<PAGE>
- -------------------------------------------------------------------------------
UAM FUNDS
FPA CRESCENT PORTFOLIO
- -------------------------------------------------------------------------------
OFFICERS AND DIRECTORS
William H. Park
Norton H. Reamer Vice President
Director, President and Chairman
Michael E. DeFao
Secretary
John T. Bennett, Jr.
Director
Karl O. Hartmann
Philip D. English Assistant Secretary
Director
Gary L. French
William A. Humenuk Treasurer
Director
Robert R. Flaherty
Assistant Treasurer
Peter M. Whitman, Jr.
Director
Gordon M. Shone
Assistant Treasurer
- -------------------------------------------------------------------------------
INVESTMENT ADVISER
First Pacific Advisors, Inc.
11400 West Olympic Boulevard
Suite 1200
Los Angeles, CA 90064
- -------------------------------------------------------------------------------
ADMINISTRATOR
UAM Fund Services, Inc.
211 Congress Street
Boston, MA 02110
- -------------------------------------------------------------------------------
CUSTODIAN
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, NY 11245
- -------------------------------------------------------------------------------
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young LLP
2600 One Commerce Square Philadelphia, PA 19103
- -------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
- -------------------------------------------------------------------------------
DISTRIBUTOR
UAM Fund Distributors, Inc.
211 Congress Street Boston, MA 02110
- -------------------------------------------------------------------------------
This report has been prepared for shareholders and may be distributed to
others only if preceded or accompanied by a current prospectus.
- -------------------------------------------------------------------------------
[LOGO OF UAM FUNDS UAM Funds
APPEARS HERE]
FPA CRESCENT PORTFOLIO
- -------------------------------------------------------------------------------
ANNUAL REPORT
MARCH 31, 1997
<PAGE>
UAM FUNDS FPA CRESCENT PORTFOLIO
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Shareholder's Letter........................................................ 1
Portfolio of Investments.................................................... 6
Statement of Assets and Liabilities......................................... 11
Statement of Operations..................................................... 12
Statement of Changes in Net Assets.......................................... 13
Financial Highlights........................................................ 14
Notes to Financial Statements............................................... 15
Report of Independent Accountants........................................... 20
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
FPA CRESCENT PORTFOLIO
April 21, 1997
Dear Fellow Shareholders:
For the past couple of years it seems as though the stock market only goes up
on days it is open--until recently, that is. January was a good month all-
around, but February brought a small-cap stock decline, and March saw both
small- and large-cap stocks drop. The FPA Crescent Portfolio ("Crescent"),
although down from its high, has performed well, beating stock and bond
indices for 1997's first quarter. For the trailing 12-month period ended
March 31, 1997, Crescent ranks #1 of 294 balanced funds (Source: Lipper).
The comparative returns for Crescent and its relevant benchmark indices are
shown below.
<TABLE>
<CAPTION>
BALANCED
BENCHMARK LEHMAN
FPA CRESCENT 60% RUSSELL BROTHERS
INSTITUTIONAL 2500 40% LB GOV'T/ RUSSELL S&P
TIME PERIOD CLASS GOV'T/CORP CORPORATE 2500 500
- ----------- ------------- ----------- --------- ------- -----
<S> <C> <C> <C> <C> <C>
Period Ended 3/31/97
Quarter..................... 3.4% -2.4% -0.9% -3.4% 2.6%
Calendar Years Ended
1996........................ 22.9% 12.6% 2.9% 19.0% 23.3%
1995........................ 26.0% 26.7% 19.2% 31.7% 37.5%
1994........................ 4.3% -2.0% -3.5% -1.1% 1.3%
From Inception*............... 17.1% 10.7% 5.7% 14.0% 17.5%
</TABLE>
* Inception is 6/2/93 for the Institutional Class shares. Returns from
inception are annualized. The annualized performance of the Russell 2500,
Lehman Brothers Government/Corporate, and S&P 500 indices begins 6/1/93. The
data quoted represents past performance and is not indicative of future
performance. An investment in the Portfolio may fluctuate so that an
investor's shares when redeemed may be worth more or less than their
original cost. The table presents the performance of the Institutional Class
shares which have been in existence since Crescent's inception. The
performance of the Institutional Service Class shares will vary based upon
the different inception date and fees assessed to that class.
Larger stocks, which have the greatest weighting in the indices, have been
propping up index returns. Individual stocks have corrected much more than the
relatively minor negative returns recently posted by the indices. The average
stock is down 16% or so from this year's high, more than twice the decline of
the S&P 500, with many stocks declining by a third or more. Even with this,
investors have not fearfully bailed out of big company stocks--so far, anyway.
Typically, in periods of stock market decline, investors seek refuge in large-
capitalization stocks with predictable earnings growth. People pay more for
predictability. Two companies in the same industry might show the same 15%
compounded growth in earnings over the preceding five years, but could have
taken different paths to get there. One might have had 15% growth every year
while the other had some losing years and some huge years. More consistent
earnings growth leads to a higher valuation, but there will be fewer
opportunities to buy it at a discount large enough to make value investors
like us happy.
With the recent stock market weakness, the Russell 2000, a small-cap index,
declined 5.2% in the first quarter of 1997, and increased only 5.1% in the
twelve-month period, poor performance when compared to the large
1
<PAGE>
companies in the S&P 500, which returned 2.6% and 19.9% for the same periods.
Given the weak relative performance of the Russell 2000, we believe that there
is currently more value in smaller companies than larger ones. Crescent's
investments currently have a small median market capitalization of
approximately $335 million to take advantage of what we perceive to be a
valuation disparity.
We like two legs supporting us when we invest--low valuation and earnings
growth--regardless of the company's size. That way, when an investment fails
to meet our original expectations, we believe that it should have less
downside than a company standing on only one leg. An investor in a high
valuation stock accepts greater volatility. There is nothing more perishable
than a high p/e. For example, a company trading at $30 and expected to
increase earnings 30% this year, to $1 per share might have a price/earnings
ratio equal to 30x. Should this company earn only $0.90, still a commendable
17% growth rate, investors will ascribe a lower p/e to its earnings--say 20x.
This would cause the stock to trade at $18, a 40% decline. Worse, if the
company were to earn less than its prior year earnings, the stock price would
probably drop by two-thirds or more. The following table reflects the lower
valuation focus of our stock portfolio. Note the below-average price/earnings
and price/book ratios.
<TABLE>
<CAPTION>
RATIOS RUSSELL S&P LEHMAN BROS.
(WEIGHTED AVERAGE) CRESCENT 2500 500 GOV'T/CORP.
- ------------------ --------- ------- ----- ------------
<S> <C> <C> <C> <C>
Stocks
Price/Earnings 1997 est.................... 15.3x 16.0x 17.3x
Price/Earnings 1998 est.................... 11.0x 14.3x 16.2x
Price/Book................................. 2.1x 3.1x 3.4x
Bonds
Duration................................... 4.4 years 5.0 years
Maturity................................... 6.4 years 9.5 years
Yield...................................... 10.3% 7.0%
</TABLE>
Listed below are Crescent's ten largest holdings, excluding short-term
investments, as of March 31, 1997. These investments account for 26.4% of the
portfolio's net assets:
COMMON STOCK
Coachmen Industries, Inc.
IHOP Corp.
Michaels Stores, Inc.
National R.V. Holdings, Inc.
Pinkerton's, Inc.
Price Enterprises, Inc.
CORPORATE BONDS
Alexander Haagen Properties, Inc. 7.5%, 1/15/01 Convertible Sub Notes
Charming Shoppes, Inc. 7.5%, 7/15/06 Convertible Sub Notes
Mobile Telecommunication Technologies Corp. 13.5%, 12/15/02 Senior Notes
Trump Atlantic City Associates 11.25%, 5/1/06 First Mortgage Notes
Coachmen and IHOP serve as recent examples of the kind of quality,
attractively priced investments we seek. We previously owned Coachmen for more
than two years until we sold our position in the fourth quarter of 1996.
Coachmen's stock price subsequently went up somewhat and then declined more
than 35% from its peak. We then repurchased our position. Coachmen returned
26% on shareholders' equity last year and trades at only 9x
2
<PAGE>
current year's earnings. (The p/e is less than 6x if you adjust for the value
of their modular housing business, their $4 per share in cash and no debt).
IHOP is a nationally known purveyor of pancakes. Most people think of this
company as a restaurant chain open only for breakfast. It's actually much
more. Surprisingly, only 40% of their sales are at breakfast, with the balance
split evenly between lunch and dinner. Of their 728 restaurants, they operate
only 62 and franchise the rest. To most of their franchisees, IHOP loans money
for the initial franchise fee, rents them their site, leases them their
equipment, and sells them product. The Company should earn $2.30 this year,
10.9x earnings. This is an inexpensive real estate, financing--oh, and
restaurant company. By the way, you should try the Country Griddle pancakes.
They're excellent, even for dinner.
Crescent had the following net asset composition at March 31, 1997.
<TABLE>
<S> <C>
Common Stocks, long..................................................... 47.8 %
Common Stocks, short.................................................... (3.4)%
Preferred Stocks........................................................ 3.8 %
Corporate Bonds......................................................... 19.8 %
Cash & Other............................................................ 32.0 %
-------
Total................................................................. 100.0 %
=======
</TABLE>
In recent years, our economy has provided a wonderful environment for
investors. This expansion has been the most restrained since World War II.
According to Barron's, the best quarterly growth in GDP in the current
expansion was only 5%, compared to an average maximum quarterly growth of
11.1% in five previous expansions. This has helped keep inflation and interest
rates low while companies have continued to grow earnings. All is not perfect
though. A record 1.1 million people declared bankruptcy in 1996; this, in an
environment where unemployment has now dropped to 5.2%. Credit delinquencies
have been expanding. (Note the recent problems confronting sub-prime auto-
lenders, including the bankruptcy filing of Jayhawk Acceptance Corp. and
Mercury Finance Company's default of their commercial paper as well as the
rising bad debt of the credit card issuers.) Many lenders are rethinking how
"loose" they wish to have their credit standards. Any tightening would have a
dampening effect on the economy. Small changes in the economy, such as a rise
in interest rates or an economic slow-down, can turn profitable customers into
bad debtors.
The Federal Reserve's recent increase in interest rates was accompanied by a
strong showing in various economic numbers raising the fear that the Fed will
hike rates further. Another increase should not be that much of a surprise, as
Alan Greenspan has clearly stated that he would preemptively increase rates to
keep inflation low. Furthermore, we do not believe that inflation is dead. It
can rear its head in such places as health care, where there has not been much
pricing pressure the past couple of years. I would argue that the bigger
health care cost savings are behind us, now 75% of the American population are
members of a managed-care network.
A recent survey by Louis Harris & Associates found that a staggering 85% of
investors have come to expect the 14% returns in the stock market over the
past ten years to continue into the next ten even though stock returns have
averaged only 10% over the past seventy years. We believe that there will be a
reversion to the mean which portends stock returns at a level less than 10%
for a period of time. Meanwhile, investors have used small market declines as
an opportunity to invest additional capital. "Buying on dips" suggests
investor complacency, taking into account only recent experience and ignoring
the potential for greater volatility. We have never seen so many
3
<PAGE>
people talking about the stock market who are not otherwise engaged in it
professionally. Furthermore, most mutual fund shareholders are relative
newcomers; 80% of the money in mutual funds has been invested since 1990. How
these shareholders might react in a stock market correction is unknown. This
gives us pause and dictates a continued cautious stance. Crescent will become
fully invested, but the companies we buy will be those trading at large
discounts to their private market value, giving us what we hope will be
greater downside protection.
As far as the bond market goes, people have been used to the idea of bonds as
a financial asset that offers big returns. This will not be the case over
time. By buying ten-year U.S. Treasury Notes today, you would receive 6.9%
over ten years without credit risk. To expect more than this would require a
rally in bonds (caused by a decrease in interest rates) and the sale of the
notes before their maturity. Such a strategy should not be confused with a
fixed income investment. It is a speculation. Although high-yield bonds have
historically low premiums to U.S. Treasuries and unattractive risk/reward
characteristics, we are doing our homework and finding some opportunities in
this sector.
Crescent has had substantial asset growth recently. Thank you for your
confidence and we endeavor to continue to earn it. We have been doing quite
well in a weak market. Since our stocks have not declined as much as the
market, it has made it somewhat more difficult to put the recent cash inflow
to work. We feel that many of the companies we own are better "holds" than
"buys" and therefore do not have the opportunity to buy more of the same
companies. This means that to employ the cash, we must find new investments.
You can therefore expect to see the number of positions we hold expand over
the shorter term and then contract as time passes. We currently own 36 stocks
in the portfolio, excluding the arbitrage positions.
Respectfully,
/s/ Steven Romick
Steven Romick
Portfolio Manager,
FPA Crescent Portfolio
4
<PAGE>
Performance Comparison
- --------------------------------------------------------------------------------
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 PURCHASE IN
FPA CRESCENT PORTFOLIO, THE STANDARD & POOR'S 500 INDEX
(S&P 500) AND THE BALANCED BENCHMARK
- ---------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN**
FOR PERIOD ENDED MARCH 31, 1997
- ---------------------------------------------------
1 YEAR SINCE 6/2/93*
- ---------------------------------------------------
20.61% 17.10%
- ---------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
FPA Crescent Portfolio S&P 500 Balanced
Institutional Class+ Index+ Benchmark+
<S> <C> <C> <C>
6/2/93 10,000 10,000 10,000
9/30/93 10,590 10,291 10,718
3/31/93 11,127 10,127 10,543
9/30/94 11,394 10,666 10,728
3/31/95 12,168 11,705 11,292
9/30/95 14,097 13,846 12,985
3/31/96 15,175 15,470 13,786
9/30/96 16,586 16,670 14,448
3/31/97 18,304 18,554 14,752
</TABLE>
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate. When shares are redeemed, they may be worth
more or less than the original cost.
* Commencement of Operations.
** Total return of the Portfolio reflects fees waived and expenses assumed by
the Adviser. Without such waiver of fees and expenses assumed, total return
would be lower.
+ The comparative indices are not adjusted to reflect expenses or other fees
that the SEC requires to be reflected in the Portfolio's performance. The
fees, if reflected, would reduce the performance quoted. The Portfolio's
performance assumes the reinvestment of all dividends and distributions. The
comparative index has been adjusted to reflect reinvestment of dividends on
securities in the index.
Definition of the Comparative Indices
-------------------------------------
The S&P 500 Index is an unmanaged index composed of 400 industrial, 40
financial, 40 utilities and 20 transportation stocks.
Balanced Benchmark, a hypothetical combination of unmanaged indices, reflects
the Portfolio's neutral mix of 60% stocks and 40% bonds (60% Russell 2500/40%
Lehman Brothers Government/Corporate Index).
The graph presents the performance of the Institutional Class shares which have
been in existence since the Portfolio's inception. The performance of the
Institutional Service Class shares will vary based upon the different inception
date and fees assessed to that Class.
Please note that one cannot invest in an unmanaged index.
5
<PAGE>
FPA CRESCENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
March 31, 1997
<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>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
FPA CRESCENT PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
March 31, 1997
<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>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
FPA CRESCENT PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
March 31, 1997
<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>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
FPA CRESCENT PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
March 31, 1997
<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>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
FPA CRESCENT PORTFOLIO
PORTFOLIO OF INVESTMENTS--(CONTINUED)
March 31, 1997
<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.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
FPA CRESCENT PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997
<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>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
FPA CRESCENT PORTFOLIO
STATEMENT OF OPERATIONS
For the Year Ended March 31, 1997
<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 Expense (Note A).................... 8,818
Amortization of Organization 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 INVESTMENTS
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 OPERATIONS............................... $5,148,189
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
FPA CRESCENT PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<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>
The accompanying notes are an integral part of the financial statements.
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>
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
- -------- --------- ------- ---------
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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 --
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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.
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