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period
(Thousands)................. $28,818 $ 8,592 $5,535 $ 3,920
Ratio of Expenses to Average
Net Assets.................. 1.50% 1.45% 1.00%* 1.76%*
Ratio of Net Investment
Income to Average Net
Assets...................... 0.68% 0.88% 1.49%* 0.59%*
Portfolio Turnover Rate...... 47% 59% 81% 47%
Average Commission Rate#..... $0.0323 $0.0316 N/A $0.0323
- -------------------------------------------------------------------------------
Voluntarily Waived Fees and
Expenses Assumed by the
Adviser..................... $ 0.05 $ 0.13 $ 0.13 $ 0.01
Ratio of Expenses to Average
Net Assets Including Expense
Offsets..................... 1.50% 1.43% 1.00%* 1.75%*
- -------------------------------------------------------------------------------
</TABLE>
* Annualized
** Not Annualized
*** Commencement of Operations
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser during the periods indicated.
++ The amount shown for a share outstanding throughout the period does not
accord with the aggregate net gains on investments for that period because
of the timing of sales and repurchases of the Portfolio shares in relation
to fluctuating market value of the investments of the Portfolio.
# Beginning with fiscal year 1996, the portfolio is required to disclose the
average commission rate per share it paid for portfolio trades on which
commissions were charged.
@ Amount is less than $0.01 per share.
13
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
UAM Funds Trust and UAM Funds, Inc. (collectively the "UAM Funds") are
registered under the Investment Company Act of 1940, as amended. The MJI
International Equity Portfolio (the "Portfolio"), a portfolio of UAM Funds
Trust, is a diversified, open-end management investment company. At April 30,
1997, the UAM Funds were comprised of forty-two active portfolios. The
financial statements of the remaining portfolios are presented separately. The
Portfolio is authorized to offer two separate classes of shares--Institutional
Class Shares and Institutional Service Class Shares. Both classes of shares
have identical voting rights (except Institutional 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 objective of the MJI International Equity Portfolio is to provide
maximum total return, including both capital appreciation and current income,
by investing primarily in the common stocks of companies based outside of the
United States.
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: Securities listed on a securities exchange for which
market quotations are readily available are valued at the last quoted sales
price as of the close of the exchange on the day the valuation is made or,
if no sale occurred on such day, at the bid price on such day. Price
information on listed securities is taken from the exchange where the
security is primarily traded. Over-the-counter and unlisted securities are
valued at the current bid price. Quotations of foreign securities and other
assets in a foreign currency are converted to U.S. dollar equivalents. The
converted value is based upon the bid price of the foreign currency against
U.S. dollars quoted by any major bank or by a broker. Short-term
investments that have remaining maturities of sixty days or less at time of
purchase are valued at amortized cost, if it approximates market value. The
value of other assets and securities for which no quotations are readily
available is determined in good faith at fair value using methods
determined by the Board of Trustees.
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 provision
for Federal income taxes is required in the financial statements.
The Portfolio may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on either income or gains earned or
repatriated. The Portfolio accrues such taxes when the related income or
gains are earned.
For the year ended April 30, 1997, the Portfolio expects to defer to May 1,
1997 for Federal income tax purposes, post-October currency losses of
approximately $19,000.
At April 30, 1997, the Portfolio had available a capital loss carryover for
Federal income tax purposes of approximately $45,000 which will expire on
April 30, 2005.
3. REPURCHASE AGREEMENTS: In connection with transactions involving
repurchase agreements, the Portfolio's custodian bank takes possession of
the underlying securities, the value of which exceeds the principal amount
of the repurchase transaction, including accrued interest. To the extent
that any repurchase transaction exceeds one business day, the value of the
collateral is monitored on a daily basis to determine the adequacy of the
collateral. In the event of default on the obligation to repurchase, the
Portfolio has the right to liquidate the collateral and apply the proceeds
in satisfaction of the obligation. In the event of default
14
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
or bankruptcy by the other party to the agreement, realization 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 balances
into a joint trading account which invests in one or more repurchase
agreements. This joint repurchase agreement is covered by the same
collateral requirements as discussed above.
4. FOREIGN CURRENCY TRANSLATION: The books and records of the Portfolio are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars on the date of valuation. The Portfolio does not isolate that
portion of realized or unrealized gains and losses resulting from changes
in the foreign exchange rate from fluctuations arising from changes in the
market prices of the securities. These gains and losses are included in net
realized and unrealized gain and loss on investments on the statement of
operations. Net realized and unrealized gains and losses on foreign
currency transactions represent net foreign exchange gains or losses from
forward foreign currency exchange contracts, disposition of foreign
currencies, currency gains or losses realized between trade and settlement
dates on securities transactions and the difference between the amount of
the investment income and foreign withholding taxes recorded on the
Portfolio's books and the U.S. dollar equivalent amounts actually received
or paid.
5. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The Portfolio may enter
into forward foreign currency exchange contracts to protect the value of
securities held and related receivables and payables against changes in
future foreign exchange rates. A forward currency contract is an agreement
between two parties to buy and sell currency at a set price on a future
date. The market value of the contract will fluctuate with changes in
currency exchange rates. The contract is marked-to-market daily using the
current forward rate and the change in market value is recorded by the
Portfolio as unrealized gain or loss. The Portfolio recognizes realized
gain or loss when the contract is closed, equal to the difference between
the value of the contract at the time it was opened and the value at the
time it was closed. Risks may arise upon entering into these contracts from
the potential inability of counterparties to meet the terms of their
contracts and are generally limited to the amount of unrealized gain on the
contracts, if any, at the date of default. Risks may also arise from the
unanticipated movements in the value of a foreign currency relative to the
U.S. dollar.
6. DISTRIBUTIONS TO SHAREHOLDERS: The Portfolio will normally distribute
substantially all of its net investment income annually. Any realized net
capital gains will be distributed annually. All distributions are recorded
on ex-dividend date.
The amount and character of income and capital gain distributions to be
paid are determined in accordance with Federal income tax regulations which
may differ from generally accepted accounting principles. These differences
are primarily due to differing book and tax treatments for foreign currency
transactions, deferred organization costs and the timing of the recognition
of gains or losses on investments.
Permanent book and tax basis differences relating to shareholder
distributions resulted in reclassifications of $64,790 to decrease
undistributed net investment income and $68,101 to decrease accumulated net
realized loss, with a decrease to paid in capital of $3,311.
Current year permanent book-tax differences, if any, are not included in
ending undistributed net investment income (loss) for the purpose of
calculating net investment income (loss) per share in the financial
highlights.
15
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
7. ORGANIZATION COSTS: Costs incurred by the Portfolio in connection with
its organization have been deferred and are being amortized on a straight-
line basis over a five-year period.
8. OTHER: Security transactions are accounted for on trade date, the date
the trade was executed. Costs used in determining realized gains and losses
on the sale of investment securities are based on the specific
identification method. Dividend income is recorded on the ex-dividend date,
except that certain dividends from foreign securities are recorded as soon
as the Portfolio is informed of the ex-dividend date. Interest income is
recognized on the accrual basis. Most expenses of the UAM Funds can be
directly attributed to a particular portfolio. Expenses which cannot be
directly attributed are apportioned among the portfolios of the UAM Funds
based on their relative net assets. Income, expenses (other than class
specific expenses) 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 have been increased to include expense
offsets, if any, for custodian balance credits.
B. ADVISORY SERVICES: Under the terms of an investment advisory agreement,
Murray Johnstone International Ltd., (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 portion 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 expense
offset arrangements, from exceeding 1.50% and 1.75% of average daily net
assets of the Portfolio's Institutional Class Shares and Service Class Shares,
respectively.
C. ADMINISTRATION SERVICES: UAM Fund Services, Inc. (the "Administrator"), a
wholly-owned subsidiary of UAM, provides and oversees administrative, fund
accounting, dividend disbursing and transfer agent services to the UAM Funds
under a Fund Administration Agreement (the "Agreement"). Pursuant to the
Agreement, the Administrator is entitled to receive annual fees, computed
daily and payable monthly, of 0.19% of the first $200 million of the combined
aggregate net assets; plus 0.11% of the next $800 million of the combined
aggregate net assets; plus 0.07% of the next $2 billion of the combined
aggregate net assets; plus 0.05% of the combined aggregate net assets in
excess of $3 billion. The fees are allocated among the portfolios of the UAM
Funds on the basis of their relative net assets and are subject to a graduated
minimum fee schedule per portfolio which rises from $2,000 per month, upon
inception of a portfolio, to $70,000 annually after two years. For portfolios
with more than one class of shares, the minimum annual fee increases to
$90,000. In addition, the Administrator receives a Portfolio-specific monthly
fee at an annual rate of 0.06% of average daily net assets of the Portfolio.
The Administrator has entered into a Mutual Funds Service Agreement with Chase
Global Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan
Bank, under which CGFSC agrees to provide certain services, including but not
limited to, administration, fund accounting, dividend disbursing and transfer
agent services. Pursuant to the Mutual Funds Service Agreement, the
Administrator pays CGFSC a monthly fee. For the year ended April 30, 1997,
$96,855 was paid to CGFSC for its services.
D. CUSTODIAN: Effective July 17, 1996, The Chase Manhattan Bank (the "Bank"),
an affiliate of CGFSC, is custodian for the Portfolio's assets held in
accordance with the custodian agreement. For the period July 17, 1996 to April
30, 1997, the amount charged to the Portfolio by the Bank aggregated $24,940,
of which $22,624 is unpaid at April 30, 1997.
16
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. DISTRIBUTION SERVICES: UAM Fund Distributors, Inc. (the "Distributor"), a
wholly-owned subsidiary of UAM, distributes the shares of the Portfolio. The
Portfolio has adopted Distribution and Service Plans (the "Plans") on behalf
of the Service Class Shares pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Under the Plans, the Portfolio may not incur distribution
and service fees which exceed an annual rate of 0.75% of the Portfolio's net
assets, however, the Board has currently limited aggregate payments under the
Plans to 0.50% per annum of the Portfolio's net assets. The Portfolio's
Service Class Shares are not currently making payments for distribution fees,
however the Portfolio does pay service fees at an annual rate of 0.25% of the
average daily value of Service Class Shares owned by clients of the Service
Agents.
F. ACCOUNT SERVICES: Effective February 28, 1997, the UAM Funds entered into
an Account Services Agreement (the "Services Agreement") with UAM Retirement
Plan Services, Inc. ("Service Provider"), a wholly-owned subsidiary of UAM.
Under the Services Agreement, the Service Provider agrees to perform certain
services for participants in a self-directed, defined contribution plan, and
for whom the Service Provider provides participant recordkeeping. Pursuant to
the Services Agreement, the Service Provider is entitled to receive, after the
end of each month, a fee at the annual rate of 0.15% of the average aggregate
daily net asset value of shares of the UAM Funds in the accounts for which
they provide services.
G. TRUSTEES' FEES: Each Trustee, who is not an officer or affiliated person,
receives $2,000 per meeting attended, 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 and reimbursement of expenses incurred in
attending Trustee meetings.
H. PURCHASES AND SALES: For the year ended April 30, 1997, the Portfolio made
purchases of $30,109,744 and sales of $8,154,409 of investment securities
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
participate 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 1/8th of 1% per annum, payable at the end of
each calendar quarter, is accrued by each participating Portfolio based on its
average daily unused portion of the line of credit. During the year ended
April 30, 1997, the Portfolio had no borrowings under the agreement.
J. OTHER: At April 30, 1997, 55.8% and 99.9% of total shares outstanding were
held by 3 and 2 record shareholders of the Institutional Class Shares and the
Institutional Service Class Shares, respectively, owning more than 10% of the
aggregate total shares outstanding.
At April 30, 1997, the net assets of the Portfolio were substantially
comprised of foreign denominated securities and currency. Changes in currency
exchange rates will affect the value of and investment income from such
securities and currency.
17
<PAGE>
MJI INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the possibly lower level of
governmental supervision and regulation of foreign securities markets and the
possibility of political or economic instability.
K. CAPITAL SHARE TRANSACTIONS: Transactions in capital shares for the
Portfolios, by class, were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INSTITUTIONAL SERVICE
SHARES CLASS SHARES
----------------------------- ---------------------
YEAR YEAR DECEMBER 31,
ENDED ENDED 1996* TO
APRIL 30, 1997 APRIL 30, 1996 APRIL 30, 1997
-------------- -------------- ---------------------
<S> <C> <C> <C>
Shares Issued.............. 2,516,858 465,365 371,710
In Lieu of Cash Distribu-
tions..................... 15,170 4,217 --
Shares Redeemed............ (663,721) (215,563) (3,511)
--------- -------- -------
Net Increase from Capital
Share Transactions........ 1,868,307 254,019 368,199
========= ======== =======
</TABLE>
* Commencement of Operations
18
<PAGE>
UAM FUNDS
NEWBOLD'S EQUITY PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION -- JULY 10, 1997
This Statement of Additional Information ("SAI") is not a Prospectus but
should be read in conjunction with the Prospectus of the UAM Funds Trust (the
"UAM Funds" or the "Fund") for the Newbold's Equity Portfolio dated July 10,
1997 relating to the Institutional Class Shares, and the Prospectus dated July
10, 1997 relating to the Institutional Service Class Shares (the "Service Class
Shares"). To obtain the Prospectuses, please call the UAM Funds Service Center
at 1-800-638-7983.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES........................... 3
PURCHASE AND REDEMPTION OF SHARES........................... 6
SHAREHOLDER SERVICES........................................ 7
INVESTMENT LIMITATIONS...................................... 8
MANAGEMENT OF THE FUND...................................... 9
INVESTMENT ADVISER.......................................... 11
SERVICE AND DISTRIBUTION PLANS.............................. 11
PORTFOLIO TRANSACTIONS...................................... 13
ADMINISTRATIVE SERVICES..................................... 14
PERFORMANCE CALCULATIONS.................................... 14
GENERAL INFORMATION......................................... 15
APPENDIX A -- DESCRIPTION OF SECURITIES AND RATINGS......... A-1
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES.. B-1
</TABLE>
FINANCIAL STATEMENTS
INVESTMENT ADVISER
Newbold's Asset Management, Inc.
DISTRIBUTOR
UAM Fund Distributors, Inc. (Distributor)
<PAGE>
ADMINISTRATOR AND TRANSFER AGENT
UAM Fund Services, Inc. (FSI)
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the investment objective and policies of
the Newbold's Equity Portfolio (the "Portfolio") as set forth in the
Prospectuses for the Institutional Class Shares and Service Class Shares of the
Portfolio:
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified brokers,
dealers, domestic and foreign banks or other financial institutions, so long as
the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940, as amended, (the "1940
Act") or the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "SEC") thereunder, which currently require that (a) the
borrower pledge and maintain with the Portfolio collateral consisting of cash,
an irrevocable letter of credit issued by a domestic U.S. bank or securities
issued or guaranteed by the United States Government having a value at all times
not less than 100% of the value of the securities loaned, (b) the borrower add
to such collateral whenever the price of the securities loaned rises (i.e., the
borrower "marks to the market" on a daily basis), (c) the loan be made subject
to termination by the Portfolio at any time, and (d) the Portfolio receives
reasonable interest on the loan (which may include the Portfolio investing any
cash collateral in interest bearing short-term investments). As with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the securities loaned if the borrower of the securities fails
financially. These risks are similar to the ones involved with repurchase
agreements as discussed in the Prospectuses.
FOREIGN SECURITIES
Investors should recognize that investing in foreign companies directly or
through the purchase of American Depositary Receipts ("ADRs") involves certain
special considerations which are not typically associated with investing in U.S.
companies. Since the securities of foreign companies are frequently denominated
in foreign currencies, investments may be affected favorably or unfavorably by
changes in currency rates and in exchange control regulations, and may incur
costs in connection with conversions between various currencies.
As foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards and they may have policies that are
not comparable to those of domestic companies, there may be less information
available about certain foreign companies than about domestic companies.
Securities of some foreign companies are generally less liquid and more volatile
than securities of comparable domestic companies. There is generally less
government supervision and regulation of stock exchanges, brokers and listed
companies than in the U.S. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
U.S. investments in those countries.
Certain foreign governments levy withholding taxes on dividend and interest
income. Although in some countries a portion of these taxes are recoverable, the
non-recoverable portion of foreign withholding taxes will reduce the income
received from the companies comprising the Portfolios' investments. However,
these foreign withholding taxes are not expected to have a significant impact.
HEDGING STRATEGIES
The Portfolio may engage in various portfolio strategies to hedge against
adverse movements in the equity markets. The Portfolio may buy or sell futures
contracts, write (i.e., sell) covered call options on its portfolio securities,
purchase put and call options on securities and engage in transactions in
related options on such futures. Each of these portfolio strategies is described
below. Although certain risks are involved in options and futures transactions,
the Adviser believes that, because the Portfolio will engage in options and
futures transactions only for hedging purposes, the options and futures
portfolio strategies of the Portfolio will not subject it to the risks
3
<PAGE>
frequently associated with the speculative use of options and futures
transactions. While the Portfolio's use of hedging strategies is intended to
reduce the volatility of the net asset value of the Portfolio's shares, the
Portfolio's net asset value will fluctuate. There can be no assurance that the
Portfolio's hedging transactions will be effective. Also, the Portfolio may not
necessarily be engaging in hedging activities when movements in any particular
equity market occur.
FUTURES CONTRACTS
The Portfolio may enter into futures contracts for the purposes of hedging,
remaining fully invested and reducing transaction costs. Futures contracts
provide for the future sale by one party and purchase by another party of a
specified amount of a specific security at a specified future time and at a
specified price. Futures contracts which are standardized as to maturity date
and underlying financial instrument are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"), a U.S. Government
agency.
Although futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold" or "selling" a contract previously
"purchased") in an identical contract to terminate the position. Brokerage
commissions are incurred when a futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in cash or
acceptable securities with a broker or custodian to initiate and maintain open
positions in futures contracts. A margin deposit is intended to assure
completion of the contract (delivery or acceptance of the underlying security)
if it is not terminated prior to the specified delivery date. Minimal initial
margin requirements are established by the futures exchange and may be changed.
Brokers may establish deposit requirements which are higher than the exchange
minimums. Generally, margin deposits are structured as percentages (e.g., 5%) of
the market value of the contracts being traded. After a futures contract
position is opened, the value of the contract is marked to market daily. If the
futures contract price changes to the extent that the margin on deposit does not
satisfy margin requirements, payment of additional "variation" margin will be
required. Conversely, change in the contract value may reduce the required
margin, resulting in a repayment of excess margin to the contract holder.
Variation margin payments are made to and from the futures broker for as long as
the contract remains open. The Portfolio expects to earn interest income on its
margin deposits.
Traders in futures contracts may be broadly classified as either "hedgers"
or "speculators". Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade and use
futures contracts with the expectation of realizing profits from a fluctuation
in interest rates. The Portfolio intends to use futures contracts only for
hedging purposes.
Regulations of the CFTC applicable to the Fund require that all of its
futures transactions constitute bona fide hedging positions or that the Fund's
commodity futures and option positions be for other purposes, only to the extent
that the aggregate initial margins and premiums required to establish such non-
hedging positions do not exceed five percent of the liquidation value of the
Portfolio. The Portfolio will only sell futures contracts to protect securities
it owns against price declines or purchase contracts to protect against an
increase in the price of securities it intends to purchase. As evidence of this
hedging interest, the Portfolio expects that approximately 75% of its futures
contracts purchases will be "completed", that is, equivalent amounts of related
securities will have been purchased or will be purchased by the Portfolio on the
settlement date of the futures contracts.
Although techniques other than the sale and purchase of futures contracts
could be used to control the Portfolio's exposure to market fluctuations, the
use of futures contracts may be a more effective means of hedging this exposure.
While the Portfolio will incur commission expenses in both opening and closing
out futures positions,
4
<PAGE>
these costs are lower than transaction costs incurred in the purchase and sale
of the underlying securities.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS
The Portfolio will not enter into futures contract transactions to the
extent that, immediately thereafter, the sum of its initial margin deposits on
open contracts exceeds 5% of the market value of its total assets. In addition,
the Portfolio will not enter into futures contracts to the extent that its
outstanding obligations to purchase securities under these contracts would
exceed 20% of its total assets.
RISK FACTORS IN FUTURES TRANSACTIONS
The Portfolio will minimize the risk that it will be unable to close out a
futures position by only entering into futures which are traded on national
futures exchanges and for which there appears to be a liquid secondary market.
However, there can be no assurance that a liquid secondary market will exist for
a particular futures contract at any given time. However, there can be no
assurance that a liquid secondary market will exist for any particular futures
contract at any specific time. Thus, it may not be possible to close a futures
position. In the event of adverse price movements, the Portfolio would continue
to be required to make daily cash payments to maintain its required margin. In
such situations, if the Portfolio has insufficient cash, it may have to sell
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, the Portfolio may be required to make
delivery of the instruments underlying futures contracts it holds. The inability
to close futures positions also could have an adverse impact on the Portfolio's
ability to effectively hedge.
The risk of loss in trading futures contracts in some strategies can be
substantial due both to the low margin deposits required and the extremely high
degree of leverage involved in futures pricing. As a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss (as well as gain) to the investor. For example, if at the time of purchase,
10% of the value of the futures contract is deposited as margin, a subsequent
10% decrease in the value of the futures contract would result in a total loss
of the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in a loss in excess of the
amount invested in the contract. However, because the futures strategies of the
Portfolio are engaged in only for hedging purposes, the Adviser does not believe
that the Portfolio is subject to the risks of loss frequently associated with
futures transactions. The Portfolio would presumably have sustained comparable
losses if, instead of the futures contract, it had invested in the underlying
financial instrument and sold it after the decline.
Utilization of futures transactions by the Portfolio does involve the risk
of imperfect or no correlation where the securities underlying the futures
contracts have different maturities than the portfolio securities being hedged.
It is also possible that the Portfolio could lose money on futures contracts and
also experience a decline in value of portfolio securities. There is also the
risk of loss by the Portfolio of margin deposits in the event of bankruptcy of a
broker with whom the Portfolio has an open position in a futures contract or
related option.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and, therefore, does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading thereby
preventing prompt liquidation of futures positions and subjecting some futures
traders to substantial losses.
Futures contracts may be traded on foreign exchanges. Such transactions are
subject to the risks of governmental actions affecting trading in or the prices
of the securities. The value of such positions also could be
5
<PAGE>
adversely affected by (i) other complex foreign political and economic factors,
(ii) lesser availability than in the United States of data on which to make
trading decisions, (iii) delays in the Portfolio's ability to act upon economic
events occurring in foreign markets during nonbusiness hours in the United
States, (iv) the imposition of different exercise and settlement terms and
procedures and margin requirements than in the United States, and (v) lesser
trading volume.
OPTIONS
The Portfolio may purchase and sell put and call options on securities and
futures contracts for hedging purposes. Investments in options involve some of
the same considerations that are involved in connection with investments in
futures contracts (e.g., the existence of a liquid secondary market). In
addition, the purchase of an option also entails the risk that changes in the
value of the underlying security or contract will not be fully reflected in the
value of the option purchased. Depending on the pricing of the option compared
to either the futures contract on which it is based or the price of the
securities being hedged, an option may or may not be less risky than ownership
of the futures contract or such securities. For example, there are significant
differences between the securities, futures and options markets that could
result in an imperfect correlation between these markets, causing a given
transaction not to achieve its objective. A decision as to whether, when, and
how to use options involves the exercise of skill and judgment by the Adviser,
and even a well-conceived transaction may be unsuccessful because of market
behavior or unexpected events.
WRITING COVERED CALL OPTIONS
The principal reason for writing call options is to attempt to realize,
through the receipt of premiums, a greater return than would be realized on
securities alone. By writing covered call options, the Portfolio gives up the
opportunity, while the option is in effect, to profit from any price increase in
the underlying security above the option exercise price. In addition, the
Portfolio's ability to sell the underlying security will be limited while the
option is in effect unless the Portfolio effects a closing purchase transaction.
A closing purchase transaction cancels out the Portfolio's position as the
writer of an option by means of an offsetting purchase of an identical option
prior to the expiration of the option it has written. Covered call options serve
as a partial hedge against the price of the underlying security declining. The
Portfolio writes only covered options, which means that so long as the Portfolio
is obligated as the writer of the option it will, in a segregated account with
its custodian, maintain cash or liquid securities denominated in U.S. dollars
with a value equal to or greater than the exercise price of the underlying
securities.
PURCHASING OPTIONS
The amount of any appreciation in the value of the underlying security
subject to a put will be partially offset by the amount of the premium paid for
the put option and any related transaction costs. Prior to its expiration, a put
option may be sold in a closing sale transaction and profit or loss from a sale
will depend on whether the amount received is more or less than the premium paid
for the put option plus the related transaction costs. A closing sale
transaction cancels out the Portfolio's position as purchaser of an option by
means of an offsetting sale of an identical option prior to the expiration of
the option it has purchased. In certain circumstances, the Portfolio may
purchase call options on securities held in its investment portfolio on which it
has written call options or on securities which it intends to purchase.
PURCHASE AND REDEMPTION OF SHARES
Both Classes of shares of the Portfolio may be purchased without sales
commission at the net asset value per share next determined after an order is
received in proper form by the Fund, and payment is received by the Fund's
custodian. An order received in proper form prior to the 4:00 p.m. close of the
New York Stock Exchange (the "Exchange") will be executed at the price computed
on the date of receipt; and an order received not in proper form or after the
4:00 p.m. close of the Exchange will be executed at the price computed on the
next day the
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<PAGE>
Exchange is open after proper receipt. The Exchange will be closed on the
following days: New Year's Day, Martin Luther King, Jr.'s Birthday, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
The Portfolio reserves the right in its sole discretion (1) to suspend the
offering of its shares, (2) to reject purchase orders when in the judgment of
management such rejection is in the best interests of the Fund, and (3) to
reduce or waive the minimum for initial and subsequent investment for certain
fiduciary accounts such as employee benefit plans or under circumstances where
certain economies can be achieved in sales of the Portfolio's shares.
The Portfolio may suspend redemption privileges or postpone the date of
payment (1) during any period that both the Exchange and custodian bank are
closed or trading on the Exchange is restricted as determined by the SEC, (2)
during any period when an emergency exists as defined by the rules of the SEC as
a result of which it is not reasonably practicable for the Portfolio to dispose
of securities owned by it or to fairly determine the value of its assets, and
(3) for such other periods as the SEC may permit. The Fund has made an election
with the SEC to pay in cash all redemptions requested by any shareholder of
record limited in amount during any 90-day period to the lesser of $250,000 or
1% of the net assets of the Fund at the beginning of such period. Such
commitment is irrevocable without the prior approval of the SEC. Redemptions in
excess of the above limits may be paid, in whole or in part, in investment
securities or in cash as the Board of Trustees may deem advisable; however,
payment will be made wholly in cash unless the Board of Trustees believe that
economic or market conditions exist which would make such a practice detrimental
to the best interests of the Fund. If redemptions are paid in investment
securities, such securities will be valued as set forth in the Prospectus under
"How Share Prices are Determined", and a redeeming shareholder would normally
incur brokerage expenses if those securities were converted to cash.
No charge is made by the Portfolio for redemptions. Any redemption may be
more or less than the shareholder's initial cost depending on the market value
of the securities held by the Portfolio.
SIGNATURE GUARANTEES
To protect your account, the Fund and Chase Global Funds Services Company
(the "CGFSC") from fraud, signature guarantees are required for (1) redemptions
where the proceeds are to be sent to someone other than the registered
shareowner(s) or the registered address or (2) share transfer requests.
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, and as
further described in the Portfolio's Prospectus. The signature guarantee must
appear either: (1) on the written request for redemption; (2) on a separate
instrument for assignment ("stock power") which should specify the total number
of shares to be redeemed; or (3) on all stock certificates tendered for
redemption and, if shares held by the Fund are also being redeemed, on the
letter or stock power.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Institutional Class Shares of the Newbold's Equity Portfolio may be
exchanged for any other Institutional Class Shares of any other UAM Funds or UAM
Funds, Inc. Portfolio, and Service Class Shares may be exchanged for any other
Service Class Shares of any other UAM Funds or UAM Funds, Inc. Portfolio.
Exchange requests should be made by calling the Fund (1-800-638-7983) or by
writing to UAM Funds, UAM Funds Service Center, c/o Chase Global Funds Services
Company, P.O. Box 2798, Boston, MA 02208-2798. The exchange privilege is only
available with respect to Portfolios that are qualified for sale in the
shareholder's state of residence.
Any such exchange will be based on the respective net asset values of the
shares involved. There is no sales commission or charge of any kind. Before
making an exchange into a Portfolio, a shareholder should read its
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<PAGE>
Prospectus and consider the investment objective of the Portfolio to be
purchased. You may obtain a Prospectus for the Portfolio(s) you are interested
in by calling the UAM Funds Service Center at 1-800-638-7983.
Neither the Fund nor CGFSC will be responsible for the authenticity of the
exchange instructions received by telephone. Exchanges may also be subject to
limitations as to amounts or frequency, and to other restrictions established by
the Board of Trustees to assure that such exchanges do not disadvantage the Fund
and its shareholders.
For Federal income tax purposes an exchange between Portfolios is a taxable
event, and, accordingly, a capital gain or loss may be realized. In a revenue
ruling relating to circumstances similar to the Fund's, an exchange between
series of a Fund was also deemed to be a taxable event. It is likely, therefore,
that a capital gain or loss would be realized on an exchange between Portfolios;
you may want to consult your tax adviser for further information in this regard.
The exchange privilege may be modified or terminated at any time.
TRANSFER OF SHARES
Shareholders may transfer shares of the Portfolio to another person by
making a written request to the Fund. The request should clearly identify the
account and number of shares to be transferred, and include the signature of all
registered owners and all stock certificates, if any, which are subject to the
transfer. The signature on the letter of request, the stock certificate or any
stock power must be guaranteed in the same manner as described under "Purchase
and Redemption of Shares." As in the case of redemptions, the written request
must be received in good order before any transfer can be made.
INVESTMENT LIMITATIONS
The following limitations supplement those set forth in each Prospectus of
the Portfolio. Whenever an investment limitation sets forth a percentage
limitation on investment or utilization of assets, such limitation shall be
determined immediately after and as a result of the Portfolio's acquisition of
such security or other asset. Accordingly, any later increase or decrease
resulting from a change in values, net assets or other circumstances will not be
considered when determining whether the investment complies with the Portfolio's
investment limitations. Investment limitations (1), (2), (3), (4) and (6) are
classified as fundamental. The Portfolio's fundamental investment limitations
cannot be changed without approval by a "majority of the outstanding shares" (as
defined in the 1940 Act) of the Portfolio. The Portfolio will not:
(1) invest in physical commodities or contracts on physical commodities;
(2) purchase or sell real estate or real estate limited partnerships,
although it may purchase and sell securities of companies which deal
in real estate and may purchase and sell securities which are secured
by interests in real estate;
(3) make loans except (i) by purchasing debt securities in accordance with
its investment objectives and (ii) by lending its portfolio securities
to banks, brokers, dealers and other financial institutions so long as
such loans are not inconsistent with the 1940 Act or the rules and
regulations or interpretations of the Commission thereunder;
(4) underwrite the securities of other issuers;
(5) invest in futures and/or options on futures unless (i) not more than
5% of the Portfolio's assets are required as deposit to secure
obligations under such futures and/or options on futures contracts
provided, however, that in the case of an option that is in-the-money
at the time of purchase, the in-the-money amount may be excluded in
computing such 5% and (ii) not more than 20% of the Portfolio's assets
are invested in futures and options;
(6) issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Portfolio from (i)
making any permitted borrowings, mortgages or pledges, or (ii)
entering into options, futures or repurchase transactions;
(7) purchase on margin or sell short except as specified in (5) above;
8
<PAGE>
(8) invest more than an aggregate of 15% of the net assets of the
Portfolio, determined at the time of investment, in securities subject
to legal or contractual restrictions on resale or securities for which
there are no readily available markets; and
(9) invest for the purpose of exercising control over management of any
company.
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The officers of the Fund manage its day-to-day operations and are
responsible to the Fund's Board of Trustees. The Trustees set broad policies for
the Fund and elect its Officers. The following is a list of the Trustees and
Officers of the Fund and a brief statement of their present positions, date of
birth, address and principal occupations during the past five years. Those
people who are "interested persons" of the Fund as that term is defined in the
1940 Act are indicated by an asterisk (*).
JOHN T. BENNETT, JR. (1/26/29), Trustee; College Road--RFD 3, Meredith, NH
03253; President of Squam Investment Management Company, Inc. and Great Island
Investment Company, Inc.; President of Bennett Management Company from 1988 to
1993.
NANCY J. DUNN (8/14/51), Trustee; 10 Garden Street, Cambridge, MA 02138; Vice
President for Finance and Administration and Treasurer of Radcliffe College
since 1991.
PHILIP D. ENGLISH (8/5/48), Trustee; 16 West Madison Street, Baltimore, MD
21201; President and Chief Executive Officer of Broventure Company, Inc.;
Chairman of the Board of Chektec Corporation and Cyber Scientific, Inc.
WILLIAM A. HUMENUK (4/21/42), Trustee; 4000 Bell Atlantic Tower, 1717 Arch
Street, Philadelphia, PA 19103; Partner in the Philadelphia office of the law
firm Dechert Price & Rhoads; Director, Hofler Corp.
NORTON H. REAMER* (3/21/35), Trustee; One International Place, Boston, MA 02110;
President and Chairman of the Fund; President, Chief Executive Officer and a
Director of United Asset Management Corporation; Director, Partner or Trustee of
each of the Investment Companies of the Eaton Vance Group of Mutual Funds.
CHARLES H. SALISBURY, JR.* (8/24/40), Trustee; One International Place, Boston,
MA 02110; Executive Vice President of United Asset Management Corporation;
formerly an executive officer and Director of T. Rowe Price and President and
Chief Investment Officer of T. Rowe Price Trust Company.
PETER M. WHITMAN, JR.* (7/1/43), Trustee; One Financial Center, Boston, MA
02111; President and Chief Investment Officer of Dewey Square Investors
Corporation ("DSI") since 1988; Director and Chief Executive Officer of H. T.
Investors, Inc., formerly a subsidiary of DSI.
WILLIAM H. PARK* (9/19/47), Vice President; One International Place, Boston, MA
02110; Executive Vice President and Chief Financial Officer of United Asset
Management Corporation.
GARY L. FRENCH* (7/4/51), Treasurer; 211 Congress Street, Boston, MA 02110;
President of UAM Fund Services, Inc. and UAM Fund Distributors, Inc.; formerly
Vice President of Operations, Development and Control of Fidelity Investment in
1995; Treasurer of the Fidelity Group of Mutual Funds from 1991 to 1995.
MICHAEL E. DEFAO* (2/28/68), Secretary; 211 Congress Street, Boston, MA 02110;
Vice President and General Counsel of UAM Fund Services, Inc. and UAM Fund
Distributors, Inc.; Associate Attorney of Ropes & Gray (a law firm) from 1993 to
1995.
ROBERT R. FLAHERTY* (9/18/63), Assistant Treasurer; 211 Congress Street, Boston,
MA 02110; Vice President of UAM Fund Services, Inc.; formerly Manager of Fund
Administration and Compliance of Chase Global Fund Services Company from 1995 to
1996; Deloitte & Touche LLP from 1985 to 1995, Senior Manager.
KARL O. HARTMANN* (3/7/55), Assistant Secretary; 73 Tremont Street, Boston, MA
02108; Senior Vice President and General Counsel of Chase Global Funds Services
Company.
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GORDON M. SHONE* (7/30/56), Assistant Treasurer; 73 Tremont Street, Boston, MA
02108; Vice President of Fund Administration and Compliance of Chase Global
Funds Services Company; formerly Senior Manager of Coopers & Lybrand LLP (1983-
1996).
REMUNERATION OF TRUSTEES AND OFFICERS
The Fund pays each Trustee, who is not also an officer or affiliated
person, a $150 quarterly retainer fee per active Portfolio which currently
amounts to $1,050 per quarter. In addition, each unaffiliated Trustee receives a
$2,000 meeting fee which is aggregated for all the Trustees and allocated
proportionately among the Portfolios of the Fund, UAM Funds, Inc. and
reimbursement for travel and other expenses incurred while attending Board
meetings. Trustees who are also officers or affiliated persons receive no
remuneration for their service as Trustees. The Fund's officers and employees
are paid by either the Adviser, United Asset Management Corporation ("UAM"), FSI
or CGFSC and receive no compensation from the Fund. As of June 30, 1997, the
Trustees and officers of the Fund owned less than 1% of the Fund's outstanding
shares.
The following table shows aggregate compensation paid to each of the Fund's
Trustees by the Fund and total compensation paid by the Fund and UAM Funds, Inc.
(collectively the "Fund Complex") in the fiscal year ended April 30, 1997.
<TABLE>
<CAPTION>
COMPENSATION TABLE
(1) (2) (3) (4) (5)
PENSION OR
RETIREMENT TOTAL COMPENSATION
AGGREGATE BENEFITS ESTIMATED ANNUAL FROM REGISTRANT AND
NAME OF PERSON, COMPENSATION ACCRUED AS PART OF BENEFITS UPON FUND COMPLEX
POSITION FROM REGISTRANT FUND EXPENSES RETIREMENT PAID TO TRUSTEES
- ---------------------- ------------------- ------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
John T. Bennett, Jr.
Trustee............. $4,874 0 0 $31,700
J. Edward Day
Former Trustee...... $2,168 0 0 $15,550
Philip D. English
Trustee............. $4,874 0 0 $31,700
William A. Humenuk
Trustee............. $4,874 0 0 $31,700
Nancy Dunn
Trustee............. $ 0 0 0 $ 0
</TABLE>
PRINCIPAL HOLDERS OF SECURITIES
As of June 16, 1997, the following persons or organizations held of
record or beneficially 5% or more of the shares of the Portfolio:
Newbold's Equity Portfolio Institutional Class Shares: Bryce Douglas
Investment L.P., Box 672, Kimberson, PA, 19.8%; David G. Jones, MD, PC, PSP,
1860 Nottingham Rd., Allentown, PA, 12.5%*; Joseph F. Rodgers, MD, 1723 Sylvan
Ln., Gladwyne, PA, 10.0%; Warren Pearlman Goldburgh Rollover IRA, 7 Gregory Rd.,
Lyme, NH, 9.8%*; James D. Jamieson, P.O. Box 95, Valley Forge, PA, 8.8%; Mary
Jane Littlepage, 302 Berkeley, Devon, PA, 7.2%; and Arthur N. Triestler, 260
Lamplighter Ln., Huntingdon Valley, PA, 5.7%.
________
* Denotes shares held by a trustee or other fiduciary for which beneficial
ownership is disclaimed or presumed disclaimed.
Any persons or organizations listed above as owning 25% or more of the
outstanding shares of the Portfolio may be presumed to "control" ( as that term
is defined in the 1940 Act) the Portfolio. As a result, those persons or
organizations could have the ability to vote a majority of the shares of the
Portfolio on any matter requiring the approval of shareholders of the Portfolio.
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<PAGE>
INVESTMENT ADVISER
CONTROL OF ADVISER
The Adviser is a wholly-owned subsidiary of UAM, a holding company
incorporated in Delaware in December 1980 for the purpose of acquiring and
owning firms engaged primarily in institutional investment management. Since its
first acquisition in August 1983, UAM has acquired or organized over 45 such
wholly-owned affiliated firms (the "UAM Affiliated Firms"). UAM believes that
permitting UAM Affiliated Firms to retain control over their investment advisory
decisions is necessary to allow them to continue to provide investment
management services that are intended to meet the particular needs of their
respective clients.
Accordingly, after acquisition by UAM, UAM Affiliated Firms continue to
operate under their own firm name, with their own leadership and individual
investment philosophy and approach. Each UAM Affiliated Firm manages its own
business independently on a day-to-day basis. Investment strategies employed and
securities selected by UAM Affiliated Firms are separately chosen by each of
them. Several UAM Affiliated Firms also act as investment advisers to separate
series or Portfolios of UAM Funds, Inc., a registered investment company.
ADVISORY FEES
As compensation for services rendered by the Adviser under the Investment
Advisory Agreement, the Portfolio pays the Adviser an annual fee in monthly
installments, calculated by applying the following annual percentage rates to
the Portfolio's average daily net assets for the month:
Newbold's Equity Portfolio............................... 0.50%
From September 13, 1995 (date of commencement) to April 30, 1996, and for
the fiscal year ended April 30, 1997, the Newbold's Equity Portfolio paid
advisory fees of $0. The Adviser voluntarily waived advisory fees of $36,000 for
the period ended April 30, 1996 and $73,749 for the fiscal year ended April 30,
1997. Until January 29, 1998, the Adviser has voluntarily agreed to waive all or
a portion of its advisory fees and to assume operating expenses otherwise
payable by the Portfolio, if necessary, in order to keep the Portfolio's total
annual operating expenses from exceeding 0.90% of average daily net assets.
SERVICE AND DISTRIBUTION PLANS
As stated in the Portfolio's Service Class Shares Prospectus, the
Distributor may enter into agreements with broker-dealers and other financial
institutions ("Service Agents"), pursuant to which they will provide
administrative support services to Service Class shareholders who are their
customers ("Customers") in consideration of the Fund's payment of 0.15% (on an
annualized basis) of the average daily net asset value of the Service Class
Shares held by the Service Agent for the benefit of its Customers. Such services
include:
(a) acting as the sole shareholder of record and nominee for beneficial
owners;
(b) maintaining account records for such beneficial owners of the Fund's
shares;
(c) opening and closing accounts;
(d) answering questions and handling correspondence from shareholders
about their accounts;
(e) processing shareholder orders to purchase, redeem and exchange shares;
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<PAGE>
(f) handling the transmission of funds representing the purchase price or
redemption proceeds;
(g) issuing confirmations for transactions in the Fund's shares by
shareholders;
(h) distributing current copies of prospectuses, statements of additional
information and shareholder reports;
(i) assisting customers in completing application forms, selecting
dividend and other account options and opening any necessary custody
accounts;
(j) providing account maintenance and accounting support for all
transactions; and
(k) performing such additional shareholder services as may be agreed upon
by the Fund and the Service Agent, provided that any such additional
shareholder services must constitute a permissible non-banking
activity in accordance with the then current regulations of, and
interpretations thereof by, the Board of Governors of the Federal
Reserve System, if applicable.
Each agreement with a Service Agent is governed by a Shareholder Service
Plan (the "Service Plan") that has been adopted by the Fund's Board of Trustees.
Pursuant to the Service Plan, the Board of Trustees reviews, at least quarterly,
a written report of the amounts expended under each agreement with Service
Agents and the purposes for which the expenditures were made. In addition,
arrangements with Service Agents must be approved annually by a majority of the
Fund's Trustees, including a majority of the Trustees who are not "interested
persons" of the company as defined in the 1940 Act and have no direct or
indirect financial interest in such arrangements.
The Board of Trustees has approved the arrangements with Service Agents
based on information provided by the Fund's service contractors that there is a
reasonable likelihood that the arrangements will benefit the Fund and its
shareholders by affording the Fund greater flexibility in connection with the
servicing of the accounts of the beneficial owners of its shares in an efficient
manner. Any material amendment to the Fund's arrangements with Service Agents
must be approved by a majority of the Fund's Board of Trustees (including a
majority of the disinterested Trustees). So long as the arrangements with
Service Agents are in effect, the selection and nomination of the members of the
Fund's Board of Trustees who are not "interested persons" (as defined in the
1940 Act) of the Company will be committed to the discretion of such non-
interested Trustees.
Pursuant to Rule 12b-1 under the 1940 Act, the Fund has adopted a
Distribution Plan for the Service Class Shares of the Fund (the "Distribution
Plan"). The Distribution Plan permits the Fund to pay for certain distribution,
promotional and related expenses involved in the marketing of only the Service
Class Shares.
The Distribution Plan permits the Service Class Shares, pursuant to the
Distribution Agreement, to pay a monthly fee to the Distributor for its services
and expenses in distributing and promoting sales of the Service Class Shares.
These expenses include, among other things, preparing and distributing
advertisements, sales literature and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, and paying distribution
and maintenance fees to securities brokers and dealers who enter into agreements
with the Distributor. In addition, the Service Class Shares may make payments
directly to other unaffiliated parties, who either aid in the distribution of
their shares or provide services to the Class.
The maximum annual aggregate fee payable by the Fund under the Service and
Distribution Plans (the "Plans"), is 0.75% of the Service Class Shares' average
daily net assets for the year. The Fund's Board of Trustees may reduce this
amount at any time. Although the maximum fee payable under the 12b-1 Plan
relating to the Service Class Shares is 0.75% of average daily net assets of
such class, the Board of Trustees has determined that the annual fee, payable on
a monthly basis, under the Plans relating to the Service Class Shares, currently
cannot exceed 0.50% of the average daily net assets represented by the Service
Class. While the current fee which will be payable under the Service Plan and
Distribution Plan has been set at 0.25% and 0.15%, respectively, the Plans
permit a full
12
<PAGE>
0.75% on all assets to be paid at any time following appropriate Board approval.
All of the distribution expenses incurred by the Distributor and others,
such as broker/dealers, in excess of the amount paid by the Service Class Shares
will be borne by such persons without any reimbursement from such Classes.
Subject to seeking best price and execution, the Fund may, from time to time,
buy or sell portfolio securities from or to firms which receive payments under
the Plans. From time to time, the Distributor may pay additional amounts from
its own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans, the Distribution Agreement and the form of dealer's and services
agreements have all been approved by the Board of Trustees of the Fund,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Fund and who have no direct or indirect
financial interest in the Plans or any related agreements, by vote cast in
person at a meeting duly called for the purpose of voting on the Plans and such
Agreements. Continuation of the Plans, the Distribution Agreement and the
related agreements must be approved annually by the Board of Trustees in the
same manner, as specified above. The Newbold's Equity Portfolio Service Class
Shares have not been offered prior to the date of this Statement.
Each year the Trustees must determine whether continuation of the Plans is
in the best interest of the shareholders of Service Class Shares and that there
is a reasonable likelihood of the Plans providing a benefit to the Class. The
Plans, the Distribution Agreement and the related agreements with any broker-
dealer or others relating to the Class may be terminated at any time without
penalty by a majority of those Trustees who are not "interested persons" or by a
majority vote of the outstanding voting securities of the Class. Any amendment
materially increasing the maximum percentage payable under the Plans must
likewise be approved by a majority vote of the relevant Class' outstanding
voting securities, as well as by a majority vote of those Trustees who are not
"interested persons." Also, any other material amendment to the Plans must be
approved by a majority vote of the Trustees including a majority of the Trustees
of the Fund having no interest in the Plans. In addition, in order for the Plans
to remain effective, the selection and nomination of Trustees who are not
"interested persons" of the Fund must be effected by the Trustees who themselves
are not "interested persons" and who have no direct or indirect financial
interest in the Plans. Persons authorized to make payments under the Plans must
provide written reports at least quarterly to the Board of Trustees for their
review. The NASD has adopted amendments to its Conduct Rules relating to
investment company sales charges. The Fund and the Distributor intend to operate
in compliance with these rules.
PORTFOLIO TRANSACTIONS
The Investment Advisory Agreement authorizes the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolio and directs the Adviser to use its best efforts to
obtain the best execution with respect to all transactions for the Portfolio.
The Adviser may, however, consistent with the interests of the Portfolio, select
brokers on the basis of the research, statistical and pricing services they
provide to the Portfolio. Information and research received from such brokers
will be in addition to, and not in lieu of, the services required to be
performed by the Adviser under the Investment Advisory Agreement. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided that such
commissions are paid in compliance with the Securities Exchange Act of 1934, as
amended, and that the Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Adviser to the Portfolio and the Adviser's other clients.
It is not the Fund's practice to allocate brokerage or effect principal
transactions with dealers on the basis of sales of Fund shares which may be made
through broker-dealer firms. However, the Adviser may place portfolio orders
with qualified broker-dealers who refer clients to the Adviser. During the
period from inception on September 13, 1995 to April 30, 1996, and for the
fiscal year ended April 30, 1997, the Newbold's Equity Portfolio paid aggregate
brokerage commissions of $20,250 and $37,343, respectively.
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<PAGE>
Some securities considered for investment by the Portfolio may also be
appropriate for other clients served by the Adviser. If purchases or sales of
securities consistent with the investment policies of the Portfolio and one or
more of these other clients served by the Adviser is considered at or about the
same time, transactions in such securities will be allocated among the Portfolio
and clients in a manner deemed fair and reasonable by the Adviser. Although
there is no specified formula for allocating such transactions, the various
allocation methods used by the Adviser, and the results of such allocations, are
subject to periodic review by the Fund's Board of Trustees.
ADMINISTRATIVE SERVICES
As stated in the Prospectus, the Board of Trustees of the Fund approved a
new Fund Administration Agreement between UAM Fund Services, Inc., a wholly
owned subsidiary of UAM, and the Fund. The Fund's Trustees also approved a
Mutual Fund Services Agreement between FSI and CGFSC. The services provided by
FSI and CGFSC and the basis of the fees payable by the Fund under the Fund
Administration Agreement are described in the Portfolios' Prospectus. Prior to
April 15, 1996, Chase Global Funds Services Company or its predecessor, Mutual
Funds Service Company, provided certain administrative services to the Fund
under an Administration Agreement between the Fund and U.S. Trust Company of New
York.
The basis of the fees paid to CGFSC for the period September 13, 1995 to
April 14, 1996 was as follows: the Fund paid a monthly fee for its services
which on an annualized basis equaled 0.20% of the first $200 million in combined
assets; plus 0.12% of the next $800 million in combined assets; plus 0.08% on
assets over $1 billion but less than $3 billion; plus 0.06% on assets over $3
billion. The fees were allocated among the Portfolios on the basis of their
relative assets and were subject to a designated minimum fee schedule per
Portfolio, which ranged from $2,000 per month upon inception of a Portfolio to
$70,000 annually after two years.
For the period ended April 30, 1996, and for the fiscal year ended April
30, 1997, administrative services fees paid to CGFSC by the Newbold's Equity
Portfolio totaled $21,891 and $61,963, respectively. For the period April 15,
1996 to April 30, 1996, and for the fiscal year ended April 30, 1997, FSI earned
$2,109 and $8,785, respectively, from the Newbold's Equity Portfolio as
Administrator. The services provided by FSI and CGFSC and the fees payable to
both effective April 15, 1996 are described in the Portfolio's Prospectuses.
PERFORMANCE CALCULATIONS
PERFORMANCE
The Portfolio may from time to time quote various performance figures to
illustrate the past performance of each class of the Portfolio. Performance
quotations by investment companies are subject to rules adopted by the
Commission, which require the use of standardized performance quotations or,
alternatively, that every non-standardized performance quotation furnished by
the Fund be accompanied by certain standardized performance information computed
as required by the Commission. Average annual compounded total return quotations
used by the Fund are based on the standardized methods of computing performance
mandated by the Commission. An explanation of the method used to compute or
express performance follows.
TOTAL RETURN
The average annual total return of the Portfolio is determined by finding
the average annual compounded rates of return over 1, 5 and 10 year periods that
would equate an initial hypothetical $1,000 investment to its ending redeemable
value. The calculation assumes that all dividends and distributions are
reinvested when paid. The quotation assumes the amount was completely redeemed
at the end of each 1, 5 and 10 year period and the deduction of all applicable
Fund expenses on an annual basis. Since Service Class Shares of the Portfolio
bear additional service and distribution expenses, the average annual total
return of the Service Class Shares of the Portfolio will generally be lower than
that of Institutional Class Shares.
14
<PAGE>
These figures are calculated according to the following formula:
P (1 + T)/n/ = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5 or 10 year periods at the
end of the 1, 5 or 10 year periods (or fractional portion
thereof).
The average annual total return for the Newbold's Equity Portfolio
Institutional Class Shares from inception on September 13, 1995 to April 30,
1997 is 19.33%. The total return for the one-year period ended April 30, 1997
for such Shares is 19.89%.
Service Class Shares of the Newbold's Equity Portfolio were not offered as
of April 30, 1997. Accordingly, no total return figures are available.
COMPARISONS
To help investors better evaluate how an investment in the Portfolio might
satisfy their investment objective, advertisements regarding the Fund may
discuss various measures of Fund performance as reported by various financial
publications. Advertisements may also compare performance (as calculated above)
to performance as reported by other investments, indices and averages. Please
see Appendix B for publications, indices and averages which may be used.
In assessing such comparisons of performance, an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the composition of investments in the Portfolio,
that the averages are generally unmanaged, and that the items included in the
calculations of such averages may not be identical to the formula used by a
Portfolio to calculate its performance. In addition, there can be no assurance
that a Portfolio will continue this performance as compared to such other
averages.
GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized under the name The Regis Fund II as a Delaware
business trust on May 18, 1994. On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's principal executive office is located
at One International Place, 44th Floor, Boston, MA 02110; however, all investor
correspondence should be directed to the Fund at UAM Funds Service Center, c/o
Chase Global Funds Services Company, P.O. Box 2798, Boston, MA 02208-2798. The
Fund's Agreement and Declaration of Trust permits the Fund to issue an unlimited
number of shares of beneficial interest, without par value. The Trustees have
the power to designate one or more series ("Portfolios") or classes of shares of
beneficial interest without further action by shareholders.
On each matter submitted to a vote of the shareholders, each holder of a
share shall be entitled to one vote for each whole share and a fractional vote
for each fractional share standing in his or her name on the books of the Fund.
In the event of liquidation of the Fund, the holders of the shares of each
Portfolio or any class thereof that has been established and designated shall be
entitled to receive, when and as declared by the Trustees, the excess of the
assets belonging to that Portfolio, or in the case of a class, belonging to that
Portfolio and allocable to that
15
<PAGE>
class, over the liabilities belonging to that Portfolio or class. The assets so
distributable to the holders of shares of any particular Portfolio or class
thereof shall be distributed to the holders in proportion to the number of
shares of that Portfolio or class thereof held by them and recorded on the books
of the Fund. The liquidation of any Portfolio or class thereof may be authorized
at any time by vote of a majority of the Trustees then in office.
Shareholders of both Classes of the Fund's Portfolios have no pre-emptive
or other rights to subscribe to any additional shares or other securities issued
by the Fund or any Portfolio, except as the Trustees in their sole discretion
shall have determined by vote. Both Institutional Class and Service Class Shares
represent an interest in the same assets of a Portfolio and are identical in all
respects except that the Service Class 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.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund's policy is to distribute substantially all of the Portfolio's net
investment income, if any, together with any net realized capital gains annually
in the amount and at the times that will avoid both income (including capital
gains) taxes incurred and the imposition of the Federal excise tax on
undistributed income and capital gains. The amounts of any income dividends or
capital gains distributions cannot be predicted. See discussion under
"Dividends, Capital Gains Distributions and Taxes" in the Prospectuses.
Any dividend or distribution paid shortly after the purchase of shares of
the Portfolio by an investor may have the effect of reducing the per share net
asset value of the Portfolio by the per share amount of the dividend or
distribution. Furthermore, such dividends or distributions, although in effect a
return of capital, are subject to income taxes as set forth in the Prospectuses.
As set forth in the Prospectuses, unless the shareholder elects otherwise
in writing, all dividend and capital gains distributions are automatically
received in additional shares of the respective Portfolio of the Fund at net
asset value (as of the business day following the record date). This will remain
in effect until the Fund is notified by the shareholder in writing at least
three days prior to the record date that either the Income Option (income
dividends in cash and capital gains distributions in additional shares at net
asset value) or the Cash Option (both income dividends and capital gains
distributions in cash) has been elected. An account statement is sent to
shareholders whenever an income dividend or capital gains distribution is paid.
Each Portfolio of the Fund will be treated as a separate entity (and hence
as a separate "regulated investment company") for Federal tax purposes. Any net
capital gains recognized by the Portfolio will be distributed to its investors
without need to offset (for Federal income tax purposes) such gains against any
net capital losses of another Portfolio.
FEDERAL TAXES
In order for the Portfolio to continue to qualify for Federal income tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), at least 90% of the Portfolio's gross income for
a taxable year must be derived from certain qualifying income, i.e., dividends,
interest, income derived from loans of securities and gains from the sale or
other disposition of stock, securities or foreign currencies, or other related
income, including gains from options, futures and forward contracts, derived
with respect to its business investing in stock, securities or currencies. Any
net gain realized from the closing out of futures contracts will, therefore,
generally be qualifying income for purposes of the 90% requirement.
Qualification as a regulated investment company also requires that less than 30%
of the Portfolio's gross income be derived from the sale or other disposition of
stock, securities, options, futures or forward contracts (including certain
foreign currencies not directly related to the Fund's business of investing in
stock or securities) held less than three months. In order to avoid realizing
excessive gains on securities held for less than three months, the Portfolio may
be required to defer the closing out of futures contracts beyond the time when
it would otherwise be advantageous to do so. It is
16
<PAGE>
anticipated that unrealized gains on futures contracts which have been open for
less than three months as of the end of the Portfolio's taxable year, and which
are recognized for tax purposes, will not be considered gains on securities held
for less than three months for the purposes of the 30% test.
Except for transactions the Portfolio has identified as hedging
transactions, the Portfolio is required for Federal income tax purposes to
recognize as income for the taxable year its net unrealized gains and losses on
forward currency and futures contracts as of the end of the taxable year as well
as those actually realized during the year. In most cases, any such gain or loss
recognized with respect to a regulated futures contract is considered to be 60%
long-term capital gain or loss and 40% short-term capital gain or loss without
regard to the holding period of the contract. Recognized gain or loss
attributable to a foreign currency forward contract is treated as 100% ordinary
income. Furthermore, foreign currency futures contracts which are intended to
hedge against a change in the value of securities held by the Portfolio may
affect the holding period of such securities and, consequently, the nature of
the gain or loss on such securities upon disposition.
The Portfolio will distribute to shareholders annually any net capital
gains which have been recognized for Federal income tax purposes (including
unrealized gains at the end of the Portfolio's taxable year) on futures
transactions. Such distribution will be combined with distributions of capital
gains realized on the Portfolio's other investments, and shareholders will be
advised on the nature of the payment.
CODE OF ETHICS
The Fund has adopted a Code of Ethics which restricts to a certain extent
personal transactions by access persons of the Fund and imposes certain
disclosure and reporting obligations.
FINANCIAL STATEMENTS
The Financial Statements of the Newbold's Equity Portfolio for the fiscal
year ended April 30, 1997 and the Financial Highlights for the respective
periods presented, and the report thereon of Price Waterhouse LLP, the Fund's
independent accountant, which appear in the Portfolios' 1997 Financial
Statements, are attached to this SAI.
17
<PAGE>
APPENDIX A -- DESCRIPTION OF SECURITIES AND RATINGS
I. DESCRIPTION OF BOND RATINGS
Excerpts from Moody's Investors Service, Inc. ("Moody's") description of
its highest bond ratings:
Aaa -- judged to be the best quality; carry the smallest degree of
investment risk:
Aa -- judged to be of high quality by all standards;
A -- possess many favorable investment attributes and are to be considered
as higher medium grade obligations;
Baa -- considered as lower medium grade obligations, i.e., they are neither
highly protected nor poorly secured.
Excerpts from Standard & Poor's Corporation's description of its highest
bond ratings: AAA -- highest grade obligations; possess the ultimate degree of
protection as to principal and interest; AA -- also qualify as high grade
obligations, and in the majority of instances differs from AAA issues only in
small degree; A -- regarded as upper medium grade; have considerable investment
strength but are not entirely free from adverse effects of changes in economic
and trade conditions. Interest and principal are regarded as safe; BBB --
regarded as borderline between definitely sound obligations and those where the
speculative element begins to predominate; this group is the lowest which
qualifies for commercial bank investment.
II. DESCRIPTION OF U.S. GOVERNMENT SECURITIES
The term "U.S. Government Securities" refers to a variety of securities
which are issued or guaranteed by the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government.
U.S. Treasury securities are backed by the "full faith and credit" of the
United States. Securities issued or guaranteed by Federal agencies and U.S.
Government sponsored instrumentalities may or may not be backed by the full
faith and credit of the United States.
In the case of securities not backed by the full faith and credit of the
United States, the investor must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for ultimate repayment,
and may not be able to assess a claim against the United States itself in the
event the agency or instrumentality does not meet its commitment. Agencies which
are backed by the full faith and credit of the United States include the Export-
Import Bank, Farmers Home Administration, Federal Financing Bank, and others.
Certain agencies and instrumentalities, such as the GNMA are, in effect, backed
by the full faith and credit of the United States through provisions in their
charters that they may make "indefinite and unlimited" drawings on the U.S.
Treasury, if needed to service its debt. Debt from certain other agencies and
instrumentalities, including the Federal Home Loan Bank and FNMA, is not
guaranteed by the United States, but those institutions are protected by the
discretionary authority of the U.S. Treasury to purchase certain amounts of
their securities to assist the institution in meeting its debt obligations.
Finally, other agencies and instrumentalities, such as the Farm Credit System
and the FHLMC, are federally chartered institutions under Government
supervision, but their debt securities are backed only by the credit worthiness
of those institutions, not the U.S. Government.
Some of the U.S. Government agencies that issue or guarantee securities
include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and the Tennessee Valley Authority.
A-1
<PAGE>
III. DESCRIPTION OF COMMERCIAL PAPER
The Portfolio may invest in commercial paper (including variable amount
master demand notes) rated A-1 or better by Standard & Poor's (""S&P") or Prime-
1 by Moody's Investors Service, Inc. ("Moody's") or by S&P. Commercial paper
refers to short-term, unsecured promissory notes issued by corporations to
finance short-term credit needs. Commercial paper is usually sold on a discount
basis and has a maturity at the time of issuance not exceeding nine months.
Variable amount master demand notes are demand obligations that permit the
investment of fluctuating amounts at varying market rates of interest pursuant
to arrangement between the issuer and a commercial bank acting as agent for the
payees of such notes whereby both parties have the right to vary the amount of
the outstanding indebtedness on the notes. As variable amount master demand
notes are direct lending arrangements between a lender and a borrower, it is not
generally contemplated that such instruments will be traded, and there is no
secondary market for these notes, although they are redeemable (and thus
immediately repayable by the borrower) at face value, plus accrued interest, at
any time. In connection with the Portfolio's investment in variable amount
master demand notes, the Adviser's investment management staff will monitor, on
an ongoing basis, the earning power, cash flow and other liquidity ratios of the
issuer and the borrower's ability to pay principal and interest on demand.
Commercial paper rated A-1 by S&P has the following characteristics: (1)
liquidity ratios are adequate to meet cash requirements; (2) long-term senior
debt is rated "A" or better; (3) the issuer has access to at least two
additional channels of borrowing; (4) basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; (5) typically, the
issuer's industry is well established, and the issuer has a strong position
within the industry; and (6) the reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determine
whether the issuer's commercial paper is A-1, A-2 or A-3. The rating Prime-1 is
the highest commercial paper rating assigned by Moody's. Among the factors
considered by Moody's in assigning ratings are the following: (1) evaluation of
the management of the issuer; (2) economic evaluation of the issuer's industry
or industries and the appraisal of speculative-type risks which may be inherent
in certain areas; (3) evaluation of the issuer's products in relation to
completion and customer acceptance; (4) liquidity; (5) amount and quality of
long term debt; (6) trend of earnings over a period of ten years; (7) financial
strength of a parent company and the relationships which exist with the issuer;
and (8) recognition by the management of issuer of obligations which may be
present or may arise as a result of public interest questions and preparations
to meet such obligations.
IV. DESCRIPTION OF BANK OBLIGATIONS
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Certificates of deposit are negotiable short-term obligations of commercial
banks. Variable rate certificates of deposit are certificates of deposit on
which the interest rate is periodically adjusted prior to their stated maturity
based upon a specified market rate. As a result of these adjustments, the
interest rate on these obligations may increase or decrease periodically.
Frequently, dealers selling variable rate certificates of deposit to the
Portfolio will agree to repurchase such instruments, at the Portfolio's option,
at par on or near the coupon dates. The dealers' obligations to repurchase these
instruments are subject to conditions imposed by various dealers. Such
conditions typically are the continued credit standing of the issuer and the
existence of reasonably orderly market conditions. The Portfolio is also able to
sell variable rate certificates of deposit in the secondary market. Variable
rate certificates of deposit normally carry a higher interest rate than
comparable fixed rate certificates of deposit. A banker's acceptance is a time
draft drawn on a commercial bank by a borrower usually in connection with an
international commercial transaction to finance the import, export, transfer or
storage of goods. The borrower is liable for payment as well as the bank which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
the secondary markets prior to maturity.
A-2
<PAGE>
V. DESCRIPTION OF FOREIGN INVESTMENTS
Investors should recognize that investing in foreign companies involves
certain special considerations which are not typically associated with investing
in U.S. companies. Since the securities of foreign companies are frequently
denominated in foreign currencies, a Portfolio may be affected favorably or
unfavorably by changes in currency rates and in exchange control regulations,
and may incur costs in connection with conversions between various currencies.
As foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards and they may have policies that are
not comparable to those of domestic companies, there may be less information
available about certain foreign companies than about domestic companies.
Securities of some foreign companies are generally less liquid and more volatile
than securities of comparable domestic companies. There is generally less
government supervision and regulation of stock exchanges, brokers and listed
companies than in the U.S. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
U.S. investments in those countries.
Although the Fund will endeavor to achieve the most favorable execution
costs in its portfolio transactions, fixed commissions on many foreign stock
exchanges are generally higher than negotiated commissions on U.S. exchanges.
Certain foreign governments levy withholding taxes on dividend and interest
income. Although in some countries a portion of these taxes are recoverable, the
non-recoverable portion of foreign withholding taxes will reduce the income
received from the companies comprising the Fund's Portfolios. However, these
foreign withholding taxes are not expected to have a significant impact.
A-3
<PAGE>
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES
With respect to the comparative measures of performance for equity
securities described herein, comparisons of performance assume
reinvestment of dividends, except as otherwise stated below.
(a) Dow Jones Composite Average or its component averages -- an unmanaged
index composed of 30 blue-chip industrial corporation stocks (Dow
Jones Industrial Average), 15 utilities company stocks and 20
transportation stocks.
(b) Standard & Poor's 500 Stock Index or its component indices -- an
unmanaged index composed of 400 industrial stocks, 40 financial
stocks, 40 utilities stocks and 20 transportation stocks.
(c) Standard & Poor's 400 Mid Cap Index - consists of 400 domestic stocks
chosen for market size, liquidity, and industry group representation.
It is also a market-value weighted index and was the first benchmark
of mid cap stock price movement.
(d) The New York Stock Exchange composite or component indices --
unmanaged indices of all industrial, utilities, transportation and
finance stocks listed on the New York Stock Exchange.
(e) Wilshire 5000 Equity Index or its component indices -- represents the
return on the market value of all common equity securities for which
daily pricing is available.
(f) Lipper -- Mutual Fund Performance Analysis and Lipper -- Fixed Income
Fund Performance Analysis -- measure total return and average current
yield for the mutual fund industry. Rank individual mutual fund
performance over specified time periods, assuming reinvestment of all
distributions, exclusive of any applicable sales charges.
(g) Lipper Capital Appreciation Funds Index - a fund that aims at maximum
capital appreciation, frequently by means of 100% or more portfolio
turnover, leveraging, purchasing unregistered securities, purchasing
options, etc. The fund may take large cash positions.
(h) Lipper Small Cap Funds Index- a fund that by prospectus or portfolio
practice invests primarily in companies with market capitalizations
of less than $1 billion at the time of purchase.
(i) Morgan Stanley Capital International EAFE Index and World Index --
respectively, arithmetic, market value-weighted averages of the
performance of over 900 securities listed on the stock exchanges of
countries in Europe, Australia and the Far East, and over 1,400
securities listed on the stock exchanges of these continents,
including North America.
(j) Goldman Sachs 100 Convertible Bond Index -- currently includes 67
bonds and 33 preferred. The original list of names was generated by
screening for convertible issues of 100 million or greater in market
capitalization. The index is priced monthly.
(k) Salomon Brothers GNMA Index -- includes pools of mortgages originated
by private lenders and guaranteed by the mortgage pools of the
Government National Mortgage Association.
(l) Salomon Brothers High Grade Corporate Bond Index -- consists of
publicly issued, non-convertible corporate bonds rated AA or AAA. It
is a value-weighted, total return index, including approximately 800
issues with maturities of 12 years or greater.
B-1
<PAGE>
(m) Salomon Brothers Broad Investment Grade Bond Index -- is a market-
weighted index that contains approximately 4,700 individually priced
investment grade corporate bonds rated BBB or better, U.S.
Treasury/agency issues and mortgage pass through securities.
(n) Lehman Brothers Long-Term Treasury Bond Index -- is composed of all
bonds covered by the Lehman Brothers Treasury Bond Index with
maturities of 10 years or greater.
(o) Lehman Brothers Government/Corporate Index -- is a combination of the
Government and Corporate Bond Indices. The Government Index includes
public obligations of the U.S. Treasury, issues of Government
agencies, and corporate debt backed by the U.S. Government. The
Corporate Bond Index includes fixed-rate nonconvertible corporate
debt. Also included are Yankee Bonds and nonconvertible debt issued
by or guaranteed by foreign or international governments and
agencies. All issues are investment grade (BBB) or higher, with
maturities of at least one year and an outstanding par value of at
least $100 million for U.S. Government issues and $25 million for
others. Any security downgraded during the month is held in the index
until month-end and then removed. All returns are market value
weighted inclusive of accrued income.
(p) NASDAQ Industrial Index -- is composed of more than 3,000 industrial
issues. It is a value-weighted index calculated on price change only
and does not include income.
(q) Value Line -- composed of over 1,600 stocks in the Value Line
Investment Survey.
(r) Russell 2000 Index -- composed of the 2,000 smallest stocks in the
Russell 3000, a market value-weighted index of the 3,000 largest U.S.
publicly-traded companies.
(s) Salomon Brothers 3 Month T-Bill Average - the average return for all
Treasury bills for the previous three month period.
(t) Composite Indices -- 60% Standard & Poor's 500 Stock Index, 30%
Lehman Brothers Long-Term Treasury Bond and 10% U.S. Treasury Bills;
70% Standard & Poor's 500 Stock Index and 30% NASDAQ Industrial
Index; 35% Standard & Poor's 500 Stock Index and 65% Salomon Brothers
High Grade Bond Index; all stocks on the NASDAQ system exclusive of
those traded on an exchange, and 65% Standard & Poor's 500 Stock
Index and 35% Salomon Brothers High Grade Bond Index.
(u) CDA Mutual Fund Report published by CDA Investment Technologies, Inc.
-- analyzes price, current yield, risk, total return and average rate
of return (average compounded growth rate) over specified time
periods for the mutual fund industry.
(v) Mutual Fund Source Book published by Morningstar, Inc. -- analyzes
price, yield, risk and total return for equity funds.
(w) Financial publications: Business Week, Changing Times, Financial
World, Forbes, Fortune, Money, Barron's, Consumer's Digest, Financial
Times, Global Investor, Wall Street Journal and Weisenberger
Investment Companies Service -- publications that rate fund
performance over specified time periods.
(x) Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics -- a statistical measure of change over
time in the price of goods and services in major expenditure groups.
B-2
<PAGE>
(y) Stocks, Bonds, Bills and Inflation, published by Ibbotson Associates
-- historical measure of yield, price and total return for common and
small company stock, long-term government bonds, U.S. Treasury bills
and inflation.
(z) Savings and Loan Historical Interest Rates -- as published by the
U.S. Savings & Loan League Fact Book.
(aa) Historical data supplied by the research departments of First Boston
Corporation; the J.P. Morgan companies; Salomon Brothers; Merrill
Lynch, Pierce, Fenner & Smith; Lehman Brothers, Inc.; and Bloomberg
L.P.
B-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
UAM Funds Trust and Shareholders of
Newbold's Equity Portfolio
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Newbold's
Equity Portfolio (the "Portfolio"), a Portfolio of UAM Funds Trust, at April
30, 1997, and the results of its operations, the changes in its net assets and
the financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Portfolio's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at April 30, 1997 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 9, 1997
- -------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED):
At April 30, 1997, the Portfolio hereby designates approximately $1,018,000 as
a long-term capital gain dividend for the purpose of the dividend paid
deduction on its Federal income tax return.
For the year ended April 30, 1997, the percentage of dividends paid from
investment company taxable income that qualify for the 70% dividend received
deduction for corporate shareholders is 38.38%.
15
<PAGE>
NEWBOLD'S EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (99.6%)
- -------------------------------------------------------------------------------
AEROSPACE & DEFENSE (1.4%)
United Technologies Corp. .................................. 2,400 $ 181,500
- -------------------------------------------------------------------------------
AUTOMOTIVE (0.9%)
Borg-Warner Automotive, Inc. ............................... 2,700 113,400
- -------------------------------------------------------------------------------
BANKS (15.4%)
Banc One Corp. ............................................. 3,600 152,550
BankBoston Corp. ........................................... 4,200 305,550
Chase Manhattan Corp. ...................................... 4,500 416,812
First Union Corp. .......................................... 4,600 386,400
Fleet Financial Group, Inc. ................................ 6,300 384,300
NationsBank Corp. .......................................... 5,000 301,875
----------
1,947,487
- -------------------------------------------------------------------------------
BEVERAGES, FOOD & TOBACCO (2.6%)
RJR Nabisco Holdings Corp. ................................. 11,100 330,225
- -------------------------------------------------------------------------------
CHEMICALS (0.5%)
Rohm & Haas Co. ............................................ 700 58,275
- -------------------------------------------------------------------------------
COMPUTERS (5.0%)
Avnet, Inc. ................................................ 3,900 237,412
International Business Machines Corp. ...................... 2,500 401,875
----------
639,287
- -------------------------------------------------------------------------------
CONSTRUCTION (1.7%)
Masco Corp. ................................................ 5,650 213,287
- -------------------------------------------------------------------------------
ENERGY (13.1%)
Amoco Corp. ................................................ 3,750 313,594
Atlantic Richfield Co. ..................................... 900 122,512
Exxon Corp. ................................................ 5,970 338,051
Mobil Corp. ................................................ 2,500 325,000
Repsol S.A. ADR ............................................ 6,500 272,188
USX-Marathon Group ......................................... 10,200 281,775
----------
1,653,120
- -------------------------------------------------------------------------------
HEALTH CARE (3.3%)
Aetna, Inc. ................................................ 4,600 419,175
- -------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
NEWBOLD'S EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- -------------------------------------------------------------------------------
INDUSTRIAL (5.4%)
AGCO Corp. ................................................ 10,400 $ 269,100
Case Corp. ................................................ 7,500 415,312
-----------
684,412
- -------------------------------------------------------------------------------
INSURANCE (9.3%)
Allstate Corp. ............................................ 3,900 255,450
Equitable of Iowa Cos. .................................... 2,600 127,075
ITT Hartford Group, Inc. .................................. 6,200 461,900
Travelers, Inc. ........................................... 6,000 332,250
-----------
1,176,675
- -------------------------------------------------------------------------------
MANUFACTURING (3.8%)
Harnischfeger Industries, Inc. ............................ 9,100 378,787
Parker-Hannifin Corp. ..................................... 2,000 99,500
-----------
478,287
- -------------------------------------------------------------------------------
METALS (3.0%)
Aluminum Company of America ............................... 2,700 188,663
Reynolds Metals Co. ....................................... 2,800 190,050
-----------
378,713
- -------------------------------------------------------------------------------
OFFICE EQUIPMENT (3.1%)
Xerox Corp. ............................................... 6,300 387,450
- -------------------------------------------------------------------------------
OIL & GAS (2.0%)
*Noble Drilling Corp. ..................................... 7,300 126,838
*Reading & Bates Corp. .................................... 5,600 125,300
-----------
252,138
- -------------------------------------------------------------------------------
REAL ESTATE (2.8%)
Meditrust ................................................. 5,000 182,500
Simon Debartolo Group Inc. ................................ 6,200 177,475
-----------
359,975
- -------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (1.7%)
Equity Residential Properties Trust ....................... 4,800 210,000
- -------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
NEWBOLD'S EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- -------------------------------------------------------------------------------
RETAIL (4.9%)
American Stores Co. ...................................... 4,800 $ 218,400
Dillard Department Stores, Class A ....................... 6,500 200,688
*Nine West Group, Inc. ................................... 5,000 198,125
-----------
617,213
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS (5.7%)
GTE Corp. ................................................ 7,800 357,825
NYNEX Corp. .............................................. 7,000 362,250
-----------
720,075
- -------------------------------------------------------------------------------
TRANSPORTATION (7.8%)
Burlington Northern Santa Fe ............................. 2,700 212,625
Delta Air Lines, Inc. .................................... 1,400 128,975
Hertz Corp., Class A ..................................... 4,000 116,000
Southwest Airlines Co. ................................... 9,600 264,000
*Team Rental Group, Inc. ................................. 11,600 261,000
-----------
982,600
- -------------------------------------------------------------------------------
UTILITIES (6.2%)
Entergy Corp. ............................................ 10,850 253,619
GPU, Inc. ................................................ 4,650 149,963
PanEnergy Corp. .......................................... 2,950 130,538
TransCanada Pipelines Ltd. ............................... 13,800 251,850
-----------
785,970
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $10,875,956)..................... 12,589,264
- -------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT
- -------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENT (0.3%)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT (0.3%)
Chase Securities, Inc. 5.20%, dated 04/30/97, due
05/01/97, to be repurchased at $45,007, collateralized by
$45,258 of various U.S. Treasury Notes, 4.75%-6.125%, due
from 08/31/98-10/31/98, valued at $45,036 (COST $45,000). $45,000 45,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.9%) (COST $10,920,956)(a)............ 12,634,264
- -------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
NEWBOLD'S EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
VALUE+
<S> <C> <C>
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (NET) (0.1%).................... $ 7,563
- --------------------------------------------------------------------------------
NET ASSETS (100%)............................................ $12,641,827
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
+See Note A to Financial Statements.
*Non--Income Producing Security.
ADR--American Depositary Receipt.
(a) The cost for federal income tax purposes was $10,901,697. At April 30,
1997, net unrealized appreciation for all securities based on tax cost
was $1,732,567. This consisted of aggregate gross unrealized appreciation
for securities of $1,894,511 and aggregate gross unrealized depreciation
for all securities of $161,944.
7
<PAGE>
NEWBOLD'S EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at Cost.............................................. $10,920,956
===========
Investments, at Value............................................. $12,634,264
Cash.............................................................. 18,350
Receivable due from Investment Adviser--Note B.................... 14,959
Dividends and Interest Receivables................................ 14,712
Other Assets...................................................... 149
- -------------------------------------------------------------------------------
Total Assets..................................................... 12,682,434
- -------------------------------------------------------------------------------
LIABILITIES
Payable for Administrative Fees--Note C........................... 7,938
Payable for Trustees' Fees--Note G................................ 478
Other Liabilities................................................. 32,191
- -------------------------------------------------------------------------------
Total Liabilities................................................ 40,607
- -------------------------------------------------------------------------------
NET ASSETS......................................................... $12,641,827
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET ASSETS CONSISTS OF:
Paid in Capital................................................... $ 9,624,341
Undistributed Net Investment Income............................... 19,698
Accumulated Net Realized Gain..................................... 1,284,480
Unrealized Appreciation........................................... 1,713,308
- -------------------------------------------------------------------------------
NET ASSETS......................................................... $12,641,827
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
Shares Issued and Outstanding (Unlimited Authorization, no par
value)........................................................... 1,098,695
Net Asset Value, Offering and Redemption Price Per Share.......... $ 11.51
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
NEWBOLD'S EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
For the Year Ended April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends................................................. $ 412,939
Interest.................................................. 29,553
- ---------------------------------------------------------------------------------
Total Income............................................. 442,492
- ---------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees--Note B
Basic Fees............................................... $ 73,749
Less: Fees Waived........................................ (73,749) --
--------
Administrative Fees--Note C............................... 70,748
Registration Fees......................................... 25,546
Printing Fees............................................. 18,559
Auditing Fees............................................. 10,386
Legal Fees................................................ 10,340
Trustees' Fees--Note G.................................... 2,190
Custodian Fees--Note D.................................... 1,924
Other Expenses............................................ 1,156
Expenses Assumed by Adviser--Note B....................... (7,973)
- ---------------------------------------------------------------------------------
Total Expenses........................................... 132,876
Expense Offset--Note A.................................... (80)
Net Expenses............................................. 132,796
- ---------------------------------------------------------------------------------
NET INVESTMENT INCOME...................................... 309,696
- ---------------------------------------------------------------------------------
NET REALIZED GAIN ON INVESTMENTS........................... 1,768,701
NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON IN-
VESTMENTS................................................. 741,741
- ---------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS.................................... 2,510,442
- ---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....... $2,820,138
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
NEWBOLD'S EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
YEAR SEPTEMBER 13,
ENDED 1995* TO
APRIL 30, APRIL 30,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income............................... $ 309,696 $ 163,403
Net Realized Gain................................... 1,768,701 128,335
Net Change in Unrealized Appreciation/Depreciation.. 741,741 971,567
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Opera-
tions............................................. 2,820,138 1,263,305
- --------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income............................... (319,779) (133,247)
Net Realized Gain................................... (1,673,443) (23,745)
- --------------------------------------------------------------------------------
Total Distributions................................ (1,993,222) (156,992)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued--Regular..................................... 1,122,250 18,446,170
- --In Lieu of Cash Distributions...................... 1,944,748 134,188
Redeemed............................................ (5,341,743) (5,597,015)
- --------------------------------------------------------------------------------
Net Increase (Decrease) from Capital Share Transac-
tions............................................. (2,274,745) 12,983,343
- --------------------------------------------------------------------------------
Total Increase (Decrease)........................... (1,447,829) 14,089,656
Net Assets:
Beginning of Period................................. 14,089,656 --
- --------------------------------------------------------------------------------
End of Period (including undistributed net invest-
ment income of $19,698 and $30,156, respectively).. $12,641,827 $14,089,656
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Shares Issued and Redeemed:......................
Shares Issued........................................ 99,728 1,820,335
In Lieu of Cash Distributions........................ 183,735 12,814
Shares Redeemed...................................... (467,635) (550,282)
- --------------------------------------------------------------------------------
(184,172) 1,282,867
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
10
<PAGE>
NEWBOLD'S EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
YEAR SEPTEMBER 13,
ENDED 1995* TO
APRIL 30, APRIL 30,
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $ 10.98 $ 10.00
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................................ 0.24 0.14
Net Realized and Unrealized Gain on Investments...... 1.79 0.98
- -------------------------------------------------------------------------------
Total From Investment Operations.................... 2.03 1.12
- -------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income................................ (0.25) (0.12)
Net Realized Gain.................................... (1.25) (0.02)
- -------------------------------------------------------------------------------
Total Distributions................................. (1.50) (0.14)
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD........................ $ 11.51 $ 10.98
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL RETURN+......................................... 19.89% 11.31%***
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)................ $12,642 $14,090
Ratio of Expenses to Average Net Assets.............. 0.90% 0.90%**
Ratio of Net Investment Income to Average Net Assets. 2.10% 2.27%**
Portfolio Turnover Rate.............................. 83% 75%
Average Commission Rate.............................. $0.0599 $0.0566
- -------------------------------------------------------------------------------
Voluntarily Waived Fees and Expenses Assumed by the
Adviser Per Share.................................... $ 0.06 $ 0.06
Ratio of Expenses to Average Net Assets Including Ex-
pense Offsets........................................ 0.90% 0.90%**
- -------------------------------------------------------------------------------
</TABLE>
*Commencement of Operations
**Annualized
***Not Annualized
+Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser.
11
<PAGE>
NEWBOLD'S EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
UAM Funds Trust and UAM Funds, Inc. (collectively the "UAM Funds") are
registered under the Investment Company Act of 1940, as amended. The Newbold's
Equity Portfolio (the "Portfolio"), a portfolio of UAM Funds Trust, is a
diversified, open-end management investment company. At April 30, 1997, the
UAM Funds were comprised of forty-two active portfolios. The financial
statements of the remaining portfolios are presented separately. The Portfolio
is authorized to offer two separate classes of shares--Institutional Class
Shares and Institutional Service Class Shares. Both classes of shares have
identical voting rights (except Institutional 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.
At April 30, 1997, Institutional Class Shares are the only active class of
shares for the Newbold's Equity Portfolio. The objective of the Newbold's
Equity Portfolio is to achieve maximum long-term total return, consistent with
reasonable risk to principal, by investing primarily in a diversified
portfolio of undervalued equity securities of statistically attractive
companies.
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: Securities listed on a securities exchange for which
market quotations are readily available are valued at the last quoted sales
price as of the close of the exchange on the day the valuation is made or,
if no sale occurred on such day, at the bid price on such day. Price
information on listed securities is taken from the exchange where the
security is primarily traded. Over-the-counter and unlisted securities are
valued at the current bid price. Short-term investments that have remaining
maturities of sixty days or less at time of purchase are valued at
amortized cost, if it approximates market value. The value of other assets
and securities for which no quotations are readily available is determined
in good faith at fair value using methods determined by the Board of
Trustees.
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 provision
for Federal income taxes is required in the financial statements.
3. REPURCHASE AGREEMENTS: In connection with transactions involving
repurchase agreements, the Portfolio's custodian bank takes possession of
the underlying securities, the value of which exceeds the principal amount
of the repurchase transaction, including accrued interest. To the extent
that any repurchase transaction exceeds one business day, the value of the
collateral is monitored on a daily basis to determine the adequacy of the
collateral. In the event of default on the obligation to repurchase, the
Portfolio has the right to liquidate the collateral and apply the proceeds
in satisfaction of the obligation. In the event of default or bankruptcy by
the other party to the agreement, realization 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 balances
into a joint trading account which invests in one or more repurchase
agreements. This joint repurchase agreement is covered by the same
collateral requirements as discussed above.
4. DISTRIBUTIONS TO SHAREHOLDERS: The Portfolio will normally distribute
substantially all of its net investment income quarterly. Any realized net
capital gains will be distributed annually. All distributions are recorded
on ex-dividend date.
12
<PAGE>
NEWBOLD'S EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
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 differences
are primarily due to differing book and tax treatments in the timing of the
recognition of gains or losses on investments, return of capital dividends,
and in-kind contributions.
Permanent book and tax basis differences relating to shareholder
distributions resulted in reclassifications of $375 to decrease
undistributed net investment income and $365,127 to increase accumulated
net realized gain, with a decrease to paid in capital of $364,752.
Current year permanent book-tax differences, if any, are not included in
ending undistributed net investment income (loss) for the purpose of
calculating net investment income (loss) per share in the financial
highlights.
5. OTHER: Security transactions are accounted for on trade date, the date
the trade was executed. Costs used in determining realized gains and losses
on the sale of investment securities are based on the specific
identification method. Dividend income is recorded on the ex-dividend date.
Interest income is recognized on the accrual basis. Most expenses of the
UAM Funds can be directly attributed to a particular portfolio. Expenses
which cannot be directly attributed are apportioned among the portfolios of
the UAM Funds based on their relative net assets. Income, expenses (other
than class specific expenses) 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 have been increased to include expense
offsets, if any, for custodian balance credits.
B. ADVISORY SERVICES: Under the terms of an investment advisory agreement,
Newbold's Asset Management Inc. (the "Adviser"), a wholly-owned subsidiary of
United Asset Management Corporation ("UAM"), provides investment advisory
services to the Portfolio at a fee calculated at an annual rate of 0.50% of
average daily net assets. The Adviser has voluntarily agreed to waive a
portion 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
expense offset arrangements, from exceeding 0.90% of average daily net assets.
C. ADMINISTRATION SERVICES: UAM Fund Services, Inc. (the "Administrator"), a
wholly-owned subsidiary of UAM, provides and oversees administrative, fund
accounting, dividend disbursing and transfer agent services to the UAM Funds
under a Fund Administration Agreement (the "Agreement"). Pursuant to the
Agreement, the Administrator is entitled to receive annual fees, computed
daily and payable monthly, of 0.19% of the first $200 million of the combined
aggregate net assets; plus 0.11% of the next $800 million of the combined
aggregate net assets; plus 0.07% of the next $2 billion of the combined
aggregate net assets; plus 0.05% of the combined aggregate net assets in
excess of $3 billion. The fees are allocated among the portfolios of the UAM
Funds on the basis of their relative net assets and are subject to a graduated
minimum fee schedule per portfolio which rises from $2,000 per month, upon
inception of a portfolio, to $70,000 annually after two years. For portfolios
with more than one class of shares, the minimum annual fee increases to
$90,000. In addition, the Administrator receives a Portfolio-specific monthly
fee at an annual rate of 0.06% of average daily net assets of the Portfolio.
The Administrator has entered into a Mutual Funds Service Agreement with Chase
Global Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan
Bank, under which CGFSC agrees to provide certain
13
<PAGE>
NEWBOLD'S EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
services, including but not limited to, administration, fund accounting,
dividend disbursing and transfer agent services. Pursuant to the Mutual Funds
Service Agreement, the Administrator pays CGFSC a monthly fee. For the year
ended April 30, 1997, $61,963 was paid to CGFSC for its services.
D. CUSTODIAN: Effective July 17, 1996, The Chase Manhattan Bank (the "Bank"),
an affiliate of CGFSC, is custodian for the Portfolio's assets held in
accordance with the custodian agreement. For the period July 17, 1996 to April
30, 1997, the amount charged to the Portfolio by the Bank aggregated $1,844,
all of which is unpaid at April 30, 1997.
E. DISTRIBUTION SERVICES: UAM Fund Distributors, Inc. (the "Distributor"), a
wholly owned subsidiary of UAM, distributes the shares of the Portfolio. The
Distributor does not receive any fee or other compensation with respect to the
Portfolio.
F. ACCOUNT SERVICES: Effective February 28, 1997, the UAM Funds entered into
an Account Services Agreement (the "Services Agreement") with UAM Retirement
Plan Services, Inc. ("Service Provider"), a wholly-owned subsidiary of UAM.
Under the Services Agreement, the Service Provider agrees to perform certain
services for participants in a self-directed, defined contribution plan, and
for whom the Service Provider provides participant recordkeeping. Pursuant to
the Services Agreement, the Service Provider is entitled to receive, after the
end of each month, a fee at the annual rate of 0.15% of the average aggregate
daily net asset value of shares of the UAM Funds in the accounts for which
they provide services. For the period February 28, 1997 to April 30, 1997, the
Portfolio was not charged a fee under the Services Agreement.
G. TRUSTEES' FEES: Each Trustee, who is not an officer or affiliated person,
receives $2,000 per meeting attended, 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, and reimbursement of expenses incurred in
attending Trustee meetings.
H. PURCHASES AND SALES: For the year ended April 30, 1997, the Portfolio made
purchases of $11,713,353 and sales of $14,555,693 of investment securities
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
participate 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 1/8th of 1% per annum, payable at the end of
each calendar quarter is accrued by each participating Portfolio based on its
average daily unused portion of the line of credit. During the year ended
April 30, 1997, the Portfolio had no borrowings under the agreement.
J. OTHER: At April 30, 1997, 31.6% of total shares outstanding were held by 2
record shareholders owning more than 10% of the aggregate total shares
outstanding.
14
<PAGE>
PART B
UAM FUNDS
TJ CORE EQUITY PORTFOLIO
INSTITUTIONAL SERVICE CLASS SHARES
STATEMENT OF ADDITIONAL INFORMATION -- JULY 10, 1997
This Statement of Additional Information ("SAI") is not a Prospectus but
should be read in conjunction with the Prospectus of the UAM Funds Trust (the
"UAM Funds" or the "Fund") for the TJ Core Equity Portfolio (the "Portfolio")
Institutional Service Class Shares dated July 10, 1997. To obtain the
Prospectus, please call the UAM Funds Service Center at 1-800-638-7983.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES........................... 2
PURCHASE AND REDEMPTION OF SHARES........................... 5
SHAREHOLDER SERVICES........................................ 6
INVESTMENT LIMITATIONS...................................... 7
MANAGEMENT OF THE FUND...................................... 8
INVESTMENT ADVISER.......................................... 10
SERVICE AND DISTRIBUTION PLANS.............................. 11
PORTFOLIO TRANSACTIONS...................................... 13
ADMINISTRATIVE SERVICES..................................... 13
PERFORMANCE CALCULATIONS.................................... 14
GENERAL INFORMATION......................................... 15
APPENDIX A - DESCRIPTION OF SECURITIES AND RATINGS.......... A-1
APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES.. B-1
</TABLE>
FINANCIAL STATEMENTS
INVESTMENT ADVISER
Tom Johnson Investment Management, Inc.
DISTRIBUTOR
UAM Fund Distributors, Inc. (Distributor)
ADMINISTRATOR AND TRANSFER AGENT
UAM Fund Services, Inc. (FSI)
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the investment objective and policies of
the TJ Core Equity Portfolio (the "Portfolio") as set forth in the Portfolio's
Prospectus:
FOREIGN SECURITIES
Investors should recognize that investing in foreign companies directly or
through the purchase of American Depositary Receipts ("ADRs") involves certain
special considerations which are not typically associated with investing in U.S.
companies. Since the securities of foreign companies are frequently denominated
in foreign currencies, investments may be affected favorably or unfavorably by
changes in currency rates and in exchange control regulations, and may incur
costs in connection with conversions between various currencies.
As foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards and they may have policies that are
not comparable to those of domestic companies, there may be less information
available about certain foreign companies than about domestic companies.
Securities of some foreign companies are generally less liquid and more volatile
than securities of comparable domestic companies. There is generally less
government supervision and regulation of stock exchanges, brokers and listed
companies than in the U.S. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
U.S. investments in those countries.
Certain foreign governments levy withholding taxes on dividend and interest
income. Although in some countries a portion of these taxes are recoverable, the
non-recoverable portion of foreign withholding taxes will reduce the income
received from the companies comprising the Portfolios' investments. However,
these foreign withholding taxes are not expected to have a significant impact.
LENDING OF SECURITIES
The Portfolio may lend its investment securities to qualified brokers,
dealers, domestic and foreign banks or other financial institutions, so long as
the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940, as amended, (the "1940
Act") or the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "SEC") thereunder, which currently require that (a) the
borrower pledge and maintain with the Portfolio collateral consisting of cash,
an irrevocable letter of credit issued by a domestic U.S. bank or securities
issued or guaranteed by the United States Government having a value at all times
of not less than 100% of the value of the securities loaned, (b) the borrower
add to such collateral whenever the price of the securities loaned rises (i.e.,
the borrower "marks to the market" on a daily basis), (c) the loan be made
subject to termination by the Portfolio at any time, and (d) the Portfolio
receives reasonable interest on the loan (which may include the Portfolio
investing any cash collateral in interest bearing short-term investments). As
with other extensions of credit, there are risks of delay in recovery or even
loss of rights in the securities loaned if the borrower of the securities fails
financially. These risks are similar to the ones involved with repurchase
agreements as discussed in the Prospectus.
HEDGING STRATEGIES
The Portfolio may engage in various portfolio strategies to hedge against
adverse movements in the equity, debt and currency markets. The Portfolio may
buy or sell futures contracts, write (i.e., sell) covered call options on its
portfolio securities, purchase put and call options on securities and engage in
transactions in stock index options and stock index futures, and related options
on such futures. Each of these portfolio strategies is described below. Although
certain risks are involved in options and future transactions, the Adviser
believes that, because the
2
<PAGE>
Portfolio will engage in options and futures transactions only for hedging
purposes, the options and futures portfolio strategies of the Portfolio will not
subject it to the risks frequently associated with the speculative use of
options and futures transactions. While the Portfolio's use of hedging
strategies is intended to reduce the volatility of the net asset value of the
Portfolio shares, the Portfolio's net asset value will fluctuate. There can be
no assurance that the Portfolio's hedging transactions will be effective. Also,
the Portfolio may not necessarily be engaging in hedging activities when
movements in any particular equity, debt or currency market occur.
FUTURES CONTRACTS
The Portfolio may enter into futures contracts for the purposes of hedging,
remaining fully invested and reducing transactions costs. Futures contracts
provide for the future sale by one party and purchase by another party of a
specified amount of a specific security at a specified future time and at a
specified price. Futures contracts which are standardized as to maturity date
and underlying financial instrument are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"), a U.S. Government Agency.
Although futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold" or "selling" a contract previously
"purchased") in an identical contract to terminate the position. Brokerage
commissions are incurred when a futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in cash or
acceptable securities with a broker or custodian to initiate and maintain open
positions in futures contracts. A margin deposit is intended to assure
completion of the contract (delivery or acceptance of the underlying security)
if it is not terminated prior to the specified delivery date. Minimal initial
margin requirements are established by the futures exchange and may be changed.
Brokers may establish deposit requirements which are higher than the exchange
minimums. Generally margin deposits are structured as percentages (e.g., 5%) of
the market value of the contracts being traded. After a futures contract
position is opened, the value of the contract is marked to market daily. If the
futures contract price changes to the extent that the margin on deposit does not
satisfy margin requirements, payment of additional "variation" margin will be
required. Conversely, change in the contract value may reduce the required
margin, resulting in a repayment of excess margin to the contract holder.
Variation margin payments are made to and from the futures broker for as long as
the contract remains open. The Portfolio expects to earn interest income on its
margin deposits.
Traders in futures contracts may be broadly classified as either "hedgers"
or "speculators". Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade and use
futures contracts with the expectation of realizing profits from a fluctuation
in interest rates. The Portfolio intends to use futures contracts only for
hedging purposes.
Regulations of the CFTC applicable to the Fund require that all of its
futures transactions constitute bona fide hedging positions or that the Fund's
commodity futures and option positions be for other purposes, only to the extent
that the aggregate initial margins and premiums required to establish such non-
hedging positions do not exceed five percent of the liquidation value of the
Portfolio. The Portfolio will only sell futures contracts to protect securities
it owns against price declines or purchase contracts to protect against an
increase in the price of securities it intends to purchase. As evidence of this
hedging interest, the Portfolio expects that approximately 75% of its futures
contracts purchases will be "completed", that is, equivalent amounts of related
securities will have been purchased or will be purchased by the Portfolio on the
settlement date of the futures contracts.
Although techniques other than the sale and purchase of futures contracts
could be used to control the Portfolio's exposure to market fluctuations, the
use of futures contracts may be a more effective means of hedging
3
<PAGE>
this exposure. While the Portfolio will incur commission expenses in both
opening and closing out future positions, these costs are lower than transaction
costs incurred in the purchase and sale of the underlying securities.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS
The Portfolio will not enter into futures contract transactions to the
extent that, immediately thereafter, the sum of its initial margin deposits on
open contracts exceeds 5% of the market value of its total assets. In addition,
the Portfolio will not enter into futures contracts to the extent that its
outstanding obligations to purchase securities under these contracts would
exceed 20% of its total assets.
RISK FACTORS IN FUTURES TRANSACTIONS
Positions in futures contracts may be closed out only on an exchange which
provides a secondary market for such futures. However, there can be no assurance
that a liquid secondary market will exist for any particular futures contract at
any specific time. Thus, it may not be possible to close a futures position. In
the event of adverse price movements, the Portfolio would continue to be
required to make daily cash payments to maintain its required margin. In such
situations, if the Portfolio has insufficient cash, it may have to sell
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, the Portfolio may be required to make
delivery of the instruments underlying futures contracts it holds. The inability
to close futures positions also could have an adverse impact on the Portfolio's
ability to effectively hedge.
The Portfolio will minimize the risk that it will be unable to close out a
futures position by only entering into futures which are traded on national
futures exchanges and for which there appears to be a liquid secondary market.
There can be no assurance, however, that a liquid secondary market will exist
for a particular futures contract at any given time.
The risk of loss in trading futures contracts in some strategies can be
substantial due both to the low margin deposits required and the extremely high
degree of leverage involved in futures pricing. As a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss (as well as gain) to the investor. For example, if at the time of purchase,
10% of the value of the futures contract is deposited as margin, a subsequent
10% decrease in the value of the futures contract would result in a total loss
of the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in a loss in excess of the
amount invested in the contract. However, because the futures strategies of the
Portfolio are engaged in only for hedging purposes, the Adviser does not believe
that the Portfolio is subject to the risks of loss frequently associated with
futures transactions. The Portfolio would presumably have sustained comparable
losses if, instead of the futures contract, it had invested in the underlying
financial instrument and sold it after the decline.
Utilization of futures transactions by the Portfolio does involve the risk
of imperfect or no correlation where the securities underlying the futures
contracts have different maturities than the Portfolio securities being hedged.
It is also possible that the Portfolio could both lose money on futures
contracts and also experience a decline in value of portfolio securities. There
is also the risk of loss by the Portfolio of margin deposits in the event of
bankruptcy of a broker with whom the Portfolio has an open position in a futures
contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and, therefore, does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading thereby
preventing prompt
4
<PAGE>
liquidation of futures positions and subjecting some futures traders to
substantial losses.
OPTIONS
The Portfolio may purchase and sell put and call options on securities and
futures contracts for hedging purposes. Investments in options involve some of
the same considerations that are involved in connection with investments in
futures contracts (e.g., the existence of a liquid secondary market). In
addition, the purchase of an option also entails the risk that changes in the
value of the underlying security or contract will not be fully reflected in the
value of the option purchased. Depending on the pricing of the option compared
to either the futures contract on which it is based or the price of the
securities being hedged, an option may or may not be less risky than ownership
of the futures contract or such securities.
For example, there are significant differences between the securities,
futures and options markets that could result in an imperfect correlation
between these markets, causing a given transaction not to achieve its objective.
A decision as to whether, when, and how to use options involves the exercise of
skill and judgment by the Adviser, and even a well-conceived transaction may be
unsuccessful because of market behavior or unexpected events.
WRITING COVERED CALL OPTIONS
The principal reason for writing call options is to attempt to realize,
through the receipt of premiums, a greater return than would be realized on
securities alone. By writing covered call options, the Portfolio gives up the
opportunity, while the option is in effect, to profit from any price increase in
the underlying security above the option exercise price. In addition, the
Portfolio's ability to sell the underlying security will be limited while the
option is in effect unless the Portfolio effects a closing purchase transaction.
A closing purchase transaction cancels out the Portfolio's position as the
writer of an option by means of offsetting purchase of an identical option prior
to the expiration of the option it has written. Covered call options serve as a
partial hedge against the price of the underlying security declining. The
Portfolio writes only covered options, which means that so long as the Portfolio
is obligated as the writer of the option it will, through its custodian, have
deposited and maintained cash, or liquid securities denominated in U.S. dollars
with a value equal to or greater than the exercise price of the underlying
securities.
PURCHASING OPTIONS
The amount of any appreciation in the value of the underlying security
subject to a put will be partially offset by the amount of the premium paid for
the put option and any related transaction costs. Prior to its expiration, a put
option may be sold in a closing sale transaction and profit or loss from a sale
will depend on whether the amount received is more or less than the premium paid
for the put option plus the related transaction costs. A closing sale
transaction cancels out the Portfolio's position as purchaser of an option by
means of an offsetting sale of an identical option prior to the expiration of
the option it has purchased. In certain circumstances, the Portfolio may
purchase call options on securities held in its investment portfolio on which it
has written call options or on securities which it intends to purchase.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Portfolio may be purchased without sales commission at the
net asset value per share next determined after an order is received in proper
form by the Fund, and payment is received by the Fund's custodian. An order
received in proper form prior to the 4:00 p.m. close of the New York Stock
Exchange (the "Exchange") will be executed at the price computed on the date of
receipt; and an order received not in proper form or after the 4:00 p.m. close
of the Exchange will be executed at the price computed on the next day the
Exchange is open after proper receipt. The exchange will be closed on the
following days: New Year's Day, Martin Luther King, Jr.'s Birthday, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and
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<PAGE>
Christmas Day.
The Portfolio reserves the right in its sole discretion (1) to suspend the
offering of its shares, (2) to reject purchase orders when in the judgment of
management such rejection is in the best interests of the Fund, and (3) to
reduce or waive the minimum for initial and subsequent investment for certain
fiduciary accounts such as employee benefit plans or under circumstances where
certain economies can be achieved in sales of the Portfolio's shares.
The Portfolio may suspend redemption privileges or postpone the date of
payment (1) during any period that both the Exchange and custodian bank are
closed or trading on the Exchange is restricted as determined by the SEC, (2)
during any period when an emergency exists as defined by the rules of the SEC as
a result of which it is not reasonably practicable for the Portfolio to dispose
of securities owned by it or to fairly determine the value of its assets, and
(3) for such other periods as the SEC may permit. The Fund has made an election
with the SEC to pay in cash all redemptions requested by any shareholder of
record limited in amount during any 90-day period to the lesser of $250,000 or
1% of the net assets of the Fund at the beginning of such period. Such
commitment is irrevocable without the prior approval of the SEC. Redemptions in
excess of the above limits may be paid, in whole or in part, in investment
securities or in cash as the Board of Trustees may deem advisable; however,
payment will be made wholly in cash unless the Trustees believe that economic or
market conditions exist which would make such a practice detrimental to the best
interests of the Fund. If redemptions are paid in investment securities, such
securities will be valued as set forth in the Prospectus under "How Shares
Prices are Determined," and a redeeming shareholder would normally incur
brokerage expenses if he converted those securities to cash.
No charge is made by the Portfolio for redemptions. Any redemption may be
more or less than the shareholder's initial cost depending on the market value
of the securities held by the Portfolio.
SIGNATURE GUARANTEES
To protect your account, the Fund and Chase Global Funds Services Company
("CGFSC") from fraud, signature guarantees are required for (1) redemptions
where the proceeds are to be sent to someone other than the registered
shareowner(s) or the registered address or (2) share transfer requests.
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, and as
further described in the Portfolio's Prospectus. The signature guarantee must
appear either: (1) on the written request for redemption; (2) on a separate
instrument for assignment ("stock power") which should specify the total number
of shares to be redeemed; or (3) on all stock certificates tendered for
redemption and, if shares held by the Fund are also being redeemed, on the
letter or stock power.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
Service Class Shares of the Portfolio may be exchanged for Service Class
Shares of any other UAM Funds or UAM Funds, Inc. Portfolio. Exchange requests
should be made by calling the Fund (1-800-638-7983) or by writing to UAM Funds,
UAM Funds Service Center, c/o Chase Global Funds Services Company, P.O. Box
2798, Boston, MA 02208-2798. The exchange privilege is only available with
respect to Portfolios that are qualified for sale in the shareholder's state of
residence.
Any such exchange will be based on the respective net asset values of the
shares involved. There is no sales commission or charge of any kind. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objective of the Portfolio to be purchased. You may
obtain a Prospectus for the Portfolio(s) you are interested in by calling the
UAM Funds Service Center at 1-800-638-7983.
6
<PAGE>
Neither the Fund nor CGFSC will be responsible for the authenticity of the
exchange instructions received by telephone. Exchanges may also be subject to
limitations as to amounts or frequency and to other restrictions established by
the Board of Trustees to assure that such exchanges do not disadvantage the Fund
and its shareholders.
For Federal income tax purposes an exchange between Portfolios is a taxable
event, and, accordingly, a capital gain or loss may be realized. In a revenue
ruling relating to circumstances similar to the Fund's, an exchange between
series of a Fund was also deemed to be a taxable event. It is likely, therefore,
that a capital gain or loss would be realized on an exchange between Portfolios;
you may want to consult your tax adviser for further information in this regard.
The exchange privilege may be modified or terminated at any time.
TRANSFER OF SHARES
Shareholders may transfer shares to another person by making a written
request to the Fund. The request should clearly identify the account and number
of shares to be transferred, and include the signature of all registered owners
and all stock certificates, if any, which are subject to the transfer. The
signature on the letter of request, the stock certificate or any stock power
must be guaranteed in the same manner as described under "Purchase and
Redemption of Shares." As in the case of redemptions, the written request must
be received in good order before any transfer can be made.
INVESTMENT LIMITATIONS
The following limitations supplement those set forth in the Prospectus.
Whenever an investment limitation sets forth a percentage limitation on
investment or utilization of assets, such limitation shall be determined
immediately after and as a result of the Portfolio's acquisition of such
security or other asset. Accordingly, any later increase or decrease resulting
from a change in values, net assets or other circumstances will not be
considered when determining whether the investment complies with the Portfolio's
investment limitations. Investment limitations (1), (2), (3), (4) and (6) are
classified as fundamental. The Portfolio's fundamental investment limitations
cannot be changed without approval by a "majority of the outstanding shares" (as
defined in the 1940 Act) of the Portfolio. The Portfolio will not:
(1) invest in physical commodities or contracts on physical commodities;
(2) purchase or sell real estate or real estate limited partnerships,
although it may purchase and sell securities of companies which deal
in real estate and may purchase and sell securities which are secured
by interests in real estate;
(3) make loans except (i) by purchasing debt securities in accordance with
its investment objectives and (ii) by lending its portfolio securities
to banks, brokers, dealers and other financial institutions so long as
such loans are not inconsistent with the 1940 Act, or the rules and
regulations or interpretations of the SEC thereunder;
(4) underwrite the securities of other issuers;
(5) invest in stock, bond or interest rate futures and/or options on
futures unless (i) not more than 5% of the Portfolio's assets are
required as deposit to secure obligations under such futures and/or
options on futures contracts provided, however, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money
amount may be excluded in computing such 5% and (ii) not more than 20%
of the Portfolio's assets are invested in futures and options;
(6) issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed
7
<PAGE>
to prohibit the Portfolio from (i) making any permitted borrowings,
mortgages or pledges, or (ii) entering into options, futures or
repurchase transactions;
(7) purchase on margin or sell short except as specified in (5) above;
(8) invest more than an aggregate of 15% of the net assets of the
Portfolio, determined at the time of investment, in securities subject
to legal or contractual restrictions on resale or securities for which
there are no readily available markets; and
(9) invest for the purpose of exercising control over management of any
company.
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The Officers of the Fund manage its day-to-day operations and are
responsible to the Fund's Board of Trustees. The Trustees set broad policies for
the Fund and elect its Officers. The following is a list of the Trustees and
Officers of the Fund and a brief statement of their present positions, date of
birth, address and principal occupations during the past five years. Those
people who are "interested persons" of the Fund as that term is defined in the
1940 Act are indicated by an asterisk (*).
JOHN T. BENNETT, JR. (1/26/29), Trustee; College Road--RFD 3, Meredith, NH
03253; President of Squam Investment Management Company, Inc. and Great Island
Investment Company, Inc.; President of Bennett Management Company from 1988 to
1993.
NANCY J. DUNN (8/14/51), Trustee; 10 Garden Street, Cambridge, MA 02138; Vice
President for Finance and Administration and Treasurer of Radcliffe College
since 1991.
PHILIP D. ENGLISH (8/5/48), Trustee; 16 West Madison Street, Baltimore, MD
21201; President and Chief Executive Officer of Broventure Company, Inc.;
Chairman of the Board of Chektec Corporation and Cyber Scientific, Inc.
WILLIAM A. HUMENUK (4/21/42), Trustee; 4000 Bell Atlantic Tower, 1717 Arch
Street, Philadelphia, PA 19103; Partner in the Philadelphia office of the law
firm Dechert Price & Rhoads; Director, Hofler Corp.
NORTON H. REAMER* (3/21/35), Trustee; One International Place, Boston, MA 02110;
President and Chairman of the Fund; President, Chief Executive Officer and a
Director of United Asset Management Corporation; Director, Partner or Trustee of
each of the Investment Companies of the Eaton Vance Group of Mutual Funds.
CHARLES H. SALISBURY, JR.* (8/24/40), Trustee; One International Place, Boston,
MA 02110; Executive Vice President of United Asset Management Corporation;
formerly an executive officer and Director of T. Rowe Price and President and
Chief Investment Officer of T. Rowe Price Trust Company.
PETER M. WHITMAN, JR.* (7/1/43), Trustee; One Financial Center, Boston, MA
02111; President and Chief Investment Officer of Dewey Square Investors
Corporation ("DSI") since 1988; Director and Chief Executive Officer of H. T.
Investors, Inc., formerly a subsidiary of DSI.
WILLIAM H. PARK* (9/19/47), Vice President; One International Place, Boston, MA
02110; Executive Vice President and Chief Financial Officer of United Asset
Management Corporation.
GARY L. FRENCH* (7/4/51), Treasurer; 211 Congress Street, Boston, MA 02110;
President of UAM Fund Services, Inc. and UAM Fund Distributors, Inc.; formerly
Vice President of Operations, Development and Control of Fidelity Investment in
1995; Treasurer of the Fidelity Group of Mutual Funds from 1991 to 1995.
MICHAEL E. DEFAO* (2/28/68), Secretary; 211 Congress Street, Boston, MA 02110;
Vice President and General Counsel of UAM Fund Services, Inc. and UAM Fund
Distributors, Inc.; Associate Attorney of Ropes & Gray (a law firm) from 1993 to
1995.
ROBERT R. FLAHERTY* (9/18/63), Assistant Treasurer; 211 Congress Street, Boston,
MA 02110; Vice President of
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UAM Fund Services, Inc.; formerly Manager of Fund Administration and Compliance
of Chase Global Fund Services Company from 1995 to 1996; Deloitte & Touche LLP
from 1985 to 1995, Senior Manager.
KARL O. HARTMANN* (3/7/55), Assistant Secretary; 73 Tremont Street, Boston, MA
02108; Senior Vice President and General Counsel of Chase Global Funds Services
Company.
GORDON M. SHONE* (7/30/56), Assistant Treasurer; 73 Tremont Street, Boston, MA
02108; Vice President of Fund Administration and Compliance of Chase Global
Funds Services Company; formerly Senior Audit Manager of Coopers & Lybrand LLP
(1983-1996).
REMUNERATION OF TRUSTEES AND OFFICERS
The Fund pays each Trustee, who is not also an officer or affiliated
person, a $150 quarterly retainer fee per active Portfolio which currently
amounts to $1,050 per quarter. In addition, each unaffiliated Trustee receives a
$2,000 meeting fee which is aggregated for all the Trustees and allocated
proportionately among the Portfolios of the Fund and UAM Funds, Inc. and
reimbursement for travel and other expenses incurred while attending Board
meetings. Trustees who are also officers or affiliated persons receive no
remuneration for their service as Trustees. The Fund's officers and employees
are paid by either the Adviser, United Asset Management Corporation ("UAM"), FSI
or CGFSC and receive no compensation from the Fund. As of June 30, 1997, the
Trustees and officers of the Fund owned less than 1% of the Fund's outstanding
shares.
The following table shows aggregate compensation paid to each of the Fund's
Trustees by the Fund and total compensation paid by the Fund, and UAM Funds,
Inc. (collectively the "Fund Complex") in the fiscal year ended April 30, 1997.
COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
TOTAL
PENSION OR COMPENSATION
RETIREMENT ESTIMATED FROM REGISTRANT
AGGREGATE BENEFITS ACCRUED ANNUAL AND
NAME OF PERSON, COMPENSATION AS PART OF BENEFITS UPON FUND COMPLEX
POSITION FROM REGISTRANT FUND EXPENSES RETIREMENT PAID TO TRUSTEES
- ---------------------- --------------- ----------------- ------------- ----------------
<S> <C> <C> <C> <C>
John T. Bennett, Jr.
Trustee............. $4,874 0 0 $31,700
J. Edward Day
Former Trustee...... $2,168 0 0 $15,550
Philip D. English
Trustee............. $4,874 0 0 $31,700
William A. Humenuk
Trustee............. $4,874 0 0 $31,700
Nancy J. Dunn
Trustee............. $0 0 0 $0
</TABLE>
PRINCIPAL HOLDERS OF SECURITIES
As of June 16, 1997, the following persons or organizations held of
record or beneficially 5% or more of the shares of the Portfolio:
T.J. Core Equity Portfolio Institutional Class Shares: Fleet National
Bank, Trustee, FBO Laidlaw Allied Industries 401K, P.O. Box 92800, Rochester,
NY, 28.2%*; Hartnat & Co., Lillick & Charles, P.O. Box 92800, Rochester, NY,
21.7%; Fleet National Bank, Trustee, FBO Laidlaw/Allied Mod. Coll., P.O. Box
92800,
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<PAGE>
Rochester, NY, 17.2%*; Hartnat & Co., FBO Catholic Healthcare West Sisters of
Mercy, P.O. Box 92800, Rochester, NY, 12.6%*; and Hartnat & Co., Allied Waste,
P.O. Box 92800, Rochester, NY, 5.0%*.
The person(s) or organization(s) listed above as owning 25% or more of
the outstanding shares of the Portfolio may be presumed to "control" (as that
term is defined in the 1940 Act) such Portfolio. As a result, those persons or
organizations could have the ability to vote a majority of the shares of the
Portfolio on any matter requiring the approval of shareholders of such
Portfolio.
_______
* Denotes shares held by a trustee or other fiduciary for which beneficial
ownership is disclaimed or presumed disclaimed.
INVESTMENT ADVISER
INVESTMENT PHILOSOPHY
Tom Johnson's investment philosophy is a conservative one which
stresses adequate diversification, risk reduction, and consistency of returns.
The firm maintains strong disciplines and emphasizes long-term results. The
firm's initial goal is preservation of capital; thus, high quality issues are
emphasized. Secondary goals include income and capital appreciation. Thorough
fundamental economic, industry, and company analyses provide the framework
within which all investment alternatives are evaluated.
CONTROL OF ADVISER
The Adviser is a wholly-owned subsidiary of UAM, a holding company
incorporated in Delaware in December 1980 for the purpose of acquiring and
owning firms engaged primarily in institutional investment management. Since its
first acquisition in August 1983, UAM has acquired or organized over 45 such
wholly-owned affiliated firms (the "UAM Affiliated Firms"). UAM believes that
permitting UAM Affiliated Firms to retain control over their investment advisory
decisions is necessary to allow them to continue to provide investment
management services that are intended to meet the particular needs of their
respective clients.
Accordingly, after acquisition by UAM, UAM Affiliated Firms continue
to operate under their own firm name, with their own leadership and individual
investment philosophy and approach. Each UAM Affiliated Firm manages its own
business independently on a day-to-day basis. Investment strategies employed and
securities selected by UAM Affiliated Firms are separately chosen by each of
them. Several UAM Affiliated Firms also act as investment advisers to separate
series or Portfolios of UAM Funds, Inc., a registered investment company.
ADVISORY FEES
As compensation for services rendered by the Adviser under the
Investment Advisory Agreement, the Portfolio pays the Adviser an annual fee in
monthly installments, calculated by applying the following annual percentage
rates to the Portfolio's average daily net assets for the month:
TJ Core Equity Portfolio.. 0.75%
From September 28, 1995 (date of commencement) to April 30, 1996, and for
the fiscal year ended April 30, 1997, the TJ Core Equity Portfolio paid advisory
fees of $0. During these periods, the Adviser voluntarily waived advisory fees
of $4,000 and $14,372, respectively. Until January 1, 1999, the Adviser has
voluntarily agreed to waive all or a portion of its advisory fees and to assume
operating expenses otherwise payable by the Portfolio, if necessary, in order to
keep the Portfolio's total annual operating expenses from exceeding 1.25% of
average daily net assets.
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<PAGE>
SERVICE AND DISTRIBUTION PLANS
As stated in the Prospectus, the "Distributor" may enter into
agreements with broker-dealers and other financial institutions ("Service
Agents"), pursuant to which they will provide administrative support services to
Institutional Service Class ("Service Class") shareholders who are their
customers ("Customers") in consideration of the Fund's payment of 0.25% (on an
annualized basis) of the average daily net asset value of the Service Class
Shares held by the Service Agent for the benefit of its Customers. Such services
include:
(a) acting as the sole shareholder of record and nominee for beneficial
owners;
(b) maintaining account records for such beneficial owners of the Fund's
shares;
(c) opening and closing accounts;
(d) answering questions and handling correspondence from shareholders
about their accounts;
(e) processing shareholder orders to purchase, redeem and exchange shares;
(f) handling the transmission of funds representing the purchase price or
redemption proceeds;
(g) issuing confirmations for transactions in the Fund's shares by
shareholders;
(h) distributing current copies of prospectuses, statements of additional
information and shareholder reports;
(i) assisting customers in completing application forms, selecting
dividend and other account options and opening any necessary custody
accounts;
(j) providing account maintenance and accounting support for all
transactions; and
(k) performing such additional shareholder services as may be agreed upon
by the Fund and the Service Agent, provided that any such additional
shareholder services must constitute a permissible non-banking
activity in accordance with the then current regulations of, and
interpretations thereof by, the Board of Governors of the Federal
Reserve System, if applicable.
Each agreement with a Service Agent is governed by a Shareholder Service
Plan (the "Service Plan") that has been adopted by the Fund's Board of Trustees.
Pursuant to the Service Plan, the Board of Trustees reviews, at least quarterly,
a written report of the amounts expended under each agreement with Service
Agents and the purposes for which the expenditures were made. In addition,
arrangements with Service Agents must be approved annually by a majority of the
Fund's Trustees, including a majority of the Trustees who are not "interested
persons" of the Fund as defined in the 1940 Act and have no direct or indirect
financial interest in such arrangements.
The Board of Trustees has approved the arrangements with Service Agents
based on information provided by the Fund's service contractors that there is a
reasonable likelihood by affording the Fund greater flexibility in connection
with the servicing of the accounts of the beneficial owners of its shares in an
efficient manner. Any material amendment to the Fund's arrangements with Service
Agents must be approved by a majority of the Fund's Board of Trustees (including
a majority of the disinterested Trustees). So long as the arrangements with
Service Agents are in effect, the selection and nomination of the members of the
Fund's Board of Trustees who are not "interested persons" (as defined in the
1940 Act) of the Fund will be committed to the discretion of such non-interested
Trustees.
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<PAGE>
Pursuant to Rule 12b-1 under the 1940 Act, the Fund has adopted a
Distribution Plan for the Service Class Shares of the Fund (the "Distribution
Plan"). The Distribution Plan permits the Fund to pay for certain distribution,
promotional and related expenses involved in the marketing of only the Service
Class Shares.
The Distribution Plan permits the Service Class Shares, pursuant to the
Distribution Agreement, to pay a monthly fee to the Distributor for its services
and expenses in distributing and promoting sales of the Service Class Shares.
These expenses include, among other things, preparing and distributing
advertisements, sales literature and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, and paying distribution
and maintenance fees to securities brokers and dealers who enter into agreements
with the Distributor. In addition, the Service Class Shares may make payments
directly to other unaffiliated parties who either aid in the distribution of
their shares or provide services to the Class.
The maximum annual aggregate fee payable by the Fund under the Service and
Distribution Plans (the "Plans"), is 0.75% of the Service Class Shares' average
daily net assets for the year. The Fund's Board of Trustees may reduce this
amount at any time. Although the maximum fee payable under the 12b-1 Plan
relating to the Service Class Shares is 0.75% of average daily net assets of
such class, the Board of Trustees has determined that the annual fee, payable on
a monthly basis, under the Plans relating to the Service Class Shares, currently
cannot exceed 0.50% of the average daily net assets represented by the Service
Class. While the current fee which will be payable under the Service Plan has
been set at 0.25%, the Plans permit a full 0.75% on all assets to be paid at any
time following appropriate Board approval.
All of the distribution expenses incurred by the Distributor and others,
such as broker/dealers, in excess of the amount paid by the Service Class Shares
will be borne by such persons without any reimbursement from such Classes.
Subject to seeking best price and execution, the Fund may, from time to time,
buy or sell portfolio securities from or to firms which receive payments under
the Plans. From time to time, the Distributor may pay additional amounts from
its own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans, the Distribution Agreement and the form of dealer's and services
agreements have all been approved by the Board of Trustees of the Fund,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Fund and who have no direct or indirect
financial interest in the Plans or any related agreements, by vote cast in
person at a meeting duly called for the purpose of voting on the Plans and such
Agreements. Continuation of the Plans, the Distribution Agreement and the
related agreements must be approved annually by the Board of Trustees in the
same manner, as specified above.
Each year the Trustees must determine whether continuation of the Plans is
in the best interest of the shareholders of Service Class Shares and that there
is a reasonable likelihood of the Plans providing a benefit to the Class. The
Plans, the Distribution Agreement and the related agreements with any broker-
dealer or others relating to the Class may be terminated at any time without
penalty by a majority of those Trustees who are not "interested persons" or by a
majority vote of the outstanding voting securities of the Class. Any amendment
materially increasing the maximum percentage payable under the Plans must
likewise be approved by a majority vote of the relevant Class' outstanding
voting securities, as well as by a majority vote of those Trustees who are not
"interested persons." Also, any other material amendment to the Plans must be
approved by a majority vote of the Trustees including a majority of the Trustees
of the Fund having no interest in the Plans. In addition, in order for the Plans
to remain effective, the selection and nomination of Trustees who are not
"interested persons" of the Fund must be effected by the Trustees who themselves
are not "interested persons" and who have no direct or indirect financial
interest in the Plans. Persons authorized to make payments under the Plans must
provide written reports at least quarterly to the Board of Trustees for their
review. The National Association of Securities Dealers, Inc. has adopted
amendments to its Conduct Rules relating to investment company sales charges.
The Fund and the Distributor intend to operate in compliance with these rules .
Fees paid to Service Agents on behalf of the Portfolio for the fiscal years
ended April 30, 1996 and April
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30, 1997 totaled $1,105 and $4,790, respectively.
PORTFOLIO TRANSACTIONS
The Investment Advisory Agreement authorizes the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolio and directs the Adviser to use its best efforts to
obtain the best execution with respect to all transactions for the Portfolio.
The Adviser may, however, consistent with the interests of the Portfolio, select
brokers on the basis of the research, statistical and pricing services they
provide to the Portfolio. Information and research received from such brokers
will be in addition to, and not in lieu of, the services required to be
performed by the Adviser under the Investment Advisory Agreement. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided that such
commissions are paid in compliance with the Securities Exchange Act of 1934, as
amended, and that the Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Adviser to the Portfolio and the Adviser's other clients.
It is not the Fund's practice to allocate brokerage or effect principal
transactions with dealers on the basis of sales of Fund shares which may be made
through broker-dealer firms. However, the Adviser may place portfolio orders
with qualified broker-dealers who refer clients to the Adviser. During the
period from September 28, 1995 to April 30, 1996, and for the fiscal year ended
April 30, 1997 the Portfolio paid aggregate brokerage commissions of $1,572, and
$3,696, respectively.
Some securities considered for investment by the Portfolio may also be
appropriate for other clients served by the Adviser. If purchases or sales of
securities consistent with the investment policies of the Portfolio and one or
more of these other clients served by the Adviser is considered at or about the
same time, transactions in such securities will be allocated among the Portfolio
and clients in a manner deemed fair and reasonable by the Adviser. Although
there is no specified formula for allocating such transactions, the various
allocation methods used by the Adviser, and the results of such allocations, are
subject to periodic review by the Fund's Board of Trustees.
ADMINISTRATIVE SERVICES
As stated in the Prospectus, the Board of Trustees of the Fund approved a
new Fund Administration Agreement between UAM Fund Services, Inc., a wholly
owned subsidiary of UAM, and the Fund. The Fund's Trustees also approved a
Mutual Fund Services Agreement between FSI and CGFSC. The services provided by
FSI and CGFSC and the basis of the fees payable by the Fund under the Fund
Administration Agreement are described in the Portfolios' Prospectus. Prior to
April 15, 1996, CGFSC or its predecessor, Mutual Funds Service Company, provided
certain administrative services to the Fund under an Administration Agreement
between the Fund and U.S. Trust Company of New York.
The basis of the fees paid to CGFSC for the period September 28, 1995 to
April 14, 1996 was as follows: the Fund paid a monthly fee for its services
which on an annualized basis equaled 0.20% of the first $200 million in combined
assets; plus 0.12% of the next $800 million in combined assets; plus 0.08% on
assets over $1 billion but less than $3 billion; plus 0.06% on assets over $3
billion. The fees were allocated among the Portfolios on the basis of their
relative assets and were subject to a designated minimum fee schedule per
Portfolio, which ranged from $2,000 per month upon inception of a Portfolio to
$70,000 annually after two years. For the period ended April 30, 1996,
administrative services fees paid to CGFSC by the TJ Core Equity Portfolio
totaled $15,232. For the period April 15, 1996 to April 30, 1996, FSI earned
$1,768 from the TJ Core Equity Portfolio as Administrator. For the fiscal year
ended April 30, 1997, administrative fees paid by the Portfolio to FSI totaled
$763 and to CGFSC totaled $59,928. The services provided by FSI and CGFSC and
the basis of the current fees payable are described in the Portfolio's
Prospectus.
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PERFORMANCE CALCULATIONS
PERFORMANCE
The Portfolio may from time to time quote various performance figures
to illustrate past performance. Performance quotations by investment companies
are subject to rules adopted by the SEC which require the use of standardized
performance quotations or, alternatively, that every non-standardized
performance quotation furnished by the Fund be accompanied by certain
standardized performance information computed as required by the SEC. Average
annual compounded total return quotations used by the Fund are based on the
standardized methods of computing performance mandated by the SEC. An
explanation of the method used to compute or express performance follows.
TOTAL RETURN
The average annual total return of the Portfolio is determined by
finding the average annual compounded rates of return over 1, 5 and 10 year
periods that would equate an initial hypothetical $1,000 investment to its
ending redeemable value. The calculation assumes that all dividends and
distributions are reinvested when paid. The quotation assumes the amount was
completely redeemed at the end of each 1, 5 and 10 year period and the deduction
of all applicable Fund expenses on an annual basis.
These figures are calculated according to the
following formula:
P(1 + T)/n/ = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1, 5 or 10 year periods at the end of the
1, 5 or 10 year periods (or fractional portion thereof).
The average annual total return for the TJ Core Equity Portfolio
Institutional Service Class Shares from inception on September 28, 1995 to April
30, 1997 is 19.91%. The total return for the one-year period ended April 30,
1997 for such Shares is 20.14%.
COMPARISONS
To help investors better evaluate how an investment in the Portfolios of
the Fund might satisfy their investment objective, advertisements regarding the
Fund may discuss various measures of Fund performance as reported by various
financial publications. Advertisements may also compare performance (as
calculated above) to performance as reported by other investments, indices and
averages. Please see Appendix B for publications, indices and averages which may
be used.
In assessing such comparisons of performance, an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the composition of investments in the Portfolio,
that the averages are generally unmanaged, and that the items included in the
calculations of such averages may not be identical to the formula used by the
Portfolio to calculate its performance. In addition, there can be no assurance
that the Portfolio will continue this performance as compared to such other
averages.
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GENERAL INFORMATION
DESCRIPTION OF SHARES AND VOTING RIGHTS
The Fund was organized under the name The Regis Fund II as a Delaware
business trust on May 18, 1994. On October 31, 1995, the name of the Fund was
changed to "UAM Funds Trust." The Fund's principal executive office is located
at One International Place, 44th floor, Boston, MA 02110; however, all investor
correspondence should be directed to the Fund at UAM Funds Service Center, c/o
Chase Global Funds Services Company, P.O. Box 2798, Boston, MA 02208-2798. The
Fund's Agreement and Declaration of Trust permits the Fund to issue an unlimited
number of shares of beneficial interest, without par value. The Trustees have
the power to designate one or more series ("Portfolios") or classes of shares of
beneficial interest without further action by shareholders.
On each matter submitted to a vote of the shareholders, each holder of
a share shall be entitled to one vote for each whole share and a fractional vote
for each fractional share standing in his name on the books of the Fund.
In the event of liquidation of the Fund, the holders of the shares of
each Portfolio or any class thereof that has been established and designated
shall be entitled to receive, when and as declared by the Trustees, the excess
of the assets belonging to that Portfolio, or in the case of a class, belonging
to that Portfolio and allocable to that class, over the liabilities belonging to
that Portfolio or class. The assets so distributable to the holders of shares of
any particular Portfolio or class thereof shall be distributed to the holders in
proportion to the number of shares of that Portfolio or class thereof held by
them and recorded on the books of the Fund. The liquidation of any Portfolio or
class thereof may be authorized at any time by vote of a majority of the
Trustees then in office.
Shareholders of both Classes of the Fund's Portfolios have no pre-
emptive or other rights to subscribe to any additional shares or other
securities issued by the Fund or any Portfolio, except as the Trustees in their
sole discretion shall have determined by vote. Both Institutional Class and
Service Class Shares represent an interest in the same assets of a Portfolio and
are identical in all respects except that the Service Class 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.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund's policy is to distribute substantially all of the
Portfolio's net investment income, if any, together with any net realized
capital gains in the amount and at the times that will avoid both income
(including capital gains) taxes incurred on it and the imposition of the Federal
excise tax on undistributed income and capital gains. The amounts of any income
dividends or capital gains distributions cannot be predicted. See the discussion
under "Dividends, Capital Gains Distributions and Taxes" in the Prospectus.
Any dividend or distribution paid shortly after the purchase of shares
of the Portfolio by an investor may have the effect of reducing the per share
net asset value of the Portfolio by the per share amount of the dividend or
distribution. Furthermore, such dividends or distributions, although in effect a
return of capital, are subject to income taxes as set forth in the Prospectus.
As set forth in the Prospectus, unless the shareholder elects
otherwise in writing, all dividend and capital gains distributions are
automatically received in additional shares of the respective Portfolio of the
Fund at net asset value (as of the business day following the record date). This
will remain in effect until the Fund is notified by the shareholder in writing
at least three days prior to the record date that either the Income Option
(income dividends in cash and capital gains distributions in additional shares
at net asset value) or the Cash Option (both income dividends and capital gains
distributions in cash) has been elected. An account statement is sent to
shareholders whenever an income dividend or capital gains distribution is paid.
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<PAGE>
Each Portfolio of the Fund will be treated as a separate entity (and
hence as a separate "regulated investment company") for Federal tax purposes.
Any net capital gains recognized by the Portfolio will be distributed to its
investors without need to offset (for Federal income tax purposes) such gains
against any net capital losses realized by another Portfolio.
CODE OF ETHICS
The Fund has adopted a Code of Ethics which restricts to a certain
extent personal transactions by access persons of the Fund and imposes certain
disclosure and reporting obligations.
FEDERAL TAXES
In order for the Portfolio to qualify for Federal income tax treatment
as a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"), at least 90% of its gross income for a taxable year must
be derived from certain qualifying income, i.e., dividends, interest, income
derived from loans of securities and gains from the sale or other disposition of
stock, securities or foreign currencies, or other related income, including
gains from options, futures and forward contracts, derived with respect to its
business investing in stock, securities or currencies. Any net gain realized
from the closing out of futures contracts will, therefore, generally be
qualifying income for purposes of the 90% requirement. Qualification as a
regulated investment company also requires that less than 30% of the Portfolio's
gross income be derived from the sale or other disposition of stock, securities,
options, futures or forward contracts (including certain foreign currencies not
directly related to the Fund's business of investing in stock or securities)
held less than three months. In order to avoid realizing excessive gains on
securities held for less than three months, the Portfolio may be required to
defer the closing out of futures contracts beyond the time when it would
otherwise be advantageous to do so. It is anticipated that unrealized gains on
futures contracts which have been open for less than three months as of the end
of the Portfolio's taxable year, and which are recognized for tax purposes, will
not be considered gains on securities held for less than three months for the
purposes of the 30% test.
Except for transactions the Portfolio has identified as hedging
transactions, in general the Portfolio is required for Federal income tax
purposes to recognize as income for each taxable year its net unrealized gains
and losses on some forward currency and some futures contracts as of the end of
each taxable year as well as those actually realized during the year. In most
cases, any such gain or loss recognized with respect to a regulated futures
contract is considered to be 60% long-term capital gain or loss and 40% short-
term capital gain or loss without regard to the holding period of the contract.
Recognized gain or loss attributable to a foreign currency forward contract is
treated as 100% ordinary income. Furthermore, foreign currency futures contracts
which are intended to hedge against a change in the value of securities held by
the Portfolio may affect the holding period of such securities and,
consequently, the nature of the gain or loss on such securities upon
disposition.
The Portfolio will distribute to shareholders annually any net capital
gains which have been recognized for Federal income tax purposes (including
unrealized gains at the end of the Portfolio's taxable year on futures
transactions). Such distribution will be combined with distributions of capital
gains realized on the Portfolio's other investments, and shareholders will be
advised as to the character of the payment.
FINANCIAL STATEMENTS
The Financial Statements of the TJ Core Equity Portfolio for the
fiscal year ended April 30, 1997 and the Financial Highlights for the periods
presented and the report thereon of Price Waterhouse LLP, the Fund's independent
accountant, which appear in the Portfolio's 1997 Financial Statements, are
attached to this SAI.
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APPENDIX A - DESCRIPTION OF SECURITIES AND RATINGS
I. DESCRIPTION OF CORPORATE BOND RATINGS
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
Aaa -- Bonds which are Aaa are judged to be the best quality; They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Moody's Investors Service, Inc. ("Moody's") applies numerical
modifiers 1, 2 and 3 in the Aa and A rating categories. The modifier 1 indicates
that the security ranks at a higher end of the rating category, modifier 2
indicates a mid-range rating and the modifier 3 indicates that the issue ranks
at the lower end of the rating category.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA -- Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation and indicate an extremely strong capacity to pay
principal and interest.
AA -- Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only to a small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than for debt in higher rated categories.
II. DESCRIPTION OF U.S. GOVERNMENT SECURITIES
The term "U.S. Government Securities" refers to a variety of
securities which are issued or guaranteed by the United States Government, and
by various instrumentalities which have been established or sponsored by the
United States Government.
A-1
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U.S. Treasury securities are backed by the "full faith and credit" of
the United States. Securities issued or guaranteed by Federal agencies and U.S.
Government sponsored instrumentalities may or may not be backed by the full
faith and credit of the United States.
In the case of securities not backed by the full faith and credit of
the United States, the investor must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for ultimate repayment,
and may not be able to assess a claim against the United States itself in the
event the agency or instrumentality does not meet its commitment. Agencies which
are backed by the full faith and credit of the United States include the Export-
Import Bank, Farmers Home Administration, Federal Financing Bank, and others.
Certain agencies and instrumentalities, such as the GNMA are, in effect, backed
by the full faith and credit of the United States through provisions in their
charters that they may make "indefinite and unlimited" drawings on the U.S.
Treasury, if needed to service its debt. Debt from certain other agencies and
instrumentalities, including the Federal Home Loan Bank and FNMA, is not
guaranteed by the United States, but those institutions are protected by the
discretionary authority of the U.S. Treasury to purchase certain amounts of
their securities to assist the institution in meeting its debt obligations.
Finally, other agencies and instrumentalities, such as the Farm Credit System
and the FHLMC, are federally chartered institutions under Government
supervision, but their debt securities are backed only by the credit worthiness
of those institutions, not the U.S. Government.
Some of the U.S. Government agencies that issue or guarantee
securities include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and the Tennessee Valley Authority.
III. DESCRIPTION OF COMMERCIAL PAPER
The Portfolio may invest in commercial paper (including variable
amount master demand notes) rated A-1 or better by Standard & Poor's ("S&P") or
Prime-1 by Moody's or by S&P. Commercial paper refers to short-term, unsecured
promissory notes issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and has a maturity at the
time of issuance not exceeding nine months. Variable amount master demand notes
are demand obligations that permit the investment of fluctuating amounts at
varying market rates of interest pursuant to arrangement between the issuer and
a commercial bank acting as agent for the payees of such notes whereby both
parties have the right to vary the amount of the outstanding indebtedness on the
notes. As variable amount master demand notes are direct lending arrangements
between a lender and a borrower, it is not generally contemplated that such
instruments will be traded, and there is no secondary market for these notes,
although they are redeemable (and thus immediately repayable by the borrower) at
face value, plus accrued interest, at any time. In connection with the
Portfolio's investment in variable amount master demand notes, the Adviser's
investment management staff will monitor, on an ongoing basis, the earning
power, cash flow and other liquidity ratios of the issuer and the borrower's
ability to pay principal and interest on demand.
Commercial paper rated A-1 by S&P has the
following characteristics:
(1) liquidity ratios are adequate to meet cash requirements; (2) long-term
senior debt is rated "A" or better; (3) the issuer has access to at least
two additional channels of borrowing; (4) basic earnings and cash flow have
an upward trend with allowance made for unusual circumstances; (5)
typically, the issuer's industry is well established, and the issuer has a
strong position within the industry; and (6) the reliability and quality of
management are unquestioned. Relative strength or weakness of the above
factors determine whether the issuer's commercial paper is A-1, A-2 or A-3.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are
the following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and the appraisal of
speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to completion and customer
acceptance; (4) liquidity; (5) amount and quality of long term debt; (6)
trend of earnings over a period of ten years; (7) financial strength of a
parent company and the relationships which exist with the issuer; and (8)
recognition by the management of issuer of obligations which may be present
or may arise as a result of public interest
A-2
<PAGE>
questions and preparations to meet such obligations.
IV. DESCRIPTION OF BANK OBLIGATIONS
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Certificates of deposit are negotiable short-term obligations of commercial
banks. Variable rate certificates of deposit are certificates of deposit on
which the interest rate is periodically adjusted prior to their stated maturity
based upon a specified market rate. As a result of these adjustments, the
interest rate on these obligations may increase or decrease periodically.
Frequently, dealers selling variable rate certificates of deposit to the
Portfolio will agree to repurchase such instruments, at the Portfolio's option,
at par on or near the coupon dates. The dealers' obligations to repurchase these
instruments are subject to conditions imposed by various dealers. Such
conditions typically are the continued credit standing of the issuer and the
existence of reasonably orderly market conditions. The Portfolio is also able to
sell variable rate certificates of deposit in the secondary market. Variable
rate certificates of deposit normally carry a higher interest rate than
comparable fixed rate certificates of deposit. A banker's acceptance is a time
draft drawn on a commercial bank by a borrower usually in connection with an
international commercial transaction to finance the import, export, transfer or
storage of goods. The borrower is liable for payment as well as the bank which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
the secondary markets prior to maturity.
V. DESCRIPTION OF FOREIGN INVESTMENTS
Investors should recognize that investing in foreign companies involves
certain special considerations which are not typically associated with investing
in U.S. companies. Since the securities of foreign companies are frequently
denominated in foreign currencies, a Portfolio may be affected favorably or
unfavorably by changes in currency rates and in exchange control regulations,
and may incur costs in connection with conversions between various currencies.
As foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards and they may have policies that are
not comparable to those of domestic companies, there may be less information
available about certain foreign companies than about domestic companies.
Securities of some foreign companies are generally less liquid and more volatile
than securities of comparable domestic companies. There is generally less
government supervision and regulation of stock exchanges, brokers and listed
companies than in the U.S. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
U.S. investments in those countries.
Although the Fund will endeavor to achieve the most favorable execution
costs in its portfolio transactions, fixed commissions on many foreign stock
exchanges are generally higher than negotiated commissions on U.S. exchanges.
Certain foreign governments levy withholding taxes on dividend and interest
income. Although in some countries a portion of these taxes are recoverable, the
non-recoverable portion of foreign withholding taxes will reduce the income
received from the companies comprising the Fund's Portfolios. However, these
foreign withholding taxes are not expected to have a significant impact.
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APPENDIX B - COMPARISON PUBLICATIONS, INDICES AND AVERAGES
With respect to the comparative measures of performance for equity
securities described herein, comparisons of performance assume
reinvestment of dividends, except as otherwise stated below.
(a) Dow Jones Composite Average or its component averages -- an unmanaged
index composed of 30 blue-chip industrial corporation stocks (Dow
Jones Industrial Average), 15 utilities company stocks and 20
transportation stocks.
(b) Standard & Poor's 500 Stock Index or its component indices -- an
unmanaged index composed of 400 industrial stocks, 40 financial
stocks, 40 utilities stocks and 20 transportation stocks.
(c) Standard & Poor's 400 Mid Cap Index - consists of 400 domestic stocks
chosen for market size, liquidity, and industry group representation.
It is also a market-value weighted index and was the first benchwork
of mid cap stock price movement.
(d) The New York Stock Exchange composite or component indices --
unmanaged indices of all industrial, utilities, transportation and
finance stocks listed on the New York Stock Exchange.
(e) Wilshire 5000 Equity Index or its component indices -- represents the
return on the market value of all common equity securities for which
daily pricing is available.
(f) Lipper -- Mutual Fund Performance Analysis and Lipper -- Fixed Income
Fund Performance Analysis -- measure total return and average current
yield for the mutual fund industry. Rank individual mutual fund
performance over specified time periods, assuming reinvestment of all
distributions, exclusive of any applicable sales charges.
(g) Lipper Capital Appreciation Funds Index - a fund that aims at maximum
capital appreciation, frequently by means of 100% or more portfolio
turnover, leveraging, purchasing unregistered securities, purchasing
options, etc. The fund may take large cash positions.
(h) Lipper Small Cap Funds Index- a fund that by prospectus or portfolio
practice invests primarily in companies with market capitalizations of
less than $1 billion at the time of purchase.
(i) Morgan Stanley Capital International EAFE Index and World Index --
respectively, arithmetic, market value-weighted averages of the
performance of over 900 securities listed on the stock exchanges of
countries in Europe, Australia and the Far East, and over 1,400
securities listed on the stock exchanges of these continents,
including North America.
(j) Goldman Sachs 100 Convertible Bond Index -- currently includes 67
bonds and 33 preferred. The original list of names was generated by
screening for convertible issues of 100 million or greater in market
capitalization. The index is priced monthly.
(k) Salomon Brothers GNMA Index -- includes pools of mortgages originated
by private lenders and guaranteed by the mortgage pools of the
Government National Mortgage Association.
(l) Salomon Brothers High Grade Corporate Bond Index -- consists of
publicly issued, non-convertible corporate bonds rated AA or AAA. It
is a value-weighted, total return index, including approximately 800
issues with maturities of 12 years or greater.
(m) Salomon Brothers Broad Investment Grade Bond Index -- is a market-
weighted index that contains
B-1
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approximately 4,700 individually priced investment grade corporate
bonds rated BBB or better, U.S. Treasury/agency issues and mortgage
pass through securities.
(n) Lehman Brothers Long-Term Treasury Bond -- is composed of all bonds
covered by the Lehman Brothers Treasury Bond Index with maturities of
10 years or greater.
(o) Lehman Brothers Government/Corporate Index -- is a combination of the
Government and Corporate Bond Indices. The Government Index includes
public obligations of the U.S. Treasury, issues of Government
agencies, and corporate debt backed by the U.S. Government. The
Corporate Bond Index includes fixed-rate nonconvertible corporate
debt. Also included are Yankee Bonds and nonconvertible debt issued by
or guaranteed by foreign or international governments and agencies.
All issues are investment grade (BBB) or higher, with maturities of at
least one year and an outstanding par value of at least $100 million
for U.S. Government issues and $25 million for others. Any security
downgraded during the month is held in the index until month-end and
then removed. All returns are market value weighted inclusive of
accrued income.
(p) NASDAQ Industrial Index -- is composed of more than 3,000 industrial
issues. It is a value-weighted index calculated on price change only
and does not include income.
(q) Value Line -- composed of over 1,600 stocks in the Value Line
Investment Survey.
(r) Russell 2000 Index -- composed of the 2,000 smallest stocks in the
Russell 3000, a market value-weighted index of the 3,000 largest U.S.
publicly-traded companies.
(s) Salomon Brothers 3 Month T-Bill Average - the average return for all
Treasury bills for the previous three month period.
(t) Composite Indices -- 60% Standard & Poor's 500 Stock Index, 30% Lehman
Brothers Long-Term Treasury Bond and 10% U.S. Treasury Bills; 70%
Standard & Poor's 500 Stock Index and 30% NASDAQ Industrial Index; 35%
Standard & Poor's 500 Stock Index and 65% Salomon Brothers High Grade
Bond Index; all stocks on the NASDAQ system exclusive of those traded
on an exchange, and 65% Standard & Poor's 500 Stock Index and 35%
Salomon Brothers High Grade Bond Index.
(u) CDA Mutual Fund Report published by CDA Investment Technologies, Inc.
-- analyzes price, current yield, risk, total return and average rate
of return (average compounded growth rate) over specified time periods
for the mutual fund industry.
(v) Mutual Fund Source Book published by Morningstar, Inc. -- analyzes
price, yield, risk and total return for equity funds.
(w) Financial publications: Business Week, Changing Times, Financial
World, Forbes, Fortune, Money, Barron's, Consumer's Digest, Financial
Times, Global Investor, Wall Street Journal and Weisenberger
Investment Companies Service -- publications that rate fund
performance over specified time periods.
(x) Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics -- a statistical measure of change over
time in the price of goods and services in major expenditure groups.
(y) Stocks, Bonds, Bills and Inflation, published by Ibbotson Associates -
- historical measure of yield, price and total return for common and
small company stock, long-term government bonds, U.S.
B-2
<PAGE>
Treasury bills and inflation.
(z) Savings and Loan Historical Interest Rates -- as published by the U.S.
Savings & Loan League Fact Book.
(aa) Historical data supplied by the research departments of First Boston
Corporation; the J.P. Morgan companies; Salomon Brothers; Merrill
Lynch, Pierce, Fenner & Smith; Lehman Brothers, Inc.; and Bloomberg
L.P.
B-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
UAM Funds Trust and Shareholders of
TJ Core Equity Portfolio
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the TJ Core Equity
Portfolio (the "Portfolio"), a Portfolio of UAM Funds Trust, at April 30,
1997, and the results of its operations, the changes in its net assets and the
financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Portfolio's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at April 30, 1997 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 9, 1997
- -------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED):
For the period ended April 30, 1997, the percentage of dividends paid from
investment company taxable income that qualify for the 70% dividend received
deduction for corporate shareholders is 78.60%.
13
<PAGE>
TJ CORE EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (96.0%)
- -------------------------------------------------------------------------------
AUTOMOTIVE (4.3%)
Ford Motor Co. ............................................. 3,600 $ 125,100
- -------------------------------------------------------------------------------
BANKS (3.4%)
First Union Corp. .......................................... 600 50,400
NationsBank Corp. .......................................... 800 48,300
----------
98,700
- -------------------------------------------------------------------------------
BASIC RESOURCES (1.7%)
Halliburton Co. ............................................ 700 49,437
- -------------------------------------------------------------------------------
BEVERAGES, FOOD & TOBACCO (4.5%)
Anheuser-Busch Cos., Inc.................................... 400 17,150
Heinz (H.J.) Co. ........................................... 1,500 62,250
Sara Lee Corp............................................... 1,200 50,400
----------
129,800
- -------------------------------------------------------------------------------
BROADCASTING & PUBLISHING (8.7%)
Dun & Bradstreet Corp. ..................................... 3,800 93,575
Gannett Co. ................................................ 1,000 87,250
McGraw-Hill Cos., Inc. ..................................... 1,400 71,225
----------
252,050
- -------------------------------------------------------------------------------
BUILDING MATERIALS (4.0%)
Foster Wheeler Corp. ....................................... 3,000 115,875
- -------------------------------------------------------------------------------
CHEMICALS (3.4%)
Mallinckrodt Group, Inc. ................................... 2,700 98,212
- -------------------------------------------------------------------------------
ELECTRONICS (1.2%)
General Electric Co. ....................................... 300 33,262
- -------------------------------------------------------------------------------
ENERGY (7.2%)
Amoco Corp.................................................. 1,000 83,625
Coastal Corp................................................ 1,500 71,250
Mobil Corp. ................................................ 400 52,000
----------
206,875
- -------------------------------------------------------------------------------
FINANCIAL SERVICES (10.3%)
American Express Co. ....................................... 1,000 65,875
Block, H&R Inc. ............................................ 3,700 119,325
Fannie Mae.................................................. 1,700 69,913
Lehman Brothers Holdings, Inc. ............................. 1,200 40,650
----------
295,763
- -------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
TJ CORE EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
- -------------------------------------------------------------------------------
HEALTH CARE (2.8%)
Columbia/HCA Healthcare Corp. .............................. 500 $ 17,500
United Healthcare Corp...................................... 1,300 63,212
----------
80,712
- -------------------------------------------------------------------------------
HOLDING COMPANY (1.2%)
Textron, Inc. .............................................. 300 33,413
- -------------------------------------------------------------------------------
INDUSTRIAL (4.0%)
Cooper Industries, Inc. .................................... 2,500 115,000
- -------------------------------------------------------------------------------
INSURANCE (1.8%)
ITT Hartford Group, Inc. ................................... 700 52,150
- -------------------------------------------------------------------------------
MANUFACTURING (4.8%)
ITT Industries, Inc. ....................................... 3,600 90,900
Tyco International Ltd...................................... 800 48,800
----------
139,700
- -------------------------------------------------------------------------------
METALS (2.1%)
USX-U.S. Steel Group, Inc................................... 2,100 61,425
- -------------------------------------------------------------------------------
OFFICE EQUIPMENT (1.1%)
Pitney Bowes, Inc. ......................................... 500 32,000
- -------------------------------------------------------------------------------
PAPER & PACKAGING (2.0%)
Union Camp Corp. ........................................... 1,200 58,350
- -------------------------------------------------------------------------------
PHARMACEUTICALS (3.8%)
Bristol-Myers Squibb Co. ................................... 1,000 65,500
Merck & Co., Inc............................................ 500 45,250
----------
110,750
- -------------------------------------------------------------------------------
RETAIL (2.9%)
Wal-Mart Stores, Inc. ...................................... 3,000 84,750
- -------------------------------------------------------------------------------
SERVICES (5.6%)
ACNielsen Corp.............................................. 533 7,995
Cognizant Corp. ............................................ 2,000 65,250
WMX Technologies, Inc....................................... 3,000 88,125
----------
161,370
- -------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
TJ CORE EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
April 30, 1997
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE+
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
- -------------------------------------------------------------------------------
TECHNOLOGY (8.1%)
Avnet, Inc. ............................................. 1,500 $ 91,313
*Compaq Computer Corp. .................................. 500 42,688
International Business Machines Corp..................... 600 96,450
NCR Corp. ............................................... 118 3,422
----------
233,873
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS (1.0%)
Lucent Technologies, Inc................................. 486 28,735
- -------------------------------------------------------------------------------
TRANSPORTATION (2.6%)
Southwest Airlines Co.................................... 2,700 74,250
- -------------------------------------------------------------------------------
UTILITIES (3.5%)
AT&T Corp................................................ 3,000 100,500
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $2,369,970)..................... 2,772,052
- -------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT
- -------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENT (4.3%)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Chase Securities, Inc. 5.20%, dated 04/30/97, due
05/01/97, to be repurchased at $124,018, collateralized
by $124,710 of various U.S. Treasury Notes, 4.75%-
6.125%, due 08/31/98-10/31/98, valued at $124,100
(COST $124,000)......................................... $124,000 124,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.3%) (COST $2,493,970)(a)........... 2,896,052
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (NET) (-0.3%)................ (7,694)
- -------------------------------------------------------------------------------
NET ASSETS (100%)......................................... $2,888,358
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
(a) The cost for federal income tax purposes was $2,494,270. At April 30,
1997, net unrealized appreciation for all securities based on tax cost was
$401,782. This consisted of aggregate gross unrealized appreciation for
all securities of $442,712 and aggregate gross unrealized depreciation for
all securities of $40,930.
5
<PAGE>
TJ CORE EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997
<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at Cost............................................... $2,493,970
==========
Investments, at Value.............................................. $2,896,052
Cash............................................................... 550
Receivable for Portfolio Shares Sold............................... 43,072
Receivable due from Investment Adviser--Note B..................... 12,798
Dividends Receivable............................................... 3,451
- -------------------------------------------------------------------------------
Total Assets...................................................... 2,955,923
- -------------------------------------------------------------------------------
LIABILITIES
Payable for Investments Purchased.................................. 27,029
Payable for Administrative Fees--Note C............................ 7,180
Payable for Distribution and Service Fees--Note E.................. 2,095
Payable for Portfolio Shares Redeemed.............................. 1,056
Payable for Account Services Fees--Note F.......................... 638
Payable for Trustees' Fees--Note G................................. 498
Other Liabilities.................................................. 29,069
- -------------------------------------------------------------------------------
Total Liabilities................................................. 67,565
- -------------------------------------------------------------------------------
NET ASSETS.......................................................... $2,888,358
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET ASSETS CONSISTS OF:
Paid in Capital.................................................... $2,436,581
Undistributed Net Investment Income................................ 2,467
Accumulated Net Realized Gain...................................... 47,228
Unrealized Appreciation............................................ 402,082
- -------------------------------------------------------------------------------
NET ASSETS.......................................................... $2,888,358
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INSTITUTIONAL SERVICE CLASS SHARES
Shares Issued and Outstanding (Unlimited authorization, no par
value)............................................................ 221,292
Net Asset Value, Offering and Redemption Price Per Share........... $ 13.05
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
TJ CORE EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
For the Year Ended April 30, 1997
<TABLE>
- ---------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends................................................... $ 39,000
Interest.................................................... 5,459
- ---------------------------------------------------------------------------------
Total Income............................................... 44,459
- ---------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees--Note B
Basic Fees................................................. $ 14,372
Less: Fees Waived.......................................... (14,372) --
--------
Registration and Filing Fees................................ 11,642
Administrative Fees--Note C................................. 60,691
Custodian Fees--Note D...................................... 2,590
Printing Fees............................................... 18,857
Audit Fees.................................................. 10,635
Distribution and Service Fees--Note E....................... 4,790
Account Services Fees--Note F............................... 638
Trustees' Fees--Note G...................................... 2,036
Other Expenses.............................................. 1,536
Expenses Assumed by the Adviser--Note B..................... (89,121)
- ---------------------------------------------------------------------------------
Total Expenses............................................. 24,294
Expense Offset--Note A...................................... (321)
- ---------------------------------------------------------------------------------
Net Expenses............................................... 23,973
- ---------------------------------------------------------------------------------
NET INVESTMENT INCOME........................................ 20,486
- ---------------------------------------------------------------------------------
NET REALIZED GAIN ON INVESTMENTS............................. 60,890
NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION OF
INVESTMENTS................................................. 317,028
- ---------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS...................................... 377,918
- ---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......... $398,404
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
TJ CORE EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR SEPTEMBER 28,
ENDED 1995* TO
APRIL 30, APRIL 30,
1997 1996
- ----------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income................................. $ 20,486 $ 5,373
Net Realized Gain..................................... 60,890 3,130
Net Change in Unrealized Appreciation/Depreciation.... 317,028 85,054
- ----------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations. 398,404 93,557
- ----------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income................................. (18,293) (5,111)
Net Realized Gain..................................... (16,792) --
- ----------------------------------------------------------------------------------
Total Distributions.................................. (35,085) (5,111)
- ----------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued--Regular....................................... 1,596,878 1,021,045
--In Lieu of Cash Distributions..................... 35,048 5,111
Redeemed.............................................. (130,217) (91,272)
- ----------------------------------------------------------------------------------
Net Increase from Capital Share Transactions......... 1,501,709 934,884
- ----------------------------------------------------------------------------------
Total Increase........................................ 1,865,028 1,023,330
Net Assets:
Beginning of Period................................... 1,023,330 --
- ----------------------------------------------------------------------------------
End of Period (including undistributed net investment
income of $2,467 and $274, respectively)............. $2,888,358 $1,023,330
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
(1)Shares Issued and Redeemed:
Shares Issued........................................ 136,745 100,921
In Lieu of Cash Distributions........................ 3,000 481
Shares Redeemed...................................... (11,047) (8,808)
- ----------------------------------------------------------------------------------
128,698 92,594
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
TJ CORE EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
YEAR SEPTEMBER 28,
ENDED 1995* TO
APRIL 30, APRIL 30,
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $ 11.05 $ 10.00
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................................ 0.12 0.06
Net Realized and Unrealized Gain on Investments...... 2.08 1.05
- -------------------------------------------------------------------------------
Total From Investment Operations.................... 2.20 1.11
- -------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income................................ (0.11) (0.06)
Net Realized Gain.................................... (0.09) --
- -------------------------------------------------------------------------------
Total Distributions................................. (0.20) (0.06)
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD........................ $ 13.05 $ 11.05
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL RETURN+......................................... 20.14% 11.13%***
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands)................ $ 2,888 $ 1,023
Ratio of Expenses to Average Net Assets.............. 1.26% 1.38%**
Ratio of Net Investment Income to Average Net Assets. 1.07% 1.06%**
Portfolio Turnover Rate.............................. 27% 17%
Average Commission Rate.............................. $0.0600 $0.0600
- -------------------------------------------------------------------------------
Voluntarily Waived Fees and Expenses Assumed by the
Adviser Per Share.................................... $ 0.60 $ 0.74
Ratio of Expenses to Average Net Assets Including
Expense Offsets...................................... 1.25% 1.25%**
- -------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations.
** Annualized.
*** Not Annualized.
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser during the period.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
TJ CORE EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
UAM Funds Trust and UAM Funds, Inc. (collectively the "UAM Funds") are
registered under the Investment Company Act of 1940, as amended. The TJ Core
Equity Portfolio (the "Portfolio"), a portfolio of UAM Funds Trust, is a
diversified, open-end management investment company. At April 30, 1997, the
UAM Funds were composed of forty-two active portfolios. The financial
statements of the remaining portfolios are presented separately. The objective
of the TJ Core Equity Portfolio is to provide maximum total return consistent
with reasonable risk to principal by investing in the common stock of quality
companies with lower valuations in sectors of the economy exhibiting strong,
or improving relative performance.
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: Securities listed on a securities exchange for
which market quotations are readily available are valued at the last quoted
sales price as of the close of the exchange on the day the valuation is
made or, if no sale occurred on such day, at the bid price on such day.
Price information on listed securities is taken from the exchange where the
security is primarily traded. Over-the-counter and unlisted securities are
valued at the current bid price. Short-term investments that have remaining
maturities of sixty days or less at time of purchase are valued at
amortized cost, if it approximates market value. The value of other assets
and securities for which no quotations are readily available is determined
in good faith at fair value using methods determined by the Board of
Trustees.
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 provision
for Federal income taxes is required in the financial statements.
3. REPURCHASE AGREEMENTS: In connection with transactions involving
repurchase agreements, the Portfolio's custodian bank takes possession of
the underlying securities, the value of which exceeds the principal amount
of the repurchase transaction, including accrued interest. To the extent
that any repurchase transaction exceeds one business day, the value of the
collateral is monitored on a daily basis to determine the adequacy of the
collateral. In the event of default on the obligation to repurchase, the
Portfolio has the right to liquidate the collateral and apply the proceeds
in satisfaction of the obligation. In the event of default or bankruptcy by
the other party to the agreement, realization 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 balances
into a joint trading account which invests in one or more repurchase
agreements. This joint repurchase agreement is covered by the same
collateral requirements as discussed above.
4. DISTRIBUTIONS TO SHAREHOLDERS: The Portfolio will normally distribute
substantially all of its net investment income quarterly. Any realized net
capital gains will be distributed annually. All distributions are recorded
on ex-dividend date.
10
<PAGE>
TJ CORE EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
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 differences
are primarily due to differing book and tax treatments in the timing of the
recognition of gains or losses on investments.
Current year permanent book-tax differences, if any, are not included in
ending undistributed net investment (income) loss for the purpose of
calculating net investment income (loss) per share in the financial
highlights.
5. OTHER: Security transactions are accounted for on trade date, the date
the trade was executed. Costs used in determining realized gains and losses
on the sale of investment securities are based on the specific
identification method. Dividend income is recorded on the ex-dividend date.
Interest income is recognized on the accrual basis. Most expenses of the
UAM Funds can be directly attributed to a particular portfolio. Expenses
which cannot be directly attributed are apportioned among the portfolios of
the UAM Funds based on their relative net assets. Custodian fees for the
Portfolio have been increased to include expense offsets, if any, for
custodian balance credits.
B. ADVISORY SERVICES: Under the terms of an investment advisory agreement,
Tom Johnson Investment Management, Inc. (the "Adviser"), a wholly-owned
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. Through January 1, 1999, the Adviser has
voluntarily agreed to waive a portion 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 expense offset arrangements, from
exceeding 1.25% of average daily net assets.
C. ADMINISTRATION SERVICES: UAM Fund Services, Inc. (the "Administrator"), a
wholly-owned subsidiary of UAM, provides and oversees administrative, fund
accounting, dividend disbursing and transfer agent services to the UAM Funds
under a Fund Administration Agreement (the "Agreement"). Pursuant to the
Agreement, the Administrator is entitled to receive annual fees, computed
daily and payable monthly, of 0.19% of the first $200 million of the combined
aggregate net assets; plus 0.11% of the next $800 million of the combined
aggregate net assets; plus 0.07% of the next $2 billion of the combined
aggregate net assets; plus 0.05% of the combined aggregate net assets in
excess of $3 billion. The fees are allocated among the portfolios of the UAM
Funds on the basis of their relative net assets and are subject to a graduated
minimum fee schedule per portfolio which rises from $2,000 per month, upon
inception of a portfolio, to $70,000 annually after two years. For portfolios
with more than one class of shares, the minimum annual fee increases to
$90,000. In addition, the Administrator receives a Portfolio-specific monthly
fee at an annual rate of 0.04% of average daily net assets of the Portfolio.
The Administrator has entered into a Mutual Funds Service Agreement with Chase
Global Funds Services Company ("CGFSC"), an affiliate of The Chase Manhattan
Bank, under which CGFSC agrees to provide certain services, including but not
limited to, administration, fund accounting, dividend disbursing and transfer
agent services. Pursuant to the Mutual Funds Service Agreement, the
Administrator pays CGFSC a monthly fee. For the year ended April 30, 1997,
$59,928 was paid to CGFSC for its services.
D. CUSTODIAN: Effective July 17, 1996, The Chase Manhattan Bank (the
"Bank"), an affiliate of CGFSC, is custodian for the Portfolio's assets held
in accordance with the custodian agreement. For the period July 17,
11
<PAGE>
TJ CORE EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
1996 to April 30, 1997, the amount charged to the Portfolio by the Bank
aggregated $1,772, all of which is unpaid at April 30, 1997.
E. DISTRIBUTION SERVICES: UAM Fund Distributors, Inc. (the "Distributor"), a
wholly-owned subsidiary of UAM, distributes the shares of the Portfolio. The
Portfolio has adopted Distribution and Service Plans (the "Plans") pursuant to
Rule 12b-1 under the Investment Company Act of 1940. Under the Plans, the
Portfolio may not incur distribution and service fees which exceed an annual
rate of 0.75% of the Portfolio's net assets, however, the Board has currently
limited aggregate payments under the Plans to 0.50% per annum of the
Portfolio's net assets. The Portfolio is not currently making payments for
distribution fees, however the Portfolio does pay service fees at an annual
rate of 0.25% of the average daily value of shares owned by clients of the
Service Agents.
F. ACCOUNT SERVICES: Effective February 28, 1997, the UAM Funds entered into
an Account Services Agreement (the "Services Agreement") with UAM Retirement
Plan Services, Inc. ("Service Provider"), a wholly-owned subsidiary of UAM.
Under the Services Agreement, the Service Provider agrees to perform certain
services for participants in a self-directed, defined contribution plan, and
for whom the Service Provider provides participant recordkeeping. Pursuant to
the Services Agreement, the Service Provider is entitled to receive, after the
end of each month, a fee at the annual rate of 0.15% of the average aggregate
daily net asset value of shares of the UAM Funds in the accounts for which
they provide services.
G. TRUSTEES' FEES: Each Trustee, who is not an officer or affiliated person,
receives $2,000 per meeting attended, 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, and reimbursement of expenses incurred in
attending Trustee meetings.
H. PURCHASES AND SALES: For the year ended April 30, 1997, the Portfolio
made purchases of $1,879,435 and sales of $503,223 of investment securities
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
participate 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 1/8th of 1% per annum, payable at the end of
each calendar quarter is accrued by each participating Portfolio based on its
average daily unused portion of the line of credit. During the year ended
April 30, 1997, the Portfolio had no borrowings under the agreement.
J. OTHER: At April 30, 1997, 69.6% of total shares outstanding were held by
2 record shareholders owning more than 10% of the aggregate total shares
outstanding.
12
<PAGE>
PART C
UAM FUNDS TRUST
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Included in Part A for the Portfolios listed below are "Financial
Highlights" for the period from the date indicated to the fiscal
year ended April 30, 1997:
BHM&S Total Return Bond Portfolio Institutional Class Shares
(November 1, 1995)
BHM&S Total Return Bond Portfolio Institutional Service Class Shares
(November 1, 1995)
Chicago Asset Management Intermediate Bond Portfolio Institutional Class
Shares (January 24, 1995)
Chicago Asset Management Value/Contrarian Portfolio Institutional Class
Shares (December 16, 1994)
IRC Enhanced Index Portfolio Institutional Class Shares (January 23, 1996)
Jacobs International Octagon Portfolio Institutional Class Shares
(January 2, 1997)
MJI International Equity Portfolio Institutional Class Shares
(September 16, 1994)
MJI International Equity Portfolio Institutional Service Class Shares
(December 31, 1996)
Newbold's Equity Portfolio Institutional Class Shares (September 13, 1995)
TJ Core Equity Portfolio Institutional Service Class Shares
(September 28, 1995)
Included in Part A for the Portfolio listed below are "Financial
Highlights" for the period from the date indicated to the fiscal year
ended March 31, 1997:
FPA Crescent Portfolio Institutional Class Shares (June 2, 1993)
FPA Crescent Portfolio Institutional Service Class Shares
(January 24, 1997)
<PAGE>
INCLUDED IN PART B FOR THE PORTFOLIOS LISTED BELOW ARE FINANCIAL STATEMENTS
DATED APRIL 30, 1997:
BHM&S Total Return Bond Portfolio Institutional Class Shares
BHM&S Total Return Bond Portfolio Institutional Service Class Shares
Chicago Asset Management Value/Contrarian Portfolio Institional Class
Shares
Chicago Asset Management Intermediate Bond Portfolio Institional Class
Shares
IRC Enhanced Index Portfolio Institutional Class Shares
Jacobs International Octagon Portfolio Institutional Class Shares
MJI International Equity Portfolio Institutional Class Shares
MJI International Equity Portfolio Institutional Service Class Shares
Newbold's Equity Portfolio Institutional Class Shares
TJ Core Equity Portfolio Institutional Service Class Shares
The Financial Statements for the above-referenced Portfolios for the time
periods set forth in each Portfolio's Annual Report dated April 30, 1997
include:
(a) Statement of Net Assets as of April 30, 1997;
(b) Statement of Operations for the period ended April 30, 1997;
(c) Statement of Changes in Net Assets for the period ended April 30, 1997;
(d) Financial Highlights as of April 30, 1997;
(e) Notes to Financial Statements; and
(f) Report of Independent Accountants.
<PAGE>
Included in Part B for the Portfolio listed below are Financial Statements
dated March 31, 1997:
FPA Crescent Portfolio Institutional Class Shares
FPA Crescent Portfolio Institutional Service Class Shares
The Financial Statements for the above-referenced Portfolio for the time
periods set forth in the Portfolio's Annual Report dated March 31, 1997
include:
(a) Statement of Net Assets as of March 31, 1997;
(b) Statement of Operations for the period ended March 31, 1997;
(c) Statement of Changes in Net Assets for the period ended March 31, 1997;
(d) Financial Highlights as of March 31, 1997;
(e) Notes to Financial Statements; and
(f) Report of Independent Accountants.
<PAGE>
(B) EXHIBITS
Exhibits previously filed by the Fund are incorporated by reference to such
filings. The following table describes the location of all exhibits. In the
table, the following reference is used: PEA14 = Post-Effective Amendment No. 14
filed on September 17, 1996, PEA13 = Post-Effective Amendment No. 13 filed on
August 28, 1996, PEA12 = Post-Effective Amendment No. 12 filed on July 17, 1996,
PEA11 = Post-Effective No. 11 filed on July 1, 1996, PEA10 = Post-Effective
Amendment No. 10 filed on July 1, 1996, PEA9 = Post-Effective Amendment No. 9
filed on May 1, 1996, PEA8 = Post-Effective Amendment No. 8 filed on March 13,
1996, PEA7 = Post-Effective Amendment No. 7 filed on August 28, 1995, PEA4 =
Post-Effective Amendment No. 4 filed on February 9, 1995, PEA3 = Post-Effective
Amendment No. 3 filed on December 14, 1994, PEA2 = Post-Effective Amendment No.
2 filed on November 25, 1994, PEA1 = Post-Effective Amendment No. 1 filed on
November 15, 1994, RS = original Registration Statement on Form N-1A filed on
June 3, 1994 and Pre EA = Pre-Effective Amendment No. 1 filed on August 24,
1994.
<TABLE>
<CAPTION>
Incorporated by
Exhibit Reference to (Location):
- --------- ---------------------------
<S> <C>
1. Declaration of Trust RS
A. Certificate of Amendment to
Certificate of Trust PEA8
2. By-Laws RS
3. Not Applicable
4. Specimen Share Certificate PEA1, PEA2, PEA3, PEA4, PEA11, PEA12, PEA14
5. Forms of Investment Advisory
Agreements RS, PEA1, PEA2, PEA3, PEA4, PEA12, PEA14
6. Form of Distribution Agreement RS
7. Not Applicable
8. Form of Custody Agreements RS
A. Global Custody Agreement Filed herewith
9. A. Fund Administration Agreement PEA13
B. Mutual Funds Service Agreement Filed herewith
10. Opinion and Consent of Counsel Pre EA
11. Consent of Independent Accountants
A. Consent of Independent Accountants
with respect to April 30, 1997 Annual Reports Filed herewith
B. Consent of Independent Accountants
with respect to March 31, 1997 Annual Report Filed herewith
12. Other Financial Statements Not Applicable
13. Agreement for Providing Initial Capital Pre EA
14. Not Applicable
15. Not Applicable
16. Performance Quotation Schedules Filed herewith
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Incorporated by
Exhibit Reference to (Location):
- --------- ---------------------------
<S> <C>
18. Rule 18f-3 Multiple Class Plan PEA 8
24. Powers of Attorney RS, PEA7, Filed herewith
27. Financial Data Schedules for periods
ended:
A. April 30, 1997 Filed herewith
B. March 31, 1997 Filed herewith
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Registrant is not controlled by or under common control with any person.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
NUMBER OF RECORD HOLDERS
TITLE OF CLASS OR SERIES AS OF MAY 30, 1997
- ------------------------ -------------------------
<S> <C>
BHM&S Total Return Bond Portfolio Institutional
Class Shares............................................................. 8
BHM&S Total Return Bond Portfolio Institutional
Service Class Shares..................................................... 15
Chicago Asset Management Value/Contrarian Portfolio
Institutional Class Shares............................................... 35
Chicago Asset Management Intermediate Bond Portfolio
Institutional Class Shares............................................... 10
Dwight Principal Preservation Portfolio Institutional Class Shares*....... 0
FPA Crescent Portfolio Institutional Class Shares......................... 405
FPA Crescent Portfolio Institutional Service Class Shares................. 14
Hanson Equity Portfolio Institutional Class Shares*....................... 0
IRC Enhanced Index Portfolio Institutional Class Shares................... 13
Jacobs International Octagon Portfolio Institutional Class Shares......... 369
MJI International Equity Portfolio Institutional Class Shares............. 57
MJI International Equity Portfolio Institutional Service Class Shares..... 6
Newbold's Equity Portfolio Institutional Class Shares..................... 20
Newbold's Equity Portfolio Institutional Service Class Shares*............ 0
TJ Core Equity Portfolio Institutional Service Class Shares............... 12
---
Total..................................................................... 964
</TABLE>
*Portfolio or class has been authorized for sale of shares but has yet to begin
operations.
ITEM 27. INDEMNIFICATION
Reference is made to Article VI of Registrant's Declaration of Trust, which is
incorporated herein by reference. Registrant hereby also makes the undertaking
consistent with Rule 484 under the Securities Act of 1933, as amended.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the caption "Fund Management and Administration" in the
Prospectuses constituting Part A of this Registration Statement and "Investment
Adviser" in Part B of this Registration Statement. The information required by
this Item 28 with respect to each director, officer, or partner of each
investment adviser of the Registrant is incorporated by reference to the
<PAGE>
Forms ADV filed by the investment advisers listed below with the Securities and
Exchange Commission pursuant to the Investment Advisers Act of 1940, as amended,
on the dates and under the File numbers indicated:
<TABLE>
<CAPTION>
Investment Adviser Date Filed File No.
- ------------------ ---------- ---------
<S> <C> <C>
Jacobs Asset Management, L.P. April 15, 1997 801-49790
First Pacific Advisors, Inc. March 27, 1997 801-39512
Chicago Asset Management Company May 1, 1997 801-20197
Murray Johnstone International
Ltd. March 31, 1997 801-34926
Newbold's Asset Management, Inc. March 31, 1997 801-33560
Tom Johnson Investment
Management, Inc. January 21, 1997 801-42549
Dwight Asset Management Company May 20, 1997 801-45304
Investment Research Company February 14, 1997 801-31292
Hanson Investment Management
Company February 26, 1997 801-14817
Barrow, Hanley, Mewhinney &
Strauss, Inc. February 14, 1997 801-31237
</TABLE>
Jacobs Asset Management, L.P., First Pacific Advisors, Inc., Chicago Asset
Management Company, Murray Johnstone International Ltd., Newbold's Asset
Management, Inc., Tom Johnson Investment Management, Inc., Dwight Asset
Management Company, Investment Research Company, Hanson Investment Management
Company and Barrow, Hanley, Mewhinney & Strauss, Inc. are affiliates of United
Asset Management Corporation ("UAM"), a Delaware corporation owning firms
engaged primarily in institutional investment management.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) UAM Fund Distributors, Inc., (the "Distributor") the firm which acts as
sole distributor of the Registrant's shares, also acts as sole distributor
for UAM Funds, Inc., Analytic Optioned Equity Fund, Inc. and The Analytic
Series Fund.
(b) The information required with respect to each Director and officer of the
Distributor is incorporated by reference to Schedule A of Form BD filed by
the Distributor pursuant to the Securities and Exchange Act of 1934 (SEC
File No. 8-41126).
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The books, accounts and other documents required by Section 31(a) under the
Investment Company Act of 1940, as amended, and the rules promulgated thereunder
will be maintained in the physical possession of the Registrant, the
Registrant's Advisers, the Registrant's Sub-Transfer and Sub-Administrative
Agent (Chase Global Funds Services Company, 73 Tremont Street, Boston,
Massachusetts 02108) and the Registrant's Custodian Bank.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
<PAGE>
(b) (i) Registrant hereby undertakes to file a Post-Effective Amendment
including reasonably current financial statements which need not be
certified for the Dwight Principal Preservation Portfolio
Institutional Class Shares, within four to six months from the
commencement of operations of the Portfolio.
(ii) Registrant hereby undertakes to file a Post-Effective Amendment
including reasonably current financial statements which need not be
certified for the Hanson Equity Portfolio Institutional Class shares
within four to six months from the commencement of operations of the
Portfolio.
(c) Registrant hereby undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
(d) Registrant hereby undertakes to call a meeting of shareholders for the
purpose of voting upon the question of the removal of a Trustee or
Trustees when requested in writing to do so by the holders of at least
10% of the Registrant's outstanding shares and in connection with such
meeting to comply with the provisions of Section 16(c) of the Investment
Company Act of 1940, as amended, relating to shareholder communications.
<PAGE>
UAM FUNDS TRUST
(FORMERLY THE REGIS FUND II)
FILE NOS. 811-8544/33-79858
POST-EFFECTIVE AMENDMENT NO. 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
8(A) Global Custody Agreement
9(B) Mutual Funds Service Agreement
11(A) Consent of Independent Accountants with respect to
April 30, 1997 Annual Reports
11(B) Consent of Independent Accountants with respect to
March 31, 1997 Annual Report
16 Performance Quotation Schedules
24 Powers of Attorney
27(A) Financial Data Schedules for period ended April
30, 1997
27(B) Financial Data Schedule for period ended March
31, 1997
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston and Commonwealth of
Massachusetts on the 9th day of July, 1997. The Registrant certifies that it
meets all of the requirements for effectiveness of this Amendment pursuant to
Rule 485(b) under the Securities Act of 1933.
UAM FUNDS TRUST
*
-------------------
Norton H. Reamer
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
<S>
<C>
* , Chairman and President July 9, 1997
- -------------------
Norton H. Reamer
* , Trustee July 9, 1997
- -------------------
John T. Bennett, Jr.
* , Trustee July 9, 1997
- -------------------
Nancy J. Dunn
* , Trustee July 9, 1997
- -------------------
Philip D. English
* , Trustee July 9, 1997
- -------------------
William A. Humenuk
* , Trustee July 9, 1997
- -------------------
Charles H. Salisbury
* , Trustee July 9, 1997
- -------------------
Peter M. Whitman, Jr.
/s/Gary L. French , Treasurer July 9, 1997
- -------------------
Gary L. French
/s/Karl O. Hartmann July 9, 1997
- -------------------
* Karl O. Hartmann
(Attorney-in-Fact)
</TABLE>
<PAGE>
GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective July 17, 1996, and is between THE CHASE
MANHATTAN BANK, N.A. (the "Bank") and UAM FUNDS TRUST (the "Customer").
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account") for
any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same or evidencing or representing any other rights or
interests therein and other similar property whether certificated or
uncertificated as may be received by the Bank or its Subcustodian (as defined in
Section 3) for the account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account") for
any and all cash in any currency received by the Bank or its Subcustodian for
the account of the Customer, which cash shall not be subject to withdrawal by
draft or check.
The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver securities of the
same class in place of those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable to the
Bank:
(a) Securities will be held in the country or other jurisdiction in which
the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other jurisdiction
in which such cash may be legally deposited or is the legal currency for the
payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or non-
interest bearing accounts as may be available for the particular currency. If
available and not contrary to instructions, cash will be held in an interest
bearing account. To the extent Instructions are issued and the Bank can comply
with such Instructions, the Bank is authorized to maintain cash balances on
deposit for the Customer with itself or one of its affiliates at such reasonable
<PAGE>
rates of interest as may from time to time be paid on such accounts, or in non-
interest bearing accounts as the Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3 (or
their securities depositories), such arrangement must be authorized by a written
agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed in
Schedule A of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians"). The Customer authorizes the Bank to hold Assets
in the Accounts in accounts which the Bank has established with one or more of
its branches or Subcustodians. The Bank and Subcustodians are authorized to
hold any of the Securities in their account with any securities depository in
which they participate.
The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule A. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
4. Use of Subcustodian.
(a) The Bank will identify the Assets on its books as belonging to the
Customer.
(b) A Subcustodian will hold such Assets together with assets belonging to
other customers of the Bank in accounts identified on such Subcustodian's books
as special custody accounts for the exclusive benefit of customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject only
to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only to
the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding its
customer's assets shall provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
the Customer with any particular Subcustodian.
5. Deposit Account Transactions.
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required by
the Bank.
(b) In the event that any payment to be made under this Section 5 exceeds
the funds available in the Deposit Account, the Bank, in its discretion, may
advance the Customer such excess amount which shall be deemed a loan payable on
demand, bearing interest at the rate customarily charged by the Bank on similar
loans.
2
<PAGE>
(c) If the Bank credits the Deposit Account on a payable date, or at any
time prior to actual collection and reconciliation to the Deposit Account, with
interest, dividends, redemptions or any other amount due, the Customer will
promptly return any such amount upon oral or written notification: (i) that such
amount has not been received in the ordinary course of business or (ii) that
such amount was incorrectly credited. If the Customer does not promptly return
any amount upon such notification, the Bank shall be entitled, upon oral or
written notification to the Customer, to reverse such credit by debiting the
Deposit Account for the amount previously credited. The Bank or its
Subcustodian shall have no duty or obligation to institute legal proceedings,
file a claim or a proof of claim in any insolvency proceeding or take any other
action with respect to the collection of such amount, but may act for the
Customer upon Instructions after consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the Bank or
its Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities
received for, and delivery of Securities out of, the Custody Account may be made
in accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the expectation of
receiving later payment and free delivery. Delivery of Securities out of the
Custody Account may also be made in any manner specifically required by
Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction.
(ii) If any Securities delivered pursuant to this Section 6 are returned by
the recipient thereof, the Bank may reverse the credits and debits of the
particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items which
call for payment upon presentation, to the extent that the Bank or Subcustodian
is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian.
3
<PAGE>
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any transfers
of Assets to or from the Accounts. Such statements, advices or notifications
shall indicate the identity of the entity having custody of the Assets. Unless
the Customer sends the Bank a written exception or objection to any Bank
statement within sixty (60) days of receipt, the Customer shall be deemed to
have approved such statement. In such event, or where the Customer has otherwise
approved any such statement, the Bank shall, to the extent permitted by law, be
released, relieved and discharged with respect to all matters set forth in such
statement or reasonably implied therefrom as though it had been settled by the
decree of a court of competent jurisdiction in an action where the Customer and
all persons having or claiming an interest in the Customer or the Customer's
Accounts were parties.
All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the Customer.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment, redemption
or other transaction regarding Securities in the Custody Account in respect of
which the Bank has agreed to take any action under this Agreement.
8. Corporate Actions; Proxies; Tax Reclaims.
(a) Corporate Actions. Whenever the Bank receives information concerning
-----------------
the Securities which requires discretionary action by the beneficial owner of
the Securities (other than a proxy), such as subscription rights, bonus issues,
stock repurchase plans and rights offerings, or legal notices or other material
intended to be transmitted to securities holders ("Corporate Actions"), the Bank
will give the Customer notice of such Corporate Actions to the extent that the
Bank's central corporate actions department has actual knowledge of a Corporate
Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar Corporate Action is received which
bears an expiration date, the Bank will endeavor to obtain Instructions from the
Customer or its Authorized Person, but if Instructions are not received in time
for the Bank to take timely action, or actual notice of such Corporate Action
was received too late to seek Instructions, the Bank is authorized to sell such
rights entitlement or fractional interest and to credit the Deposit Account with
the proceeds or take any other action it deems, in good faith, to be appropriate
in which case it shall be held harmless for any such action.
(b) Proxy Voting. The Bank shall provide proxy voting services, if elected
------------
by the Customer, in accordance with the terms of the proxy voting services rider
hereto. Proxy voting services may be provided by the Bank or, in whole or in
part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank).
(c) Tax Reclaims.
------------
(i) Subject to the provisions hereof, the Bank will apply for a reduction
of withholding tax and any refund of any tax paid or tax credits which
apply in each applicable market in respect of income payments on Securities
for the benefit of the Customer which the Bank believes may be available to
such Customer.
(ii) The provision of tax reclaim services by the Bank is conditional upon
the Bank receiving from the beneficial owner of Securities (A) a
4
<PAGE>
declaration of its identity and place of residence and (B) certain other
documentation (pro forma copies of which are available from the Bank). The
--- -----
Customer acknowledges that, if the Bank does not receive such declarations,
documentation and information, additional United Kingdom taxation will be
deducted from all income received in respect of Securities issued outside
the United Kingdom and that U.S. non-resident alien tax or U.S. backup
withholding tax will be deducted from U.S. source income. The Customer
shall provide to the Bank such documentation and information as it may
require in connection with taxation, and warrants that, when given, this
information shall be true and correct in every respect, not misleading in
any way, and contain all material information. The Customer undertakes to
notify the Bank immediately if any such information requires updating or
amendment.
(iii) The Bank shall not be liable to the Customer or any third party for
any tax, fines or penalties payable by the Bank or the Customer, and shall
be indemnified accordingly, whether these result from the inaccurate
completion of documents by the Customer or any third party, or as a result
of the provision to the Bank or any third party of inaccurate or misleading
information or the withholding of material information by the Customer or
any other third party, or as a result of any delay of any revenue authority
or any other matter beyond the control of the Bank.
(iv) The Customer confirms that the Bank is authorized to deduct from any
cash received or credited to the Deposit Account any taxes or levies
required by any revenue or governmental authority for whatever reason in
respect of the Securities or Cash Accounts.
(v) The Bank shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to the
Customer from time to time and the Bank may, by notification in writing, at
its absolute discretion, supplement or amend the markets in which the tax
reclaim services are offered. Other than as expressly provided in this
sub-clause, the Bank shall have no responsibility with regard to the
Customer's tax position or status in any jurisdiction.
(vi) The Customer confirms that the Bank is authorized to disclose any
information requested by any revenue authority or any governmental body in
relation to the Customer or the Securities and/or Cash held for the
Customer.
(vii) Tax reclaim services may be provided by the Bank or, in whole or in
part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank); provided that the Bank shall be liable for the
performance of any such third party to the same extent as the Bank would
have been if it performed such services itself.
9. Nominees.
Securities which are ordinarily held in registered form may be registered
in a nominee name of the Bank, Subcustodian or securities depository, as the
case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Securities in the Custody Account.
5
<PAGE>
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer or its designated agent to act on behalf of the Customer under
this Agreement. Such persons shall continue to be Authorized Persons until such
time as the Bank receives Instructions from the Customer or its designated agent
that any such employee or agent is no longer an Authorized Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold the
Bank harmless for the failure of an Authorized Person to send such confirmation
in writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such duties
as are set forth in this Agreement or expressly contained in Instructions which
are consistent with the provisions of this Agreement as follows:
(i) The Bank will use reasonable care with respect to its obligations under
this Agreement and the safekeeping of Assets. The Bank shall be liable to
the Customer for any loss which shall occur as the result of the failure of
a Subcustodian to exercise reasonable care with respect to the safekeeping
of such Assets to the same extent that the Bank would be liable to the
Customer if the Bank were holding such Assets in New York. In the event of
any loss to the Customer by reason of the failure of the Bank or its
Subcustodian to utilize reasonable care, the Bank shall be liable to the
Customer only to the extent of the Customer's direct damages, to be
determined based on the market value of the property which is the subject
of the loss at the date of discovery of such loss and without reference to
any special conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission, default or the
solvency of any broker or agent which it or a Subcustodian appoints unless
such appointment was made negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without liability to the
Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise within the scope of this Agreement if such act or
omission was in good faith, without negligence. In performing its
6
<PAGE>
obligations under this Agreement, the Bank may rely on the genuineness of
any document which it believes in good faith to have been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes
or other governmental charges, and any related expenses with respect to
income from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to
such advice.
(vi) The Bank need not maintain any insurance solely for the benefit of the
Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable for any
loss which results from: 1) the general risk of investing, or 2) investing
or holding Assets in a particular country including, but not limited to,
losses resulting from nationalization, expropriation or other governmental
actions; regulation of the banking or securities industry; currency
restrictions, devaluations or fluctuations; and market conditions which
prevent the orderly execution of securities transactions or affect the
value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no
duty or responsibility to:
(i) question Instructions or make any suggestions to the Customer or an
Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or the
retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any default in
the payment of principal or income of any security other than as provided
in Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person regarding
the financial condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this Agreement;
(v) review or reconcile trade confirmations received from brokers. The
Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations
against Instructions issued to and statements issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any of
the activities listed herein.
7
<PAGE>
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this Agreement
such amount as may be agreed upon in writing, as set forth in the attached Fee
Schedule together with the Bank's reasonable out-of-pocket or incidental
expenses, including, but not limited to, legal fees. The Bank shall have a lien
on and is authorized to charge any Accounts of the Customer for any amount owing
to the Bank under any provision of this Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration of the
------------------------------
Customer's trading and investment activity, the Bank is authorized to enter into
spot or forward foreign exchange contracts with the Customer or an Authorized
Person for the Customer and may also provide foreign exchange through its
subsidiaries, affiliates or Subcustodians. Instructions, including standing
instructions, may be issued with respect to such contracts but the Bank may
establish rules or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates or
Subcustodians enter into a foreign exchange contract related to Accounts, the
terms and conditions of the then current foreign exchange contract of the Bank,
its subsidiary, affiliate or Subcustodian and, to the extent not inconsistent,
this Agreement shall apply to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it is a
--------------------------------
resident of the United States and agrees to notify the Bank of any changes in
residency. The Bank may rely upon this certification or the certification of
such other facts as may be required to administer the Bank's obligations under
this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. The Bank shall allow the Customer's independent
------------------
public accountant reasonable access to the records of the Bank relating to the
Assets as is required in connection with their examination of books and records
pertaining to the Customer's affairs. Subject to restrictions under applicable
law, the Bank shall also obtain an undertaking to permit the Customer's
independent public accountants reasonable access to the records of any
Subcustodian which has physical possession of any Assets as may be required in
connection with the examination of the Customer's books and records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
-------------------------------------
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the
------------------------------------
Assets deposited in the Accounts are (Check one):
Employee Benefit Plan or other assets subject to the Employee
----
Retirement Income Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and Exchange
-
Commission ("SEC") rules and regulations;
Neither of the above.
----
This Agreement consists exclusively of this document together with Schedule
A and the following Rider(s) [Check applicable rider(s)]:
8
<PAGE>
X ERISA
----
X MUTUAL FUND
--
X PROXY VOTING
-
X SPECIAL TERMS AND CONDITIONS
----
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions of this
-------------
Agreement are held invalid, illegal or unenforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of such provision or provisions under other circumstances or
in other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no failure or
-------
delay on the part of either party in exercising any power or right under this
Agreement operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party of any provision of this Agreement,
or waiver of any breach or default, is effective unless in writing and signed by
the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
--------
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses or
such other addresses as may subsequently be given to the other party in writing:
Bank: The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex: ____________________________________________________
Customer: UAM Fund Services, Inc.
211 Congress Street
Boston, MA 02110
Attention: Gary L. French, President
or telex: ____________________________________________________
(i) Termination. This Agreement may be terminated by the Customer or the
------------
Bank by giving sixty (60) days written notice to the other, provided that such
notice to the Bank shall specify the names of the persons to whom the Bank shall
deliver the Assets in the Accounts. If notice of termination is given by the
Bank, the Customer shall, within sixty (60) days (or such other amount of days
as is contemplated by the Extension Notice) following receipt of the notice,
deliver to the Bank Instructions specifying the names of the persons to whom the
Bank shall deliver the Assets. In either case the Bank will deliver the Assets
9
<PAGE>
to the persons so specified, after deducting any amounts which the Bank
determines in good faith to be owed to it under Section 13. If within sixty
(60) days following receipt of a notice of termination by the Bank, the Bank
does not receive Instructions from the Customer specifying the names of the
persons to whom the Bank shall deliver the Assets, the Bank, at its election,
may deliver the Assets to a bank or trust company doing business in the State of
New York to be held and disposed of pursuant to the provisions of this
Agreement, or to Authorized Persons, or may continue to hold the Assets until
Instructions are provided to the Bank.
UAM FUNDS TRUST
By: /s/ Gary L. French
-------------------
Title: Treasurer
-------------------
Date: July 12, 1996
-------------------
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Donald P. Hearn
---------------------
Title: Senior Vice President
---------------------
Date: July 11, 1996
---------------------
63825
10
<PAGE>
SCHEDULE A
FEE SCHEDULE TO GLOBAL CUSTODY
AGREEMENT BETWEEN UAM FUNDS TRUST
AND THE CHASE MANHATTAN BANK, N.A.
Domestic Custody Services Fees
- ------------------------------
For domestic custody services, the Portfolios shall pay a custody safekeeping
fee of three fourths of one basis point (.000075%) on each Porfolio's average
net assets, plus custody transaction fees as follows:
Domestic Custody Transaction Fees
$ 8.00 per DTC or Fed Book Entry transaction
$ 8.00 per PTC transaction
$25.00 per Physical transaction
$30.00 per Future or Option Wire
$ 8.00 per Wire Transfer
Global Custody Services Fees
- ----------------------------
For global custody services, the Portfolios shall pay safekeeping fees plus
transaction fees based on the following schedule:
<TABLE>
<CAPTION>
COUNTRY BASIS POINTS TRANSACTION FEES
<S> <C> <C>
ARGENTINA 0.35% $ 75.00
AUSTRALIA 0.06% $ 50.00
AUSTRIA 0.10% $ 35.00
BANGLADESH 0.40% $125.00
BELGIUM 0.10% $ 35.00
BRAZIL 0.30% $ 50.00
CANADA 0.05% $ 20.00
CEDEL 0.04% $ 35.00
CHILE 0.40% $100.00
CHINA(SHANGHAI) 0.40% $ 75.00
CHINA(SHENZHEN) 0.40% $ 75.00
COLOMBIA 0.40% $100.00
CZECH REPUBLIC 0.40% $100.00
DENMARK 0.10% $ 35.00
EGYPT 0.40% $100.00
FINLAND 0.10% $ 75.00
EURO CD'S 0.03% $ 30.00
FRANCE 0.08% $ 35.00
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
COUNTRY BASIS POINTS TRANSACTION FEES
<S> <C> <C>
GERMANY 0.08% $ 30.00
GREECE 0.40% $125.00
HONG KONG 0.10% $ 75.00
HUNGARY 0.40% $125.00
INDIA 0.40% $100.00
INDONESIA 0.30% $ 50.00
IRELAND 0.10% $ 35.00
ISRAEL 0.35% $125.00
ITALY 0.08% $ 35.00
JAPAN 0.06% $ 30.00
JORDAN 0.40% $125.00
KOREA 0.25% $ 50.00
LUXEMBOURG 0.10% $ 35.00
MALAYSIA 0.12% $ 75.00
MEXICO 0.16% $ 35.00
MOROCCO 0.40% $125.00
NETHERLANDS 0.08% $ 22.00
NEW ZEALAND 0.10% $ 35.00
NORWAY 0.10% $ 75.00
PAKISTAN 0.40% $100.00
PERU 0.40% $125.00
PHILIPPINES 0.30% $ 50.00
POLAND 0.40% $ 50.00
PORTUGAL 0.40% $100.00
SINGAPORE 0.10% $ 75.00
SOUTH AFRICA 0.10% $ 50.00
SPAIN 0.15% $ 55.00
SRI LANKA 0.30% $ 50.00
SWEDEN 0.10% $ 35.00
SWITZERLAND 0.08% $ 35.00
TAIWAN 0.35% $100.00
THAILAND 0.20% $ 35.00
TURKEY 0.40% $ 75.00
UK 0.05% $ 45.00
US 0.0075% $ 15.00
URUGUAY 0.40% $125.00
VENEZUELA 0.40% $ 75.00
ZIMBABWE 0.40% $100.00
</TABLE>
12
<PAGE>
STATE OF MASSACHUSETTS)
: ss.
COUNTY OF SUFFOLK)
On this 11th day of July, 1996, before me personally came Donald P.
Hearn, to me known, who being by me duly sworn, did depose and say that he
resides in Boston at 73 Tremont Street, that he is a Senior Vice President of
The Chase Manhattan Bank, N.A., the entity described in and which executed the
foregoing instrument; that he knows the seal of said entity, that the seal
affixed to said instrument is such seal, that it was so affixed by order of said
entity, and that he signed his name thereto by like order.
/s/ Donald P. Hearn
-------------------
Donald P. Hearn
Sworn to before me this 11th
day of July, 1996.
/s/ Julia Brown
- ---------------
Julia Brown
Notary
My Commission Expires January 25, 2002
<PAGE>
STATE OF MASSACHUSETTS)
: ss.
COUNTY OF SUFFOLK)
On this 12th day of July, 1996, before me personally came Gary L.
French, to me known, who being by me duly sworn, did depose and say that he
resides in Boston at 211 Congress Street, that he is a Treasurer of UAM Funds
Trust, the corporation described in and which executed the foregoing instrument;
the he knows the seal of said corporation, that the seal affixed to said
instrument is such corporate seal, that it was so affixed by order of the Board
of Directors of said corporation, and that he signed his name thereto by like
order.
/s/ Gary L. French
-------------------
Gary L. French
Sworn to before me this 12th
day of July, 1996.
/s/ Karen C. Scrima
- --------------------
Karen C. Scrima
Notary
My Commission Expires June 6, 1997
<PAGE>
ERISA Rider to Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
UAM FUNDS TRUST
effective July 17, 1996
Customer represents that the Assets being placed in the Bank's custody
are subject to ERISA. It is understood that in connection therewith the Bank is
a service provider and not a fiduciary of the plan and trust to which the assets
are related. The Bank shall not be considered a party to the underlying plan
and trust and the Customer hereby assumes all responsibility to assure that
Instructions issued under this Agreement are in compliance with such plan and
trust and ERISA.
This Agreement will be interpreted as being in compliance with the
Department of Labor Regulations Section 2550.404b-1 concerning the maintenance
of indicia of ownership of plan assets outside of the jurisdiction of the
district courts of the United States.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
------------------------------------------
Add the following language to the end of Section 3:
As used in this Agreement, the term Subcustodian and the term securities
depositories include a branch of the Bank, a branch of a qualified U.S.
bank, an eligible foreign custodian, or an eligible foreign securities
depository, where such terms shall mean:
(a) "qualified U.S. bank" shall mean a U.S. bank as described in paragraph
(a)(2)(ii)(A)(1) of the Department of Labor Regulations Section
2550.404b-1;
(b) "eligible foreign custodian" shall mean a banking institution
incorporated or organized under the laws of a country other than the
United States which is supervised or regulated by that country's
government or an agency thereof or other regulatory authority in the
foreign jurisdiction having authority over banks; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the
laws of a country other than the United States, which is supervised or
regulated by that country's government or an agency thereof or other
regulatory authority in the foreign jurisdiction having authority over
such depositories or clearing agencies and which is described in
paragraph (c)(2) of the Department of Labor Regulations Section
2550.404b-1.
Section 4. Use of Subcustodian.
--------------------
Subsection (d) of this section is modified by deleting the last sentence.
Section 5. Deposit Account Payments.
-------------------------
<PAGE>
Subsection (b) is amended to read as follows:
(b) In the event that any payment made under this Section 5 exceeds the
funds available in the Deposit Account, such discretionary advance shall be
deemed a service provided by the Bank under this Agreement for which it is
entitled to recover its costs as may be determined by the Bank in good
faith.
Section 10. Authorized Persons.
-------------------
Add the following paragraph at the end of Section 10:
Customer represents that: a) Instructions will only be issued by or for a
fiduciary pursuant to Department of Labor Regulation Section 404b-1
(a)(2)(i) and b) if Instructions are to be issued by an investment manager,
such entity will meet the requirements of Section 3(38) of ERISA and will
have been designated by the Customer to manage assets held in the Customer
Accounts ("Investment Manager"). An Investment Manager may designate
certain of its employees to act as Authorized Persons under this Agreement.
Section 14(a). Foreign Exchange Transactions.
------------------------------
Add the following paragraph at the end of Subsection 14(a):
Instructions to execute foreign exchange transactions with the Bank, its
subsidiaries, affiliates or Subcustodians will include (1) the time period
in which the transaction must be completed; (2) the location i.e., Chase
----
New York, Chase London, etc. or the Subcustodian with whom the contract is
to be executed and (3) such additional information and guidelines as may be
deemed necessary; and, if the Instruction is a standing Instruction, a
provision allowing such Instruction to be overridden by specific contrary
Instructions.
2
<PAGE>
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
UAM FUNDS TRUST
effective July 17, 1996
Customer represents that the Assets being placed in the Bank's custody are
subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.
Except to the extent that the Bank has specifically agreed to comply with a
condition of a rule, regulation, interpretation promulgated by or under the
authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that the maintenance
of Assets under this Agreement complies with such rules, regulations,
interpretations or exemptive order promulgated by or under the authority of the
Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
------------------------------------------
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible foreign
custodian or an eligible foreign securities depository, which are further
defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined in
Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution or
trust company incorporated or organized under the laws of a country other
than the United States that is regulated as such by that country's
government or an agency thereof and that has shareholders' equity in excess
of $200 million in U.S. currency (or a foreign currency equivalent
thereof), (ii) a majority owned direct or indirect subsidiary of a
qualified U.S. bank or bank holding company that is incorporated or
organized under the laws of a country other than the United States and that
has shareholders' equity in excess of $100 million in U.S. currency (or a
foreign currency equivalent thereof) (iii) a banking institution or trust
company incorporated or organized under the laws of a country other than
the United States or a majority owned direct or indirect subsidiary of a
qualified U.S. bank or bank holding company that is incorporated or
organized under the laws of a country other than the United States which
has such other qualifications as shall be specified in Instructions and
approved by the Bank; or (iv) any other entity that shall have been so
qualified by exemptive order, rule or other appropriate action of the SEC;
and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws of
a country other than the United States, which operates (i) the central
system for handling securities or equivalent book-entries in that country,
or (ii) a transnational system for the central handling of securities or
equivalent book-entries.
<PAGE>
The Customer represents that its Board of Directors has approved each of
the Subcustodians listed in Schedule A to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, which are attached
as Exhibits I through _____ of Schedule A, and further represents that its Board
has determined that the use of each Subcustodian and the terms of each
subcustody agreement are consistent with the best interests of the Fund(s) and
its (their) shareholders. The Bank will supply the Customer with any amendment
to Schedule A for approval. The Customer has supplied or will supply the Bank
with certified copies of its Board of Directors resolution(s) with respect to
the foregoing prior to placing Assets with any Subcustodian so approved.
Section 11. Instructions.
-------------
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is
to be made and Customer shall be solely responsible to assure that
Instructions are in accord with any limitations or restrictions applicable
to the Customer by law or as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise become
payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a pledge
of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any
restrictions applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the Bank,
its Subcustodian or the Customer's transfer agent, such shares to be
purchased or redeemed;
(j) For the purpose of redeeming in kind shares of the Customer against
delivery to the Bank, its Subcustodian or the Customer's transfer agent of
such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement among
the Customer, the Bank and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to compliance
with the rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
2
<PAGE>
organizations, regarding escrow or other arrangements in connection with
transactions by the Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only
upon payment to the Bank of monies for the premium due and a receipt for
the Securities which are to be held in escrow. Upon exercise of the
option, or at expiration, the Bank will receive from brokers the Securities
previously deposited. The Bank will act strictly in accordance with
Instructions in the delivery of Securities to be held in escrow and will
have no responsibility or liability for any such Securities which are not
returned promptly when due other than to make proper request for such
return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related
transactions;
(n) For other proper purposes as may be specified in Instructions issued
by an officer of the Customer which shall include a statement of the
purpose for which the delivery or payment is to be made, the amount of the
payment or specific Securities to be delivered, the name of the person or
persons to whom delivery or payment is to be made, and a certification that
the purpose is a proper purpose under the instruments governing the
Customer; and
(o) Upon the termination of this Agreement as set forth in Section 14(i).
Section 12. Standard of Care; Liabilities.
------------------------------
Add the following subsection (c) to Section 12:
(c) The Bank hereby warrants to the Customer that in its opinion, after
due inquiry, the established procedures to be followed by each of its
branches, each branch of a qualified U.S. bank, each eligible foreign
custodian and each eligible foreign securities depository holding the
Customer's Securities pursuant to this Agreement afford protection for such
Securities at least equal to that afforded by the Bank's established
procedures with respect to similar securities held by the Bank and its
securities depositories in New York.
Section 14. Access to Records.
------------------
Add the following language to the end of Section 14(c):
-------------------------------------------------------
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of
internal accounting controls applicable to the Bank's duties under this
Agreement. The Bank shall endeavor to obtain and furnish the Customer with
such similar reports as it may reasonably request with respect to each
Subcustodian and securities depository holding the Customer's assets.
3
<PAGE>
GLOBAL PROXY SERVICE RIDER
To Global Custody Agreement
Between
THE CHASE MANHATTAN BANK, N.A.
AND
UAM FUNDS TRUST (the "Customer")
dated July 17, 1996
1. Global Proxy Services (the "Services") shall be provided for the countries
listed in the procedures and guidelines ("Procedures") furnished to
Customer, as the same may be amended by the Bank from time to time on prior
notice to Customer. The Procedures are incorporated by reference herein
and form a part of this Rider.
2. The Services shall consist of those elements as set forth in the
Procedures, and shall include (a) notifications ("Notifications") by the
Bank to Customer of the dates of pending shareholder meetings, resolutions
to be voted upon and the return dates as may be received by the Bank or
provided to the Bank by its Subcustodians or third parties, and (b) voting
by the Bank of proxies based on Customer Directions. Original proxy
materials or copies thereof shall not be provided. Notifications shall
generally be in English and, where necessary, shall be summarized and
translated from such non-English materials as have been made available to
the Bank or its Subcustodian. In this respect the Bank's only obligation
is to provide information from sources it believes to be reliable and/or to
provide materials summarized and/or translated in good faith. the Bank
reserves the right to provide Notifications, or parts thereof, in the
language received. Upon reasonable advance request by Customer, backup
information relative to Notifications, such as annual reports, explanatory
material concerning resolutions, management recommendations or other
material relevant to the exercise of proxy voting rights shall be provided
as available, but without translation.
3. While the Bank shall attempt to provide accurate and complete
Notifications, whether or not translated, the Bank shall not be liable for
any losses or other consequences that may result from reliance by Customer
upon Notifications where the Bank prepared the same in good faith.
4 Notwithstanding the fact that the Bank may act in a fiduciary capacity with
respect to Customer under other agreements or otherwise under the
Agreement, in performing Services the Bank shall be acting solely as the
agent of Customer, and shall not exercise any discretion with regard to
such Services.
5. Proxy voting may be precluded or restricted in a variety of circumstances,
including, without limitation, where the relevant Financial Assets are: (i)
on loan; (ii) at registrar for registration or reregistration; (iii) the
subject of a conversion or other corporate action; (iv) not held in a name
subject to the control of the Bank or its Subcustodian or are otherwise
held in a manner which precludes voting; (v) not capable of being voted on
account of local market regulations or practices or restrictions by the
issuer; or (vi) held in a margin or collateral account.
6 Customer acknowledges that in certain countries the Bank may be unable to
vote individual proxies but shall only be able to vote proxies on a net
basis (e.g., a net yes or no vote given the voting instructions received
---
from all customers).
<PAGE>
7. Customer shall not make any use of the information provided hereunder,
except in connection with the funds or plans covered by this Agreement, and
shall in no event sell, license, give or otherwise make the information
provided hereunder available, to any third party, and shall not directly or
indirectly compete with the Bank or diminish the market for the Services by
provision of such information, in whole or in part, for compensation or
otherwise, to any third party.
8. The names of Authorized Persons for Services shall be furnished to the Bank
in accordance with (S)10 of the Agreement. Fees for the Services shall be
agreed as set forth in (S)13 of the Agreement.
2
<PAGE>
SPECIAL TERMS AND CONDITIONS RIDER
----------------------------------
GLOBAL CUSTODY AGREEMENT
WITH UAM FUNDS TRUST
DATE July 17, 1996
<PAGE>
DOMESTIC ONLY
SPECIAL TERMS AND CONDITIONS RIDER
----------------------------------
Domestic Corporate Actions and Proxies
- --------------------------------------
With respect to domestic U.S. and Canadian Securities (the latter if held in
DTC), the following provisions will apply rather than the provisions of Section
8 of the Agreement and the Global Proxy Service rider:
The Bank will send to the Customer or the Authorized Person for a Custody
Account, such proxies (signed in blank, if issued in the name of the Bank's
nominee or the nominee of a central depository) and communications with
respect to Securities in the Custody Account as call for voting or relate
to legal proceedings within a reasonable time after sufficient copies are
received by the Bank for forwarding to its customers. In addition, the
Bank will follow coupon payments, redemptions, exchanges or similar matters
with respect to Securities in the Custody Account and advise the Customer
or the Authorized Person for such Account of rights issued, tender offers
or any other discretionary rights with respect to such Securities, in each
case, of which the Bank has received notice from the issuer of the
Securities, or as to which notice is published in publications routinely
utilized by the Bank for this purpose.
Fees
- ----
The fees referenced in Section 13 of this Agreement cover only domestic and
euro-dollar holdings. There will be no Schedule A to this Agreement, as there
are no foreign assets in the Accounts.
<PAGE>
DOMESTIC AND GLOBAL
SPECIAL TERMS AND CONDITIONS RIDER
----------------------------------
Domestic Corporate Actions and Proxies
- --------------------------------------
With respect to domestic U.S. and Canadian Securities (the latter if held in
DTC), the following provisions will apply rather than the pertinent provisions
of Section 8 of the Agreement and the Global Proxy Service rider:
The Bank will send to the Customer or the Authorized Person for a Custody
Account, such proxies (signed in blank, if issued in the name of the Bank's
nominee or the nominee of a central depository) and communications with
respect to Securities in the Custody Account as call for voting or relate
to legal proceedings within a reasonable time after sufficient copies are
received by the Bank for forwarding to its customers. In addition, the
Bank will follow coupon payments, redemptions, exchanges or similar matters
with respect to Securities in the Custody Account and advise the Customer
or the Authorized Person for such Account of rights issued, tender offers
or any other discretionary rights with respect to such Securities, in each
case, of which the Bank has received notice from the issuer of the
Securities, or as to which notice is published in publications routinely
utilized by the Bank for this purpose.
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
. SUB-FUND ADMINISTRATION SERVICES
. SUB-FUND ACCOUNTING SERVICES
. SUB-TRANSFER AGENCY SERVICES
UAM FUNDS TRUST
JUNE 30, 1997
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
TABLE OF CONTENTS
-----------------
SECTION/PARAGRAPH PAGE
- ----------------- ----
<TABLE>
<CAPTION>
<S> <C> <C>
1. Appointment......................................... 1
2. Representations and Warranties...................... 2
3. Delivery of Documents............................... 3
4. Services Provided................................... 4
5. Fees; Expenses; Expense Reimbursement............... 5
6 Proprietary and Confidential Information............ 8
7. Duties, Responsibilities and Limitation of Liability 8
8. Term................................................ 10
9. Notices............................................. 11
10. Assignability....................................... 11
11. Waiver.............................................. 12
12. Force Majeure....................................... 12
13. Amendments.......................................... 12
14. Severability........................................ 13
15. Governing Law....................................... 13
Signatures................................................. 13
</TABLE>
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
TABLE OF CONTENTS (CONTINUED)
-----------------------------
<TABLE>
<CAPTION>
SECTION/PARAGRAPH PAGE
----
<S> <C>
Schedule A -- Fees and Expenses............................. A-1
Schedule B -- Fund Sub-Administration Services Description.. B-1
Schedule C -- Fund Sub-Accounting Services Description...... C-1
Schedule D -- Sub-Transfer Agency Services Description...... D-1
Schedule E -- Service Quality Standards..................... E-1
</TABLE>
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
AGREEMENT made as of June 30, 1997 by and between UAM FUND SERVICES,
INC. ("UAMFSI"), a Delaware corporation, and CHASE GLOBAL FUNDS SERVICES COMPANY
("Chase"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, UAM Funds Trust (the "Fund") is registered as an open-end
management, investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and currently offers for sale to investors its shares
in several investment portfolios ("Portfolios") and classes of such Portfolios
("Classes");
WHEREAS, UAMFSI is responsible for the provision of certain fund
administration, fund accounting and transfer agent services with respect to the
Fund pursuant to the Agreement between UAMFSI and the Fund dated April 15, 1996
(the "Administration Agreement"); and
WHEREAS, UAMFSI wishes to retain Chase to provide certain fund sub-
administration, sub-accounting and sub-transfer agent services with respect to
the Fund, and Chase is willing to furnish such services;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. UAMFSI hereby appoints Chase to provide certain fund
sub-administration, sub-accounting and sub-transfer agent services for the
Fund, subject to the supervision of UAMFSI and the Board of Directors of the
Fund (the "Board"), for the period and on the terms set forth in this Agreement.
Chase accepts such appointment and agrees to furnish the services herein set
forth in return for the compensation as provided in Paragraph 5, of and Schedule
A, to this Agreement.
1
<PAGE>
2. REPRESENTATIONS AND WARRANTIES.
(a) Chase represents and warrants to UAMFSI that:
(i) Chase is a corporation existing under the laws of the State
of Delaware;
(ii) Chase is duly qualified to carry on its business in the
Commonwealth of Massachusetts;
(iii) Chase is empowered under applicable laws and by its
Certificate of Incorporation and By-Laws to enter into and perform this
Agreement;
(iv) all requisite corporate proceedings have been taken to
authorize Chase to enter into and perform this Agreement;
(v) Chase has, and will continue to have, access to the
facilities, personnel and equipment required to fully perform its duties and
obligations hereunder;
(vi) Chase is registered as a transfer agent pursuant to Section
17A of the Securities Exchange Act of 1934;
(vii) no legal or administrative proceedings have been instituted
or threatened which would impair Chase's ability to perform its duties and
obligations under this Agreement; and
(viii) Chase's entrance into this Agreement shall not cause a
material breach or be in material conflict with any other agreement or
obligation of Chase or any law or regulation applicable to Chase.
(b) UAMFSI represents and warrants to Chase that:
(i) UAMFSI is a corporation existing under the laws of the State
of Delaware;
(ii) UAMFSI is duly qualified to carry on its business in the
Commonwealth of Massachusetts;
(iii) UAMFSI is empowered under applicable laws and by its
Certificate of Incorporation and By-Laws to enter into and perform this
Agreement;
(iv) all requisite corporate proceedings have been taken to
authorize UAMFSI to enter into and perform this Agreement;
(v) UAMFSI has, and will continue to have, access to the
facilities, personnel and equipment required to fully perform its duties and
obligations hereunder;
2
<PAGE>
(vi) no legal or administrative proceedings have been instituted
or threatened which would impair UAMFSI's ability to perform its duties and
obligations under this Agreement; and
(vii) UAMFSI's entrance into this Agreement shall not cause a
material breach or be in material conflict with any other agreement or
obligation of UAMFSI or any law or regulation applicable to UAMFSI;
(c) UAMFSI represents and warrants to Chase with respect to the Fund
that:
(i) the Fund is a Maryland corporation, duly organized and
existing and in good standing under the laws of the State of Maryland;
(ii) the Fund is an investment company properly registered
under the 1940 Act;
(iii) a registration statement for the Fund under the Securities
Act of 1933, as amended ("1933 Act") and the 1940 Act on Form N-1A has been
filed and will be effective and will remain effective during the term of this
Agreement, and all necessary filings under the laws of the states will have been
made and will be current during the term of this Agreement; and
(iv) that outside counsel to the Fund has represented that the
Fund's registration statements comply in all material respects with the
Securities Act of 1933 ("1933 Act") and the 1940 Act (including the rules and
regulations thereunder) and none of the Fund's prospectuses contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements therein not misleading.
3. DELIVERY OF DOCUMENTS. UAMFSI will promptly furnish to Chase such
copies, properly certified or authenticated, of contracts, documents and other
related information that Chase may reasonably request or require to properly
discharge its duties. Such documents may include but are not limited to the
following:
(a) Resolutions of the Fund's Board authorizing the appointment of
UAMFSI to provide certain fund administration, fund accounting and transfer
agency services to the Fund and approving this Agreement;
(b) UAMFSI's and the Fund's Articles of Incorporation;
3
<PAGE>
(c) UAMFSI's and the Fund's By-Laws;
(d) Authorization by the Fund contained in the Administration
Agreement allowing UAMFSI to make representations to Chase on its behalf;
(e) The Fund's Notification of Registration on Form N-8A under the
1940 Act, as filed with the Securities and Exchange Commission ("SEC");
(f) The Fund's registration statement including exhibits, as amended,
on Form N-1A (the "Registration Statement") under the 1933 Act and the 1940 Act,
as filed with the SEC;
(g) Copies of the Investment Advisory Agreements between the Fund and
its investment advisers (the "Advisory Agreements")
(h) Opinions of counsel and auditors' reports;
(i) The Fund's Prospectus(es) and Statement(s) of Additional
Information relating to all Portfolios and all amendments and supplements
thereto (such Prospectus(es) and Statement(s) of Additional Information and
supplements thereto, as presently in effect and as from time to time hereafter
amended and supplemented, herein called the "Prospectuses"); and
(j) Such other agreements as the Fund may enter into from time to time
which may be relevant to the performance of Chase's duties and obligations under
the terms of this Agreement, including securities lending agreements, futures
and commodities account agreements, brokerage agreements, and options
agreements.
4. SERVICES PROVIDED
(a) Chase will provide the following services subject to the control,
direction and supervision of UAMFSI and the Fund's Board and in compliance with
the objectives, policies and limitations set forth in the Fund's Registration
Statement, Articles of Incorporation and By-Laws; applicable laws and
regulations; and all resolutions and policies implemented by the Board:
(i) Fund Sub-Administration
(ii) Sub-Accounting
(iii) Sub-Transfer Agency
A description of each of the above services is contained in Schedules B, C, and
D respectively, to this Agreement.
4
<PAGE>
(b) Chase will also:
(i) provide office facilities with respect to the provision of the
services contemplated herein (which may be in the offices of Chase or a
corporate affiliate of Chase);
(ii) provide the services of individuals to serve as officers of the
Fund who will be designated by Chase with the approval of UAMFSI, and elected by
the Board;
(iii) provide or otherwise obtain personnel sufficient for
provision of the services contemplated herein;
(iv) furnish equipment and other materials, which Chase believes are
necessary or desirable for provision of the services contemplated herein; and
(v) keep records relating to the services provided hereunder in
such form and manner as set forth in Schedules B, C and D in accordance with the
1940 Act. To the extent required by Section 31 of the 1940 Act and the rules
thereunder, Chase agrees that all such records prepared or maintained by Chase
relating to the services provided hereunder are the property of UAMFSI and the
Fund and will be preserved for the periods prescribed under Rule 31a-2 under the
1940 Act, maintained at UAMFSI's and/or the Fund's expense, and made available
in accordance with such Section and rules. Chase further agrees to surrender
promptly to UAMFSI or the Fund upon its request and cease to retain in its
records and files those records and documents created and maintained by Chase
pursuant to this Agreement, unless otherwise required by law. Chase will provide
a copy of such records to UAMFSI, upon request, in a mutually agreed upon
electronic format.
5. FEES; EXPENSES; EXPENSE REIMBURSEMENT.
(a) As compensation for the services rendered to the Fund and UAMFSI
pursuant to this Agreement, UAMFSI shall pay Chase monthly fees determined as
set forth in Schedule A to this Agreement. Such fees are to be billed monthly
and shall be due and payable upon receipt of the invoice. Upon any termination
of this Agreement before the end of any month, the fee for the part of the month
before such termination shall be prorated according to the proportion which such
part bears to the full monthly period and shall be payable upon the date of
termination of this Agreement.
5
<PAGE>
(b) For the purpose of determining fees calculated as a function of
the Fund's assets, the value of the Fund's assets and net assets shall be
computed as required by its currently effective Prospectus, generally accepted
accounting principles, and resolutions of the Fund's Board.
(c) Chase may, in its sole discretion, from time to time employ or
associate with such person or persons as may be appropriate to assist Chase in
the performance of this Agreement. Such person or persons may be officers and
employees who are employed or designated as officers by both Chase and the Fund.
The compensation of such person or persons for such employment shall be paid by
Chase and no obligation will be incurred by or on behalf of the Fund or UAMFSI
in such respect.
(d) UAMFSI may request additional services, additional processing, or
special reports on behalf of the Fund or itself. UAMFSI shall submit such
requests in writing together with such specifications and requirements
documentation as may be reasonably required by Chase. If Chase elects to
provide such services or arrange for their provision, it shall be entitled to
reasonable additional fees and expenses at its customary rates and charges, or
such other fees, if any, mutually agreed to by Chase and UAMFSI.
(e) Chase will bear all of its own expenses in connection with the
performance of the services under this Agreement except as otherwise expressly
provided herein. UAMFSI agrees to promptly reimburse Chase for any equipment and
supplies specially ordered by or for UAMFSI or the Fund through Chase and for
any other expenses not contemplated by this Agreement that Chase may incur on
the Fund's and/or UAMFSI's behalf at the Fund's and/or UAMFSI's request or as
consented to by the Fund and/or UAMFSI, provided that Chase will notify the Fund
and/or UAMFSI of the approximate amount of such expenses prior to incurring
them. Such other expenses to be incurred in the operation of the Fund and to be
borne by the Fund and/or UAMFSI, include, but are not limited to: taxes;
interest; brokerage fees and commissions; salaries and fees of officers and
directors who are not officers, directors, shareholders or employees of Chase,
or the Fund's investment advisers or distributor; SEC and state Blue Sky
registration and qualification fees, levies, fines and other charges; EDGAR
filing fees, processing services and related fees; advisory and administration
fees; charges and expenses
6
<PAGE>
of pricing and data services, independent public accountants and custodians;
insurance premiums including fidelity bond premiums; auditing and legal
expenses; costs of maintenance of corporate existence; expenses of typesetting
and printing of prospectuses for regulatory purposes and for distribution to
current shareholders of the Fund (the Fund's distributor to bear the expense of
all other printing, production, and distribution of prospectuses, statements of
additional information, and marketing materials); expenses of printing and
production costs of shareholders' reports and proxy statements and materials;
costs and expenses of Fund stationery and forms; costs and expenses of special
telephone and data lines and devices; costs associated with corporate,
shareholder, and Board meetings; trade association dues and expenses; and any
extraordinary expenses and other customary Fund expenses. In addition, Chase
may utilize one or more independent pricing services, approved from time to time
by the Fund's Board, to obtain securities prices and to act as backup to the
primary pricing services, in connection with determining the net asset values of
the Fund, and UAMFSI and/or the Fund will reimburse Chase for the Fund's share
of the cost of such services based upon the actual usage, or a pro-rata estimate
of the use, of the services for the benefit of the Fund.
(f) All fees, out-of-pocket expenses, or additional charges of Chase
shall be billed on a monthly basis and shall be due and payable upon receipt of
the invoice.
Chase will render, after the close of each month in which services
have been furnished, a statement reflecting all of the charges for such month.
Charges remaining unpaid after thirty (30) days of receipt shall bear interest
in finance charges equivalent to, in the aggregate, the Prime Rate (as
determined by Chase) plus two percent per year and all costs and expenses of
effecting collection of any such sums, including reasonable attorney's fees,
shall be paid by UAMFSI to Chase.
In the event that UAMFSI is more than sixty (60) days delinquent in
its payments of monthly billings in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by UAMFSI),
this Agreement may be terminated upon thirty (30) days' written notice to UAMFSI
by Chase. UAMFSI must notify Chase in writing of any contested amounts within
thirty (30) days of receipt of a billing for such amounts. Disputed amounts are
not due and payable while they are being disputed. The fees set forth in
Schedule A may be changed from time to time upon agreement of the parties.
7
<PAGE>
6. PROPRIETARY AND CONFIDENTIAL INFORMATION. Chase agrees on behalf
of itself and its employees to treat confidentially and as proprietary
information of the Fund, all records and other information relative to the
Fund's prior, present or potential shareholders, and to not use such records and
information for any purpose other than performance of Chase's responsibilities
and duties hereunder. Chase may seek a waiver of such confidentiality provisions
by furnishing reasonable prior notice to the Fund and UAMFSI and obtaining
approval in writing from the Fund and UAMFSI, which approval shall not be
unreasonably withheld and may not be withheld where Chase may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities. Waivers of
confidentiality are automatically effective without further action by Chase with
respect to Internal Revenue Service levies, subpoenas and similar actions, or
with respect to any request by the Fund or UAMFSI.
7. DUTIES, RESPONSIBILITIES, AND LIMITATION OF LIABILITY.
(a) In the performance of its duties hereunder, Chase shall be
obligated to act in good faith in performing the services provided for under
this Agreement. In performing its services hereunder, UAMFSI represents and
warrants that Chase shall be entitled to rely on any oral or written
instructions, notices or other communications, including electronic
transmissions, from UAMFSI and the Fund and its custodians, officers and
directors, investors, agents, legal counsel and other service providers which
Chase reasonably believes to be genuine, valid and authorized, and that Chase
shall also be entitled to consult with and rely on the advice and opinions of
outside legal counsel retained by UAMFSI and/or the Fund, as necessary or
appropriate.
(b) Chase shall not be liable for any error of judgment or mistake of
law or for any loss or expense suffered by the Fund or UAMFSI, in connection
with the matters to which this Agreement relates, except for a loss or expense
solely caused by or resulting from willful misfeasance, bad faith or gross
negligence on Chase's part in the performance of its duties or from reckless
disregard by Chase of its obligations and duties under this Agreement. Any
person, even though also an officer, director, partner, employee or agent of
Chase, who may be or become an officer, director, partner, employee or agent of
the Fund, shall be deemed when rendering services
8
<PAGE>
to the Fund or acting on any business of the Fund (other than services or
business in connection with Chase's duties hereunder) to be rendering such
services to or acting solely for the Fund and not as an officer, director,
partner, employee or agent or person under the control or direction of Chase
even though paid by Chase. In no event shall Chase be liable to the Fund,
UAMFSI or any other party for special, indirect or consequential loss or damage
of any kind whatsoever (including but not limited to lost profits), even if
Chase has been advised of the likelihood of such loss or damage and regardless
of the form of action.
(c) Subject to Paragraph 7 (b) above, Chase shall not be responsible
for, and UAMFSI shall indemnify and hold Chase harmless from and against, any
and all losses, damages, costs, reasonable attorneys' fees and expenses,
payments, expenses and liabilities arising out of or attributable to:
(i) all actions of Chase or its officers or agents required to be
taken pursuant to this Agreement;
(ii) the reliance on or use by Chase or its officers or agents of
information, records, or documents which are received by Chase or its officers
or agents and furnished to it or them by or on behalf of UAMFSI and/or the Fund,
and which have been prepared or maintained by UAMFSI and/or the Fund or any
third party on behalf of UAMFSI and/or the Fund;
(iii) UAMFSI's refusal or failure to comply with the terms of this
Agreement or UAMFSI's lack of good faith, or its actions, or lack thereof,
involving negligence or willful misfeasance;
(iv) the breach of any representation or warranty of UAMFSI
hereunder;
(v) the taping or other form of recording of telephone
conversations or other forms of electronic communications with investors and
shareholders, or reliance by Chase on telephone or other electronic instructions
of any person acting on behalf of a shareholder or shareholder account for which
telephone or other electronic services have been authorized;
9
<PAGE>
(vi) the reliance on or the carrying out by Chase or its officers
or agents of any proper instructions reasonably believed to be duly authorized,
or requests of the Fund or UAMFSI, or recognition by Chase of any share
certificates which are reasonably believed to bear the proper signatures of the
officers of the Fund and the proper countersignature of any transfer agent or
registrar of the Fund;
(vii) any delays, inaccuracies, errors in or omissions from data
provided to Chase by data and pricing services;
(viii) the offer or sale of shares by the Fund in violation of any
requirement under the Federal securities laws or regulations or the securities
laws or regulations of any state, or in violation of any stop order or other
determination or ruling by any Federal agency or any state agency with respect
to the offer or sale of such shares in such state (1) resulting from activities,
actions, or omissions by the Fund or its other service providers and agents, or
(2) existing or arising out of activities, actions or omissions by or on behalf
of the Fund prior to the effective date of this Agreement;
(ix) any failure of the Fund's registration statement to comply
with the 1933 Act and the 1940 Act (including the rules and regulations
thereunder) and any other applicable laws, or any untrue statement of a material
fact or omission of a material fact necessary to make any statement therein not
misleading in a Fund's prospectus; and
(x) the actions taken by UAMFSI, its investment advisers, and
its distributor in compliance with applicable securities, tax, commodities and
other laws, rules and regulations, or the failure to so comply.
8. TERM. This Agreement shall become effective on the date first
hereinabove written and shall continue for an initial term of one year, unless
sooner terminated, as provided herein. Thereafter, unless so terminated, this
Agreement shall continue in effect from year to year provided such continuance
is specificially approved by UAMFSI. This Agreement may be modified or amended
from time to time by mutual agreement between the parties hereto. This Agreement
may be terminated by either party on 90 days' prior written notice; subject to
10
<PAGE>
renegotiation after the initial term. Upon termination of this Agreement,
UAMFSI shall pay to Chase such compensation and any out-of-pocket or other
reimbursable expenses which may become due or payable under the terms hereof as
of the date of termination or after the date that the provision of services
ceases, whichever is later.
9. NOTICES. Any notice required or permitted hereunder shall be in
writing to the parties at the following address (or such other address as a
party may specify by notice to the other):
If to UAMFSI:
UAM Fund Services, Inc.
211 Congress Street, 4th Floor
Boston, MA 02110
Attention: Gary L. French, President
Fax: (617) 542-7440
If to Chase:
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
Attention: Karl O. Hartmann, General Counsel
Fax: (617) 557-8616
Notice shall be effective upon receipt if by mail, on the date of personal
delivery (by private messenger, courier service or otherwise) or upon confirmed
receipt of telex or facsimile, whichever occurs first.
10. ASSIGNABILITY. This Agreement shall not be assigned by either of the
parties hereto without the prior consent in writing of the other party;
provided, however, that Chase may in its own discretion and without limitation
or prior consent of the Fund or UAMFSI, whenever and on such terms and
conditions as Chase deems necessary or appropriate, subcontract, delegate or
assign its rights, duties, obligations and liabilities to subsidiaries or
affiliates of Chase; provided, further, that any such subcontract, agreement or
understanding shall not discharge Chase or its affiliates or subsidiaries, as
the case may be, from its obligations hereunder. Similarly, Chase or its
affiliated subcontractor, designee, or assignee may at its discretion, without
notice to the Fund or UAMFSI, enter into such subcontracts, agreements and
understandings,
11
<PAGE>
whenever and on such terms and conditions as Chase or they deem necessary or
appropriate to perform services hereunder, with non-affiliated third parties;
provided, that such subcontract, agreement or understanding shall not discharge
Chase, or its subcontractor, designee, or assignee, as the case may be, from
Chase's obligations hereunder. Chase or its affiliated subcontractor, designee,
or assignee shall, however, be discharged from Chase's obligations hereunder, if
UAMFSI, the Fund or its sponsor, investment advisers or distributor require
Chase or its affiliated subcontractor, designee, or assignee to enter into any
subcontract, agreement or understanding to perform services hereunder with any
non-affiliated third party; and UAMFSI shall indemnify and hold harmless Chase
and its affiliated subcontractor, designee, or assignee from and against, any
and all losses, damages, costs, reasonable attorneys' fees and expenses,
payments, expenses and liabilities arising out of or attributable to such
subcontract, agreement or understanding.
11. WAIVER. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be in
writing signed by the waiving party.
12. FORCE MAJEURE. Chase shall not be responsible or liable for any
failure or delay in performance of its obligations under this Agreement arising
out of or caused, directly or indirectly, by circumstances beyond its control,
including without limitation, acts of God, earthquakes, fires, floods, wars,
acts of civil or military authorities, or governmental actions, nor shall any
such failure or delay give the Fund the right to terminate this Agreement.
13. AMENDMENTS. This Agreement may be modified or amended from time to
time by mutual written agreement between the parties. No provision of this
Agreement may be changed, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought. The addition of new portfolios or
new classes of portfolios to the Fund will be deemed self-executing amendments
to this Agreement requiring no further action, subject to the approval of Chase.
Such self-executing amendments will be subject to the terms and conditions of
this Agreement, and may in no other way alter the terms and conditions contained
herein, unless done so by mutual written agreement between the parties.
12
<PAGE>
14. SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable, the balance of the Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance it shall nevertheless
remain applicable to all other persons and circumstances.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK, INCLUDING THE DETERMINATION OF WHEN AN
"ASSIGNMENT" HAS OCCURRED.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
UAM FUND SERVICES, INC.
Attest: /s/ Michael E. DeFao By: /s/ Gary L. French
-------------------- ------------------
Name: Michael E. DeFao Name: Gary L. French
-------------------- ----------------
Title: President
----------------
CHASE GLOBAL FUNDS
SERVICES COMPANY
Attest: /s/ Helen A. Robichaud By: /s/ Bernard Dagnall
----------------------- -------------------
Name: Helen A. Robichaud Name: Bernard Dagnall
----------------------- -----------------
Title: President
----------------
13
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE A
FEES AND EXPENSES
Fees for Fund Sub-Accounting, Fund Sub-Administration, and Sub-Transfer Agency
- ------------------------------------------------------------------------------
Services for UAM Funds, Inc., UAM Funds Trust and all other affiliated mutual
- -----------------------------------------------------------------------------
funds for which Chase provides services (collectively the "Funds")
- ------------------------------------------------------------------
. 19 Basis Points on the first $200 million of total net assets of the Funds,
. 11 Basis Points on the next $800 million of total net assets of the Funds,
. 7 Basis Points on the next $2 billion of total net assets of the Funds,
. 5 Basis Points on total net assets of the Funds in excess of $3 billion.
A minimum annual fee of $70,000 per Portfolio will apply and shall be phased in
- -------------------------------------------------------------------------------
according to the following schedule:
- ------------------------------------
. $2,000 per month per Portfolio for the first six months of service,
. $3,500 per month per Portfolio for the second six months of service,
. $5,000 per month per Portfolio for the third six months of service,
. $5,833 per month per Portfolio thereafter.
ALL PORTFOLIOS WILL HAVE AN ADDITIONAL MINIMUM ANNUAL CHARGE OF $20,000 PER
PORTFOLIO CLASS OF SHARES. HOWEVER, THERE WILL BE NO EXTRA CHARGE FOR AN
ADDITIONAL CLASS OF SHARES WHERE THE PORTFOLIO'S FEES ALREADY EXCEED THE MINIMUM
APPLICABLE FEE BY $20,000.
THESE FEES DO NOT INCLUDE OUT-OF-POCKET EXPENSES, WHICH UNDER THE TERMS OF THIS
AGREEMENT WILL BE BILLED MONTHLY AND DUE UPON BILLING.
A-1
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE B
GENERAL DESCRIPTION OF FUND SUB-ADMINISTRATION SERVICES
I. FINANCIAL AND TAX REPORTING
A. Prepare agreed upon management reports and Board of Directors
materials such as unaudited financial statements and distribution
summaries.
B. Report Fund performance to outside services as directed by Fund
management or UAMFSI.
C. Calculate dividend and capital gain distributions in accordance with
distribution policies detailed in the Fund's prospectus(es). Assist
UAMFSI in making final determinations of distribution amounts.
D. Estimate and recommend year-end dividend and capital gain
distributions necessary to establish the Portfolio's status as a
regulated investment company ("RIC") under Section 4982 of the
Internal Revenue Code of 1986, as amended (the "Code") regarding
minimum distribution requirements.
E. Working with the Fund's public accountants or other professionals,
prepare and file Fund's Federal tax return on Form 1120-RIC along with
all state and local tax returns where applicable. Prepare and file
Federal Excise Tax Return (Form 8613).
F. Prepare and file Fund's Form N-SAR with the SEC.
G. Prepare and coordinate printing of Fund's Semiannual and Annual
Reports to Shareholders.
H. Notify shareholders as to what portion, if any, of the distributions
made by the Fund's during the prior fiscal year were exempt-interest
dividends under Section 852 (b)(5)(A) of the Code.
I. Provide Form 1099-MISC to persons other than corporations (i.e.,
Directors to whom the Fund paid more than $600 during the year).
J. Prepare and file California State Expense Limitation Report, if
applicable.
K. Provide financial information for Fund proxies and prospectuses
(Expense Table).
B-1
<PAGE>
II. PORTFOLIO COMPLIANCE
A. Assist with monitoring each Portfolio's compliance with investment
restrictions (e.g., issuer or industry diversification, etc.) listed
in the current prospectus(es) and Statement(s) of Additional
Information, although primary responsibility for such compliance shall
remain with the Fund's investment adviser or investment manager.
B. Assist with monitoring each Portfolio's compliance with the
requirements of Section 851 of the Code for qualification as a RIC
(i.e., 90% Income, 30% Income - Short Three, Diversification Tests)
although primary responsibility for such compliance shall remain with
the Fund's investment adviser or investment manager.
C. Assist with monitoring investment manager's compliance with Board
directives such as "Approved Issuers Listings for Repurchase
Agreements", Rule 17a-7, and Rule 12d-3 procedures, although primary
responsibility for such compliance shall remain with the Fund's
investment adviser or investment manager.
D. Mail quarterly requests for "Securities Transaction Reports" to the
Fund's Directors and Officers and "access persons" under the terms of
the Fund's Code of Ethics and SEC regulations.
E. Prepare and update compliance manuals and procedures.
F. Mail, collect and review on a quarterly basis compliance checklists
for each Portfolio.
III. REGULATORY AFFAIRS AND CORPORATE GOVERNANCE
A. Prepare and file post-effective amendments to the Fund's registration
statement on Form N-1A and supplements as needed.
B. Prepare and file proxy materials and administer shareholder meetings.
C. Prepare and file all state registrations of the Fund's securities
including annual renewals, registering new Portfolios, preparing and
filing sales reports, filing copies of the registration statement and
final prospectus and statement of additional information, and
increasing registered amounts of securities in individual states.
D. Prepare Board materials for all Board meetings.
B-2
<PAGE>
E. Assist with the review and monitoring of fidelity bond and errors and
omissions insurance coverage and make any related regulatory filings.
F. Prepare and update documents such as charter document, by-laws,
foreign qualification filings.
G. Prepare and file Rule 24f-2 Notice.
H. Assist in identifying and monitoring pertinent regulatory and
legislative developments which may affect the Fund and, in response to
the results of such monitoring, coordinate and provide support to
UAMFSI, the Fund and the Fund's investment adviser with respect to
those developments and results, including support with respect to
routine regulatory examinations or investigations of the Fund, and
with respect to such matters, to work in conjunction with outside
counsel, auditors and other professional organizations engaged by the
Fund.
I. File copies of financial reports to shareholders with the SEC under
Rule 30b2-1.
J. Liaison with the Fund's Distributor and outside counsel.
IV. GENERAL ADMINISTRATION
A. Furnish officers of the Fund, subject to reasonable UAMFSI and Board
approval.
B. Prepare Fund or Portfolio expense projections, establish accruals and
review on a periodic basis, including expenses based on a percentage
of Fund's average daily net assets (advisory and administrative fees)
and expenses based on actual charges annualized and accrued daily
(audit fees, registration fees, directors' fees, etc.).
C. For new Portfolios, obtain Employer or Taxpayer Identification Number
and CUSIP numbers. Estimate organizational costs and expenses and
monitor against actual disbursements.
D. Coordinate all communications and data collection with regard to any
regulatory examinations and yearly audits by independent accountants.
B-3
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE C
GENERAL DESCRIPTION OF FUND SUB-ACCOUNTING SERVICES
I. GENERAL DESCRIPTION
Chase shall provide the following accounting services to the Fund:
A. Maintenance of the books and records and accounting controls for the
Fund's assets, including records of all securities transactions;
B. Calculation of each Portfolio's Net Asset Value in accordance with the
prospectus and once the Portfolio meets eligibility requirements,
transmission to NASDAQ and to such other entities as directed by the
Fund and/or UAMFSI;
C. Accounting for dividends and interest received and distributions made
by the Fund;
D. Production of transaction data, financial reports and such other
periodic and special reports as UAMFSI and/or the Board may reasonably
request;
E. Liaison with the Fund's independent auditors; and
F. A listing of reports that will be available to UAMFSI and the Fund is
included below.
II. DOMESTIC FUND ACCOUNTING DAILY REPORTS
A. General Ledger Reports
1. Trial Balance Report
2. General Ledger Activity Report
B. Portfolio Reports
1. Portfolio Report
2. Cost Lot Report
3. Purchase Journal
4. Sell/Maturity Journal
5. Amortization/Accretion Report
6. Maturity Projection Report
C-1
<PAGE>
C. Pricing Reports
1. Pricing Report
2. Pricing Report by Market Value
3. Pricing Variance by % Change
4. NAV Report
5. NAV Proof Report
6. Money Market Pricing Report
D. Accounts Receivable/Payable Reports
1. Accounts Receivable for Investments Report
2. Accounts Payable for Investments Report
3. Interest Accrual Report
4. Dividend Accrual Report
E. Other Reports
1. Dividend Computation Report
2. Cash Availability Report
3. Settlement Journal
III. INTERNATIONAL FUND ACCOUNTING DAILY REPORTS
A. General Ledger
1. Trial Balance Report
2. General Ledger Activity Report
B. Portfolio Reports
1. Portfolio Report by Sector
2. Cost Lot Report
3. Purchase Journal
4. Sell/Maturity Journal
C. Currency Reports
1. Currency Purchase /Sales Journal
2. Currency Valuation Report
D. Pricing Reports
1. Pricing Report by Country
2. Pricing Report by Market Value
3. Price Variance by % Change
4. NAV Report
5. NAV Proof Report
C-2
<PAGE>
E. Accounts Receivable/Payable Reports
1. Accounts Receivable for Investments Sold/Matured
2. Accounts Payable for Investments Purchased
3. Accounts Receivable for Forward Exchange Contracts
4. Accounts Payable for Forward Exchange Contracts
5. Interest Receivable Valuation
6. Interest Recoverable Withholding Tax
7. Dividends Receivable Valuation
8. Dividends Recoverable Withholding Tax
F. Other Reports
1. Exchange Rate Report
IV. MONTHLY FUND ACCOUNTING REPORTS
A. Standard Reports
1. Cost Proof Report
2. Transaction History Report
3. Realized Gain/Loss Report
4. Interest Record Report
5. Dividend Record Report
6. Broker Commission Totals
7. Broker Principal Trades
8. Shareholder Activity Report
9. Fund Performance Report
B. International Reports
1. Forward Contract Transaction History Report
2. Currency Gain/Loss Report
C-3
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE D
GENERAL DESCRIPTION OF SUB-TRANSFER AGENCY SERVICES
The following is a general description of the sub-transfer agency
services Chase shall provide to the Fund. Chase will at all times provide a
group of individuals dedicated to performing the duties set forth below for the
Fund. Such dedicated team shall be comprised of not less than seven (7) people
in the aggregate or as mutually agreed upon, whose duties will include, in
addition to those set forth below, acting as telephone representatives on behalf
of the Portfolios with respect to the Portfolios' shareholders, and other
potential investors.
A. SHAREHOLDER RECORDKEEPING. Maintain records showing for each Fund
shareholder the following: (i) name, address, appropriate tax
certification and tax identifying number; (ii) number of shares of
each Portfolio and/or Class; (iii) historical information including,
but not limited to, dividends paid and date and price of all
transactions, including individual purchases and redemptions, with
appropriate supporting documents; and (iv) any dividend reinvestment
order, application, dividend to a specific address and correspondence
relating to the current maintenance of the account.
B. SHAREHOLDER ISSUANCE. Record the issuance of shares of common stock
of each Portfolio and/or Class and notify the Fund in case any
proposed issue of shares by the Fund shall result in an over-issue as
identified by Section 8-104(2) of the Uniform Commercial Code and in
case any issue would result in such an over-issue, shall refuse to
countersign and issue, and/or credit, said shares. Except as
specifically agreed in writing between Chase and the Fund, Chase shall
have no obligation when countersigning and issuing and/or crediting
shares to take cognizance of any other laws relating to the issue and
sale of such shares except insofar as policies and procedures of the
Stock Transfer Association recognize such laws.
C. PURCHASE ORDERS. Process all orders for the purchase of shares of
the Fund in accordance with the Fund's current prospectus, including
electronic transmissions, which the Fund acknowledges it has
authorized. Upon receipt of any check or other payment for purchase
of shares of the Fund from an investor, Chase will (i) stamp the order
or other documentation with the date and time of receipt, (ii)
forthwith process the same for collection, (iii) determine the amounts
thereof due the Fund, and notify the Fund of such determination and
deposit, such notification to be given on a daily basis of the total
amounts determined and deposited to the Fund's custodian bank account
during such day. Chase shall then credit the share account of the
investor with the number of Fund shares to be purchased according to
the price of the Fund's shares in effect for purchases made on the
date such
D-1
<PAGE>
payment is received by Chase, as set forth in the Fund's current
prospectus and shall promptly mail a confirmation of said purchase to
the investor, all subject to any instructions which the Fund may give
to Chase with respect to the timing or manner of acceptance of orders
for shares relating to payments so received by it. Any purchase order
received by Chase, which is deemed not in good order by Chase, will be
rejected immediately.
D. REDEMPTION ORDERS. Receive and stamp with the date and time of
receipt all requests for redemptions or repurchase of shares held in
certificate or non-certificate form, and process redemptions and
repurchase requests as follows: (i) if such certificate or redemption
request complies with the applicable standards approved by the Fund,
Chase shall on each business day notify the Fund of the total number
of shares presented and covered by such requests received by Chase on
such day; (ii) on or prior to the seventh calendar day succeeding any
such requests received by Chase, Chase shall notify the Custodian,
subject to instructions from the Fund, to transfer monies to such
account as designated by Chase for such payment to the redeeming
shareholder of the applicable redemption or repurchase price; and
(iii) if any such certificate or request for redemption or repurchase
does not comply with applicable standards, Chase shall promptly notify
the investor of such fact, together with the reason therefor, and
shall effect such redemption at the Portfolio's price next determined
after receipt of documents complying with said standards or, at such
other time as the Fund shall so direct.
E. TELEPHONE ORDERS. Process redemptions, exchanges and transfers of Fund
shares upon telephone instructions from qualified shareholders in
accordance with the procedures set forth in the Fund's current
prospectus. Chase shall be permitted to redeem, exchange and/or
transfer Fund shares from any account for which such services have
been authorized, including electronic transmissions. Chase will also
respond to other inquiries by shareholders and other potential
investors, consistent with its duties as transfer agent.
F. TRANSFER OF SHARES. Upon receipt by Chase of documentation in proper
form to effect a transfer of shares, including in the case of shares
for which certificates have been issued, the share certificates in
proper form for transfer, Chase will register such transfer on the
Fund's shareholder records maintained by Chase pursuant to
instructions received from the transferor in good form, cancel the
certificates representing such shares, if any, and if so requested,
countersign, register, issue and mail by first class mail new
certificates for the same or a smaller whole number of shares.
G. SHAREHOLDER COMMUNICATIONS. Address and mail all communications by
the Fund to its shareholders promptly following the delivery by the
Fund of the material to be mailed.
D-2
<PAGE>
H. PROXY MATERIALS. Prepare shareholder lists, mail and certify as to the
mailing of proxy materials, receive the tabulated proxy cards, render
periodic reports to the Fund on the progress of such tabulation, and
provide the Fund with inspectors of election at any meeting of
shareholders.
I. SHARE CERTIFICATES. If a shareholder of the Fund requests a
certificate representing his shares, Chase as sub-Transfer Agent, will
countersign and mail, a share certificate to the investor at his/her
address as it appears on the Fund's transfer books. Chase shall
supply, at the expense of the Fund a supply of blank share
certificates. The certificates shall be properly signed, manually or
by facsimile, as authorized by the Fund, and shall bear the Fund's
seal or facsimile; and notwithstanding the death, resignation or
removal of any officers of the Fund authorized to sign certificates,
Chase may, until otherwise directed by the Fund, continue to
countersign certificates which bear the manual or facsimile signature
of such officer.
J. RETURNED CHECKS. In the event that any check or other order for the
payment of money is returned unpaid for any reason, Chase will take
such steps, including redepositing the check for collection, returning
the check to the investor, or redeeming appropriate shares as Chase
may, at its discretion, deem appropriate and notify the Fund of such
action, or as the Fund may instruct. However, the Fund remains
ultimately liable for any returned checks of its shareholders.
K. SHAREHOLDER CORRESPONDENCE. Acknowledge all correspondence from
shareholders relating to their share accounts and undertake such other
shareholder correspondence as may from time to time be mutually agreed
upon.
L. TAX REPORTING. Chase shall issue appropriate shareholder tax forms on
an annual basis.
M. ESCHEATMENT. All Fund assets shall be subject to the escheatment laws
of the Commonwealth of Massachusetts, including those which relate to
reciprocal agreements with other states.
N. DIVIDEND DISBURSING. Chase will serve as the Fund's dividend
disbursing agent. Chase will prepare and mail checks, place wire
transfers and credit income and capital gain payments to shareholders.
UAMFSI and/or the Fund will advise Chase of the declaration of any
dividend or distribution and the record and payable date thereof at
least five (5) days prior to the record date. Chase will, on or before
the payment date of any such dividend or distribution, notify the
Fund's Custodian of the estimated amount required to pay any portion
of such dividend or distribution payable in cash, and on or before the
payment date of such distribution, the Fund
D-3
<PAGE>
will instruct its Custodian to make available to Chase sufficient
funds for the cash amount to be paid out. If a shareholder is entitled
to receive additional shares by virtue of any such distribution or
dividend, appropriate credits will be made to each shareholder's
account.
O. FULFILLMENT. Chase will, if requested by shareholders or other
potential investors in the Portfolios, provide by mail or other
acceptable means the following materials: prospectuses, SAIs, annual
reports or other materials as directed by the Fund.
D-4
<PAGE>
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE E
SERVICE QUALITY STANDARDS
UAM Funds Trust and Chase Global Funds Services Company agree that this Schedule
E is part of the Mutual Funds Service Agreement dated June 30, 1997.
SUB-ACCOUNTING
- --------------
<TABLE>
<CAPTION>
GOAL STANDARD
---- --------
<S> <C> <C> <C>
Pricing Accuracy* 99%
Reporting NAV to NASDAQ 98%
SUB-TRANSFER AGENT
- ------------------
MINIMUM
QUALITY CONTROL
TRANSACTION PROCESSING SAMPLE (1) GOAL STANDARD
- ---------------------------- --------------- ---- --------
New Accounts 25% 98%
Purchases by Check 25% 98%
Purchases by Wire 25% 98%
Redemptions by Check 25% 98%
Redemptions by Wire 25% 98%
Exchanges 25% 98%
Transfers 25% 98%
Maintenance 25% 98%
SHAREHOLDER SERVICE
Monthly Correspondence
Financial 25% 3 Days 98%
Non Financial 25% 5 Days 98%
Average Monthly Communications
Delayed 15 Seconds 100%
Answered with in 10 seconds 80% 100%
Abandoned 2% 100%
</TABLE>
E-1
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statements of Additional Information
constituting part of this Post-Effective Amendment No. 16 to the registration
statement on Form N-1A ( the "Registration Statement" ) of our reports dated
June 9, 1997, relating to the financial statements and financial highlights
appearing in the April 30, 1997 Annual Reports to the Shareholders of TJ Core
Equity Portfolio, Jacobs International Octagon Portfolio, IRC Enhanced Index
Portfolio, BHM&S Total Return Bond Portfolio, Newbold's Equity Portfolio, MJI
International Equity Portfolio and Chicago Asset Management Company Portfolios,
which appear in such Statements of Additional Information, and to the
incorporation by reference of our reports into the Prospectuses which constitute
parts of this Registration Statement.
We also consent to the use in the Statement of Additional Information of our
report dated May 12, 1997, relating to the financial statements and financial
highlights for the year ended March 31, 1997, appearing in the March 31, 1997
Annual report to the Shareholders of FPA Crescent Portfolio, which appears in
such Statement of Additional Information, and to the incorporation by reference
of our report into the Prospectus.
We also consent to the references to us under the headings "Financial
Statements" in such Statements of Additional Information and to the references
to us under the headings "Financial Highlights", "Accountants" and "Reports" in
such Prospectuses.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
July 7, 1997
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use of our report dated April 26, 1996 on the financial
statements and the financial highlights of FPA Crescent Portfolio (formerly "The
Crescent Fund"), a series of shares of the UAM Funds Trust. Such financial
statements and financial highlights are incorporated by reference in the
Post-Effective Amendment No. 16 to the Registration Statement on Form N-1A of
UAM Funds Trust. We also consent to the references to our Firm in the
Registration Statement and Prospectus.
/s/ TAIT, WELLER & BAKER
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 8, 1997
<PAGE>
Schedule or Computation of Performance Quotations
BHM & S Total Return Bond Portfolio - Institutional Class Shares
Exhibit 16
1. Average Annual Return (As of April 30, 1997)
at Maximum Offering Price
P (1+T)/N/ = ERV
Where: P = A hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value at end of the period
Since Inception
One Year 11/01/95
-------- --------
P = $1,000 P = $1,000
T = 6.745% T = 4.510%
N = 1 year N = 1.499 years
ERV = $1,067 ERV = $1,068
2. Yield (30 days ending April 30, 1997)
Yield = 2[((a-b)/(c*d)+1)/6/-1]
Where: a = dividends and interest paid during the period
b = expenses accrued during the period
(net or reimbursements)
c = the average daily number of shares
outstanding during the period
d = the maximum offering price per share
on the last day of the period
a = $77,675
b = $5,841
c = 1,311,394
d = $9.96
Yield = 6.69%
<PAGE>
Schedule or Computation of Performance Quotations
BHM & S Total Return Bond Portfolio - Institutional Service Class Shares
Exhibit 16
1. Average Annual Return (As of April 30, 1997)
at Maximum Offering Price
P (1+T)/N/ = ERV
Where: P = A hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value at end of the period
Since Inception
One Year 11/01/95
-------- --------
P = $1,000 P = $1,000
T = 6.468% T = 4.225%
N = 1 year N = 1.499 years
ERV = $1,065 ERV = $1,064
2. Yield (30 days ending April 30, 1997)
Yield = 2[((a-b)/(c*d)+1)/6/-1]
Where: a = dividends and interest paid during the period
b = expenses accrued during the period
(net or reimbursements)
c = the average daily number of shares
outstanding during the period
d = the maximum offering price per share
on the last day of the period
a = $23,643
b = $2,577
c = 399,832
d = $9.95
Yield = 6.44%
<PAGE>
Schedule or Computation of Performance Quotations
Chicago Asset Management Value / Contrarian Portfolio
Exhibit 16
1. Average Annual Return (As of April 30, 1997)
at Maximum Offering Price
P (1+T)/N/ = ERV
Where: P = A hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value at end of the period
Since Inception
One Year 12/16/94
-------- --------
P = $1,000 P = $1,000
T = 3.721% T = 18.089%
N = 1 year N = 2.375 years
ERV = $1,037 ERV = $1,484
<PAGE>
Schedule or Computation of Performance Quotations
Chicago Asset Management Intermediate Bond Portfolio
Exhibit 16
1. Average Annual Return (As of April 30, 1997)
at Maximum Offering Price
P (1+T)/N/ = ERV
Where: P = A hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value at end of the period
Since Inception
One Year 01/24/95
-------- --------
P = $1,000 P = $1,000
T = 5.526% T = 7.753%
N = 1 year N = 2.268 years
ERV = $1,055 ERV = $1,185
2. Yield (30 days ending April 30, 1997)
Yield = 2[((a-b)/(c*d)+1)/6/-1]
Where: a = dividends and interest paid during the period
b = expenses accrued during the period
(net or reimbursements)
c = the average daily number of shares
outstanding during the period
d = the maximum offering price per share
on the last day of the period
a = $55,133
b = $6,539
c = 974,320
d = $10.30
Yield = 5.88%
<PAGE>
Schedule or Computation of Performance Quotations
FPA Cresent Portfolio - Institutional Class Shares
Exhibit 16
1. Average Annual Return (As of March 31, 1997)
at Maximum Offering Price
P (1+T)/N/ = ERV
Where: P = A hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value at end of the period
Since Inception
One Year 06/02/93
-------- --------
P = $1,000 P = $1,000
T = 20.614% T = 18.843%
N = 1 year N = 3.833 years
ERV = $1,206 ERV = $1,938
<PAGE>
Schedule or Computation of Performance Quotations
FPA Cresent Portfolio - Institutional Service Class Shares
Exhibit 16
1. Average Annual Return (As of March 31, 1997)
at Maximum Offering Price
P (1+T)/N/ = ERV
Where: P = A hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value at end of the period
Since Inception
01/24/97
--------
P = $1,000
T = 2.363%
N = 0.184 years
ERV= $1,004
<PAGE>
Schedule or Computation of Performance Quotations
IRC Enhanced Index Portfolio
Exhibit 16
1. Average Annual Return (As of April 30, 1997)
at Maximum Offering Price
P (1+T)/N/ = ERV
Where: P = A hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value at end of the period
Since Inception
One Year 01/23/96
-------- --------
P = $1,000 P = $1,000
T = 21.481% T = 19.463%
N = 1 year N = 1.271 years
ERV = $1,215 ERV = $1,254
<PAGE>
Schedule or Computation of Performance Quotations
Jacobs International Octagon Portfolio
Exhibit 16
1. Average Annual Return (As of April 30, 1997)
at Maximum Offering Price
P (1+T)/N/ = ERV
Where: P = A hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value at end of the period
Since Inception
01/02/97
--------
P = $1,000
T = 1.700%
N = 0.326 years
ERV = $1,006
<PAGE>
Schedule or Computation of Performance Quotations
MJI International Equity Portfolio - Institutional Class Shares
Exhibit 16
1. Average Annual Return (As of April 30, 1997)
at Maximum Offering Price
P (1+T)/N/ = ERV
Where: P = A hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value at end of the period
Since Inception
One Year 09/16/94
-------- --------
P = $1,000 P = $1,000
T = 4.688% T = 2.995%
N = 1 year N = 2.625 years
ERV = $1,047 ERV = $1,081
<PAGE>
Schedule or Computation of Performance Quotations
MJI International Equity Portfolio - Institutional Service Class Shares
Exhibit 16
1. Average Annual Return (As of April 30, 1997)
at Maximum Offering Price
P (1+T)/N/ = ERV
Where: P = A hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value at end of the period
Since Inception
One Year 12/31/96
-------- --------
P = $1,000 P = $1,000
T = 1.140% T = 1.140%
N = 1 year N = 0.332 years
ERV = $1,011 ERV = $1,004
<PAGE>
Schedule or Computation of Performance Quotations
Newbold's Equity Portfolio Institutional Class Shares
Exhibit 16
1. Average Annual Return (As of April 30, 1997)
at Maximum Offering Price
P (1+T)/N/ = ERV
Where: P = A hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value at end of the period
Since Inception
One Year 09/13/95
-------- --------
P = $1,000 P = $1,000
T = 19.894% T = 19.330%
N = 1 year N = 1.633 years
ERV = $1,199 ERV = $1,335
<PAGE>
Schedule or Computation of Performance Quotations
TJ Core Equity Portfolio Institutional Service Class Shares
Exhibit 16
1. Average Annual Return (As of April 30, 1997)
at Maximum Offering Price
P (1+T)/N/ = ERV
Where: P = A hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value at end of the period
Since Inception
One Year 09/28/95
-------- --------
P = $1,000 P = $1,000
T = 20.138% T = 19.907%
N = 1 year N = 1.592 years
ERV = $1,201 ERV = $1,335
<PAGE>
POWER OF ATTORNEY
The undersigned Trustee of UAM Funds Trust (the "Fund") hereby appoints Michael
E. DeFao, Karl O. Hartmann and Audrey C. Talley her true and lawful attorneys-
in-fact with authority to execute in the name of such Trustee on behalf of the
Fund and to file with the U.S. Securities and Exchange Commission, Commodity
Futures Trading Commission or any other federal or state regulatory body
("Regulatory Agency"), on behalf of the Fund any and all regulatory materials
necessary or advisable to enable the Fund to comply with the Securities Act of
1933, as amended, and/or the Investment Company Act of 1940, as amended, and any
other rules, regulations and requirements of such Regulatory Agency. The powers
of the aforesaid attorneys-in-fact are hereby expressly limited to the execution
and filing of such documents with the appropriate Regulatory Agency.
/s/ Nancy J. Dunn
-----------------
Nancy J. Dunn
Date: June 20, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned Trustee of UAM Funds Trust (the "Fund") hereby appoints Michael
E. DeFao, Karl O. Hartmann and Audrey C. Talley his true and lawful attorneys-
in-fact with authority to execute in the name of such Trustee on behalf of the
Fund and to file with the U.S. Securities and Exchange Commission, Commodity
Futures Trading Commission or any other federal or state regulatory body
("Regulatory Agency"), on behalf of the Fund any and all regulatory materials
necessary or advisable to enable the Fund to comply with the Securities Act of
1933, as amended, and/or the Investment Company Act of 1940, as amended, and any
other rules, regulations and requirements of such Regulatory Agency. The powers
of the aforesaid attorneys-in-fact are hereby expressly limited to the execution
and filing of such documents with the appropriate Regulatory Agency.
/s/ Charles H. Salisbury
------------------------
Charles H. Salisbury
Date: June 20, 1997
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> UAM FUNDS TRUST
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<NAME> NEWBOLD'S EQUITY PORTFOLIO
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