<PAGE>
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 /X/
Post-Effective Amendment No. 36 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 37 /X/
UAM FUNDS TRUST
(Exact Name of Registrant as specified in Charter)
c/o UAM Fund Services, Inc.
211 Congress St., 4th Floor
Boston, Massachusetts 02110
Registrant's Telephone Number (617) 542-5440
(Address of Principal Executive Offices)
----------------------------------------
Michael E. DeFao, Esq.
Secretary
UAM Fund Services, Inc.
211 Congress Street
Boston, Massachusetts 02110
(Name and Address of Agent for Service)
---------------------------------------
COPY TO:
Audrey C. Talley, Esq.
Drinker Biddle & Reath LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3469
It is proposed that this filing become effective (check appropriate box):
[ ] Immediately upon filing pursuant to Paragraph (b)
[ ] on August 6, 1999 pursuant to Paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a) (1)
[ ] on (date) pursuant to paragraph (a) (1)
[X] 75 days after filing pursuant to Paragraph (a) (2)
[ ] on (date) pursuant to Paragraph (a) (2) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
PART A
UAM FUNDS TRUST
The Institutional Class and Institutional Service Class prospectuses for Dwight
Interest Income Portfolio are included in this Post-Effective Amendment No. 36.
The prospectuses for the following portfolios are contained in Post-Effective
Amendment No. 35 to this Registration Statement, filed on August 9, 1999:
. BHM&S Total Return Bond Portfolio Institutional Class Shares
. BHM&S Total Return Bond Portfolio Institutional Service Class Shares
. Cambiar Opportunity Portfolio
. Chicago Asset Management Intermediate Bond Portfolio
. Chicago Asset Management Value/Contrarian Portfolio
. Clipper Focus Portfolio
. Hanson Equity Portfolio
. Jacobs International Octagon Portfolio
. MJI International Equity Portfolio Institutional Class Shares
. MJI International Equity Portfolio Institutional Service Class Shares
. Pell Rudman Mid-Cap Growth Portfolio
. TJ Core Equity Portfolio
The Institutional Class and Institutional Service Class prospectuses for FPA
Crescent Portfolio are contained in this Post-Effective Amendment No. 34 to this
Registration Statement, filed on July 28, 1999.
The Advisor Class and Institutional Class prospectuses for Heitman Real Estate
Portfolio are contained in Post-Effective Amendment No. 30 to this Registration
Statement, filed on April 22, 1999.
The Institutional Class and Institutional Service Class prospectuses for Dwight
Capital Preservation Portfolio are contained in Post-Effective Amendment No. 29
to this Registration Statement, filed on April 12, 1999.
<PAGE>
PRLIMINARY PROSPECTUS DATED OCTOBER 15, 1999
SUBJECT TO COMPLETION
UAM Funds
Funds for the Informed Investor/sm/
UAM
The Dwight Interest Income Portfolio
Institutional Service Class Prospectus ___________, 1999
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
<PAGE>
Table of Contents
PORTFOLIO SUMMARY............................................................1
WHAT ARE THE OBJECTIVES OF THE PORTFOLIO?.................................1
WHAT ARE THE PRINCIPAL INVESTMENT STRATEGIES OF THE PORTFOLIO?............1
WHAT ARE THE PRINCIPAL RISKS OF THE PORTFOLIO?............................1
WHAT ARE THE FEES AND EXPENSES OF THE PORTFOLIO?..........................3
INVESTING WITH THE UAM FUNDS.................................................4
BUYING SHARES.............................................................4
REDEEMING SHARES..........................................................5
TRANSACTION POLICIES......................................................5
ACCOUNT POLICIES............................................................10
DISTRIBUTIONS............................................................10
TAXES....................................................................10
PORTFOLIO DETAILS...........................................................11
PRINCIPAL INVESTMENTS AND RISKS OF THE PORTFOLIO.........................11
OTHER INVESTMENT PRACTICES AND STRATEGIES................................14
YEAR 2000................................................................15
INVESTMENT MANAGEMENT....................................................15
SHAREHOLDER SERVICING ARRANGEMENTS.......................................17
ADDITIONAL CLASSES OF SHARES.............................................17
<PAGE>
Portfolio Summary
- --------------------------------------------------------------------------------
The portfolio offers its shares exclusively to qualified voluntary employee
benefit associations and participant-directed employee benefit plans that
restrict their participants' ability to direct withdrawals from the portfolio.
For more information concerning what plans may invest in the portfolio and the
circumstances under which plan participants may make withdrawals, please see
"Who May Invest in the Portfolio."
WHAT ARE THE OBJECTIVES OF THE PORTFOLIO?
- --------------------------------------------------------------------------------
The portfolio seeks a level of current income higher than that of money market
funds, while attempting to preserve principal and maintain a stable net asset
value per share (NAV). The portfolio cannot guarantee it will meet its
investment objectives. The portfolio may change its investment objectives
without shareholder approval.
WHAT ARE THE PRINCIPAL INVESTMENT STRATEGIES OF THE PORTFOLIO?
- --------------------------------------------------------------------------------
This section summarizes the principal investment strategies of the portfolio.
For more information see "PRINCIPAL INVESTMENTS AND RISKS OF THE PORTFOLIO."
The portfolio is designed to produce higher returns than a money market fund,
while seeking to maintain a NAV that is considerably more stable than a
typical high-quality fixed-income fund.
Like other high-quality fixed-income funds, the portfolio invests primarily in
debt securities that a nationally recognized statistical rating agency (rating
agency), such as Moody's Investors Service or Standard & Poor's Rating Group,
has rated in its top rating category at the time of purchase. Unlike other
fixed-income funds, however, the portfolio seeks to stabilize its NAV by
purchasing wrapper agreements from financial institutions, such as insurance
companies and banks (wrap providers). A wrapper agreement is a contract that
obligates the wrap provider to maintain the adjusted cost basis (book value)
of some or all of the assets of the portfolio. For example, if the portfolio
were to sell a security for less than its book value, the wrap provider may be
obligated to pay the portfolio the difference, and vice versa.
In purchasing a wrapper agreement, the portfolio trades the potential for
capital appreciation and some yield for protection from a decline in the value
of its holdings caused by changes in interest rates.
WHAT ARE THE PRINCIPAL RISKS OF THE PORTFOLIO?
- --------------------------------------------------------------------------------
This section summarizes the principal risks associated with investing in the
portfolio. For more information see "PRINCIPAL INVESTMENTS AND RISKS OF THE
PORTFOLIO."
1
<PAGE>
Risks Common to All Mutual Funds
As with all mutual funds, at any time your investment in the portfolio may be
worth more or less than the price that you originally paid for it. You may
lose money by investing in the portfolio because:
. The value of the securities it owns changes, sometimes rapidly and
unpredictably.
. The portfolio is not successful in reaching its goal because of its
strategy or because it did not implement its strategy properly.
. Unforeseen occurrences in the securities markets negatively affect the
portfolio.
Dwight Interest Income Portfolio
The portfolio cannot guarantee that the combination of securities and wrapper
agreements will provide a constant NAV or a current rate of return that is
higher than a money market mutual fund.
The portfolio tries to offset changes in the value of its investments and to
maintain a stable NAV by combining its investments in debt securities with
wrapper agreements. However, the portfolio may not be able to maintain a
stable NAV if:
. A provider of a wrapper agreement defaults on its obligation.
. The portfolio cannot purchase wrapper agreements.
. The portfolio buys wrapper agreements that do not fully offset changes in
its NAV.
If the portfolio's attempts to stabilize its NAV fail, the value of its
investments could fall because:
. Of market conditions and economic and political events.
. Interest rates rise, which tends to cause the value of debt securities to
fall.
. A security's credit rating worsens or its issuer becomes unable to honor
its financial obligations.
2
<PAGE>
WHAT ARE THE FEES AND EXPENSES OF THE PORTFOLIO?
- --------------------------------------------------------------------------------
Annual Portfolio Operating Expenses (Expenses That Are Deducted From the Assets
of the Portfolio)
This table describes the fees and expenses that you may pay if you buy and
hold shares of the portfolio.
Dwight Interest Income
Portfolio
- --------------------------------------------------------------------------------
Shareholder Fees (Fees Paid Directly From Your Account)
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage of amount redeemed) 2.00%
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses That Are
Deducted From the Assets of the Portfolio)
- --------------------------------------------------------------------------------
Management Fee 0.35%
- --------------------------------------------------------------------------------
Service(12b-1) Fees 0.25%
- --------------------------------------------------------------------------------
Other Expenses 0.55%
- --------------------------------------------------------------------------------
Total Expenses 1.15%
# Redemption Fee Redemptions of shares that are not directed by plan
participants, such as a redemption by a plan, and that are made with
less than twelve months prior written notice will be subject to a
2.00% redemption fee.
+ Other Expenses are based on estimated amounts for the first fiscal
year of the portfolio. Other Expenses include the fees the portfolio
expects to pay for wrapper agreements.
* Actual Fees and Expenses The percentages stated in the table above are
higher than the expenses you would have actually paid. Due to certain
expense limits by the adviser and expense offsets, investors in the
portfolio actually paid the total operating expenses listed in the
table below. The adviser may change or cancel its expense limitation
at any time.
Dwight Interest Income Portfolio
----------------------------------------------------------------------
Actual Fees 0.95%
Example
This example can help you to compare the cost of investing in this portfolio
to the cost of investing in other mutual funds. The example assumes you invest
$10,000 in the portfolio for the periods shown and then redeem all of your
shares at the end of those periods. The example also assumes that you earned a
5% return on your investment each year and that you paid the total expenses
stated above (which do not reflect any expense limitations) throughout the
period of your investment. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------------
Dwight Interest Income Portfolio $117 $365 $633 $1398
3
<PAGE>
Investing with the UAM Funds
BUYING SHARES
- --------------------------------------------------------------------------------
To open an account To buy more shares
- --------------------------------------------------------------------------------
By Mail Send a check or money Send a check and, if possible,
order and your account the "Invest by Mail" stub that
application to the UAM accompanied your statement to
Funds. Make checks the UAM Funds. Be sure your
payable to "UAM Funds" check identifies clearly your
(the UAM Funds will not name, account number and the
accept third-party UAM Fund into which you want
checks). to invest.
- --------------------------------------------------------------------------------
By Wire Call 1-877-826-5465 for Call 1-877-826-5465 to get a
an account number and wire control number and wire
wire control number and your money to the UAM Funds as
then send your completed follows:
account application to
the UAM Funds. Wire your
money to the UAM Funds as
follows:
Wiring Instructions
--------------------------
United Missouri Bank
ABA # 101000695
UAM Funds
DDA Acct. # 9870964163
Ref: UAM Fund name/account number/
account name/wire control number
- --------------------------------------------------------------------------------
Minimum $1,000,000 There is no minimum for
Investments subsequent investments.
UAM Funds
PO Box 419081
Kansas City, MO 64141-6081
(Toll free) 1-877-UAM-LINK (826-5465)
www.uam.com
4
<PAGE>
REDEEMING SHARES
- --------------------------------------------------------------------------------
By Mail Send a letter signed by all registered parties on the
account to the UAM Funds specifying:
. The name of the UAM Fund.
. The account number.
. The dollar amount or number of shares you wish to
redeem.
Certain shareholders may need to include additional
documents. Please see the Statement of Additional
Information (SAI) if you need more information.
- --------------------------------------------------------------------------------
By Telephone You must first establish the telephone redemption
privilege (and, if desired, the wire redemption
privilege) by completing the appropriate sections of the
account application.
Call 1-877-826-5465 to redeem your shares. Based on your
instructions, the UAM Funds will mail your proceeds to
you or wire them to your bank.
TRANSACTION POLICIES
- --------------------------------------------------------------------------------
Who May Invest in the Portfolio
The portfolio offers its shares exclusively to qualified voluntary employee
benefit associations and participant-directed employee benefit plans that
restrict their participants' ability to direct withdrawals from the
portfolio to the following circumstances:
. Upon the plan participant's death, disability, retirement or
termination;
. To fund plan participant loans or other "in service" withdrawals made
pursuant to the terms of the plan; and
. For transfers to other plan investment options that are not "competing
funds". Competing funds are any fixed-income investment option that
has a targeted average duration of three years or less, or any
investment option that seeks to maintain a stable value per unit or
share, including money market funds. Transfers between the portfolio
and a non-competing fund must remain in the non-competing fund for at
least three months before being transferred to a competing fund.
Plans may invest in the portfolio directly or through a vehicle such as a
bank collective fund or an insurance company separate account consisting
solely of such plans. The portfolio may by itself represent an investment
option for a plan or may be combined with other investments as part of a
pooled investment option for the plan. Pooled investment options may
include lifestyle, asset allocation or balanced funds. In the case of
pooled investment
5
<PAGE>
options, the portfolio will require plans to provide information concerning
the withdrawal order and other characteristics of any pooled investment
option in which the shares are to be included prior to a plan's initial
investment. Thereafter, the portfolio may require the plan to provide
information regarding any changes to the withdrawal order and other
characteristics of the pooled investment option before such changes are
implemented.
Before investing in the portfolio, each plan must submit for the three year
period immediately preceding its investment, a monthly summary of cash flow
activity for the investment option in which the shares are included,
detailing contribution and benefit payment amounts transferred to and from
other investment options. The portfolio also may require a plan to provide
various other documents before investing in the portfolio in order to
verify that such plan is eligible to invest in the portfolio.
Calculating Your Share Price
You may buy, sell or exchange shares of a UAM Fund at a price equal to its
net asset value per share (NAV) next computed after it receives and accepts
your order. NAVs are calculated each day the New York Stock Exchange (NYSE)
is open as of the close of trading on the NYSE (generally 4:00 p.m. Eastern
Time). Therefore, to receive the NAV on any given day, the UAM Funds must
accept your order before the close of trading on the NYSE that day.
Otherwise, you will receive the NAV that is calculated on the close of
trading at the following business day. The UAM Funds are open for business
on the same days as the NYSE, which is closed on weekends and certain
holidays.
The UAM Funds calculate their NAVs by adding the total value of their
assets, subtracting their liabilities and then dividing the result by the
number of shares outstanding. The UAM Funds use market prices to value
their investments. Investments that do not have readily available market
prices are valued at fair value, according to guidelines established by the
UAM Funds. The UAM Funds may also value securities at fair value when
events occur that make established valuation methods (such as stock
exchange closing prices) unreliable. The UAM Funds value debt securities
that are purchased with remaining maturities of 60 days or less at
amortized cost, which approximates market value. The UAM Funds may use a
pricing service to value some of their assets, such as debt securities or
foreign securities.
Buying or Selling Shares through a Plan
Plan participant-directed purchases and redemptions are handled according
to each plan's specific provisions. Plans may have different provisions
concerning the timing and method of purchases and redemptions by plan
participants. Plan participants should contact their plan administrator or
other plan service provider for details concerning how they may direct
transactions in shares. It is the responsibility of the plan's service
provider to forward instructions for these transactions to the portfolio.
6
<PAGE>
In-Kind Transactions
Under certain conditions and at the portfolio's discretion, you may pay for
shares with securities instead of cash. In addition, the portfolio reserves
the right to pay all or part of any redemption request with securities and
wrapper agreements selected solely at the discretion of the portfolio. The
portfolio may make an in-kind redemption when a plan redeems all or part of
its interest in the portfolio on less than twelve months' notice.
To the extent the portfolio pays you with securities, you may incur
transaction expenses to hold and dispose of the securities.
Wrapper agreements assigned to you as payment in-kind are illiquid and will
require you to pay fees directly to the wrap provider rather than to the
portfolio. They also contain restrictions on the securities they will cover
(i.e., a wrapper agreement may limit the types, maturities, duration and
credit quality of covered assets). Therefore, to obtain the benefits of a
wrapper agreement you may not be able to freely trade the securities that
are covered by the agreement. Wrapper agreements assigned to you are
subject to all of the risks associated with such agreements described
below.
To the extent that a payment in-kind includes a wrapper agreement, the
portfolio will assign a portion of one or more wrapper agreements to you.
The economic terms and conditions of each assigned wrapper agreement will
be substantially similar to the wrapper agreements held by the portfolio.
By purchasing shares of the portfolio, you agree to accept an assignment of
a wrapper agreement as part of an in-kind redemption, provided that at the
time of the redemption payment such assignment would not violate applicable
law. In addition, prior to an assignment of a wrapper agreement, a wrap
provider may require you to represent and warrant that such an assignment
does not violate applicable laws. The wrap provider also may require you to
obtain at your own expense the services of a qualified professional asset
manager acceptable to the wrap provider to manage the securities
distributed in-kind in conformity with the provisions of the wrapper
agreement.
In the event a wrapper agreement cannot be assigned to you, the portfolio
may satisfy the redemption request through a cash payment, a redemption
in-kind consisting solely of securities or a combination of cash and
securities.
Payment of Redemption Proceeds
The UAM Funds will pay for all shares redeemed within seven days after they
receive a redemption request in proper order. If you redeem shares that
were purchased by check, you will not receive your redemption proceeds
until the check has cleared, which may take up to 15 days from the purchase
date. You may avoid these delays by paying for shares with a certified
check, bank check or money order.
Redemption Fee
Redemptions of shares that are not directed by plan participants, such as
redemptions by a plan, and that are made with less than twelve months prior
7
<PAGE>
written notice will be subject to a 2.00% redemption fee. However,
redemptions of shares for the systematic re-balancing of lifestyle, asset
allocation or balanced fund options to their target allocations are not
subject to the redemption fee.
The portfolio charges the redemption fee primarily to help minimize the
impact the redemption may have on the performance of the portfolio and to
offset certain transaction costs and administrative expenses the portfolio
incurs because of the redemption. The portfolio also charges the redemption
fee to discourage market timing by those shareholders initiating
redemptions to take advantage of short-term interest rate movements.
Other Redemption Requirements
Redemption requests by a participant of a plan that represent a withdrawal
of 10% or more of a plan's assets invested in the portfolio on any business
day must be accompanied or preceded by written verification that such
redemption is directed by plan participants in accordance with the
provisions of the plan. All redemption requests that are not directed by a
plan-participant must be accompanied or preceded by written notification of
such redemption.
Signature Guarantee
You must have your signature guaranteed when (1) you want the proceeds from
your redemption sent to a person or address different from that registered
on the account, or (2) you request a transfer of your shares.
You may obtain a signature guarantee from most banks, savings institutions,
securities dealers, national securities exchanges, registered securities
associations, clearing agencies and other guarantor institutions. A notary
public cannot guarantee a signature.
Telephone Transactions
The UAM Funds will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. The UAM Funds will not
be responsible for any loss, liability, cost or expense for following
instructions received by telephone that it reasonably believes to be
genuine.
8
<PAGE>
Rights Reserved by the UAM Funds
Purchases
At any time and without notice, the UAM Funds may:
. Stop offering shares of a portfolio.
. Reject any purchase order.
. Bar an investor engaged in a pattern of excessive trading from buying
shares of any portfolio. (Excessive trading can hurt the performance
of a portfolio by disrupting its management and by increasing its
expenses.)
Redemptions
At any time, the UAM Funds may change or eliminate any of the redemption
methods described above, except redemption by mail. The UAM Funds may
suspend your right to redeem if:
. Trading on the NYSE is restricted.
. The SEC allows the UAM Funds to delay redemptions.
The portfolio may require written verification that a redemption request is
directed by a plan participant in accordance with the provisions of the
plan or is otherwise made by a withdrawing plan before processing any
redemption request.
9
<PAGE>
ACCOUNT POLICIES
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Normally, the portfolio declares its net investment income daily and pays it
monthly. In addition, the portfolio distributes its net capital gains once a
year. The UAM Funds will automatically reinvest dividends and distributions in
additional shares of the portfolio, unless you elect on your account
application to receive them in cash.
To maintain a stable NAV, the portfolio may have to declare and pay dividends
in amounts that are not equal to the amount of net investment income it
actually earns. This may cause the portfolio to take some or all of the
following actions:
. If the portfolio distributes more money than it actually earned through its
investments, it may have to make a distribution that may be considered a
return of capital.
. If the income the portfolio receives exceeds the amount of dividends
distributed, the portfolio may have to distribute that excess income to
shareholders and declare a reverse split of its shares.
The portfolio may split its shares when it distributes its net capital gains.
Share splits or reverse share splits will cause the number of shares owned by
shareholders to increase or decrease while allowing the NAV of the portfolio
to remain stable.
TAXES
- --------------------------------------------------------------------------------
The following is a summary of the federal income tax consequences of investing
in the portfolio. There may also be state and local tax consequences on your
investment. You should always consult your tax advisor for specific guidance
regarding the tax effect of your investment in the UAM Funds.
In general, qualified voluntary employee benefit associations and participant
directed employee benefit plans are governed by a complex set of tax rules.
For plan participants using the portfolio as an investment option under a
plan, dividend and capital gains distributions from the portfolio are
generally tax deferred, which means that plan participants will not pay taxes
on such distributions until they are withdrawn. Each plan-participant should
consult with the plan administrator, the plan documents and their tax advisor
regarding the consequences of their participation in their plan and before
contributing or withdrawing any money from the plan and/or portfolio.
10
<PAGE>
Portfolio Details
PRINCIPAL INVESTMENTS AND RISKS OF THE PORTFOLIO
- --------------------------------------------------------------------------------
The following briefly describes the principal investment strategies that the
portfolio may employ in seeking its objectives. For more information
concerning these investment practices and their associated risks, please read
the "PORTFOLIO SUMMARY" and the SAI. The portfolio may change these strategies
without shareholder approval.
The portfolio invests primarily in debt securities that a nationally
recognized statistical rating agency (rating agency), such as Moody's
Investors Service or Standard & Poor's Rating Group, has rated in its top
rating category at the time of purchase. The portfolio may also invest in:
. Liquid short-term investments, such as money market instruments, that a
rating agency has rated in one of its top two short-term rating categories
at the time of purchase.
. Other investments, including commingled pools of debt securities.
The average duration of the portfolio will normally range from 1.5 to 4.0
years. The portfolio expects its dollar weighted average maturity will be six
years or less.
The portfolio seeks to stabilize its NAV by purchasing wrapper agreements from
financial institutions, such as insurance companies and banks (wrap
providers). The portfolio will buy wrapper agreements from wrap providers that
a rating agency has rated in one of its top two rating categories at the time
of purchase. The portfolio expects to purchase enough wrapper agreements to
cover all of its debt securities, but not its cash, cash equivalents or other
liquid short-term investments.
Comparison to Money Market Funds and Other Fixed Income Funds
While not fixed at $1.00 per share like a money market fund, the wrapper
agreements are likely to cause the net asset value of the portfolio to be
considerably more stable than a typical high-quality fixed-income fund. A
money market fund will generally have a shorter average maturity than the
portfolio and its yield will tend to more closely track the direction of
current market rates than the yield of the portfolio. Over the long-term,
however, the adviser believes the portfolio will offset those differences by
producing higher returns than a money market fund. The portfolio cannot,
however, guarantee that the combination of securities and wrapper agreements
will provide a constant NAV or a current rate of return that is higher than a
money market mutual fund.
Debt Securities
A debt security is an interest bearing security that corporations and
governments use to borrow money from investors. The issuer of a debt security
promises to pay interest at a stated rate, which may be variable or
11
<PAGE>
fixed, and to repay the amount borrowed at maturity (dates when debt
securities are due and payable). The portfolio may invest in debt securities
issued by corporations and the U.S. government and its agencies, mortgage-
backed and asset-backed securities (securities that are backed by pools of
loans or mortgages assembled for sale to investors), municipal notes and
bonds, commercial paper and certificates of deposit.
The concept of duration is useful in assessing the sensitivity of a
fixed-income fund to interest rate movements, which are the main source of
risk for most fixed-income funds. Duration measures price volatility by
estimating the change in price of a debt security for a 1% change in its
yield. For example, a duration of five means the price of a debt security will
change about 5% for every 1% change in its yield. Thus, the higher the
duration, the more volatile the security.
The price of a debt security generally moves in the opposite direction from
interest rates (i.e., if interest rates go up the price of the bond will go
down, and vice versa). Some types of debt securities are more affected by
changes in interest rates than others. For example, changes in rates may cause
people to pay off or refinance the loans underlying mortgage-backed and
asset-backed securities earlier or later than expected, which would shorten or
lengthen the maturity of the security. This behavior can negatively affect the
performance of a portfolio by shortening or lengthening its average maturity
and, thus, changing its effective duration. The unexpected timing of mortgage
backed and asset-backed prepayments caused by changes in interest rates may
also cause the portfolio to reinvest its assets at lower rates, reducing the
yield of the portfolio.
The credit rating or financial condition of an issuer may affect the value of
a debt security. Generally, the lower the quality rating of a security, the
greater the risk that the issuer will fail to pay interest fully and return
principal in a timely manner. If an issuer defaults or becomes unable to honor
its financial obligations, the security may lose some or all of its value.
Wrapper Agreements
A wrapper agreement obligates the wrap provider to maintain the book value of
some or all of the portfolio's assets (covered assets). Under a typical
wrapper agreement, if the portfolio sells a covered asset for less than book
value, the wrap provider will pay the portfolio the difference. If the
portfolio sells a security for more than its book value, the portfolio will
pay the wrap provider the difference. The book value of the covered assets is
their purchase price:
. Plus interest on the covered assets at a rate specified in the wrapper
agreement (crediting rate).
. Less an adjustment to reflect any defaulted securities.
The portfolio and the wrapper provider calculate the crediting rate used in
computing book value according to a formula specified in the wrapper
agreement. Usually, the crediting rate is
12
<PAGE>
. The actual interest earned on the covered assets or an index-based
approximation of the interest earned on the covered assets.
. Plus or minus an adjustment for an amount receivable from or payable to the
wrapper provider based on fluctuations in the market value of the covered
assets.
The portfolio anticipates that the value of the wrapper agreements will move
in the opposite direction from the value of the covered assets. When the value
of the covered assets is less than their book value, the portfolio will treat
the difference as an asset. Similarly, when the value of the covered assets is
more than their book value, the excess will be a liability of the portfolio.
Normally, the portfolio expects the sum of the total value of its wrapper
agreements plus the total value of all of its covered assets to equal the book
value of its covered assets.
The terms of the wrapper agreements vary concerning when payments must
actually be made between the portfolio and the wrap provider. In some cases,
payments may be due upon disposition of the covered assets. Other wrapper
agreements only provide for settlement when the wrapper agreement terminates
or the portfolio sells all of the covered assets.
Risks of Wrapper Agreements
The crediting rate will generally reflect movements in prevailing interest
rates, though, it may at any time be different from these rates or the actual
interest income earned on the covered assets. The costs the portfolio incurs
when buying wrapper agreements may reduce its return as compared to a direct
investment in the covered assets. Consequently, the portfolio may not perform
as well as other high-quality fixed-income funds of comparable duration.
The portfolio may have to maintain a specified percentage of its total assets
in short-term investments (liquidity reserve) to cover redemptions and
portfolio expenses. This may result in a lower return for the portfolio than
if it had invested in longer-term debt securities.
The following are some of the factors that may cause the value of your shares
to decline:
. The wrap provider defaults or has its credit rating lowered.
. An issuer of a security may default on payments of principal or interest or
have its credit rating downgraded, which may require the portfolio to sell
covered assets quickly and at prices that may not fully reflect their
current value. Wrap providers do not typically assume the credit risk
associated with the issuer of any covered assets. In addition, downgrades
below investment- grade and defaults by the issuer of covered assets usually
will cause the wrap provider to remove such assets from the coverage of a
wrapper agreement.
13
<PAGE>
. The portfolio might not be able to replace existing wrapper agreements with
other suitable wrapper agreement if (1) they mature or terminate or (2) the
wrap provider defaults.
. The portfolio may be unable to obtain suitable wrapper agreements or may
elect not to cover some or all of its assets with wrapper agreements. This
could occur if wrapper agreements are not available or if the adviser
believes that the terms of available wrapper agreements are unfavorable.
There is no active trading market for wrapper agreements and the portfolio
does not expect one to develop; therefore, the portfolio will consider wrapper
agreements illiquid. The portfolio may invest up to 15% of its net assets in
illiquid securities.
OTHER INVESTMENT PRACTICES AND STRATEGIES
- --------------------------------------------------------------------------------
As described below, the portfolio may use derivatives and may deviate from its
investment strategy from time to time. In addition, the portfolio may employ
investment strategies that are not described in this prospectus, such as
repurchase agreements, when-issued and forward commitment transactions,
lending of securities, borrowing and other techniques. For information
concerning these investment practices, you should read the SAI.
Derivatives
The portfolio may use options, futures and swaps (types of derivatives).
Derivatives are often more volatile than other investments and may magnify a
portfolio's gains or losses. A portfolio may lose money if the adviser:
. Fails to predict correctly the direction in which the underlying asset or
economic factor will move.
. Judges market conditions incorrectly.
. Employs a strategy that does not correlate well with the investments of the
portfolio.
Portfolio Turnover
The portfolio may buy and sell investments relatively often and estimates that
its annual portfolio turnover rate will not exceed 200%. Such a strategy often
involves higher expenses, including brokerage commissions, and may increase
the amount of capital gains, particularly short-term gains realized by the
portfolio. Shareholders must pay tax on such capital gains.
Short-Term Investing
At times, the adviser may decide to invest up to 100% of the portfolio's
assets in a variety of high-quality, short-term debt securities, such as U.S.
government securities. The adviser may invest in these types of securities for
temporary defensive purposes, to earn a return on uninvested assets or to meet
redemptions. The adviser may temporarily adopt a defensive position to
14
<PAGE>
reduce changes in the value of the shares of the portfolio that may result
from adverse market, economic, political or other developments.
When the adviser pursues a temporary defensive strategy, the portfolio may not
profit from favorable developments that it would have otherwise profited from
if it were pursuing its normal strategies. Likewise, these strategies may
prevent the portfolio from achieving its stated objectives.
YEAR 2000
- --------------------------------------------------------------------------------
Many computer programs in use today cannot distinguish the year 2000 from the
year 1900 because of the way they encode and calculate dates. Consequently,
these programs may not be able to perform necessary functions and could
disrupt the operations of the UAM Funds or financial markets in general. The
year 2000 issue affects all companies and organizations, including those that
provide services to the UAM Funds and those in which the UAM Funds invest.
The UAM Funds and their advisers, administrator, distributor and transfer
agent are taking steps they believe are reasonably necessary to address any
portfolio-related year 2000-related computer problems. They are actively
working on necessary changes to their own computer systems to prepare for the
year 2000 and expect that their systems will be adapted before that date. They
are also requesting information on each service provider's state of readiness
and contingency plan. However, at this time the degree to which the year 2000
issue will affect the UAM Funds' investments or operations cannot be
predicted. Any negative consequences could adversely affect your investment in
the UAM Funds.
INVESTMENT MANAGEMENT
- --------------------------------------------------------------------------------
Investment Adviser
Dwight Asset Management Company, a Delaware corporation located at 125 College
Street, Burlington, Vermont 05401, is the investment adviser to the portfolio.
The adviser manages and supervises the investment of the portfolio's assets on
a discretionary basis. The adviser, an affiliate of United Asset Management
Corporation, has provided investment management services to corporations,
pension and profit-sharing plans, 401(k) and thrift plans since 1983.
For its services, the portfolio pays the adviser a fee of 0.35% of its average
net assets. In addition, the adviser has voluntarily agreed to limit the total
annual fund operating expenses of the portfolio to 0.70%. To maintain this
expense limit, the adviser may waive a portion of its management fee and/or
reimburse certain expenses (excluding interest, taxes and extraordinary
expenses) of the portfolio. The adviser intends to continue this expense
limitation until further notice.
15
<PAGE>
Portfolio Managers
A team of investment professionals of the adviser is primarily responsible for
the day-to-day management of the portfolio.
Adviser's Historical Performance
The adviser manages accounts of debt securities that have substantially
similar investment objectives as the portfolio. The adviser manages these
accounts using techniques and strategies substantially similar, though not
always identical, to those used to manage the portfolio. A composite of the
performance of all of these accounts is listed below. The performance data for
the managed accounts reflects deductions of all fees and expenses. All fees
and expenses of the separate accounts were less than the operating expenses of
the portfolio. If the performance of the managed accounts was adjusted to
reflect fees and expenses of the portfolio, the composite's performance would
have been lower.
Quarterly returns of the composite combine the individual accounts' returns by
asset-weighing each individual account's asset value as of the end of the
quarter. The yearly returns are computed by geometrically linking the returns
of each quarter within the year. This calculation method differs from the SEC
method of calculating returns. Had the adviser calculated its performance
using the SEC's method, its results might have differed.
The separately managed accounts are not subject to investment limitations,
diversification requirements, and other restrictions imposed by the Investment
Company Act of 1940 and the Internal Revenue Code. If they were, their returns
might have been lower. The performance of these separate accounts is not
intended to predict or suggest the performance of the portfolio and may be
calculated differently than the performance of the portfolio.
<TABLE>
<CAPTION>
Dwight Asset Management Company Ryan 5 Year
All Funds Composite* GIC Master Index+
- --------------------------------------------------------------------------------
<S> <C> <C>
Calendar Years
1998 6.94% 6.57%
----------------------------------------------------------------------------
1997 7.11% 6.58%
----------------------------------------------------------------------------
1996 7.28% 6.73%
----------------------------------------------------------------------------
1995 7.63% 7.19%
----------------------------------------------------------------------------
1994 8.10% 7.52%
----------------------------------------------------------------------------
1993 8.69% 8.15%
----------------------------------------------------------------------------
1992 9.37% 8.70%
Average Annual Returns For Periods Ended 9/30/99
1-year 6.70% 6.58%
------------------------------------------------------------------------------
3-years 6.95% 6.58%
------------------------------------------------------------------------------
5-years 7.19% 6.77%
------------------------------------------------------------------------------
10-years 8.40% 7.67%
</TABLE>
* All returns are dollar weighted, and are net of fees and expenses. Returns
are net fees, which are based on a dollar weight average of 0.10% as of
9/30/99.
16
<PAGE>
SHAREHOLDER SERVICING ARRANGEMENTS
- --------------------------------------------------------------------------------
Brokers, dealers, banks, trust companies and other financial representatives
may receive compensation from the UAM Funds or their service providers for
providing a variety of services. This section briefly describes how financial
representatives may get paid.
Distribution Plans
The UAM Funds have adopted a Distribution Plan and a Shareholder Services Plan
under Rule 12b-1 of the Investment Company Act of 1940 that permit them to pay
broker-dealers, financial institutions and other third parties for marketing,
distribution and shareholder services. The UAM Funds' 12b-1 plans allow them
to pay up to 1.00% of its average daily net assets annually for these
services. However, they are currently authorized to pay only 0.25% per year.
Because Institutional Service Class Shares pay these fees out of their assets
on an ongoing basis, over time, your shares may cost more than if you had paid
another type of sales charge. Long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charges permitted by rules
of the National Association of Securities Dealers, Inc.
Shareholder Servicing
For providing certain services to their clients, financial representatives may
be paid a fee based on the assets of the UAM Funds that are attributable to
the financial representative. These services may include record keeping,
transaction processing for shareholders' accounts and certain shareholder
services not currently offered to shareholders that deal directly with the UAM
Funds. In addition, your financial representatives may charge you other
account fees for buying or redeeming shares of the UAM Funds or for servicing
your account. Your financial representative should provide you with a schedule
of its fees and services.
The UAM Funds may pay all or part of the fees paid to financial
representatives. Periodically, the board of the UAM Funds reviews these
arrangements to ensure that the fees paid are appropriate to the services
performed. The UAM Funds do not pay these service fees on shares purchased
directly. In addition, the adviser and its affiliates may, at their own
expense, pay financial representatives for these services.
The adviser and its affiliates may, at their own expense, pay financial
representatives for distribution and marketing services performed with respect
to the UAM Funds.
The adviser may pay its affiliated companies distribution and marketing
services performed with respect to the UAM Funds.
ADDITIONAL CLASSES OF SHARES
- --------------------------------------------------------------------------------
The portfolio also offers Institutional Class shares, which do not pay
marketing or shareholder servicing fees.
17
<PAGE>
Portfolio Codes
The reference information below will be helpful to you when you contact the
UAM Funds to purchase or exchange shares, check daily NAVs or get additional
information.
CUSIP Number Portfolio Number
- --------------------------------------------------------------------------------
<PAGE>
The Dwight Interest Income Portfolio
For investors who want more information about the portfolio, the following
documents are available upon request.
Annual/Semi-annual Reports
The annual and semi-annual reports of the portfolio provide additional
information about its investments. In the annual report, you will also find a
discussion of the market conditions and investment strategies that
significantly affected the performance of the portfolio during the last fiscal
year. The portfolio's first annual report will be available December 2000.
Statement of Additional Information
The SAI contains additional detailed information about the portfolio and is
incorporated by reference into (legally part of) this prospectus.
How to Get More Information
Investors can receive free copies of these materials, request other
information about the UAM Funds and make shareholder inquiries by writing to
or calling:
UAM Funds
PO Box 419081
Kansas City, MO 64141-6081
(toll free) 1-877-UAM-LINK (826-5465)
www.uam.com
For a fee, you can get copies of the reports of the portfolio and SAI by
writing to the SEC's Public Reference Section, Washington, D.C. 20459-6009, or
by calling the SEC at 1-800-SEC-0330. You can get copies of this information
for free on the SEC's Internet site at www.sec.gov.
The portfolio's Investment Company Act of 1940 file number is 811-8544.
[LOGO OF UAM APPEARS HERE]
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting and offer to buy these securities
in any state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS DATED OCTOBER 15, 1999
SUBJECT TO COMPLETION
UAM Funds
Funds for the Informed Investor(SM)
The Dwight Interest Income Portfolio
Institutional Class Prospectus ___________, 1999
[LOGO OF UAM APPEARS HERE]
<PAGE>
Table of Contents
PORTFOLIO SUMMARY................................................ 1
What are the Objectives of the Portfolio?....................... 1
What are the Principal Investment Strategies of the Portfolio?.. 1
What are the Principal Risks of the Portfolio?.................. 1
What are the Fees and Expenses of the Portfolio?................ 3
INVESTING WITH THE UAM FUNDS..................................... 4
Buying Shares................................................... 4
Redeeming Shares................................................ 5
Transaction Policies............................................ 5
ACCOUNT POLICIES................................................. 10
Distributions................................................... 10
Taxes........................................................... 10
PORTFOLIO DETAILS................................................ 11
Principal Investments And Risks Of The Portfolio................ 11
Other Investment Practices and Strategies....................... 14
Year 2000....................................................... 15
Investment Management........................................... 15
Shareholder Servicing Arrangements.............................. 17
Additional Classes of Shares.................................... 17
<PAGE>
PORTFOLIO SUMMARY
The portfolio offers its shares exclusively to qualified voluntary employee
benefit associations and participant-directed employee benefit plans that
restrict their participants' ability to direct withdrawals from the portfolio.
For more information concerning what plans may invest in the portfolio and the
circumstances under which plan participants may make withdrawals, please see
"Who May Invest in the Portfolio."
WHAT ARE THE OBJECTIVES OF THE PORTFOLIO?
- --------------------------------------------------------------------------------
The portfolio seeks a level of current income higher than that of money market
funds, while attempting to preserve principal and maintain a stable net asset
value per share (NAV). The portfolio cannot guarantee it will meet its
investment objectives. The portfolio may change its investment objectives
without shareholder approval.
WHAT ARE THE PRINCIPAL INVESTMENT STRATEGIES OF THE PORTFOLIO?
- --------------------------------------------------------------------------------
This section summarizes the principal investment strategies of the portfolio.
For more information see "PRINCIPAL INVESTMENTS AND RISKS OF THE PORTFOLIO."
The portfolio is designed to produce higher returns than a money market fund,
while seeking to maintain a NAV that is considerably more stable than a
typical high-quality fixed-income fund.
Like other high-quality fixed-income funds, the portfolio invests primarily in
debt securities that a nationally recognized statistical rating agency (rating
agency), such as Moody's Investors Service or Standard & Poor's Rating Group,
has rated in its top rating category at the time of purchase. Unlike other
fixed-income funds, however, the portfolio seeks to stabilize its NAV by
purchasing wrapper agreements from financial institutions, such as insurance
companies and banks (wrap providers). A wrapper agreement is a contract that
obligates the wrap provider to maintain the adjusted cost basis (book value)
of some or all of the assets of the portfolio. For example, if the portfolio
were to sell a security for less than its book value, the wrap provider may be
obligated to pay the portfolio the difference, and vice versa.
In purchasing a wrapper agreement, the portfolio trades the potential for
capital appreciation and some yield for protection from a decline in the value
of its holdings caused by changes in interest rates.
WHAT ARE THE PRINCIPAL RISKS OF THE PORTFOLIO?
- --------------------------------------------------------------------------------
This section summarizes the principal risks associated with investing in the
portfolio. For more information see "PRINCIPAL INVESTMENTS AND RISKS OF THE
PORTFOLIO."
1
<PAGE>
Risks Common to All Mutual Funds
As with all mutual funds, at any time your investment in the portfolio may be
worth more or less than the price that you originally paid for it. You may
lose money by investing in the portfolio because:
. The value of the securities it owns changes, sometimes rapidly and
unpredictably.
. The portfolio is not successful in reaching its goal because of its
strategy or because it did not implement its strategy properly.
. Unforeseen occurrences in the securities markets negatively affect the
portfolio.
Dwight Interest Income Portfolio
The portfolio cannot guarantee that the combination of securities and wrapper
agreements will provide a constant NAV or a current rate of return that is
higher than a money market mutual fund.
The portfolio tries to offset changes in the value of its investments and to
maintain a stable NAV by combining its investments in debt securities with
wrapper agreements. However, the portfolio may not be able to maintain a
stable NAV if:
. A provider of a wrapper agreement defaults on its obligation.
. The portfolio cannot purchase wrapper agreements.
. The portfolio buys wrapper agreements that do not fully offset changes in
its NAV.
If the portfolio's attempts to stabilize its NAV fail, the value of its
investments could fall because:
. Of market conditions and economic and political events.
. Interest rates rise, which tends to cause the value of debt securities to
fall.
. A security's credit rating worsens or its issuer becomes unable to honor
its financial obligations.
2
<PAGE>
WHAT ARE THE FEES AND EXPENSES OF THE PORTFOLIO?
- --------------------------------------------------------------------------------
Annual Portfolio Operating Expenses (Expenses That Are Deducted From the Assets
of the Portfolio)
This table describes the fees and expenses that you may pay if you buy and
hold shares of the portfolio.
Dwight Interest Income
Portfolio
- --------------------------------------------------------------------------------
Shareholder Fees (Fees Paid Directly From Your Account)
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage of amount redeemed) 2.00%
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses That Are
Deducted From the Assets of the Portfolio)
- --------------------------------------------------------------------------------
Management Fee 0.35%
- --------------------------------------------------------------------------------
Other Expenses 0.55%
- --------------------------------------------------------------------------------
Total Expenses 0.90%
# Redemption Fee Redemptions of shares that are not directed by plan
participants, such as a redemption by a plan, and that are made with less
than twelve months prior written notice will be subject to a 2.00%
redemption fee.
+ Other Expenses are based on estimated amounts for the first fiscal year of
the portfolio. Other Expenses include the fees the portfolio expects to pay
for wrapper agreements.
* Expected Fees and Expenses The portfolio expects that the ratios stated in
the table above are higher than the expenses you will actually pay. Due to
certain expense limits by the adviser and expense offsets, you are expected
to pay the total operating expenses listed in the table below during its
first fiscal year. The adviser may cancel its expense limitation at any
time.
Dwight Interest Income Portfolio
------------------------------------------------------------------------------
Actual Fees 0.75%
Example
This example can help you to compare the cost of investing in this portfolio
to the cost of investing in other mutual funds. The example assumes you invest
$10,000 in the portfolio for the periods shown and then redeem all of your
shares at the end of those periods. The example also assumes that you earned a
5% return on your investment each year and that you paid the total expenses
stated above (which do not reflect any expense limitations) throughout the
period of your investment. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1 Year 3 Years
-----------------------------------------------------------------------------
Dwight Interest Income Portfolio $91 $286
3
<PAGE>
INVESTING WITH THE UAM FUNDS
BUYING SHARES
- --------------------------------------------------------------------------------
To open an account To buy more shares
- --------------------------------------------------------------------------------
By Mail Send a check or money Send a check and, if possible,
order and your account the "Invest by Mail" stub that
application to the UAM accompanied your statement to
Funds. Make checks the UAM Funds. Be sure your
payable to "UAM Funds" check identifies clearly your
(the UAM Funds will not name, account number and the
accept third-party UAM Fund into which you want
checks). to invest.
- --------------------------------------------------------------------------------
By Wire Call 1-877-826-5465 for Call 1-877-826-5465 to get a
an account number and wire control number and wire
wire control number and your money to the UAM Funds as
then send your completed follows:
account application to
the UAM Funds. Wire your
money to the UAM Funds as
follows:
Wiring Instructions
-------------------
United Missouri Bank
ABA # 101000695
UAM Funds
DDA Acct. # 9870964163
Ref: UAM Fund name/account number/
account name/wire control number
- --------------------------------------------------------------------------------
Minimum $1,000,000 There is no minimum for
Investments subsequent investments.
UAM Funds
PO Box 419081
Kansas City, MO 64141-6081
(Toll free) 1-877-UAM-LINK (826-5465)
www.uam.com
4
<PAGE>
REDEEMING SHARES
- --------------------------------------------------------------------------------
By Mail Send a letter signed by all registered parties on the
account to the UAM Funds specifying:
. The name of the UAM Fund.
. The account number.
. The dollar amount or number of shares you wish to
redeem.
Certain shareholders may need to include additional
documents. Please see the Statement of Additional
Information (SAI) if you need more information.
- --------------------------------------------------------------------------------
By Telephone You must first establish the telephone redemption
privilege (and, if desired, the wire redemption
privilege) by completing the appropriate sections of the
account application.
Call 1-877-826-5465 to redeem your shares. Based on your
instructions, the UAM Funds will mail your proceeds to
you or wire them to your bank.
TRANSACTION POLICIES
- --------------------------------------------------------------------------------
Who May Invest in the Portfolio
The portfolio offers its shares exclusively to qualified voluntary employee
benefit associations and participant-directed employee benefit plans that
restrict their participants' ability to direct withdrawals from the portfolio
to the following circumstances:
. Upon the plan participant's death, disability, retirement or termination;
. To fund plan participant loans or other "in service" withdrawals made
pursuant to the terms of the plan; and
. For transfers to other plan investment options that are not "competing
funds". Competing funds are any fixed-income investment option that has a
targeted average duration of three years or less, or any investment option
that seeks to maintain a stable value per unit or share, including money
market funds. Transfers between the portfolio and a non-competing fund must
remain in the non-competing fund for at least three months before being
transferred to a competing fund.
Plans may invest in the portfolio directly or through a vehicle such as a bank
collective fund or an insurance company separate account consisting solely of
such plans. The portfolio may by itself represent an investment option for a
plan or may be combined with other investments as part of a pooled investment
option for the plan. Pooled investment options may include lifestyle, asset
allocation or balanced funds. In the case of pooled investment
5
<PAGE>
options, the portfolio will require plans to provide information concerning
the withdrawal order and other characteristics of any pooled investment option
in which the shares are to be included prior to a plan's initial investment.
Thereafter, the portfolio may require the plan to provide information
regarding any changes to the withdrawal order and other characteristics of the
pooled investment option before such changes are implemented.
Before investing in the portfolio, each plan must submit for the three year
period immediately preceding its investment, a monthly summary of cash flow
activity for the investment option in which the shares are included, detailing
contribution and benefit payment amounts transferred to and from other
investment options. The portfolio also may require a plan to provide various
other documents before investing in the portfolio in order to verify that such
plan is eligible to invest in the portfolio.
Calculating Your Share Price
You may buy, sell or exchange shares of a UAM Fund at a price equal to its net
asset value per share (NAV) next computed after it receives and accepts your
order. NAVs are calculated each day the New York Stock Exchange (NYSE) is open
as of the close of trading on the NYSE (generally 4:00 p.m. Eastern Time).
Therefore, to receive the NAV on any given day, the UAM Funds must accept your
order before the close of trading on the NYSE that day. Otherwise, you will
receive the NAV that is calculated on the close of trading at the following
business day. The UAM Funds are open for business on the same days as the
NYSE, which is closed on weekends and certain holidays.
The UAM Funds calculate their NAVs by adding the total value of their assets,
subtracting their liabilities and then dividing the result by the number of
shares outstanding. The UAM Funds use market prices to value their
investments. Investments that do not have readily available market prices are
valued at fair value, according to guidelines established by the UAM Funds.
The UAM Funds may also value securities at fair value when events occur that
make established valuation methods (such as stock exchange closing prices)
unreliable. The UAM Funds value debt securities that are purchased with
remaining maturities of 60 days or less at amortized cost, which approximates
market value. The UAM Funds may use a pricing service to value some of their
assets, such as debt securities or foreign securities.
Buying or Selling Shares through a Plan
Plan participant-directed purchases and redemptions are handled according to
each plan's specific provisions. Plans may have different provisions
concerning the timing and method of purchases and redemptions by plan
participants. Plan participants should contact their plan administrator or
other plan service provider for details concerning how they may direct
transactions in shares. It is the responsibility of the plan's service
provider to forward instructions for these transactions to the portfolio.
6
<PAGE>
In-Kind Transactions
Under certain conditions and at the portfolio's discretion, you may pay for
shares with securities instead of cash. In addition, the portfolio reserves
the right to pay all or part of any redemption request with securities and
wrapper agreements selected solely at the discretion of the portfolio. The
portfolio may make an in-kind redemption when a plan redeems all or part of
its interest in the portfolio on less than twelve months' notice.
To the extent the portfolio pays you with securities, you may incur
transaction expenses to hold and dispose of the securities.
Wrapper agreements assigned to you as payment in-kind are illiquid and will
require you to pay fees directly to the wrap provider rather than to the
portfolio. They also contain restrictions on the securities they will cover
(i.e., a wrapper agreement may limit the types, maturities, duration and
credit quality of covered assets). Therefore, to obtain the benefits of a
wrapper agreement you may not be able to freely trade the securities that are
covered by the agreement. Wrapper agreements assigned to you are subject to
all of the risks associated with such agreements described below.
To the extent that a payment in-kind includes a wrapper agreement, the
portfolio will assign a portion of one or more wrapper agreements to you. The
economic terms and conditions of each assigned wrapper agreement will be
substantially similar to the wrapper agreements held by the portfolio. By
purchasing shares of the portfolio, you agree to accept an assignment of a
wrapper agreement as part of an in-kind redemption, provided that at the time
of the redemption payment such assignment would not violate applicable law. In
addition, prior to an assignment of a wrapper agreement, a wrap provider may
require you to represent and warrant that such an assignment does not violate
applicable laws. The wrap provider also may require you to obtain at your own
expense the services of a qualified professional asset manager acceptable to
the wrap provider to manage the securities distributed in-kind in conformity
with the provisions of the wrapper agreement.
In the event a wrapper agreement cannot be assigned to you, the portfolio may
satisfy the redemption request through a cash payment, a redemption in-kind
consisting solely of securities or a combination of cash and securities.
Payment of Redemption Proceeds
The UAM Funds will pay for all shares redeemed within seven days after they
receive a redemption request in proper order. If you redeem shares that were
purchased by check, you will not receive your redemption proceeds until the
check has cleared, which may take up to 15 days from the purchase date. You
may avoid these delays by paying for shares with a certified check, bank check
or money order.
Redemption Fee
Redemptions of shares that are not directed by plan participants, such as
redemptions by a plan, and that are made with less than twelve months prior
7
<PAGE>
written notice will be subject to a 2.00% redemption fee. However,
redemptions of shares for the systematic re-balancing of lifestyle, asset
allocation or balanced fund options to their target allocations are not
subject to the redemption fee.
The portfolio charges the redemption fee primarily to help minimize the impact
the redemption may have on the performance of the portfolio and to offset
certain transaction costs and administrative expenses the portfolio incurs
because of the redemption. The portfolio also charges the redemption fee to
discourage market timing by those shareholders initiating redemptions to take
advantage of short-term interest rate movements.
Other Redemption Requirements
Redemption requests by a participant of a plan that represent a withdrawal of
10% or more of a plan's assets invested in the portfolio on any business day
must be accompanied or preceded by written verification that such redemption
is directed by plan participants in accordance with the provisions of the
plan. All redemption requests that are not directed by a plan-participant must
be accompanied or preceded by written notification of such redemption.
Signature Guarantee
You must have your signature guaranteed when (1) you want the proceeds from
your redemption sent to a person or address different from that registered on
the account, or (2) you request a transfer of your shares.
You may obtain a signature guarantee from most banks, savings institutions,
securities dealers, national securities exchanges, registered securities
associations, clearing agencies and other guarantor institutions. A notary
public cannot guarantee a signature.
Telephone Transactions
The UAM Funds will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. The UAM Funds will not be responsible
for any loss, liability, cost or expense for following instructions received
by telephone that it reasonably believes to be genuine.
8
<PAGE>
Rights Reserved by the UAM Funds
Purchases
At any time and without notice, the UAM Funds may:
. Stop offering shares of a portfolio.
. Reject any purchase order.
. Bar an investor engaged in a pattern of excessive trading from buying
shares of any portfolio. (Excessive trading can hurt the performance of a
portfolio by disrupting its management and by increasing its expenses.)
Redemptions
At any time, the UAM Funds may change or eliminate any of the redemption
methods described above, except redemption by mail. The UAM Funds may suspend
your right to redeem if:
. Trading on the NYSE is restricted.
. The SEC allows the UAM Funds to delay redemptions.
The portfolio may require written verification that a redemption request is
directed by a plan participant in accordance with the provisions of the plan
or is otherwise made by a withdrawing plan before processing any redemption
request.
9
<PAGE>
Account Policies
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Normally, the portfolio declares its net investment income daily and pays it
monthly. In addition, the portfolio distributes its net capital gains once a
year. The UAM Funds will automatically reinvest dividends and distributions
in additional shares of the portfolio, unless you elect on your account
application to receive them in cash.
To maintain a stable NAV, the portfolio may have to declare and pay dividends
in amounts that are not equal to the amount of net investment income it
actually earns. This may cause the portfolio to take some or all of the
following actions:
. If the portfolio distributes more money than it actually earned through its
investments, it may have to make a distribution that may be considered a
return of capital.
. If the income the portfolio receives exceeds the amount of dividends
distributed, the portfolio may have to distribute that excess income to
shareholders and declare a reverse split of its shares.
The portfolio may split its shares when it distributes its net capital gains.
Share splits or reverse share splits will cause the number of shares owned by
shareholders to increase or decrease while allowing the NAV of the portfolio
to remain stable.
TAXES
- --------------------------------------------------------------------------------
The following is a summary of the federal income tax consequences of investing
in the portfolio. There may also be state and local tax consequences on your
investment. You should always consult your tax advisor for specific guidance
regarding the tax effect of your investment in the UAM Funds.
In general, qualified voluntary employee benefit associations and participant
directed employee benefit plans are governed by a complex set of tax rules.
For plan participants using the portfolio as an investment option under a
plan, dividend and capital gains distributions from the portfolio are
generally tax deferred, which means that plan participants will not pay taxes
on such distributions until they are withdrawn. Each plan-participant should
consult with the plan administrator, the plan documents and their tax advisor
regarding the consequences of their participation in their plan and before
contributing or withdrawing any money from the plan and/or portfolio.
10
<PAGE>
Portfolio Details
PRINCIPAL INVESTMENTS AND RISKS OF THE PORTFOLIO
- --------------------------------------------------------------------------------
The following briefly describes the principal investment strategies that the
portfolio may employ in seeking its objectives. For more information
concerning these investment practices and their associated risks, please read
the "PORTFOLIO SUMMARY" and the SAI. The portfolio may change these strategies
without shareholder approval.
The portfolio invests primarily in debt securities that a nationally
recognized statistical rating agency (rating agency), such as Moody's
Investors Service or Standard & Poor's Rating Group, has rated in its top
rating category at the time of purchase. The portfolio may also invest in:
. Liquid short-term investments, such as money market instruments, that a
rating agency has rated in one of its top two short-term rating categories
at the time of purchase.
. Other investments, including commingled pools of debt securities. The
average duration of the portfolio will normally range from 1.5 to 4.0
years. The portfolio expects its dollar weighted average maturity will be
six years or less.
The portfolio seeks to stabilize its NAV by purchasing wrapper agreements from
financial institutions, such as insurance companies and banks (wrap
providers). The portfolio will buy wrapper agreements from wrap providers
that a rating agency has rated in one of its top two rating categories at the
time of purchase. The portfolio expects to purchase enough wrapper agreements
to cover all of its debt securities, but not its cash, cash equivalents or
other liquid short-term investments.
Comparison to Money Market Funds and Other Fixed Income Funds
While not fixed at $1.00 per share like a money market fund, the wrapper
agreements are likely to cause the net asset value of the portfolio to be
considerably more stable than a typical high-quality fixed-income fund. A
money market fund will generally have a shorter average maturity than the
portfolio and its yield will tend to more closely track the direction of
current market rates than the yield of the portfolio. Over the long-term,
however, the adviser believes the portfolio will offset those differences by
producing higher returns than a money market fund. The portfolio cannot,
however, guarantee that the combination of securities and wrapper agreements
will provide a constant NAV or a current rate of return that is higher than a
money market mutual fund.
Debt Securities
A debt security is an interest bearing security that corporations and
governments use to borrow money from investors. The issuer of a debt security
promises to pay interest at a stated rate, which may be variable or
11
<PAGE>
fixed, and to repay the amount borrowed at maturity (dates when debt
securities are due and payable). The portfolio may invest in debt securities
issued by corporations and the U.S. government and its agencies, mortgage-
backed and asset-backed securities (securities that are backed by pools of
loans or mortgages assembled for sale to investors), municipal notes and
bonds, commercial paper and certificates of deposit.
The concept of duration is useful in assessing the sensitivity of a fixed-
income fund to interest rate movements, which are the main source of risk for
most fixed-income funds. Duration measures price volatility by estimating the
change in price of a debt security for a 1% change in its yield. For example,
a duration of five means the price of a debt security will change about 5% for
every 1% change in its yield. Thus, the higher the duration, the more
volatile the security.
The price of a debt security generally moves in the opposite direction from
interest rates (i.e., if interest rates go up the price of the bond will go
down, and vice versa). Some types of debt securities are more affected by
changes in interest rates than others. For example, changes in rates may
cause people to pay off or refinance the loans underlying mortgage-backed and
asset-backed securities earlier or later than expected, which would shorten or
lengthen the maturity of the security. This behavior can negatively affect
the performance of a portfolio by shortening or lengthening its average
maturity and, thus, changing its effective duration. The unexpected timing of
mortgage backed and asset-backed prepayments caused by changes in interest
rates may also cause the portfolio to reinvest its assets at lower rates,
reducing the yield of the portfolio.
The credit rating or financial condition of an issuer may affect the value of
a debt security. Generally, the lower the quality rating of a security, the
greater the risk that the issuer will fail to pay interest fully and return
principal in a timely manner. If an issuer defaults or becomes unable to honor
its financial obligations, the security may lose some or all of its value.
Wrapper Agreements
A wrapper agreement obligates the wrap provider to maintain the book value of
some or all of the portfolio's assets (covered assets). Under a typical
wrapper agreement, if the portfolio sells a covered asset for less than book
value, the wrap provider will pay the portfolio the difference. If the
portfolio sells a security for more than its book value, the portfolio will
pay the wrap provider the difference. The book value of the covered assets is
their purchase price:
. Plus interest on the covered assets at a rate specified in the wrapper
agreement (crediting rate).
. Less an adjustment to reflect any defaulted securities.
The portfolio and the wrapper provider calculate the crediting rate used in
computing book value according to a formula specified in the wrapper
agreement. Usually, the crediting rate is
12
<PAGE>
. The actual interest earned on the covered assets or an index-based
approximation of the interest earned on the covered assets.
. Plus or minus an adjustment for an amount receivable from or payable to the
wrapper provider based on fluctuations in the market value of the covered
assets.
The portfolio anticipates that the value of the wrapper agreements will move
in the opposite direction from the value of the covered assets. When the value
of the covered assets is less than their book value, the portfolio will treat
the difference as an asset. Similarly, when the value of the covered assets
is more than their book value, the excess will be a liability of the
portfolio. Normally, the portfolio expects the sum of the total value of its
wrapper agreements plus the total value of all of its covered assets to equal
the book value of its covered assets.
The terms of the wrapper agreements vary concerning when payments must
actually be made between the portfolio and the wrap provider. In some cases,
payments may be due upon disposition of the covered assets. Other wrapper
agreements only provide for settlement when the wrapper agreement terminates
or the portfolio sells all of the covered assets.
Risks of Wrapper Agreements
The crediting rate will generally reflect movements in prevailing interest
rates, though, it may at any time be different from these rates or the actual
interest income earned on the covered assets. The costs the portfolio incurs
when buying wrapper agreements may reduce its return as compared to a direct
investment in the covered assets. Consequently, the portfolio may not perform
as well as other high-quality fixed-income funds of comparable duration.
The portfolio may have to maintain a specified percentage of its total assets
in short-term investments (liquidity reserve) to cover redemptions and
portfolio expenses. This may result in a lower return for the portfolio than
if it had invested in longer-term debt securities.
The following are some of the factors that may cause the value of your shares
to decline:
. The wrap provider defaults or has its credit rating lowered.
. An issuer of a security may default on payments of principal or interest or
have its credit rating downgraded, which may require the portfolio to sell
covered assets quickly and at prices that may not fully reflect their
current value. Wrap providers do not typically assume the credit risk
associated with the issuer of any covered assets. In addition, downgrades
below investment- grade and defaults by the issuer of covered assets
usually will cause the wrap provider to remove such assets from the
coverage of a wrapper agreement.
13
<PAGE>
. The portfolio might not be able to replace existing wrapper agreements with
other suitable wrapper agreement if (1) they mature or terminate or (2) the
wrap provider defaults.
. The portfolio may be unable to obtain suitable wrapper agreements or may
elect not to cover some or all of its assets with wrapper agreements. This
could occur if wrapper agreements are not available or if the adviser
believes that the terms of available wrapper agreements are unfavorable.
There is no active trading market for wrapper agreements and the portfolio
does not expect one to develop; therefore, the portfolio will consider wrapper
agreements illiquid. The portfolio may invest up to 15% of its net assets in
illiquid securities.
OTHER INVESTMENT PRACTICES AND STRATEGIES
- --------------------------------------------------------------------------------
As described below, the portfolio may use derivatives and may deviate from its
investment strategy from time to time. In addition, the portfolio may employ
investment strategies that are not described in this prospectus, such as
repurchase agreements, when-issued and forward commitment transactions,
lending of securities, borrowing and other techniques. For information
concerning these investment practices, you should read the SAI.
Derivatives
The portfolio may use options, futures and swaps (types of derivatives).
Derivatives are often more volatile than other investments and may magnify a
portfolio's gains or losses. A portfolio may lose money if the adviser:
. Fails to predict correctly the direction in which the underlying asset or
economic factor will move.
. Judges market conditions incorrectly.
. Employs a strategy that does not correlate well with the investments of the
portfolio.
Portfolio Turnover
The portfolio may buy and sell investments relatively often and estimates that
its annual portfolio turnover rate will not exceed 200%. Such a strategy
often involves higher expenses, including brokerage commissions, and may
increase the amount of capital gains, particularly short-term gains realized
by the portfolio. Shareholders must pay tax on such capital gains.
Short-Term Investing
At times, the adviser may decide to invest up to 100% of the portfolio's
assets in a variety of high-quality, short-term debt securities, such as U.S.
government securities. The adviser may invest in these types of securities for
temporary defensive purposes, to earn a return on uninvested assets or to meet
redemptions. The adviser may temporarily adopt a defensive position to
14
<PAGE>
reduce changes in the value of the shares of the portfolio that may result
from adverse market, economic, political or other developments.
When the adviser pursues a temporary defensive strategy, the portfolio may not
profit from favorable developments that it would have otherwise profited from
if it were pursuing its normal strategies. Likewise, these strategies may
prevent the portfolio from achieving its stated objectives.
YEAR 2000
- --------------------------------------------------------------------------------
Many computer programs in use today cannot distinguish the year 2000 from the
year 1900 because of the way they encode and calculate dates. Consequently,
these programs may not be able to perform necessary functions and could
disrupt the operations of the UAM Funds or financial markets in general. The
year 2000 issue affects all companies and organizations, including those that
provide services to the UAM Funds and those in which the UAM Funds invest.
The UAM Funds and their advisers, administrator, distributor and transfer
agent are taking steps they believe are reasonably necessary to address any
portfolio-related year 2000-related computer problems. They are actively
working on necessary changes to their own computer systems to prepare for the
year 2000 and expect that their systems will be adapted before that date.
They are also requesting information on each service provider's state of
readiness and contingency plan. However, at this time the degree to which the
year 2000 issue will affect the UAM Funds' investments or operations cannot be
predicted. Any negative consequences could adversely affect your investment in
the UAM Funds.
INVESTMENT MANAGEMENT
- --------------------------------------------------------------------------------
Investment Adviser
Dwight Asset Management Company, a Delaware corporation located at 125 College
Street, Burlington, Vermont 05401, is the investment adviser to the portfolio.
The adviser manages and supervises the investment of the portfolio's assets on
a discretionary basis. The adviser, an affiliate of United Asset Management
Corporation, has provided investment management services to corporations,
pension and profit-sharing plans, 401(k) and thrift plans since 1983.
For its services, the portfolio pays the adviser a fee of 0.35% of its average
net assets. In addition, the adviser has voluntarily agreed to limit the
total annual fund operating expenses of the portfolio to 0.70%. To maintain
this expense limit, the adviser may waive a portion of its management fee
and/or reimburse certain expenses (excluding interest, taxes and extraordinary
expenses) of the portfolio. The adviser intends to continue this expense
limitation until further notice.
15
<PAGE>
Portfolio Managers
A team of investment professionals of the adviser is primarily responsible for
the day-to-day management of the portfolio.
Adviser's Historical Performance
The adviser manages accounts of debt securities that have substantially
similar investment objectives as the portfolio. The adviser manages these
accounts using techniques and strategies substantially similar, though not
always identical, to those used to manage the portfolio. A composite of the
performance of all of these accounts is listed below. The performance data for
the managed accounts reflects deductions of all fees and expenses. All fees
and expenses of the separate accounts were less than the operating expenses of
the portfolio. If the performance of the managed accounts was adjusted to
reflect fees and expenses of the portfolio, the composite's performance would
have been lower.
Quarterly returns of the composite combine the individual accounts' returns by
asset-weighing each individual account's asset value as of the end of the
quarter. The yearly returns are computed by geometrically linking the returns
of each quarter within the year. This calculation method differs from the SEC
method of calculating returns. Had the adviser calculated its performance
using the SEC's method, its results might have differed.
The separately managed accounts are not subject to investment limitations,
diversification requirements, and other restrictions imposed by the Investment
Company Act of 1940 and the Internal Revenue Code. If they were, their
returns might have been lower. The performance of these separate accounts is
not intended to predict or suggest the performance of the portfolio and may be
calculated differently than the performance of the portfolio.
Dwight Asset Management Company Ryan 5 Year
All Funds Composite* GIC Master Index+
- --------------------------------------------------------------------------------
Calendar Years
1998 6.94% 6.57%
- --------------------------------------------------------------------------------
1997 7.11% 6.58%
- --------------------------------------------------------------------------------
1996 7.28% 6.73%
- --------------------------------------------------------------------------------
1995 7.63% 7.19%
- --------------------------------------------------------------------------------
1994 8.10% 7.52%
- --------------------------------------------------------------------------------
1993 8.69% 8.15%
- --------------------------------------------------------------------------------
1992 9.37% 8.70%
Average Annual Returns For Periods Ended 9/30/99
1-year 6.70 6.58
- --------------------------------------------------------------------------------
3-years 6.95 6.58
- --------------------------------------------------------------------------------
5-years 7.19 6.77
- --------------------------------------------------------------------------------
10-years 8.40 7.67
* All returns are dollar weighted, and are net of fees and expenses. Returns
are net fees, which are based on a dollar weight average of 0.10% as of
9/30/99.
16
<PAGE>
SHAREHOLDER SERVICING ARRANGEMENTS
- --------------------------------------------------------------------------------
Brokers, dealers, banks, trust companies and other financial representatives
may receive compensation from the UAM Funds or their service providers for
providing a variety of services. This section briefly describes how financial
representatives may get paid.
For providing certain services to their clients, financial representatives may
be paid a fee based on the assets of the UAM Funds that are attributable to
the financial representative. These services may include record keeping,
transaction processing for shareholders' accounts and certain shareholder
services not currently offered to shareholders that deal directly with the UAM
Funds. In addition, your financial representatives may charge you other
account fees for buying or redeeming shares of the UAM Funds or for servicing
your account. Your financial representative should provide you with a schedule
of its fees and services.
The UAM Funds may pay all or part of the fees paid to financial
representatives. Periodically, the board of the UAM Funds reviews these
arrangements to ensure that the fees paid are appropriate to the services
performed. The UAM Funds do not pay these service fees on shares purchased
directly. In addition, the adviser and its affiliates may, at their own
expense, pay financial representatives for these services.
The adviser and its affiliates may, at their own expense, pay financial
representatives for distribution and marketing services performed with respect
to the UAM Funds.
The adviser may pay its affiliated companies distribution and marketing
services performed with respect to the UAM Funds.
ADDITIONAL CLASSES OF SHARES
- --------------------------------------------------------------------------------
The portfolio also offers Institutional Service Class shares, which pay
marketing or shareholder servicing fees.
17
<PAGE>
Portfolio Codes
The reference information below will be helpful to you when you contact the
UAM Funds to purchase or exchange shares, check daily NAVs or get additional
information.
CUSIP Number Portfolio Number
- --------------------------------------------------------------------------------
<PAGE>
The Dwight Interest Income Portfolio
For investors who want more information about the portfolio, the following
documents are available upon request.
Annual/Semi-annual Reports
The annual and semi-annual reports of the portfolio provide additional
information about its investments. In the annual report, you will also find a
discussion of the market conditions and investment strategies that
significantly affected the performance of the portfolio during the last fiscal
year. The portfolio's first annual report will be available December 2000.
Statement of Additional Information
The SAI contains additional detailed information about the portfolio and is
incorporated by reference into (legally part of) this prospectus.
How to Get More Information
Investors can receive free copies of these materials, request other
information about the UAM Funds and make shareholder inquiries by writing to
or calling:
UAM Funds
PO Box 419081
Kansas City, MO 64141-6081
(toll free) 1-877-UAM-LINK (826-5465)
www.uam.com
For a fee, you can get copies of the reports of the portfolio and SAI by
writing to the SEC's Public Reference Section, Washington, D.C. 20459-6009, or
by calling the SEC at 1-800-SEC-0330. You can get copies of this information
for free on the SEC's Internet site at www.sec.gov.
The portfolio's Investment Company Act of 1940 file number is 811-8544.
[LOGO APPEARS HERE]
<PAGE>
PART B
UAM FUNDS TRUST
The statement of additional information for Dwight Interest Income Portfolio are
included in this Post-Effective Amendment No. 36.
The statements of additional information for the following portfolios are
contained in Post-Effective Amendment No. 35 to this Registration Statement,
filed on August 9, 1999:
. BHM&S Total Return Bond Portfolio
. Cambiar Opportunity Portfolio
. Chicago Asset Management Intermediate Bond Portfolio
. Chicago Asset Management Value/Contrarian Portfolio
. Clipper Focus Portfolio
. Hanson Equity Portfolio
. Jacobs International Octagon Portfolio
. MJI International Equity Portfolio
. Pell Rudman Mid-Cap Growth Portfolio
. TJ Core Equity Portfolio
The statement of additional information for FPA Crescent Portfolio are contained
in this Post-Effective Amendment No. 34 to this Registration Statement, filed on
July 28, 1999.
The statement of additional information for Heitman Real Estate Portfolio are
contained in Post-Effective Amendment No. 30 to this Registration Statement,
filed on April 22, 1999.
The statement of additional information for Dwight Capital Preservation
Portfolio are contained in Post-Effective Amendment No. 29 to this Registration
Statement, filed on April 12, 1999.
<PAGE>
PRELIMINARY STATEMENT OF ADDITIONAL
INFORMATION DATED OCTOBER 15, 1999
SUBJECT TO COMPLETION
The information in this Statement of Additional
Information is not complete and may be changed.
We may not sell these securities until the registration
statement filed with the Securities and Exchange
Commission is effective. This Statement of
Additional Information is not an offer to sell these
Securities in any state where the offer or sale is not
permitted.
UAM Funds
PO Box 419081
Kansas City, MO 64141-6081
(Toll free) 1-877-UAM-LINK (826-5465)
Dwight Interest Income Portfolio
Institutional Class Shares
Institutional Service Class Shares
Statement of Additional Information
_________, 1999
This statement of additional information is not a prospectus. However, you
should read it in conjunction with the Institutional Class and Institutional
Service Class prospectuses of the portfolio dated _______, as supplemented form
time to time. You may obtain the portfolio's prospectuses by contacting the UAM
Funds at the address listed above.
<PAGE>
TABLE OF CONTENTS
Definitions...................................................................1
The Fund......................................................................1
Description of the Portfolio and Its Investments and Risks....................1
Debt Securities..........................................................1
Derivatives..............................................................8
Investment Companies....................................................14
Repurchase Agreements...................................................14
Restricted Securities...................................................15
Securities Lending......................................................15
When-Issued, Forward Commitment And Delayed Delivery Transactions.......15
Wrapper Agreements......................................................16
Investment Policies.....................................................19
Management Of The Fund.......................................................20
Investment Advisory and Other Services.......................................22
Investment Adviser......................................................22
Distributor.............................................................23
Administrative Services.................................................23
Custodian...............................................................25
Independent Public Accountant...........................................25
Service And Distribution Plans..........................................25
Brokerage Allocation and Other Practices.....................................27
Selection of Brokers....................................................27
Simultaneous Transactions...............................................27
Brokerage Commissions...................................................28
Capital Stock and Other Securities...........................................28
Description Of Shares And Voting Rights.................................28
Dividends And Capital Gains Distributions....................................29
Purchase Redemption and Pricing of Shares....................................29
Net Asset Value Per Share...............................................29
Purchase of Shares......................................................30
Redemption of Shares....................................................31
Transfer Of Shares......................................................32
Valuation of Shares.....................................................32
Performance Calculations.....................................................33
Total Return............................................................33
Yield...................................................................34
Comparisons.............................................................34
Taxes...................................................................34
Moody's Investors Service, Inc................................................1
Preferred Stock Ratings..................................................1
Debt Ratings - Taxable Debt & Deposits Globally..........................1
Short-Term Prime Rating System - Taxable Debt & Deposits Globally........2
Standard & Poor's Ratings Services............................................3
Preferred Stock Ratings..................................................3
Long-Term Issue Credit Ratings...........................................3
Short-Term Issue Credit Ratings..........................................4
Duff & Phelps Credit Rating Co................................................5
Long-Term Debt and Preferred Stock.......................................5
Short-Term Debt..........................................................5
Fitch IBCA Ratings............................................................6
International Long-Term Credit Ratings...................................6
<PAGE>
Definitions
The "Fund" is UAM Funds Trust.
The term "adviser" means Dwight Asset Management Company, the portfolio's
investment adviser.
UAM is United Asset Management Corporation.
UAMFSI is UAM Fund Services, Inc., the Fund's administrator.
UAMFDI is UAM Fund Distributors, Inc., the Fund's distributor.
UAMSSC is UAM Fund Shareholder Servicing Center, the Fund's sub-shareholder-
servicing agent.
SEI is SEI Investments, the Fund's sub-administrator.
UAM Funds Complex includes UAM Funds, Inc., UAM Funds, Inc. II, UAM Funds
Trust, UAM Funds Trust II and all of their portfolios.
The term "the portfolio" is used to refer to Dwight Interest Income Portfolio,
while "portfolio" or "portfolios" refers to some or all portfolios of the UAM
Funds Complex.
The terms "board" and "governing board" refer to the Fund's Board of Directors
as a group, while "board member" refers to a single member of the board.
"1940 Act" refers to the Investment Company Act of 1940, as amended.
All other defined terms, which are not otherwise defined in this SAI, have the
same meaning in the SAI as they do in the prospectus of Dwight Interest Income
Portfolio.
The Fund
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, Boston, MA 02110; shareholders should direct all
correspondence to the address listed on the cover of this SAI.
The Fund is registered as an open-end, management investment company under the
1940 Act. The portfolio is a diversified series of the Fund, which means that
with respect to 75% of its total assets, the portfolio may not invest more
than 5% of its total assets in the securities of any one issuer (except U.S.
government securities). The remaining 25% of its total assets are not subject
to this restriction. To the extent the portfolio invests a significant
portion of its assets in the securities of a particular issuer, it will be
subject to an increased risk of loss if the market value of such issuer's
securities declines.
Description of the Portfolio and Its Investments and Risks
DEBT SECURITIES
- --------------------------------------------------------------------------------
Corporations and governments use debt securities to borrow money from
investors. Most debt securities promise a variable or fixed rate of return
and repayment of the amount borrowed at maturity. Some debt securities, such
as zero-coupon bonds, do not pay current interest and are purchased at a
discount from their face value. Debt securities may include, among other
things, all types of bills, notes, bonds, mortgage-backed securities or asset-
backed securities.
1
<PAGE>
Types of Debt Securities
U.S. Government Securities
U.S. government securities are securities that the United States Treasury has
issued (treasury securities) and securities that a federal agency or a
government-sponsored entity has issued (agency securities). Treasury
securities include treasury notes, which have initial maturities of one to ten
years and treasury bonds, which have initial maturities of at least ten years
and certain types of mortgage-backed securities that are described under
"Mortgage-Backed and Other Asset-Backed Securities." This SAI discusses
mortgage-backed treasury and agency securities in detail in the section called
"Mortgage-Backed and other Asset-Backed Securities.
The full faith and credit of the U.S. government supports treasury securities.
Unlike treasury securities, the full faith and credit of the United States
government generally do not back agency securities. Agency securities are
typically supported in one of three ways:
. By the right of the issuer to borrow from the United States Treasury.
. By the discretionary authority of the United States government to buy the
obligations of the agency
. By the credit of the sponsoring agency.
While U.S. government securities are guaranteed as to principal and interest,
their market value is not guaranteed. U.S. government securities are subject
to the same interest rate and credit risks as other fixed income securities.
However, since U.S. government securities are of the highest quality, the
credit risk is minimal. The U.S. government does not guarantee the net asset
value of the assets of the portfolio.
Corporate Bonds
Corporations issue bonds and notes to raise money for working capital or for
capital expenditures such as plant construction, equipment purchases and
expansion. In return for the money loaned to the corporation by investors,
the corporation promises to pay investors interest, and repay the principal
amount of the bond or note.
Mortgage-Backed Securities
Mortgage-backed securities are interests in pools of mortgage loans that
various governmental, government-related and private organizations assemble as
securities for sale to investors. Unlike most debt securities, which pay
interest periodically and repay principal maturity specified call dates,
mortgage-backed securities make monthly payments that consist of both interest
and principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their mortgage loans, net
of any fees paid to the issuer or guarantor of such securities. Since
homeowners usually have the option of paying either part or all of the loan
balance before maturity, the effective maturity of a mortgage backed security
is often shorter than its stated.
Governmental entities, private insurers and the mortgage poolers may insure or
guaranty the timely payment of interest and principal of these pools through
various forms of insurance or guarantees, including individual loan, title,
pool and hazard insurance and letters of credit. The adviser will consider
such insurance and guarantees and the creditworthiness of the issuers thereof
in determining whether a mortgage-related security meets its investment
quality standards. It is possible that the private insurers or guarantors will
not meet their obligations under the insurance policies or guarantee
arrangements.
Although the market for such securities is becoming increasingly liquid,
securities issued by certain private organizations may not be readily
marketable.
Government National Mortgage Association (GNMA)
GNMA is the principal governmental guarantor of mortgage-related securities.
GNMA is a wholly owned corporation of the U.S. government and it falls within
the Department of Housing and Urban Development. Securities issued by GNMA are
treasury securities, which means the faith and credit of the U.S. government
backs them. GNMA guarantees the timely payment of principal and interest on
securities issued by
2
<PAGE>
institutions approved by GNMA and backed by pools of FHA-insured or VA-
guaranteed mortgages. GNMA does not guarantee the market value or yield of
mortgage-backed securities or the value of portfolio shares. To buy GNMA
securities, the portfolio may have to pay a premium over the maturity value of
the underlying mortgages, which the portfolio may lose if prepayment occurs.
Federal National Mortgage Association (FNMA)
FNMA is a government-sponsored corporation owned entirely by private
stockholders. FNMA is regulated by the Secretary of Housing and Urban
development. FNMA purchases conventional mortgages from a list of approved
sellers and service providers, including state and federally-chartered savings
and loan associations, mutual savings banks, commercial banks and credit
unions and mortgage bankers. Securities issued by FNMA are agency securities,
which means FNMA, but not the U.S. government, guarantees their timely payment
of principal and interest.
Federal Home Loan Mortgage Corporation (FHLMC)
FHLMC is a corporate instrumentality of the U.S. government whose stock is
owned by the twelve Federal Home Loan Banks. Congress created FHLMC in 1970
to increase the availability of mortgage credit for residential housing. FHLMC
issues Participation Certificates (PCs) which represent interests in
conventional mortgages from its national portfolio. Like FNMA, FHLMC
guarantees the timely payment of interest and ultimate collection of
principal, but PCs are not backed by the full faith and credit of the U.S.
government.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional mortgage loans. In addition to
guaranteeing the mortgage-related security, such issuers may service and/or
have originated the underlying mortgage loans. Pools created by these issuers
generally offer a higher rate of interest than pools created by GNMA, FNMA &
FHLMC because they are not guaranteed by a government agency.
Risks of Mortgage-Backed Securities
Yield characteristics of mortgage-backed securities differ from those of
traditional debt securities in a variety of ways, the most significant of
which are that mortgage-backed securities:
. Their payments of interest and principal are more frequent (usually
monthly).
. They usually have adjustable interest rates.
. The may pay off their entire principal substantially earlier than their
final distribution dates so that the price of the security will generally
decline when interest rates rise.
In addition to risks associated with changes in interest rates described in
"Factors Affecting the Value of Debt Securities," a variety of economic,
geographic, social and other factors, such as the sale of the underlying
property, refinancing or foreclosure, can cause investors to repay the loans
underlying a mortgage-backed security sooner than expected. If the prepayment
rates increase, the portfolio may have to reinvest its principal at a rate of
interest that is lower than the rate on existing mortgage-backed securities.
Other Asset-Backed Securities
These securities are interests in pools of a broad range of assets other than
mortgage, such as automobile loans, computer leases and credit card
receivables. Like mortgage-backed securities, these securities are pass-
through. In general, the collateral supporting these securities is of shorter
maturity than mortgage loans and is less likely to experience substantial
prepayments with interest rate fluctuations.
Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities may not have the
benefit of any security interest in the related assets, which raises the
3
<PAGE>
possibility that recoveries on repossessed collateral may not be available to
support payments on these securities. For example, credit card receivables
are generally unsecured and the debtors are entitled to the protection of a
number of state and federal consumer credit laws, many of which allow debtors
to reduce their balances by offsetting certain amounts owed on the credit
cards. Most issuers of asset-backed securities backed by automobile
receivables permit the servicers of such receivables to retain possession of
the underlying obligations. If the servicer were to sell these obligations to
another party, there is a risk that the purchaser would acquire an interest
superior to that of the holders of the rated asset-backed securities. Due to
the quantity of vehicles involved and requirements under state laws, asset-
backed securities backed by automobile receivables may not have a proper
security interest in all of the obligations backing such receivables.
To lessen the effect of failures by obligors on underlying assets to make
payments, the entity administering the pool of assets may agree to ensure the
receipt of payments on the underlying pool occurs in a timely fashion
("liquidity protection"). In addition, asset-backed securities may obtain
insurance, such as guarantees, policies or letters of credit obtained by the
issuer or sponsor from third parties, for some or all of the assets in the
pool ("credit support"). Delinquency or loss more than that anticipated or
failure of the credit support could adversely affect the return on an
investment in such a security.
The portfolio may also invest in residual interests in asset-backed
securities, which is the excess cash flow remaining after making required
payments on the securities and paying related administrative expenses. The
amount of residual cash flow resulting from a particular issue of asset-backed
securities depends in part on the characteristics of the underlying assets,
the coupon rates on the securities, prevailing interest rates, the amount of
administrative expenses and the actual prepayment experience on the underlying
assets.
Collateralized Mortgage Obligations (CMOs)
CMOs are hybrids between mortgage-backed bonds and mortgage pass-through
securities. Similar to a bond, CMOs usually pay interest and prepaid principal
semiannually. While whole mortgage loans may collateralize CMOs, portfolios of
mortgage-backed securities guaranteed by GNMA, FHLMC, or FNMA, and their
income streams more typically collateralize them.
A REMIC is a CMO that qualifies for special tax treatment under the Internal
Revenue Code of 1986, as amended, and invests in certain mortgages primarily
secured by interests in real property and other permitted investments.
CMOs are structured into multiple classes, each bearing a different stated
maturity. Each class of CMO or REMIC certificate, often referred to as a
"tranche," is issued at a specific interest rate and must be fully retired by
its final distribution date. Generally, all classes of CMOs or REMIC
certificates pay or accrue interest monthly. Investing in the lowest tranche
of CMOs and REMIC certificates involves risks similar to those associated with
investing in equity securities.
Short-Term Investments
To earn a return on uninvested assets, meet anticipated redemptions, or for
temporary defensive purposes, a portfolio may invest a portion of its assets
in
. The short-term investments described below.
. U.S. government securities
. Investment-grade corporate debt securities.
Unless otherwise specified, a short-term debt security has a maturity of one
year or less.
Bank Obligations
The portfolio will only invest in a security issued by a commercial bank if
the bank:
. Has total assets of at least $1 billion, or the equivalent in other
currencies;
. Is a U.S. bank and a member of the Federal Deposit Insurance Corporation; and
4
<PAGE>
. Is a foreign branch of a U.S. bank and the adviser believes the security is
of an investment quality comparable with other debt securities that the
portfolio may purchase.
Time Deposits
Time deposits are non-negotiable deposits, such as savings accounts or
certificates of deposit, held by a financial institution for a fixed term with
the understanding that the depositor can withdraw its money only by giving
notice to the institution. However, there may be early withdrawal penalties
depending upon market conditions and the remaining maturity of the obligation.
The portfolio may only purchase time deposits maturing from two business days
through seven calendar days.
Certificates of Deposit
Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank or savings and loan association for a definite
period of time and earning a specified return.
Banker's Acceptance
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).
Commercial Paper
Commercial paper is a short-term obligation with a maturity ranging from 1 to
270 days issued by banks, corporations and other borrowers. Such investments
are unsecured and usually discounted. A portfolio may invest in commercial
paper rated A-1 or A-2 by S&P or Prime-1 or Prime-2 by Moody's, or, if not
rated, issued by a corporation having an outstanding unsecured debt issue
rated A or better by Moody's or by S&P. See Appendix A for a description of
commercial paper ratings.
Yankee Bonds
Yankee bonds are dollar-denominated bonds issued inside the United States by
foreign entities. Investment in these securities involve certain risks which
are not typically associated with investing in domestic securities. See
"FOREIGN SECURITIES".
Zero Coupon Bonds
These securities make no periodic payments of interest, but instead are sold
at a discount from their face value. When held to maturity, their entire
income, which consists of accretion of discount, comes from the difference
between the issue price and their value at maturity. The amount of the
discount rate varies depending on factors including the time remaining until
maturity, prevailing interest rates, the security's liquidity and the issuer's
credit quality. The market value of zero coupon securities may exhibit greater
price volatility than ordinary debt securities because a stripped security
will have a longer duration than an ordinary debt security with the same
maturity. The portfolio's investments in pay-in-kind, delayed and zero coupon
bonds may require it to sell certain of its portfolio securities to generate
sufficient cash to satisfy certain income distribution requirements.
These securities may include U.S. Treasury securities that have had their
interest payments ("coupons") separated from the underlying principal
("corpus") by their holder, typically a custodian bank or investment brokerage
firm. Once the holder of the security has stripped or separated corpus and
coupons, it may sell each component separately. The principal or corpus is
then sold at a deep discount because the buyer receives only the right to
receive a future fixed payment on the security and does not receive any rights
to periodic interest (cash) payments. Typically, the coupons are sold
separately or grouped with other coupons with like maturity dates and sold
bundled in such form. The underlying U.S. Treasury security is held in book-
entry form at the Federal Reserve Bank or, in the case of bearer securities
(i.e., unregistered securities which are owned ostensibly by the bearer or
holder thereof), in trust on behalf of the owners thereof. Purchasers of
stripped
5
<PAGE>
obligations acquire, in effect, discount obligations that are economically
identical to the zero coupon securities that the Treasury sells itself.
The U.S. Treasury has facilitated transfers of ownership of zero coupon
securities by accounting separately for the beneficial ownership of particular
interest coupon and corpus payments on Treasury securities through the Federal
Reserve book-entry record keeping system. Under a Federal Reserve program
known as "STRIPS" or "Separate Trading of Registered Interest and Principal of
Securities," the portfolio can record its beneficial ownership of the coupon
or corpus directly in the book-entry record-keeping system.
Terms to Understand
Maturity
Every debt security has a stated maturity date when the issuer must repay the
amount it borrowed (principal) from investors. Some debt securities, however,
are callable, meaning the issuer can repay the principal earlier, on or after
specified dates (call dates). Debt securities are most likely to be called
when interest rates are falling because the issuer can refinance at a lower
rate, similar to a homeowner refinancing a mortgage. The effective maturity
of a debt security is usually its nearest call date.
A portfolio that invests in debt securities has no real maturity. Instead, it
calculates its weighted average maturity. This number is an average of the
stated maturity of each debt securities held by the portfolio, with the
maturity of each security weighted by the percentage of the assets of the
portfolio it represents.
Duration
Duration is a calculation that seeks to measure the price sensitivity of a
debt security, or a portfolio that invests in debt securities, to changes in
interest rates. It measures sensitivity more accurately than maturity because
it takes into account the time value of cash flows generated over the life of
a debt security. Future interest payments and principal payments are
discounted to reflect their present value and then are multiplied by the
number of years they will be received to produce a value expressed in years --
the duration. Effective duration takes into account call features and sinking
fund prepayments that may shorten the life of a debt security.
An effective duration of 4 years, for example, would suggest that for each 1%
reduction in interest rates at all maturity levels, the price of a security is
estimated to increase by 4%. An increase in rates by the same magnitude is
estimated to reduce the price of the security by 4%. By knowing the yield and
the effective duration of a debt security, one can estimate total return based
on an expectation of how much interest rates, in general, will change. While
serving as a good estimator of prospective returns, effective duration is an
imperfect measure.
Factors Affecting the Value of Debt Securities
The total return of a debt instrument is composed of two elements: the
percentage change in the security's price and interest income earned. The
yield to maturity of a debt security estimates its total return only if the
price of the debt security remains unchanged during the holding period and
coupon interest is reinvested at the same yield to maturity. The total return
of a debt instrument, therefore, will be determined not only by how much
interest is earned, but also by how much the price of the security and
interest rates change.
Interest Rates
The price of a debt security generally moves in the opposite direction from
interest rates (i.e., if interest rates go up, the value of the bond will go
down, and vice versa).
Prepayment Risk
This risk effects mainly mortgage-backed securities. Unlike other debt
securities, falling interest rates can hurt mortgage-backed securities, which
may cause your share price to fall. Lower rates motivate people to pay off
mortgage-backed and asset-backed securities earlier than expected. The
portfolio may then have to reinvest the proceeds from such prepayments at
lower interest rates, which can reduce its yield. The unexpected timing of
mortgage and asset-backed prepayments caused by the variations in interest
rates may also shorten or
6
<PAGE>
lengthen the average maturity of the portfolio. If left unattended, drifts in
the average maturity of the portfolio can have the unintended effect of
increasing or reducing the effective duration of the portfolio, which may
adversely affect the expected performance of the portfolio.
Extension Risk
The other side of prepayment risk occurs when interest rates are rising.
Rising interest rates can cause a portfolio's average maturity to lengthen
unexpectedly due to a drop in mortgage prepayments. This would increase the
sensitivity of the portfolio to rising rates and its potential for price
declines. Extending the average life of a mortgage-backed security increases
the risk of depreciation due to future increases in market interest rates. For
these reasons, mortgage-backed securities may be less effective than other
types of U.S. government securities as a means of "locking in" interest rates.
Credit Rating
Coupon interest is offered to investors of fixed income securities as
compensation for assuming risk, although short-term U.S. treasury securities,
such as 3 month treasury bills, are considered "risk free." Corporate
securities offer higher yields than U.S. treasuries because their payment of
interest and complete repayment of principal is less certain. The credit
rating or financial condition of an issuer may affect the value of a debt
security. Generally, the lower the quality rating of a security, the greater
the risks that the issuer will fail to pay interest and return principal. To
compensate investors for taking on increased risk, issuers with lower credit
ratings usually offer their investors a higher "risk premium" in the form of
higher interest rates above comparable U.S. treasuries.
Changes in investor confidence regarding the certainty of interest and
principal payments of a fixed income corporate security will result in an
adjustment to this "risk premium." Since an issuer's outstanding debt carries
a fixed coupon, adjustments to the risk premium must occur in the price, which
effects the yield to maturity of the bond. If an issuer defaults or becomes
unable to honor its financial obligations, the bond may lose some or all of
its value
A security rated within the four highest rating categories by a rating agency
is called investment-grade because its issuer is more likely to pay interest
and repay principal than an issuer of a lower rated bond. Adverse economic
conditions or changing circumstances, however, may weaken the capacity of the
issuer to pay interest and repay principal. If a security is not rated or is
rated under a different system, the adviser may determine that it is of
investment-grade. The adviser may retain securities that are downgraded, if
it believes that keeping those securities is warranted.
Debt securities rated below investment-grade (junk bonds) are highly
speculative securities that are usually issued by smaller, less credit worthy
and/or highly leveraged (indebted) companies. A corporation may issue a junk
bond because of a corporate restructuring or other similar event. Compared
with investment-grade bonds, junk bonds carry a greater degree of risk and are
less likely to make payments of interest and principal. Market developments
and the financial and business condition of the corporation issuing these
securities influences their price and liquidity more than changes in interest
rates, when compared to investment-grade debt securities. Insufficient
liquidity in the junk bond market may make it more difficult to dispose of
junk bonds and may cause the portfolio to experience sudden and substantial
price declines. A lack of reliable, objective data or market quotations may
make it more difficult to value junk bonds accurately.
Rating agencies are organizations that assign ratings to securities based
primarily on the rating agency's assessment of the issuer's financial
strength. The portfolios currently use ratings compiled by Standard and
Poor's Ratings Services, Duff & Phelps Rating Co., Fitch IBCA, Inc. and,
Moody's Investor Services. Credit ratings are only an agency's opinion, not an
absolute standard of quality, and they do not reflect an evaluation of market
risk. Appendix A contains further information concerning the ratings of
certain rating agencies and their significance.
The adviser may use ratings produced by ratings agencies as guidelines to
determine the rating of a security at the time the portfolio buys it. A rating
agency may change its credit ratings at any time. The adviser monitors the
rating of the security and will take appropriate actions if a rating agency
reduces the security's rating. The
7
<PAGE>
portfolio is not obligated to dispose of securities whose issuers subsequently
are in default or which are downgraded below the above-stated ratings.
DERIVATIVES
- --------------------------------------------------------------------------------
Derivatives are financial instruments whose value is based on an underlying
asset, such as a stock or a bond, an underlying economic factor, such as an
interest rate or a market benchmark, such as an index. The portfolio tries to
minimize its loss by investing in derivatives to protect them from broad
fluctuations in market prices, interest rates or foreign currency exchange
rates. Investing in derivatives for these purposes is known as "hedging." When
hedging is successful, the portfolio will have offset any depreciation in the
value of its portfolio securities by the appreciation in the value of the
derivative position. Although techniques other than the sale and purchase of
derivatives could be used to control the exposure of the portfolio to market
fluctuations, the use of derivatives may be a more effective means of hedging
this exposure.
Types of Derivatives
Futures
A futures contract is an agreement between two parties whereby one party sells
and the other party agrees to buy a specified amount of a financial instrument
at an agreed upon price and time. The financial instrument underlying the
contract may be a stock, stock index, bond, bond index, interest rate, foreign
exchange rate or other similar instrument. Agreeing to buy the underlying
financial information is called buying a futures contract or taking a long
position in the contract. Likewise, agreeing to sell the underlying financial
instrument is called selling a futures contract or taking a short position in
the contract.
Futures contracts are traded in the United States on commodity exchanges or
boards of trade -- known as "contract markets" -- approved for such trading
and regulated by the Commodity Futures Trading Commission, a federal agency.
These contract markets standardize the terms, including the maturity date and
underlying financial instrument, of all futures contracts.
Unlike other securities, the parties to a futures contract do not have to pay
for or deliver the underlying financial instrument until some future date (the
delivery date). Contract markets require both the purchaser and seller to
deposit "initial margin" with a futures broker, known as a futures commission
merchant, when they enter into the contract. Initial margin deposits are
typically equal to a percentage of the contract's value. After they open a
futures contract, the parties to the transaction must compare the purchase
price of the contract to its daily market value. If the value of the futures
contract changes in such a way that a party's position declines, that party
must make additional "variation margin" payments so that the margin payment is
adequate. On the other hand, the value of the contract may change in such a
way that there is excess margin on deposit, possibly entitling the party that
has a gain to receive all or a portion of this amount. This process is known
as "marking to the market."
Although the actual terms of a futures contract calls for the actual delivery
of and payment for the underlying security, in many cases the parties may
close the contract early by taking an opposite position in an identical
contract. If the offsetting purchase price is less than the original purchase
price, the party closing the contract would realize a gain; if it is more, it
would realize a loss. The opposite is also true for a sale, that is, if the
offsetting sale price is more than the original sale price, the party closing
the contract would realize a gain; if it is less, it would realize a loss.
The portfolio will incur commission expenses in both opening and closing
futures positions.
Options
An option is a contract between two parties for the purchase and sale of a
financial instrument for a specified price (known as the "strike price" or
"exercise price") at any time during the option period. Unlike a futures
contract, an option grants a right (not an obligation) to buy or sell a
financial instrument. Generally, a seller of an option can grant a buyer two
kinds of rights: a "call" (the right to buy the security) or a "put" (the
right to sell the security). Options have various types of underlying
instruments, including specific securities, indices of securities prices,
foreign currencies, interest rates and futures contracts. Options may be
traded on an
8
<PAGE>
exchange (exchange-traded-options) or may be customized agreements between the
parties (over-the-counter or "OTC options"). Like futures, a financial
intermediary, known as a clearing corporation, financially backs exchange-
traded options. However, OTC options have no such intermediary and are subject
to the risk that the counter-party will not fulfill its obligations under the
contract.
Purchasing Put and Call Options
When the portfolio purchases a put option, it buys the right to sell the
instrument underlying the option at a fixed strike price. In return for this
right, the portfolio pays the current market price for the option (known as
the "option premium"). The portfolio may purchase put options to offset or
hedge against a decline in the market value of its securities ("protective
puts") or to benefit from a decline in the price of securities that it does
not own. The portfolio would ordinarily realize a gain if, during the option
period, the value of the underlying securities decreased below the exercise
price sufficiently to cover the premium and transaction costs. However, if the
price of the underlying instrument does not fall enough to offset the cost of
purchasing the option, a put buyer would lose the premium and related
transaction costs.
Call options are similar to put options, except that the portfolio obtains the
right to purchase, rather than sell, the underlying instrument at the option's
strike price. The portfolio would normally purchase call options in
anticipation of an increase in the market value of securities it owns or wants
to buy. The portfolio would ordinarily realize a gain if, during the option
period, the value of the underlying instrument exceeded the exercise price
plus the premium paid and related transaction costs. Otherwise, the portfolio
would realize either no gain or a loss on the purchase of the call option.
The purchaser of an option may terminate its position by:
. Allowing it to expire and losing its entire premium;
. Exercising the option and either selling (in the case of a put option) or
buying (in the case of a call option) the underlying instrument at the
strike price; or
. Closing it out in the secondary market at its current price.
Selling (Writing) Put and Call Options
When the portfolio writes a call option it assumes an obligation to sell
specified securities to the holder of the option at a specified price if the
option is exercised at any time before the expiration date. Similarly, when
the portfolio writes a put option it assumes an obligation to purchase
specified securities from the option holder at a specified price if the option
is exercised at any time before the expiration date. The portfolio may
terminate its position in an exchange-traded put option before exercise by
buying an option identical to the one it has written. Similarly, it may
cancel an over-the-counter option by entering into an offsetting transaction
with the counter-party to the option.
The portfolio could try to hedge against an increase in the value of
securities it would like to acquire by writing a put option on those
securities. If security prices rise, the portfolio would expect the put option
to expire and the premium it received to offset the increase in the security's
value. If security prices remain the same over time, the portfolio would hope
to profit by closing out the put option at a lower price. If security prices
fall, the portfolio may lose an amount of money equal to the difference
between the value of the security and the premium it received. Writing covered
put options may deprive the portfolio of the opportunity to profit from a
decrease in the market price of the securities it would like to acquire.
The characteristics of writing call options are similar to those of writing
put options, except that call writers expect to profit if prices remain the
same or fall. The portfolio could try to hedge against a decline in the value
of securities it already owns by writing a call option. If the price of that
security falls as expected, the portfolio would expect the option to expire
and the premium it received to offset the decline of the security's value.
However, the portfolio must be prepared to deliver the underlying instrument
in return for the strike price, which may deprive it of the opportunity to
profit from an increase in the market price of the securities it holds.
The portfolio is permitted only to write covered options. The portfolio can
cover a call option by owning, at the time of selling the option.
9
<PAGE>
. The underlying security (or securities convertible into the underlying
security without additional consideration), index, interest rate, foreign
currency or futures contract.
. A call option on the same security or index with the same or lesser exercise
price.
. A call option on the same security or index with a greater exercise price
and segregating cash or liquid securities in an amount equal to the
difference between the exercise prices.
. Cash or liquid securities equal to at least the market value of the optioned
securities, interest rate, foreign currency or futures contract.
. In the case of an index, the portfolio of securities that corresponds to the
index.
The portfolio can cover a put option by, at the time of selling the option:
. Entering into a short position in the underlying security.
. Purchasing a put option on the same security, index, interest rate, foreign
currency or futures contract with the same or greater exercise price.
. Purchasing a put option on the same security, index, interest rate, foreign
currency or futures contract with a lesser exercise price and segregating
cash or liquid securities in an amount equal to the difference between the
exercise prices.
. Maintaining the entire exercise price in liquid securities.
Options on Securities Indices
Options on securities indices are similar to options on securities, except
that the exercise of securities index options requires cash settlement
payments and does not involve the actual purchase or sale of securities. In
addition, securities index options are designed to reflect price fluctuations
in a group of securities or segment of the securities market rather than price
fluctuations in a single security.
Options on Futures
An option on a futures contract provides the holder with the right to buy a
futures contract (in the case of a call option) or sell a futures contract (in
the case of a put option) at a fixed time and price. Upon exercise of the
option by the holder, the contract market clearing house establishes a
corresponding short position for the writer of the option (in the case of a
call option) or a corresponding long position (in the case of a put option).
If the option is exercised, the parties will be subject to the futures
contracts. In addition, the writer of an option on a futures contract is
subject to initial and variation margin requirements on the option position.
Options on futures contracts are traded on the same contract market as the
underlying futures contract.
The buyer or seller of an option on a futures contract may terminate the
option early by purchasing or selling an option of the same series (i.e., the
same exercise price and expiration date) as the option previously purchased or
sold. The difference between the premiums paid and received represents the
trader's profit or loss on the transaction.
The portfolio may purchase put and call options on futures contracts instead
of selling or buying futures contracts. The portfolio may buy a put option on
a futures contract for the same reasons it would sell a futures contract. It
also may purchase such put options in order to hedge a long position in the
underlying futures contract. The portfolio may buy call options on futures
contracts for the same purpose as the actual purchase of the futures
contracts, such as in anticipation of favorable market conditions.
The portfolio may write a call option on a futures contract to hedge against a
decline in the prices of the instrument underlying the futures contracts. If
the price of the futures contract at expiration were below the exercise price,
the portfolio would retain the option premium, which would offset, in part,
any decline in the value of its portfolio securities.
The writing of a put option on a futures contract is similar to the purchase
of the futures contracts, except that, if market price declines, the portfolio
would pay more than the market price for the underlying instrument.
10
<PAGE>
The premium received on the sale of the put option, less any transaction
costs, would reduce the net cost to the portfolio.
Combined Positions
The portfolio may purchase and write options in combination with each other,
or in combination with futures or forward contracts, to adjust the risk and
return characteristics of the overall position. For example, the portfolio
could construct a combined position whose risk and return characteristics are
similar to selling a futures contract by purchasing a put option and writing a
call option on the same underlying instrument. Alternatively, the portfolio
could write a call option at one strike price and buy a call option at a lower
price to reduce the risk of the written call option in the event of a
substantial price increase. Because combined options positions involve
multiple trades, they result in higher transaction costs and may be more
difficult to open and close out.
Swaps, Caps and Floors
Swap Agreements
A swap is a financial instrument that typically involves the exchange of cash
flows between two parties on specified dates (settlement dates), where the
cash flows are based on agreed-upon prices, rates, indices, etc. The nominal
amount on which the cash flows are calculated is called the notional amount.
Swaps are individually negotiated and structured to include exposure to a
variety of different types of investments or market factors, such as interest
rates, foreign currency rates, mortgage securities, corporate borrowing rates,
security prices or inflation rates.
Swap agreements may increase or decrease the overall volatility of the
investments of the portfolio and its share price. The performance of swap
agreements may be affected by a change in the specific interest rate,
currency, or other factors that determine the amounts of payments due to and
from the portfolio. If a swap agreement calls for payments by the portfolio,
the portfolio must be prepared to make such payments when due. In addition, if
the counter-party's creditworthiness declined, the value of a swap agreement
would be likely to decline, potentially resulting in losses.
Generally, swap agreements have a fixed maturity date that will be agreed upon
by the parties. The agreement can be terminated before the maturity date only
under limited circumstances, such as default by one of the parties or
insolvency, among others, and can be transferred by a party only with the
prior written consent of the other party. The portfolio may be able to
eliminate its exposure under a swap agreement either by assignment or by other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party. If the counter-party is unable to
meet its obligations under the contract, declares bankruptcy, defaults or
becomes insolvent, the portfolio may not be able to recover the money it
expected to receive under the contract.
A swap agreement can be a form of leverage, which can magnify a portfolio's
gains or losses. In order to reduce the risk associated with leveraging, a
portfolio will cover its current obligations under swap agreements according
to guidelines established by the Securities and Exchange Commission. If the
portfolio enters into a swap agreement on a net basis, it will segregate
assets with a daily value at least equal to the excess, if any, of the
portfolio's accrued obligations under the swap agreement over the accrued
amount the portfolio is entitled to receive under the agreement. If the
portfolio enters into a swap agreement on other than a net basis, it will
segregate assets with a value equal to the full amount of the portfolio's
accrued obligations under the agreement.
Equity Swaps -- In a typical equity index swap, one party agrees to pay
another party the return on a stock, stock index or basket of stocks in return
for a specified interest rate. By entering into an equity index swap, for
example, the index receiver can gain exposure to stocks making up the index of
securities without actually purchasing those stocks. Equity index swaps
involve not only the risk associated with investment in the securities
represented in the index, but also the risk that the performance of such
securities, including dividends, will not exceed the return on the interest
rate that the portfolio will be committed to pay.
11
<PAGE>
Interest Rate Swaps -- Interest rate swaps are financial instruments that
involve the exchange on one type of interest rate for another type of interest
rate cash flow on specified dates in the future. Some of the different types
of interest rate swaps are fixed-for floating rate swaps, termed basis swaps
and index amortizing swaps. Fixed-for floating rate swap, which involves the
exchange of fixed interest rate cash flows for floating rate cash flows.
Termed basis swaps entail cash flows to both parties based on floating
interest rates, where the interest rate indices are different. Index
amortizing swaps are typically fixed-for-floating swaps where the notional
amount changes if certain conditions are met.
Like a traditional investment in a debt security, a portfolio could lose money
by investing in an interest rate swap if interest rates change adversely. For
example, if the portfolio enters into a swap where it agrees to exchange a
floating rate of interest for a fixed rate of interest, the portfolio may have
to pay more money than it receives. Similarly, if the portfolio enters into a
swap where it agrees to exchange a fixed rate of interest for a floating rate
of interest, the portfolio may receive less money than it has agreed to pay.
Currency Swaps -- A currency swap is an agreement between two parties in which
one party agrees to make interest rate payments in one currency and the other
promises to make interest rate payments in another currency. A portfolio may
enter into a currency swap when it has one currency and desires a different
currency. Typically the interest rates that determine the currency swap
payments are fixed, although occasionally one or both parties may pay a
floating rate of interest. Unlike an interest rate swaps, however, the
principal amounts are exchanged at the beginning of the contract and returned
at the end of the contract. Currency swaps may be negatively affected by
changes in foreign exchange rates and changes in interest rates, as described
above.
Caps and Floors
Caps and floors have an effect similar to buying or writing options. In a
typical cap or floor agreement, one party agrees to make payments only under
specified circumstances, usually in return for payment of a fee by the other
party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specified interest rate exceeds an
agreed-upon level. The seller of an interest rate floor is obligated to make
payments to the extent that a specified interest rate falls below an agreed-
upon level. An interest rate collar combines elements of buying a cap and
selling a floor.
Risks of Derivatives
While transactions in derivatives may reduce certain risks, these transactions
themselves entail certain other risks. For example, unanticipated changes in
interest rates, securities prices or currency exchange rates may result in a
poorer overall performance of the portfolio than if it had not entered into
any derivatives transactions. Derivatives may magnify the portfolio's gains
or losses, causing it to make or lose substantially more than it invested.
When used for hedging purposes, increases in the value of the securities the
portfolio holds or intends to acquire should offset any losses incurred with a
derivative. Purchasing derivatives for purposes other than hedging could
expose the portfolio to greater risks.
Correlation of Prices
The portfolio's ability to hedge its securities through derivatives depends on
the degree to which price movements in the underlying index or instrument
correlate with price movements in the relevant securities. In the case of poor
correlation, the price of the securities the portfolio is hedging may not move
in the same amount, or even in the same direction as the hedging instrument.
The adviser will try to minimize this risk by investing only in those
contracts whose behavior it expects to resemble the portfolio securities it is
trying to hedge. However, if the portfolio's prediction of interest and
currency rates, market value, volatility or other economic factors is
incorrect, the portfolio may lose money, or may not make as much money as it
could have.
Derivative prices can diverge from the prices of their underlying instruments,
even if the characteristics of the underlying instruments are very similar to
the derivative. Listed below are some of the factors that may cause such a
divergence.
12
<PAGE>
. Current and anticipated short-term interest rates, changes in volatility of
the underlying instrument, and the time remaining until expiration of the
contract.
. A difference between the derivatives and securities markets, including
different levels of demand, how the instruments are traded, the imposition
of daily price fluctuation limits or trading of an instrument stops.
. Differences between the derivatives, such as different margin requirements,
different liquidity of such markets and the participation of speculators in
such markets.
Derivatives based upon a narrower index of securities, such as those of a
particular industry group, may present greater risk than derivatives based on
a broad market index. Since narrower indices are made up of a smaller number
of securities, they are more susceptible to rapid and extreme price
fluctuations because of changes in the value of those securities.
While currency futures and options values are expected to correlate with
exchange rates, they may not reflect other factors that affect the value of
the investments of the portfolio. A currency hedge, for example, should
protect a yen-denominated security from a decline in the yen, but will not
protect the portfolio against a price decline resulting from deterioration in
the issuer's creditworthiness. Because the value of the portfolio's foreign-
denominated investments changes in response to many factors other than
exchange rates, it may not be possible to match the amount of currency options
and futures to the value of the portfolio's investments precisely over time.
Lack of Liquidity
Before a futures contract or option is exercised or expires, the portfolio can
terminate it only by entering into a closing purchase or sale transaction.
Moreover, a portfolio may close out a futures contract only on the exchange
the contract was initially traded. Although a portfolio intends to purchase
options and futures only where there appears to be an active market, there is
no guarantee that such a liquid market will exist. If there is no secondary
market for the contract, or the market is illiquid, the portfolio may not be
able to close out its position. In an illiquid market, the portfolio may:
. Have to sell securities to meet its daily margin requirements at a time when
it is disadvantageous to do so.
. Have to purchase or sell the instrument underlying the contract.
. Not be able to hedge its investments.
. Not be able realize profits or limit its losses.
Derivatives may become illiquid (i.e., difficult to sell at a desired time and
price) under a variety of market conditions. For example:
. An exchange may suspend or limit trading in a particular derivative
instrument, an entire category of derivatives or all derivatives, which
sometimes occurs because of increased market volatility.
. Unusual or unforeseen circumstances may interrupt normal operations of an
exchange.
. The facilities of the exchange may not be adequate to handle current trading
volume.
. Equipment failures, government intervention, insolvency of a brokerage firm
or clearing house or other occurrences may disrupt normal trading activity.
. Investors may lose interest in a particular derivative or category of
derivatives.
Management Risk
If the adviser incorrectly predicts stock market and interest rate trends, the
portfolio may lose money by investing in derivatives. For example, if the
portfolio were to write a call option based on its adviser's expectation that
the price of the underlying security
13
<PAGE>
would fall, but the price were to rise instead, the portfolio could be
required to sell the security upon exercise at a price below the current
market price. Similarly, if the portfolio were to write a put option based on
the adviser's expectation that the price of the underlying security would
rise, but the price were to fall instead, the portfolio could be required to
purchase the security upon exercise at a price higher than the current market
price.
Volatility and Leverage
The prices of derivatives are volatile (i.e., they may change rapidly,
substantially and unpredictably) and are influenced by a variety of factors,
including
. Actual and anticipated changes in interest rates,
. Fiscal and monetary policies
. National and international political events.
Most exchanges limit the amount by which the price of a derivative can change
during a single trading day. Daily trading limits establish the maximum
amount that the prince of a derivative may vary from the settlement price of
that derivative at the end of the trading on previous day. Once the price of
a derivative reaches this value, a portfolio may not trade that derivative at
a price beyond that limit. The daily limit governs only price movements
during a given day and does not limit potential gains or losses. Derivative's
prices have occasionally moved to the daily limit for several consecutive
trading days, preventing prompt liquidation of the derivative.
Because of the low margin deposits required upon the opening of a derivative
position, such transactions involve an extremely high degree of leverage.
Consequently, a relatively small price movement in a derivative may result in
an immediate and substantial loss (as well as gain) to the portfolio and it
may lose more than it originally invested in the derivative.
If the price of a futures contract changes adversely, the portfolio may have
to sell securities at a time when it is disadvantageous to do so to meet its
minimum daily margin requirement. The portfolio may lose its margin deposits
if a broker with whom it has an open futures contract or related option
becomes insolvent or declares bankruptcy.
INVESTMENT COMPANIES
- --------------------------------------------------------------------------------
A portfolio may buy and sell shares of other investment companies. Such
investment companies may pay management and other fees that are similar to the
fees currently paid by the portfolio. Like other shareholders, each portfolio
would pay its proportionate share those fees. Consequently, shareholders of a
portfolio would pay not only the management fees of the portfolio, but also
the management fees of the investment company in which the portfolio invests.
The SEC has granted an order that allows each portfolio to invest the greater
of 5% of its total assets or $2.5 million in the UAM DSI Money Market
Portfolio, provided that the investment is:
. For cash management purposes.
. Consistent with the portfolio's investment policies and restrictions.
. The adviser to the investing portfolio waives any fees it earns on the
assets of the portfolio that are invested in the UAM DSI Money Market
Portfolio.
The investing portfolio will bear expenses of the UAM DSI Money Market
Portfolio on the same basis as all of its other shareholders.
REPURCHASE AGREEMENTS
- --------------------------------------------------------------------------------
In a repurchase agreement, an investor agrees to buy a security (underlying
security) from a securities dealer or bank that is a member of the Federal
Reserve System (counter-party). At the time, the counter-party agrees to
repurchase the underlying security for the same price, plus interest.
Repurchase agreements are generally for a relatively short period (usually not
more than 7 days). The portfolios normally use repurchase agreements to earn
income on assets that are not invested.
14
<PAGE>
When it enters into a repurchase agreement, a portfolio will:
. Pay for the underlying securities only upon physically receiving them or
upon evidence of their receipt in book-entry form.
. Require the counter party to add to the collateral whenever the price of the
repurchase agreement rises above the value of the underlying security (i.e.,
it will require the borrower "mark to the market" on a daily basis).
If the seller of the security declares bankruptcy or otherwise becomes
financially unable to buy back the security, the portfolio's right to sell the
security may be restricted. In addition, the value of the security might
decline before the portfolio can sell it and the portfolio might incur
expenses in enforcing its rights.
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, 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 the
portfolio's investment limitations. The price 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
securities.
SECURITIES LENDING
- --------------------------------------------------------------------------------
A portfolio may lend a portion of its total assets to broker- dealers or other
financial institutions. The portfolio may then reinvest the collateral it
receives in short-term securities and money market funds. When a portfolio
lends its securities, it will follow the following guidelines:
. The borrower must provide collateral at least equal to the market value of
the securities loaned.
. The collateral must consist of cash, an irrevocable letter of credit issued
by a domestic U.S. bank or securities issued or guaranteed by the U. S.
government.
. The borrower must add to the collateral whenever the price of the securities
loaned rises (i.e., the borrower "marks to the market" on a daily basis).
. The portfolio must be able to terminate the loan at any time.
. The portfolio must receive reasonable interest on the loan (which may
include the portfolio investing any cash collateral in interest bearing
short-term investments).
. The portfolio must determine that the borrower is an acceptable credit risk.
These risks are similar to the ones involved with repurchase agreements. When
the portfolio lends securities, there is a risk that the borrower fails
financially become financially unable to honor its contractual obligations.
If this happens, the portfolio could
. Lose its rights in the collateral and not be able to retrieve the securities
it lent to the borrower.
. Experience delays in recovering its securities.
WHEN-ISSUED, FORWARD COMMITMENT AND DELAYED DELIVERY TRANSACTIONS
- --------------------------------------------------------------------------------
A when-issued security is one whose terms are available and for which a market
exists, but which have not been issued. In a forward delivery transaction, the
portfolio contracts to purchase securities for a fixed price at a future date
beyond customary settlement time. "Delayed delivery" refers to securities
transactions on the secondary market where settlement occurs in the future.
In each of these transactions, the parties fix the payment obligation and the
interest rate that they will receive on the securities at the time the parties
enter the commitment; however, they do not pay money or delivery securities
until a later date. Typically, no income
15
<PAGE>
accrues on securities the portfolio has committed to purchase before the
securities are delivered, although the portfolio may earn income on securities
it has in a segregated account. The portfolio will only enter into these types
of transactions with the intention of actually acquiring the securities, but
may sell them before the settlement date.
The portfolio uses when-issued, delayed-delivery and forward delivery
transactions to secure what it considers being an advantageous price and yield
at the time of purchase. When the portfolio engages in when-issued, delayed-
delivery and forward delivery transactions, it relies on the other party to
consummate the sale. If the other party fails to complete the sale, the
portfolio may miss the opportunity to obtain the security at a favorable price
or yield.
When purchasing a security on a when-issued, delayed delivery, or forward
delivery basis, the portfolio assumes the rights and risks of ownership of the
security, including the risk of price and yield changes. At the time of
settlement, the market value of the security may be more or less than the
purchase price. The yield available in the market when the delivery takes
place also may be higher than those obtained in the transaction itself.
Because the portfolio does not pay for the security until the delivery date,
these risks are in addition to the risks associated with its other
investments.
The portfolio will add liquid assets to the account daily so that the value of
the assets in the account is equal to the amount of such commitments. Such
segregated securities either will mature or, if necessary, be sold on or
before the settlement date.
WRAPPER AGREEMENTS
- --------------------------------------------------------------------------------
Wrapper agreements are used in order to stabilize the NAV of the portfolio.
Each wrapper agreement obligates the wrapper provider to maintain the "book
value" of a portion of the portfolio's assets (covered assets) up to a
specified maximum dollar amount, upon the occurrence of certain specified
events. Generally, the book value of the covered assets is their (1) purchase
price plus interest on the covered assets accreted at a rate specified in the
wrapper agreement (crediting rate) less an adjustment to reflect any defaulted
securities. The crediting rate used in computing book value is calculated by a
formula specified in the wrapper agreement and is adjusted periodically. In
the case of wrapper agreements purchased by the portfolio, the crediting rate
is the actual interest earned on the covered assets, or an index-based
approximation thereof, plus or minus an adjustment for an amount receivable
from or payable to the wrapper provider based on fluctuations in the market
value of the covered assets. As a result, while the crediting rate will
generally reflect movements in the market rates of interest, it may at any
time be more or less than these rates or the actual interest income earned on
the covered assets. The crediting rate may also be impacted by defaulted
securities and by increases and decreases of the amount of covered assets as a
result of contributions and withdrawals tied to the purchase and redemption of
shares. In no event will the crediting rate fall below zero percent under the
wrapper agreements entered into by the portfolio.
Wrapper providers are banks, insurance companies and other financial
institutions. The number of wrapper providers has been increasing in recent
years. As of April 1998, there were approximately fifteen wrapper providers
rated in one of the top two long-term rating categories by Moody's, S&P or
another NRSRO. The cost of wrapper agreements is typically 0.10% to 0.25% per
dollar of covered assets per annum.
Generally, under the terms of a wrapper agreement, if the market value (plus
accrued interest on the underlying securities) of the covered assets is less
than their book value at the time the covered assets are liquidated in order
to provide proceeds for withdrawals of portfolio interests resulting from
redemptions of shares by IRA Owners, the wrapper provider becomes obligated to
pay to the portfolio the difference. Conversely, the portfolio becomes
obligated to make a payment to the wrapper provider if it is necessary for the
portfolio to liquidate covered assets at a price above their book value in
order to make withdrawal payments. (Withdrawals generally will arise when the
portfolio must pay shareholders who redeem shares.) Because it is anticipated
that each wrapper agreement will cover all covered assets up to a specified
dollar amount, if more than one wrapper provider becomes obligated to pay to
the portfolio the difference between book value and market value (plus accrued
interest on the underlying securities), each wrapper provider will be
obligated to pay an amount as designated by their contract according to the
withdrawal hierarchy specified
16
<PAGE>
by the Adviser in the wrapper agreement. Thus, the portfolio will not have the
option of choosing which wrapper agreement to draw upon in any such payment
situation.
The terms of the wrapper agreements vary concerning when these payments must
actually be made between the portfolio and the wrapper provider. In some
cases, payments may be due upon disposition of covered assets; other wrapper
agreements provide for settlement of payments only upon termination of the
wrapper agreement or total liquidation of the covered assets.
The portfolio expects that the use of wrapper agreements by the portfolio will
under most circumstances permit the portfolio to maintain a constant NAV and
to pay dividends that will generally reflect over time both the interest
income of, and market gains and losses on, the covered assets held by the
portfolio less the expenses of the portfolio. However, there can be no
guarantee that the portfolio will maintain a constant NAV or that any
shareholder will realize the same investment return as might be realized by
investing directly in the portfolio assets other than the wrapper agreements.
For example, a default by the issuer of a portfolio Security or a wrapper
provider on its obligations might result in a decrease in the value of the
portfolio assets and, consequently, the shares. The wrapper agreements
generally do not protect the portfolio from loss if an issuer of portfolio
securities defaults on payments of interest or principal. Additionally, a
portfolio shareholder may realize more or less than the actual investment
return on the portfolio Securities. Furthermore, there can be no assurance
that the portfolio will be able at all times to obtain wrapper agreements.
Although it is the current intention of the portfolio to obtain such
agreements covering all of its assets (with the exceptions noted), the
portfolio may elect not to cover some or all of its assets with wrapper
agreements should wrapper agreements become unavailable or should other
conditions such as cost, in the Adviser's sole discretion, render their
purchase inadvisable.
If, in the event of a default of a wrapper provider, the portfolio were unable
to obtain a replacement wrapper agreement, participants redeeming shares might
experience losses if the market value of the portfolio's assets no longer
covered by the wrapper agreement is below book value. The combination of the
default of a wrapper provider and an inability to obtain a replacement
agreement could render the portfolio and the portfolio unable to achieve their
investment objective of maintaining a stable NAV. If the governing board
determines that a wrapper provider is unable to make payments when due, that
Board may assign a fair value to the wrapper agreement that is less than the
difference between the book value and the market value (plus accrued interest
on the underlying securities) of the applicable covered assets and the
portfolio might be unable to maintain NAV stability.
Some wrapper agreements require that the portfolio maintain a specified
percentage of its total assets in short-term investments (liquidity reserve).
These short-term investments must be used for the payment of withdrawals from
the portfolio and portfolio expenses. To the extent the liquidity reserve
falls below the specified percentage of total assets, the portfolio is
obligated to direct all net cash flow to the replenishment of the liquidity
reserve. The obligation to maintain a liquidity reserve may result in a lower
return for the portfolio than if these funds were invested in longer-term debt
securities. The liquidity reserve required by all wrapper agreements is not
expected to exceed 2-10% of the portfolio's total assets.
Wrapper agreements may also require that the covered assets have a specified
duration or maturity, consist of specified types of securities or be of a
specified investment quality. The portfolio will purchase wrapper agreements
whose criteria in this regard are consistent with the portfolio's investment
objective and policies.
Wrapper agreements may also require the disposition of securities whose
ratings are downgraded below a certain level. This may limit the portfolio's
ability to hold such downgraded securities.
Wrapper agreements are structured with a number of different features. Wrapper
agreements purchased by the portfolio are of three basic types: (1) non-
participating, (2) participating and (3) "hybrid." In addition, the wrapper
agreements will either be of fixed-maturity or open-end maturity
("evergreen"). The portfolio enters into particular types of wrapper
agreements depending upon their respective cost to the portfolio and the
wrapper provider's creditworthiness, as well as upon other factors. Under most
circumstances, it is anticipated that the portfolio will enter into
participating wrapper agreements of open-end maturity and hybrid wrapper
agreements.
17
<PAGE>
Types of Wrapper Agreements
Non-Participating Wrapper Agreement
Under a non-participating wrapper agreement, the wrapper provider becomes
obligated to make a payment to the portfolio whenever the portfolio sells
covered assets at a price below book value to meet withdrawals of a type
covered by the wrapper agreement (a "Benefit Event"). Conversely, the
portfolio becomes obligated to make a payment to the wrapper provider whenever
the portfolio sells covered assets at a price above their book value in
response to a Benefit Event. In neither case is the crediting rate adjusted at
the time of the Benefit Event. Accordingly, under this type of wrapper
agreement, while the portfolio is protected against decreases in the market
value of the covered assets below book value, it does not realize increases in
the market value of the covered assets above book value; those increases are
realized by the wrapper providers.
Participating Wrapper Agreement
Under a participating wrapper agreement, the obligation of the wrapper
provider or the portfolio to make payments to each other typically does not
arise until all of the covered assets have been liquidated. Instead of
payments being made on the occurrence of each Benefit Event, these obligations
are a factor in the periodic adjustment of the crediting rate.
Hybrid Wrapper Agreement
Under a hybrid wrapper agreement, the obligation of the wrapper provider or
the portfolio to make payments does not arise until withdrawals exceed a
specified percentage of the covered assets, after which time payment covering
the difference between market value and book value will occur. For example, a
50/50 hybrid wrap on $100mm of securities would provide for a participating
wrapper be in place for the first $50 million of withdrawals which might lead
to adjustments in the crediting rate, with a non-participating wrapper in
place for the next $50 million of withdrawals, with those withdrawals not
creating any adjustment to the crediting rate.
Fixed-Maturity Wrapper Agreement
A fixed-maturity wrapper agreement terminates at a specified date, at which
time settlement of any difference between book value and market value of the
covered assets occurs. A fixed-maturity wrapper agreement tends to ensure that
the covered assets provide a relatively fixed rate of return over a specified
period of time through bond immunization, which targets the duration of the
covered assets to the remaining life of the wrapper agreement.
Evergreen Wrapper Agreement
An evergreen wrapper agreement has no fixed maturity date on which payment
must be made, and the rate of return on the covered assets accordingly tends
to vary. Unlike the rate of return under a fixed-maturity wrapper agreement,
the rate of return on assets covered by an evergreen wrapper agreement tends
to more closely track prevailing market interest rates and thus tends to rise
when interest rates rise and fall when interest rates fall. An Evergreen
wrapper agreement may be converted into a fixed-maturity wrapper agreement
that will mature in the number of years equal to the duration of the covered
assets.
Additional Risks of Wrapper Agreements
In the event of the default of a wrapper provider, the portfolio could
potentially lose the book value protections provided by the wrapper agreements
with that wrapper provider. However, the impact of such a default on the
portfolio as a whole may be minimal or non-existent if the market value of the
covered assets thereunder is greater than their book value at the time of the
default, because the wrapper provider would have no obligation to make
payments to the portfolio under those circumstances. In addition, the
portfolio may be able to obtain another wrapper agreement from another wrapper
provider to provide book value protections with respect to those covered
assets. The cost of the replacement wrapper agreement might be higher than the
initial wrapper agreement due to market conditions or if the market value
(plus accrued interest on the underlying securities) of those covered assets
is less than their book value at the time of entering into the
18
<PAGE>
replacement agreement. Such cost would also be in addition to any premiums
previously paid to the defaulting wrapper provider. If the portfolio were
unable to obtain a replacement wrapper agreement, participants redeeming
shares might experience losses if the market value of the portfolio's assets
no longer covered by the wrapper agreement is below book value. The
combination of the default of a wrapper provider and an inability to obtain a
replacement agreement could render the portfolio and the portfolio unable to
achieve its investment objective of seeking to maintain a stable NAV.
With respect to payments made under the wrapper agreements between the
portfolio and the wrapper provider, some wrapper agreements, as noted in the
portfolio's prospectus, provide that payments may be due upon disposition of
the covered assets, while others provide for payment only upon the total
liquidation of the Covered assets or upon termination of the wrapper
agreement. In none of these cases, however, would the terms of the wrapper
agreements specify which portfolio securities are to be disposed of or
liquidated. Moreover, because it is anticipated that each wrapper agreement
will cover all covered assets up to a specified dollar amount, if more than
one wrapper provider becomes obligated to pay to the portfolio the difference
between book value and market value (plus accrued interest on the underlying
securities), each wrapper provider will pay a pro-rata amount in proportion to
the maximum dollar amount of coverage provided. Thus, the portfolio will not
have the option of choosing which wrapper agreement to draw upon in any such
payment situation. Under the terms of most wrapper agreements, the wrapper
provider will have the right to terminate the wrapper agreement in the event
that material changes are made to the portfolio's investment objectives or
limitations or to the nature of the portfolio's operations. In such event, the
portfolio may be obligated to pay the wrapper provider termination fees. The
portfolio will have the right to terminate a wrapper agreement for any reason.
Such right, however, may also be subject to the payment of termination fees.
In the event of termination of a wrapper agreement or conversion of an
Evergreen Wrapper Agreement to a fixed maturity, some wrapper agreements may
require that the duration of some portion of the portfolio's securities be
reduced to correspond to the fixed maturity or termination date and that such
securities maintain a higher credit rating than is normally required, either
of which requirements might adversely affect the return of the portfolio.
INVESTMENT POLICIES
- --------------------------------------------------------------------------------
The portfolio will determine percentages (with the exception of a limitation
relating to borrowing) immediately after and as a result of the portfolio's
acquisition of such security or other asset. Accordingly, the portfolio will
not consider changes in values, net assets or other circumstances when
determining whether the investment complies with its investment limitations.
Fundamental Policies
The following investment limitations are fundamental, which means the
portfolio cannot change them without approval by the vote of a majority of the
outstanding voting securities of the portfolio, as defined by the 1940 Act.
The portfolio will not:
. Make any investment that is inconsistent with its classification as a
diversified investment management company under the 1940 Act.
. Concentrate its investments in securities of issuers primarily engaged in
any particular industry (other securities issued or guaranteed by the United
States government or its agencies or instrumentalities or when the portfolio
adopts a temporary defensive position).
. Issue senior securities, except as permitted by the 1940 Act
. Invest in physical commodities or contracts on physical commodities.
. 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.
. Make loans except (i) by that the acquisition of investment securities or
other investment instruments in accordance with the portfolio's prospectus
and statement of additional information shall not be deemed to
10
<PAGE>
be the making of a loan; and (ii) that the portfolio may lend its
portfolio securities in accordance with applicable law and the guidelines
set forth in the portfolio's prospectus and statement of additional
information, as they may be amended from time to time.
. Underwrite the securities of other issuers.
. Borrow money, except to the extent permitted by applicable law and the
guidelines set forth in the portfolio's prospectus and statement of
additional information, as they may be amended from time to time.
Non-Fundamental Policies
The following limitations are non-fundamental, which means the portfolio may
change them without shareholder approval.
The portfolio will not:
. Purchase on margin or sell short except that the portfolio may purchase
futures as described in the prospectus and this SAI.
. Invest more than 10% of its total assets in the securities of other
investment companies.
. Invest more than 5% of its total assets in the securities of any one
investment company.
. Acquire more than 3% of the voting securities of any other investment
company.
. Invest more than an aggregate of 15% of its net assets in securities that
are subject to legal or contractual restrictions on resale (restricted
securities) or securities for which there are no readily available markets
(illiquid securities).
Borrowing
The portfolio may borrow from banks and enter into reverse repurchase
agreements in an amount up to 33 1/3% of its total assets, taken at market
value. The portfolio may also borrow an additional 5% of its total assets from
banks or others for temporary or emergency purposes, such as the redemption of
portfolio shares. The portfolio may purchase additional securities so long as
borrowings do not exceed 5% of its total assets. The portfolio may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
of portfolio securities.
Asset Coverage
The portfolio will cover its derivatives according to guidelines established
by the SEC so as to avoid creating a "senior security" (as defined in the
1940 act) in connection with use of such instruments. Accordingly, the
portfolio will either own the securities underlying the derivative or will
segregate with its custodian cash or liquid securities in an amount at all
times equal to the portfolio's commitment with respect to these instruments or
contracts. Assets that are segregated for purposes of proving cover need not
be physically segregated in a separate account provided that the custodian
notes on its books that such securities are segregated. The portfolio will
also cover its use of wrapper agreements to the extent necessary to avoid
creating a "senior security" (as defined in the 1940 act) in connection with
its purchase of such agreements.
Management Of The Fund
The governing board manages the business of the Fund. The governing board
elects officers to manage the day-to-day operations of the Fund and to execute
policies the board has formulated. The Fund pays each board member who is not
also an officer or affiliated person (independent board member) a $150
quarterly retainer fee per active portfolio per quarter and a $2,000 meeting
fee. In addition, the Fund reimburses each independent board member for
travel and other expenses incurred while attending board meetings. The $2,000
meeting fee and expense reimbursements are aggregated for all of the board
members and allocated proportionately among the portfolios of the UAM Funds
Complex. The Fund does not pay board members
20
<PAGE>
that are affiliated with the fund for their services as board members. UAM,
its affiliates or SEI pay the Fund's officers.
The following table lists the board members and officers of the Fund and
provides information regarding their present positions, date of birth,
address, principal occupations during the past five years, aggregate
compensation received from the Fund and total compensation received from the
UAM Funds Complex. The UAM Funds Complex is currently comprised of 48
portfolios. Those people with an asterisk beside their name are "interested
persons" of the Fund as that term is defined in the 1940 Act. Mr. English does
have an investment advisory relationship with Investment Counselors of
Maryland, an investment adviser to one of the portfolios in the UAM Funds
Complex. However, the Fund does not believe that the relationship is a
material business relationship, and, therefore, does not consider him to be an
"interested person" of the Fund. If these circumstances change, the Board
will determine whether any action is required to change the composition of the
Board.
<TABLE>
<CAPTION>
Total
Aggregate Compensation
Compensation From UAM
Position with Principal Occupations During the Past 5 from Fund as Funds Complex
Name, Address, DOB with Fund years of 4/30/99 as of 12/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
John T. Bennett, Jr. Board Member President of Squam Investment Management Company, $8,094 $30,000
College Road -- RFD 3 Inc. and Great Island Investment Company, Inc.;
Meredith, NH 03253 President of Bennett Management Company from 1988
1/26/29 to 1993.
- ------------------------------------------------------------------------------------------------------------------------------------
Nancy J. Dunn Board Member Financial Officer of World Wildlife Fund since $8,094 $40,575
10 Garden Street January 1999; Vice President for Finance and
Cambridge, MA 02138 Administration and Treasurer of Radcliffe College
8/14/51 from 1991 to 1999.
- ------------------------------------------------------------------------------------------------------------------------------------
William A. Humenuk Board Member Executive Vice President and Chief Administrative $8,094 $40,030
100 King Street West Officer of Philip Services Corp.; Formerly, a
P.O. Box 2440, LCD-1 Partner in the Philadelphia office of the law firm
Hamilton Ontario, Dechert Price & Rhoads and a Director of Hofler
Canada L8N-4J6 Corp.
4/21/42
- ------------------------------------------------------------------------------------------------------------------------------------
Philip D. English Board Member President and Chief Executive Officer of $8,094 $40,702
16 West Madison Street Broventure Company, Inc.; Chairman of the Board of
Baltimore, MD 21201 Chektec Corporation and Cyber Scientific, Inc.
8/5/48
- ------------------------------------------------------------------------------------------------------------------------------------
James P. Pappas* Board Member President of UAM Investment Services, Inc. since 0 0
211 Congress Street March 1999; Vice President UAM Trust Company since
Boston, MA 02110 January 1996; Principal of UAM Fund Distributors,
2/24/53 Inc. since December 1995; Vice President of UAM
Investment Services, Inc. from January 1996 to
March 1999 and a Director and Chief Operating
Officer of CS First Boston Investment Management
from 1993-1995.
- ------------------------------------------------------------------------------------------------------------------------------------
Norton H. Reamer* Board Member; Chairman, Chief Executive Officer and a Director 0 0
One International Place President and of United Asset Management Corporation; Director,
Boston, MA 02110 Chairman Partner or Trustee of each of the Investment
3/21/35 Companies of the Eaton Vance Group of Mutual Funds.
- ------------------------------------------------------------------------------------------------------------------------------------
Peter M. Whitman, Jr.* Board Member President and Chief Investment Officer of Dewey 0 0
One Financial Center Square Investors Corporation since 1988; Director
Boston, MA 02111 and Chief Executive Officer of H.T. Investors,
7/1/43 Inc., formerly a subsidiary of Dewey Square.
- ------------------------------------------------------------------------------------------------------------------------------------
William H. Park Vice President Executive Vice President and Chief Financial 0 0
One International Place Officer of United Asset Management Corporation.
Boston, MA 02110
9/19/47
- ------------------------------------------------------------------------------------------------------------------------------------
Gary L. French Treasurer President of UAMFSI and UAMFDI; Treasurer of the 0 0
211 Congress Street Fidelity Group of Mutual Funds from 1991 to 1995;
Boston, MA 02110 held various other offices with Fidelity
7/4/51 Investments from November 1990 to March 1995.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Total
Aggregate Compensation
Compensation From UAM
Position with Principal Occupations During the Past 5 from Fund as Funds Complex
Name, Address, DOB with Fund years of 4/30/99 as of 12/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Michael E. DeFao Secretary Vice President and General Counsel of UAMFSI and 0 0
211 Congress Street UAMFDI; Associate Attorney of Ropes & Gray (a law
Boston, MA 02110 firm) from 1993 to 1995.
2/28/68
- ------------------------------------------------------------------------------------------------------------------------------------
Robert R. Flaherty Assistant Vice President of UAMFSI; Manager of Fund 0 0
211 Congress Street Treasurer Administration and Compliance of CGFSC from 1995
Boston, MA 02110 to 1996; Senior Manager of Deloitte & Touche LLP
9/18/63 from 1985 to 1995,
- ------------------------------------------------------------------------------------------------------------------------------------
Michael J. Leary Assistant Vice President of Chase Global Funds Services 0 0
73 Tremont Street Treasurer Company since 1993. Manager of Audit at Ernst &
Boston, MA 02108 Young from 1988 to 1993.
11/23/65
- ------------------------------------------------------------------------------------------------------------------------------------
Michelle Azrialy Assistant Assistant Treasurer of Chase Global Funds Services 0 0
73 Tremont Street Secretary Company since 1996. Senior Public Accountant with
Boston, MA 02108 EPrice Waterhouse LLP from 1991 to 1994.
4/12/69
</TABLE>
Investment Advisory and Other Services
INVESTMENT ADVISER
- --------------------------------------------------------------------------------
Control of Adviser
The Adviser is located at 125 College Street, Burlington, Vermont 05401. The
Adviser (or its predecessor), an affiliate of United Asset Management
Corporation, has provided investment management services to corporations,
pension and profit-sharing plans, 401(k), 403(b) and thrift plans since 1978.
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 approximately 45 such 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
portfolio of the UAM Funds complex.
Investment Advisory Agreement
Service Performed by Adviser
Pursuant to the Investment Advisory Agreement (Advisory Agreement) between the
Fund and the Adviser, the Adviser has agreed to:
. Manage the investment and reinvestment of the assets of the portfolio.
. Continuously review, supervise and administer the investment program of the
portfolio.
. Determine in its discretion the securities the portfolio will buy or sell
and the portion of its assets the portfolio will hold uninvested.
Limitation of Liability
In the absence of (1) willful misfeasance, bad faith, or gross negligence of
the part of the Adviser in the performance of its obligations and duties under
the Advisory Agreement, (2) reckless disregard by the Adviser
22
<PAGE>
of its obligations and duties under the Advisory Agreement, or (3) a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services, the Adviser shall not be subject to any liability
whatsoever to the Fund, for any error of judgment, mistake of law or any other
act or omission in the course of, or connected with, rendering services under
the Advisory Agreement.
Continuing an Advisory Agreement
Unless sooner terminated, an Advisory Agreement shall continue for periods of
one year so long as such continuance is specifically approved at least
annually (a) by a majority of those members of the governing board of the Fund
who are not parties to the Advisory Agreement or interested persons of any
such party and (b) by a majority of the governing board of the Fund or a
majority of the shareholders of the portfolio. An Advisory Agreement may be
terminated at any time by the Fund, without the payment of any penalty, by
vote of a majority of the portfolio' shareholders on 60 days' written notice
to the Adviser. The Adviser may terminate the Advisory Agreements at any time,
without the payment of any penalty, upon 90 days' written notice to the Fund.
An Advisory Agreement will automatically and immediately terminate if it is
assigned.
Investment Advisory Fee
For its services, the Adviser receives an advisory fee calculated annual rate
of 0.35% of the average daily net assets of the portfolio for the month. The
Adviser's fee is paid monthly.
Expense Limitation
The Adviser may voluntarily agree to limit the expenses of the portfolio. The
Adviser may reduce its compensation to the extent that the expenses of the
portfolio exceed such lower expense limitation as the Adviser may, by notice
to the portfolio, declare to be effective. The expenses subject to this
limitation are exclusive of brokerage commissions, interest, taxes, deferred
organizational and extraordinary expenses and, if the fund has a distribution
plan, payments required under such plan. The prospectus describes the terms of
any expense limitation that are in effect from time to time.
Representative Institutional Clients
As of the date of this SAI, the Adviser's representative institutional clients
included Morgan Stanley, MFS, SEI Corporation, Chase Manhattan Bank, Asea
Brown Boveri, Hoffmann-LaRoche and the State of Vermont.
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.
DISTRIBUTOR
- --------------------------------------------------------------------------------
UAMFDI is the Fund's distributor. The Fund offers its shares continuously.
While UAMFDI will use its best efforts to sell shares of the Fund, it is not
obligated to sell any particular amount of shares. UAMFDI receives no
compensation for its services, and any amounts it may receive under a Service
and Distribution Plan are passed through their entirety to third parties.
UAMFDI, an affiliate of UAM, is located at 211 Congress Street, Boston,
Massachusetts 02110.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Administrator
Pursuant to a Fund Administration Agreement with the Fund, UAMFSI manages,
administers and conducts the general business activities of the Fund. As a
part of its responsibilities, UAMFSI provides and oversees the provision by
various third parties of administrative, fund accounting, dividend disbursing
and transfer agent services for the Fund. UAMFSI, an affiliate of UAM, has its
principal office at 211 Congress Street, Boston, Massachusetts 02110.
23
<PAGE>
UAMFSI will bear all expenses in connection with the performance of its
services under the Fund Administration Agreement. Other expenses to be
incurred in the operation of the Fund will be borne by the Fund or other
parties, including:
. Taxes, interest, brokerage fees and commissions.
. Salaries and fees of officers and members of the board who are not officers,
directors, shareholders or employees of an affiliate of UAM, including
UAMFSI, UAMFDI or the adviser.
. SEC fees and state Blue-Sky fees.
. EDGAR filing fees.
. Processing services and related fees.
. Advisory and administration fees.
. Charges and expenses of pricing and data services, independent public
accountants and custodians.
. Insurance premiums including fidelity bond premiums.
. Outside legal expenses.
. Costs of maintenance of corporate existence.
. Typesetting and printing of prospectuses for regulatory purposes and for
distribution to current shareholders of the Fund.
. Printing and production costs of shareholders' reports and corporate
meetings.
. Cost and expenses of Fund stationery and forms.
. Costs of special telephone and data lines and devices.
. Trade association dues and expenses.
. Any extraordinary expenses and other customary Fund expenses.
The Fund Administration Agreement continues in effect from year to year if the
Board specifically approves such continuance every year. The Board or UAMFSI
may terminate the Fund Administration Agreement, without penalty, on not less
than ninety (90) days' written notice. The Fund Administration Agreement
automatically terminates upon its assignment by UAMFSI without the prior
written consent of the Fund.
UAMFSI will from time to time employ other people to assist it in performing
its duties under the Fund Administration Agreement. Such people may be
officers and employees who are employed by both UAMFSI and the Fund. UAMFSI
will pay such people for such employment. The Fund will not incur any
obligations with respect to such people.
Administration and Transfer Agency Services Fees
The portfolio pays a four-part fee to UAMFSI as follows:
1. In exchange for administrative services, the portfolio pays a fee to UAMFSI
calculated at the annual rate of:
. $19,500 for the first operational class; plus
. $3,750 for each additional class; plus
. 0.063% of the aggregate net assets of the portfolio.
2. The portfolio also pays a fee to UAMFSI for sub-administration and other
services provided by SEI. The fee, which UAMFSI pays to SEI, is calculated
at the annual rate of:
. Not more than $35,000 for the first operational class; plus
24
<PAGE>
. $5,000 for each additional operational class; plus
. 0.03% of their pro rata share of the combined assets of the Fund, UAM
Funds, Inc. and UAM Funds Trust II.
3. An annual base fee that UAMFSI pays to DST Systems, Inc. for its services
as transfer agent and dividend-disbursing agent equal to $10,500 for the
first operational class and $10,500 for each additional class.
4. An annual base fee that UAMFSI pays to UAMSSC for its services as sub-
shareholder-servicing agent equal to $7,500 for the first operational
class and $2,500 for each additional class.
CUSTODIAN
- --------------------------------------------------------------------------------
The Chase Manhattan Bank, 3 Chase MetroTech Center, Brooklyn, New York 11245,
provides for the custody of the Fund's assets pursuant to the terms of a
custodian agreement with the Fund.
INDEPENDENT PUBLIC ACCOUNTANT
- --------------------------------------------------------------------------------
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts 02110,
serves as independent accountant for the Fund.
SERVICE AND DISTRIBUTION PLANS
- --------------------------------------------------------------------------------
The Fund has adopted a Distribution Plan and a Shareholder Servicing Plan (the
"Plans") for their Institutional Service Class Shares pursuant to Rule 12b-1
under the 1940 Act.
Shareholder Servicing Plan
The Shareholder Servicing Plan (Service Plan) permits the Fund to compensate
broker-dealers or other financial institutions (Service Agents) that have
agreed with UAMFDI to provide administrative support services to Institutional
Service Class shareholders that are their customers. Under the Service Plan,
Institutional Service Class Shares may pay service fees at the maximum annual
rate of 0.25% of the average daily net asset value of such shares held by the
Service Agent for the benefit of its customers. The Fund pays these fees out
of the assets allocable to Institutional Service Class Shares to UAMFDI, to
the Service Agent directly or through UAMFDI. 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 Service Class Shares as the SEC construes such term under Rule 12b-1.
Services for which Institutional Service Class Shares may compensate Service
Agents include:
. 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.
. Processing shareholder orders to purchase, redeem and exchange shares.
. 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.
25
<PAGE>
. 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.
Rule 12b-1 Distribution Plan
The Distribution Plan permits the portfolio to pay UAMFDI or others for
certain distribution, promotional and related expenses involved in marketing
its Institutional Service Class Shares. Under the Distribution Plan,
Institutional Service Class Shares may pay distribution fees at the maximum
annual rate of 0.75% of the average daily net asset value of such shares held
by the Service Agent for the benefit of its customers. These expenses
include, among other things:
. Advertising the availability of services and products.
. Designing materials to send to customers and developing methods of making
such materials accessible to customers.
. Providing information about the product needs of customers.
. Providing facilities to solicit Fund sales and to answer questions from
prospective and existing investors about the Fund.
. Receiving and answering correspondence from prospective investors, including
requests for sales literature, prospectuses and statements of additional
information.
. Displaying and making available sales literature and prospectuses.
. Acting as liaison between shareholders and the Fund, including obtaining
information from the Fund and providing performance and other information
about the Fund.
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.
Fees Paid under the Service and Distribution Plans
The Plans permit Institutional Service Class shares to pay distribution and
service fees at the maximum annual rate of 1.00% of the class' average daily
net assets for the year. The Fund's governing board has limited the amount
the Institutional Service Class may pay under the Plans to 0.40% of the class'
average daily net assets for the year, and may increase such amount to the
plan maximum at any time.
The Fund will not reimburse the Distributor or others for distribution
expenses incurred in excess of the amount permitted by the Plans.
Subject to seeking best price and execution, the Fund may buy or sell
portfolio securities through firms that receive payments under the Plans.
UAMFDI, at its own expense, may pay dealers for aid in distribution or for aid
in providing administrative services to shareholders.
Approving, Amending and Terminating the Fund's Distribution Arrangements
Shareholders of the portfolio have approved the Plans. The Plans also were
approved by the governing board of the Fund, including a majority of the
members of the board who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plans (Plan
Members), by votes cast in person at meetings called for the purpose of voting
on these Plans.
Continuing the Plans
The Plans continue in effect from year to year so long as they are approved
annually by a majority of the Fund's board members and its Plan Members. To
continue the Plans, the board must determine whether such continuation is in
the best interest of the Institutional Service Class shareholders and that
there is a reasonable likelihood of the Plans providing a benefit to the
Class. The Fund's board has determined that the
26
<PAGE>
Fund's distribution arrangements are likely to benefit the Fund and its
shareholders by enhancing the Fund's ability to efficiently service the
accounts of its Institutional Service Class shareholders.
Amending the Plans
A majority of the Fund's governing board and a majority of its the Plan
Members must approve any material amendment to the Plans. Likewise, any
amendment materially increasing the maximum percentage payable under the Plans
must be approved by a majority of the outstanding voting securities of the
Class, as well as by a majority of the Plan Members.
Terminating the Plans
A majority of the Plan Members or a majority of the outstanding voting
securities of the Class may terminate the Plans at any time without penalty.
In addition, the Plans will terminate automatically upon their assignment.
Miscellaneous
So long as the Plans are in effect, the non-interested board members will
select and nominate the Plan Members of the Fund.
The Fund and UAMFDI intend to comply with the Conduct Rules of the National
Association of Securities Dealers relating to investment company sales
charges with these rules.
Pursuant to the Plans, the board 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.
Additional Non-12b-1 Shareholder Servicing Arrangements
In addition to payments by the Fund under the Plans, UAM and any of its
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 services
arrangements, when in effect, are made generally available to all qualified
service providers. The adviser may also compensate its affiliated companies
for referring investors to the portfolio.
Brokerage Allocation and Other Practices
Selection of Brokers
- --------------------------------------------------------------------------------
The Advisory Agreement authorizes the adviser to select the brokers or dealers
that will execute the purchases and sales of investment securities for the
portfolio. The Advisory Agreement also directs the adviser to use its best
efforts to obtain the best execution with respect to all transactions for the
portfolio. The adviser may select brokers based on research, statistical and
pricing services they provide to the adviser. Information and research
provided by a broker will be in addition to, and not instead of, the services
the adviser is required to perform under the Advisory Agreement. In so doing,
the 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 practice of the Fund to allocate brokerage or effect principal
transactions with dealers based on sales of shares that a broker-dealer firm
makes. However, the Fund may place trades with qualified broker-dealers who
recommend the Fund or who act as agents in the purchase of Fund shares for
their clients.
SIMULTANEOUS TRANSACTIONS
- --------------------------------------------------------------------------------
The adviser makes investment decisions for the portfolio independently of
decisions made for its other clients. When a security is suitable for the
investment objective of more than one client, it may be prudent for the
27
<PAGE>
adviser to engage in a simultaneous transaction, that is, buy or sell the same
security for more than one client. The adviser strives to allocate such
transactions among its clients, including the portfolio, in a fair and
reasonable manner. Although there is no specified formula for allocating such
transactions, the Fund's governing board periodically reviews the various
allocation methods used by the adviser.
BROKERAGE COMMISSIONS
- --------------------------------------------------------------------------------
Equity Securities
Generally, equity securities are bought and sold through brokerage
transactions for which commissions are payable. Purchases from underwriters
will include the underwriting commission or concession, and purchases from
dealers serving as market makers will include a dealer's mark-up or reflect a
dealer's mark-down.
Debt Securities
Debt securities are usually bought and sold directly from the issuer or an
underwriter or market maker for the securities. Generally, each Fund will not
pay brokerage commissions for such purchases. When a debt security is bought
from an underwriter, the purchase price will usually include an underwriting
commission or concession. The purchase price for securities bought from
dealers serving as market makers will similarly include the dealer's mark up
or reflect a dealer's mark down. When the portfolio executes transactions in
the over-the-counter market, it will deal with primary market makers unless
prices that are more favorable are otherwise obtainable.
Capital Stock and Other Securities
DESCRIPTION OF SHARES AND VOTING RIGHTS
- --------------------------------------------------------------------------------
The Fund's Declaration of Trust, as amended, permit its governing board to
issue an unlimited number of shares without par value. The governing board has
the power to create and designate one or more series (portfolio) or classes of
shares of common stock and to classify or reclassify any unissued shares at
any time and without shareholder approval. When issued and paid for, the
shares of each series and class of the Fund are fully paid and nonassessable,
and have no pre-emptive rights or preference as to conversion, exchange,
dividends, retirement or other features. The shares of each series and class
have non-cumulative voting rights, which means that the holders of more than
50% of the shares voting for the election of members of the governing board
can elect 100% of the members if they choose to do so. On each matter
submitted to a vote of the shareholders, a shareholder is entitled to one vote
for each full share held (and a fractional vote for each fractional share
held), then standing in his name on the books of the Fund. Shares of all
classes will vote together as a single class except when otherwise required by
law or as determined by the members of the Fund's governing board.
If the Fund is liquidated, the shareholders of the portfolio or any class
thereof are entitled to receive the net assets belonging to the portfolio, or
in the case of a class, belonging to the portfolio and allocable to that
class. The Fund will distribute is net assets to its shareholders in
proportion to the number of shares of the portfolio or class thereof held by
them and recorded on the books of the Fund. The liquidation of the portfolio
or any class thereof may be authorized at any time by vote of a majority of
the members of the governing board.
The governing board has authorized two classes of shares, Institutional and
Institutional Service. Both Institutional Class and Institutional Service
Class Shares represent interests in the same assets of the portfolio and,
except as discussed below, are identical in all respects. Unlike
Institutional Class Shares, Institutional 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. The two classes also have different exchange
privileges. The net income attributable to Institutional Service Class
Shares and the dividends payable on Institutional Service Class Shares will be
reduced by the amount of the shareholder servicing and distribution fees;
accordingly, the net asset value of the Institutional Service Class Shares
will be reduced by such amount to the extent the portfolio has undistributed
net income.
28
<PAGE>
The Fund will not hold annual meetings except when required to by the 1940 Act
or other applicable law. The Fund has undertaken that the governing board 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.
Dividends And Capital Gains Distributions
The Fund tries to distribute substantially all of the net investment income of
the portfolio and net realized capital gains so as to avoid income taxes on
its dividends and distributions and the imposition of the federal excise tax
on undistributed income and capital gains. However, the Fund cannot predict
the time or amount of any such dividends or distributions.
Distributions by the portfolio reduce its NAV. A distribution that reduces the
NAV of the portfolio below its cost basis is taxable as described in the
prospectus of the portfolio, although from an investment standpoint, it is a
return of capital. If you buy shares of the portfolio on or before the "record
date" -- the date that establishes which shareholders will receive an upcoming
distribution -- for a distribution, you will receive some of the money you
invested as a taxable distribution.
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. The portfolio will
distribute its net capital gains to its investors, but will not offset (for
federal income tax purposes) such gains against any net capital losses of
another portfolio.
Purchase Redemption and Pricing of Shares
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------
Calculating NAV
The purchase and redemption price of the shares of a portfolio is equal to the
NAV of the portfolio. The fund calculates the NAV of a portfolio by
subtracting its liabilities from its total assets and dividing the result by
the total number of shares outstanding. For purposes of this calculation
. Liabilities include accrued expenses and dividends payable.
. Total assets include the market value of the securities held by the
portfolio, plus cash and other assets plus income accrued but not yet
received.
Each portfolio normally calculates its NAV as of the close of trading on the
NYSE every day the NYSE is open for trading. The NYSE usually closes at 4:00
p.m. The NYSE is closed on the following days: New Year's Day, Dr. Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.
How the Fund Values it Assets
Equity Securities
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
29
<PAGE>
for which market quotations are readily available are valued neither exceeding
the asked prices nor less than the 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.
Debt Securities
Debt securities are valued according to the broadest and most representative
market, which will ordinarily be the over-the-counter market. Debt securities
may be valued based on 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 governing board determines that amortized cost reflects fair
value.
Other Assets
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 governing board.
PURCHASE OF SHARES
- --------------------------------------------------------------------------------
Who May Invest in the Portfolio
As described in the portfolio's prospectus, with certain exceptions, the
portfolio offers its shares to investors who wish to invest in the portfolio
through certain individual retirement accounts. From time to time, the
portfolio may allow certain shareholders, including affiliates of its
investment adviser, to buy shares of the portfolio through an account that
does not qualify as an individual retirement account described above. The
portfolio may also offer its shares through fund supermarkets, fund networks
and various other similar third-party service providers that maintain
shareholder accounts on behalf of the portfolio. The portfolio recognizes
that such service providers cannot guarantee that shares of the portfolio will
be sold only through individual retirement accounts.
In-Kind Purchases
At its discretion, the fund may permit shareholders to purchase shares of the
portfolio with securities, instead of cash. If the fund allows a shareholder
to make an in-kind purchase, it will value such securities according to the
policies described under "VALUATION OF SHARES" at the next determination of
net asset value after acceptance. The fund will issue shares of the portfolio
at the NAV of the portfolio determined as of the same time.
The fund will only acquire securities through an in-kind purchase for
investment and not for immediate resale. The fund will only accept in-kind
purchases if the transaction meets the following conditions:
. The securities are eligible investments for the portfolio.
. The securities have readily available market quotations.
. The investor represents and agrees that the securities are liquid and that
there are no restrictions on their resale imposed by the 1933 Act or
otherwise.
. All dividends, interest, subscription, or other rights pertaining to such
securities become the property of the portfolio and are delivered to the
fund by the investor upon receipt from the issuer.
. Immediately after the transaction is complete, the value of all securities
of the same issuer held by the portfolio cannot exceed 5% of the net assets
of the portfolio. This condition does not apply to U.S. government
securities.
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.
30
<PAGE>
Other Purchase Information
Service Agents may enter confirmed purchase orders on behalf of their
customers. To do so, the Service Agent must receive your investment order
before the close of trading on the NYSE and must transmit it to the fund
before the close of its business day to receive that day's share price. The
fund must receive proper payment for the order by the time the portfolio
calculates its NAV 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.
Shareholders can buy full and fractional (calculated to three decimal places)
shares of a portfolio. The fund will not issue certificates for fractional
shares and will only issue certificates for whole shares upon the written
request of a shareholder.
The Fund may 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.
REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
When you redeem, your shares may be worth more or less than the price you paid
for them depending on the market value of the investments held by the
portfolio.
By Mail
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 the shareholder wishes to redeem signed by all registered
owners of the shares in the exact names in which they are registered.
. Any required signature guarantees (see "Signature Guarantees").
. Estates, trusts, guardianships, custodianships, corporations, pension and
profit sharing plans and other organizations must submit any other necessary
legal documents.
By Telephone
Shareholders may not do the following by telephone:
. Change the name of the commercial bank or the account designated to receive
redemption proceeds. To change an account in the manner, you must submit a
written request that each shareholder signed, with each signature
guaranteed).
. Redeem shares represented by a certificate.
The fund and its UAMSSC 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 and before 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 UAMSSC may be liable for any losses due to
unauthorized or fraudulent telephone instructions if the fund or the UAMSSC
does not employ the procedures described above. Neither the fund nor the
UAMSSC 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
The fund requires signature guarantees for certain types of documents,
including.
. Written requests for redemption
31
<PAGE>
. Separate instruments for assignment ("stock power"), which should specify
the total number of shares to be redeemed
. On all stock certificates tendered for redemption.
The purpose of signature guarantees is to verify the identity of the person
who has authorized a redemption from your account and to protect your account,
the fund and its sub-transfer agent from fraud.
The fund will accept signature guarantees from any eligible guarantor
institution, as defined by the Securities Exchange Act of 1934 that
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. You can get a complete definition of eligible guarantor
institutions by calling 1-877-826-5465. 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 pay for all shares redeemed under proper procedures
within seven days after it received your request. However, the fund will pay
your redemption proceeds earlier as applicable law so requires.
The Fund may suspend redemption privileges or postpone the date of payment:
. When the NYSE and custodian bank are closed
. Trading on the NYSE is restricted.
. During any period when an emergency exists as defined by the rules of the
Commission 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.
. For such other periods as the Commission may permit.
TRANSFER OF SHARES
- --------------------------------------------------------------------------------
Shareholders may transfer shares of the portfolio to another person by making
a written request to the Fund. Your request should clearly identify the
account and number of shares you wish to transfer. All registered owners
should sign the request 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
"Signature Guarantees." As in the case of redemptions, the written request
must be received in good order before any transfer can be made.
VALUATION OF SHARES
- --------------------------------------------------------------------------------
The Fund does not price its shares on those days when the New York Stock
Exchange is closed, which are currently: Presidents' Day; Good Friday;
Memorial Day; Independence Day; Labor Day; Thanksgiving Day; Christmas Day;
New Year's Day and Dr. Martin Luther King, Jr. Day.
Debt Securities
Debt securities are valued according to the broadest and most representative
market, which will ordinarily be the over-the-counter market. Debt securities
may be valued based on 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 UAM Funds' boards determines that amortized cost reflects fair
value.
32
<PAGE>
Wrapper Agreements
The value of Wrapper Agreements determined in good faith at fair value using
methods determined by the UAM Funds' boards. The fair value of a wrapper
agreement generally will be equal to the difference between the book value and
the market value of the applicable covered assets after consideration is given
to the credit rating of the wrap provider and its ability to pay amounts due
under the wrapper agreement. If the board determines that a wrap provider is
unable to make such payments, the board may assign a value to the wrapper
agreement that is less than the difference between the book value and the
market value of the covered assets, which might adversely affect the
portfolio's ability to maintain a stable NAV.
Other Assets
The value of other assets and securities for which no quotations are readily
available (including illiquid and restricted securities) is determined in good
faith at fair value using methods determined by the UAM Funds' boards.
Performance Calculations
The portfolio measures its performance by calculating its yield and total
return. Yield and total return figures are based on historical earnings and
are not intended to indicate future performance. The SEC has adopted rules
that require mutual funds to present performance quotations in a standard
manner. Mutual funds can present non-standard performance quotations only if
they also provide certain standardized performance information that they have
computed according to the requirements of the SEC. The fund calculates its
current yield and average annual compounded total return information using the
method of computing performance mandated by the SEC.
The fund calculates separately the performance for the Institutional Class and
Service Class Shares of each portfolio. Dividends paid by a portfolio with
respect to Institutional Class and Service Class Shares 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.
TOTAL RETURN
- --------------------------------------------------------------------------------
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. 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 fund calculates the average annual total return of a portfolio by finding
the average annual compounded rates of return over one, five and ten-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 one, five and ten-year period and the
deduction of all applicable Fund expenses on an annual basis. Since
Institutional Service Class Shares bear additional service and distribution
expenses, their average annual total return will generally be lower than that
of the Institutional Class Shares.
The fund calculates these figures 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
33
<PAGE>
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).
YIELD
- --------------------------------------------------------------------------------
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
income actually paid to shareholders.
The current yield 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 Institutional Service Class shares bear additional service
and distribution expenses, their yield will generally be lower than that of
the Institutional Class Shares.
Yield is obtained using the following formula:
Yield = 2[((a-b)/(cd)+1)/6/-1]
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.
COMPARISONS
- --------------------------------------------------------------------------------
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 SAI. This information may also be included in sales
literature and advertising.
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 that
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.
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, 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,
34
<PAGE>
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.
The portfolio will distribute to shareholders annually any net capital gains
that have been recognized for federal income tax purposes. Shareholders will
be advised on the nature of the payments.
If for any taxable year a portfolio does not qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code, all of
the portfolio's taxable income would be subject to tax at regular corporate
rates without any deduction for distributions to shareholders. In this event,
a portfolio's distributions to shareholders would be taxable as ordinary
income to the extent of the current and accumulated earnings and profits of
the particular portfolio, and would be eligible for the dividends received
deduction in the case of corporate shareholders.
Dividends and interest received by each portfolio may give rise to withholding
and other taxes imposed by foreign countries. These taxes reduce each
portfolio's dividends but are included in the taxable income reported on your
tax statement if each 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.
35
<PAGE>
Appendix A: Description of Securities and Ratings
A-1
<PAGE>
Moody's Investors Service, Inc.
PREFERRED STOCK RATINGS
- --------------------------------------------------------------------------------
aaa An issue which is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and
the least risk of dividend impairment within the universe of
preferred stock.
aa An issue which is rated "aa" is considered a high-grade preferred
stock. This rating indicates that there is a reasonable assurance
the earnings and asset protection will remain relatively well
maintained in the foreseeable future.
a An issue which is rated "a" is considered to be an upper-medium
grade preferred stock. While risks are judged to be somewhat
greater than in the "aaa" and "aa" classification, earnings and
asset protection are, nevertheless, expected to be maintained at
adequate levels.
baa An issue which is rated "baa" is considered to be a medium-grade
preferred stock, neither highly protected nor poorly secured.
Earnings and asset protection appear adequate at present but may
be questionable over any great length of time.
ba An issue which is rated "ba" is considered to have speculative
elements and its future cannot be considered well assured.
Earnings and asset protection may be very moderate and not well
safeguarded during adverse periods. Uncertainty of position
characterizes preferred stocks in this class.
b An issue which is rated "b" generally lacks the characteristics of
a desirable investment. Assurance of dividend payments and
maintenance of other terms of the issue over any long periods of
time may be small.
caa An issue which is rated "caa" is likely to be in arrears on
dividend payments. This rating designation does not purport to
indicate the future status of payments.
ca An issue which is rated "ca" is speculative in a high degree and
is likely to be in arrears on dividends with little likelihood of
eventual payments.
c This is the lowest rated class of preferred or preference stock.
Issues so rated can thus be regarded as having extremely poor
prospects of ever attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each rating
classification: the modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-
range ranking and the modifier 3 indicates that the issue ranks in the lower
end of its generic rating category.
DEBT RATINGS - TAXABLE DEBT & DEPOSITS GLOBALLY
- --------------------------------------------------------------------------------
Aaa Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are
generally referred to as "gilt-edged." 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. 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 the 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.
A-1
<PAGE>
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.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; modifier 2
indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of that generic rating category.
SHORT-TERM PRIME RATING SYSTEM - TAXABLE DEBT & DEPOSITS GLOBALLY
- --------------------------------------------------------------------------------
Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations. These obligations have an original
maturity not exceeding one year, unless explicitly noted.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
Prime-1 Issuers rated Prime-1 (or supporting institution) have a
superior ability for repayment of senior short-term debt
obligations. Prime-1 repayment ability will often be evidenced
by many of the following characteristics:
. High rates of return on funds employed.
. Conservative capitalization structure with moderate
reliance on debt and ample asset protection.
. Broad leading market positions in well-established
industries.
. margins in earnings coverage of fixed financial charges
and high internal cash generation.
. Well-established access to a range of financial markets
and assured sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt
obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject
to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained.
Prime 3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term
obligation. The effect of industry characteristics and market
compositions may be more pronounced. Variability in earnings
and profitability may result in changes in the level of debt
protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is
maintained. Not Prime Issuers rated
Not Prime Issuers rated Nor Prime do not fall within any of the Prime
rating categories.
A-2
<PAGE>
Standard & Poor's Ratings Services
PREFERRED STOCK RATINGS
- --------------------------------------------------------------------------------
AAA This is the highest rating that may be assigned by Standard &
Poor's to a preferred stock issue and indicates an extremely
strong capacity to pay the preferred stock obligations.
AA A preferred stock issue rated AA also qualifies as a high-quality,
fixed-income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for
issues rated AAA.
A An issue rated A is backed by a sound capacity to pay the
preferred stock obligations, although it is somewhat more
susceptible to the adverse effects of changes in circumstances and
economic conditions.
BBB An issue rated BBB is regarded as backed by an adequate capacity
to pay the preferred stock obligations. Whereas it normally
exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to make payments for a preferred stock in this
category than for issues in the A category.
BB, B, Preferred stock rated BB, B, and CCC are regarded, on
CCC balance, as predominantly speculative with respect to the issuer's
capacity to pay preferred stock obligations. BB indicates the
lowest degree of speculation and CCC the highest. While such
issues will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
CC The rating CC is reserved for a preferred stock issue that is in
arrears on dividends or sinking fund payments, but that is
currently paying.
C A preferred stock rated C is a nonpaying issue.
D A preferred stock rated D is a nonpaying issue with the issuer in
default on debt instruments.
N.R. This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that
Standard & Poor's does not rate a particular type of obligation as
a matter of policy.
Plus To provide more detailed indications of preferred stock quality,
(+) or ratings from AA to CCC may be modified by the addition of a plus
minus or minus sign to show relative standing within the major rating
categories.
LONG-TERM ISSUE CREDIT RATINGS
- --------------------------------------------------------------------------------
Issue credit ratings are based, in varying degrees, on the following
considerations:
Likelihood of payment-capacity and willingness of the obligor to meet its
financial commitment on an obligation in accordance with the terms of the
obligation;
Nature of and provisions of the obligation;
Protection afforded by, and relative position of, the obligation in the event
of bankruptcy, reorganization, or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA An obligation rated AAA have the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is extremely strong.
AA An obligation rated AA differs from the highest-rated obligations
only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher- rated categories. However, the obligor's
capacity to meet its financial commitment on the obligation is
still strong.
BBB An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligator to
meet its financial commitment on the obligation.
A-3
<PAGE>
Obligations rated BB, B, CCC , CC and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and
C the highest. While such obligations will likely have some quality and
protective characteristics, these may be outweighed by large uncertainties or
major risk exposures to adverse conditions.
BB An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties
or exposures to adverse business, financial, or economic
conditions which could lead to the obligor's inadequate capacity
to meet its financial commitment on the obligation.
B An obligation rated B is more vulnerable to nonpayment than
obligations rated BB, but the obligor currently has the capacity
to meet its financial commitment on the obligation. Adverse
business, financial, or economic conditions will likely impair the
obligor's capacity or willingness to meet its financial commitment
on the obligation.
CCC An obligation rated CCC is currently vulnerable to non-payment,
and is dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on the
obligation. In the event of adverse business, financial, or
economic conditions, the obligor is not likely to have the
capacity to meet its financial commitment on the obligations.
CC An obligation rated CC is currently highly vulnerable to
nonpayment.
C The C rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
D An obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date
due even if the applicable grace period has not expired, unless
Standard & Poor's believes that such payments will be made during
such grace period. The D rating also will be used upon the filing
of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
Plus (+) or minus (-) The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
r This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligation linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk-such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
SHORT-TERM ISSUE CREDIT RATINGS
- --------------------------------------------------------------------------------
Short-term ratings are generally assigned to those obligations considered
short-term in the relevant market. In the U.S., for example, that means
obligations with an original maturity of no more than 365 days - including
commercial paper. Short-term ratings are also used to indicate the
creditworthiness of an obligor with respect to put features on long-term
obligations. The result is a dual rating in which the short-term rating
addresses the put feature, in addition to the usual long-term rating. Medium-
term notes are assigned long-term ratings.
A-1 A short-term obligation rated A-1 is rated in the highest category
by Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is strong. Within this category,
certain obligations are designated with a plus sign (+). This
indicates that the obligor's capacity to meet its financial
commitment on these obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions than obligation in higher rating categories. However,
the obligor's capacity to meet its financial commitment on the
obligation is satisfactory.
A-3 A short-term obligation rated A-3 exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of
the obligor to meet its financial commitment on the obligation.
A-4
<PAGE>
B A short-term obligation rated B is regarded as having
significant speculative characteristics. The obligor currently
has the capacity to meet its financial commitment on the
obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet
its financial commitment on the obligation.
C A short-term obligation rated C is currently vulnerable to
nonpayment and is dependent upon favorable business,
financial, and economic conditions for the obligor to meet its
financial commitment on the obligation.
D A short-term obligation rated D is in payment default. The D
rating category is used when payments on an obligation are not
made on the date due even if the applicable grace period has
not expired, unless Standard & Poors' believes that such
payments will be made during such grace period. The D rating
also will be used upon the filing of a bankruptcy petition or
the taking of a similar action if payments on an obligation
are jeopardized.
Duff & Phelps Credit Rating Co.
LONG-TERM DEBT AND PREFERRED STOCK
- --------------------------------------------------------------------------------
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
AA+/AA High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of
economic conditions.
A+/A/A- Protection factors are average but adequate. However, risk
factors are more variable in periods of greater economic
stress.
BBB+/BBB Below-average protection factors but still considered
BBB- sufficient for prudent investment. Considerable variability in
risk during economic cycles.
BB+/BB Below investment grade but deemed likely to meet obligations
/BB- when due. Present or prospective financial protection factors
fluctuate according to industry conditions. Overall quality
may move up or down frequently within this category.
B+/B/B- Below investment grade and possessing risk that obligation
will not be net when due. Financial protection factors will
fluctuate widely according to economic cycles, industry
conditions and/or company fortunes. Potential exists for
frequent changes in the rating within this category or into a
higher or lower rating grade.
CCC Well below investment-grade securities. Considerable
uncertainty exists as to timely payment of principal, interest
or preferred dividends. Protection factors are narrow and risk
can be substantial with unfavorable economic/industry
conditions, and/or with unfavorable company developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments. Issuer failed to meet
scheduled principal and/or interest payments.
DP Preferred stock with dividend arrearages.
SHORT-TERM DEBT
- --------------------------------------------------------------------------------
High Grade
D-1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors.
Risk factors are minor.
A-5
<PAGE>
D-1- High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk
factors are very small.
Good Grade
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets
is good. Risk factors are small.
Satisfactory Grade
D-3 Satisfactory liquidity and other protection factors qualify
issues as to investment grade. Risk factors are larger and
subject to more variation. Nevertheless, timely payment is
expected.
Non-Investment Grade
D-4 Speculative investment characteristics. Liquidity is not
sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high
degree of variation.
Default
D-5 Issuer failed to meet scheduled principal and/or interest
payments.
Fitch IBCA Ratings
INTERNATIONAL LONG-TERM CREDIT RATINGS
- --------------------------------------------------------------------------------
Investment Grade
AAA Highest credit quality. `AAA' ratings denote the lowest
expectation of credit risk. They are assigned only in case of
exceptionally strong capacity for timely payment for financial
commitments. This capacity is highly unlikely to be adversely
affected by foreseeable events.
AA Very high credit quality. `AA' ratings denote a very low
expectation of credit risk. They indicate very strong capacity
for timely payment of financial commitments. This capacity is
not significantly vulnerable to foreseeable events.
A High credit quality. `A' ratings denote a low expectation of
credit risk. The capacity for timely payment of financial
commitments is considered strong. This capacity may,
nevertheless, be more vulnerable to changes in circumstances or
in economic conditions than is the case for higher ratings.
B Good credit quality. `BBB' ratings indicate that there is
currently a low expectation of credit risk. The capacity for
timely payment of financial commitments is considered adequate,
but adverse changes in circumstances and in economic conditions
are more likely to impair this capacity. This is the lowest
investment-grade category.
Speculative Grade
BB Speculative. `BB' ratings indicate that there is a possibility
of credit risk developing, particularly as the result of
adverse economic change over time; however, business or
financial alternatives may be available to allow financial
commitments to be met. Securities rated in this category are
not investment grade.
B Highly speculative. `B' ratings indicate that significant
credit risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however,
capacity for continued payment is contingent upon a sustained,
favorable business and economic environment.
CCC,CC,C High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained,
favorable business or economic developments. A `CC' rating
indicates that default of some kind appears probable. `C'
ratings signal imminent default.
A-6
<PAGE>
DDD,DD,D Default. Securities are not meeting current obligations and are
extremely speculative. `DDD' designates the highest potential
for recovery of amounts outstanding on any securities involved.
For U.S. corporates, for example, `DD' indicates expected
recovery of 50% - 90% of such outstandings, and `D' the lowest
recovery potential, i.e. below 50%.
International Short-Term Credit Ratings
F1 Highest credit quality. Indicates the strongest capacity for
timely payment of financial commitments; may have an added "+" to
denote any exceptionally strong credit feature.
F2 Good credit quality. A satisfactory capacity for timely payment of
financial commitments, but the margin of safety is not as great as
in the case of the higher ratings.
F3 Fair credit quality. The capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could
result in a reduction to non-investment grade.
B Speculative. Minimal capacity for timely payment of financial
commitments, plus vulnerability to near-term adverse changes in
financial and economic conditions.
C High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon a sustained,
favorable business and economic environment.
D Default. Denotes actual or imminent payment default.
Notes
"+" or "-" may be appended to a rating to denote relative status within major
rating categories. Such suffixes are not added to the `AAA' long-term rating
category, to categories below `CCC', or to short-term ratings other than `F1'.
`NR' indicates that Fitch IBCA does not rate the issuer or issue in question.
`Withdrawn': A rating is withdrawn when Fitch IBCA deems the amount of
information available to be inadequate for rating purposes, or when an
obligation matures, is called, or refinanced.
RatingAlert: Ratings are placed on RatingAlert to notify investors that there
is a reasonable probability of a rating change and the likely direction of
such change. These are designated as "Positive", indicating a potential
upgrade, "Negative", for a potential downgrade, or "Evolving", if ratings may
be raised, lowered or maintained. RatingAlert is typically resolved over a
relatively short period.
A-7
<PAGE>
Appendix B - Comparisons
B-1
<PAGE>
CDA Mutual Fund Report, published by CDA Investment Technologies, Inc. --
analyzes price, current yield, risk, total return and average rate of return
(average annual compounded growth rate) over specified time periods for the
mutual fund industry.
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.
Donoghue's Money Fund Average -- is an average of all major money market fund
yields, published weekly for 7 and 30-day yields.
Dow Jones Industrial Average - a price-weighted average of thirty blue-chip
stocks that are generally the leaders in their industry and are listed on the
New York Stock Exchange. It has been a widely followed indicator of the stock
market since October 1, 1928.
Dow Jones Industrial Average -- an unmanaged price weighted average of 30
blue-chip stocks.
Financial publications: Business Week, Changing Times, Financial World,
Forbes, Fortune, Money, Barron's, Consumer's Digest, Financial Times, Global
Investor, Investor's Daily, Lipper Analytical Services, Inc., Morningstar,
Inc., New York Times, Personal Investor, Wall Street Journal and Weisenberger
Investment Companies Service -- publications that rate fund performance over
specified time periods.
Historical data supplied by the research departments of First Boston
Corporation, J.P. Morgan & Co, Inc., Salomon Smith Barney, Merrill Lynch &
Co., Inc., Lehman Brothers, Inc. and Bloomberg L.P.
IBC's Money Fund Average/All Taxable - an average of all major money market
fund yields, published weekly for 7- and 30-day yields.
IFC Investable Index - an unmanaged index maintained by the International
Finance Corporation. This index consists of 890 companies in 25 emerging
equity markets, and is designed to measure more precisely the returns
portfolio managers might receive from investment in emerging markets equity
securities by focusing on companies and markets that are legally and
practically accessible to foreign investors.
Lehman Aggregate Bond Index - an unmanaged fixed income market value-weighted
index that combines the Lehman Government/Corporate Index and the Lehman
Mortgage-Backed Securities Index, and includes treasury issues, agency issues,
corporate bond issues and mortgage backed securities. It includes fixed rate
issuers of investment grade (BBB) or higher, with maturities of at least one
year and outstanding par values of at least $200 million for U.S. government
issues and $25 million for others.
Lehman Corporate Bond Index - an unmanaged indices of all publicly issues,
fixed-rate, nonconvertible investment grade domestic corporate debt. Also
included are yankee bonds, which are dollar-denominated SEC registered public,
noncovertible debt issued or guaranteed by foreign sovereign governments,
municipalities, or governmental agencies, or international agencies.
Lehman Government Bond Index -an unmanaged treasury bond index including all
public obligations of the U.S. Treasury, excluding flower bonds and foreign-
targeted issues, and the Agency Bond Index (all publicly issued debt of U.S.
government agencies and quasi-federal corporation, and corporate debt
guaranteed by the U.S. government). In addition to the aggregate index, sub-
indices cover intermediate and long term issues.
Lehman Government/Corporate Index -- an unmanaged fixed income market value-
weighted index that combines the Government and Corporate Bond Indices,
including U.S. government treasury securities, corporate and yankee bonds.
All issues are investment grade (BBB) or higher, with maturities of at least
one year and outstanding par value of at least $100 million of r 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.
Lehman High Yield Bond Index - an unmanaged index of fixed rate, non-
investment grade debt. All bonds included in the index are dollar
denominated, noncovertible, have at least one year remaining to maturity and
an outstanding par value of at least $100 million.
Lehman Intermediate Government/Corporate Index - an unmanaged fixed income
market value-weighted index that combines the Lehman Government Bond Index
(intermediate-term sub-index) and Lehman Corporate Bond Index.
B-2
<PAGE>
Lipper 1-5 Year Short Investment Grade Debt Funds Average -- is an average of
100 funds that invest at least 65% of assets in investment grade debt issues
(BBB or higher) with dollar-weighted average maturities of 5 years or less.
Lipper Balanced Fund Index - an unmanaged index of open-end equity funds whose
primary objective is to conserve principal by maintaining at all time a
balanced portfolio of both stocks and bonds. Typically, the stock/bond ratio
ranges around 60%/40%.
Lipper Equity Income Fund Index - an unmanaged index of equity funds which
seek relatively high current income and growth of income through investing 60%
or more of the portfolio in equities.
Lipper Equity Mid Cap Fund Index - an unmanaged index of funds which by
prospectus or portfolio practice invest primarily in companies with market
capitalizations less than $5 billion at the time of purchase.
Lipper Equity Small Cap Fund Index - an unmanaged index of funds by prospectus
or portfolio practice invest primarily in companies with market
capitalizations less than $1 billion at the time of purchase.
Lipper Growth Fund Index - an unmanaged index composed of the 30 largest funds
by asset size in this investment objective.
Lipper Mutual Fund Performance Analysis and Lipper -Fixed Income Fund
Performance Analysis -- measures total return and average current yield for
the mutual fund industry. Rank individual mutual fund performance over
specified time periods, assuming reinvestments of all distributions, exclusive
of any applicable sales charges.
Merrill Lynch 1-4.99 Year Corporate/Government Bond Index -- is an unmanaged
index composed of U.S. treasuries, agencies and corporates with maturities
from 1 to 4.99 years. Corporates are investment grade only (BBB or higher).
Morgan Stanley Capital International EAFE Index -- 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.
Mutual Fund Source Book, published by Morningstar, Inc. - analyzes price,
yield, risk and total return for equity funds.
NASDAQ Composite Index -- is a market capitalization, price only, unmanaged
index that tracks the performance of domestic common stocks traded on the
regular NASDAQ market as well as national market System traded foreign common
stocks and ADRs..
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.
Russell 1000 Index - an unmanaged index composed of the 1000 largest stocks in
the Russell 3000 Index.
Russell 2000 Growth Index - contains those Russell 2000 securities with higher
price-to-book ratios and higher forecasted growth values.
Russell 2000 Index -- an unmanaged index composed of the 2,000 smallest stocks
in the Russell 3000 Index.
Russell 2000 Value Index - contains those Russell 2000 securities with a less-
than-average growth orientation. Securities in this index tend to exhibit
lower price-to-book and price-earnings ratios, higher dividend yields and
lower forecasted growth values than the growth universe.
Russell 2500 Growth Index - contains those Russell 2500 securities with a
greater-than-average growth orientation. Securities in this index tend to
exhibit higher price-to-book and price-earnings ratios, lower dividend yields
and higher forecasted growth values than the value universe.
Russell 2500 Index - an unmanaged index composed of the 2,5000 smallest stocks
in the Russell 3000.
Russell 2500 Value Index - contains those Russell 2500 securities with a less-
than-average growth orientation. Securities in this index tend to exhibit
lower price-to-book and price-earnings ratios, higher dividend yields and
lower forecasted growth values then the Growth universe.
B-3
<PAGE>
Russell 3000 Index - composed of the 3,000 largest U.S. publically traded
companies based on total market capitalization, which represents approximately
98% of the investable U.S. equity market.
Russell Mid-Cap Index -- is composed of the 800 smallest stocks in the Russell
1000 Index, with an average capitalization of $1.96 billion.
Salomon Smith Barney Global excluding U.S. Equity Index - an comprised of the
smallest stocks (less than $1 billion market capitalization) of the Extended
Market Index, of both developed and emerging markets.
Salomon Smith Barney One to Three Year Treasury Index - an unmanaged index
comprised of U.S. treasury notes and bonds with maturities one year or
greater, but less than three years.
Salomon Smith Barney Three-Month T-Bill Average -- the average for all
treasury bills for the previous three-month period.
Salomon Smith Barney Three-Month U.S. Treasury Bill Index - a return
equivalent yield average based on the last three 3-month Treasury bill issues.
Savings and Loan Historical Interest Rates -- as published by the U.S. Savings
and Loan League Fact Book.
Standard & Poors' 600 Small Cap Index - an unmanaged index comprised of 600
domestic stocks chosen for market size, liquidity, and industry group
representation. The index is comprised of stocks from the industrial,
utility, financial, and transportation sectors.
Standard & Poors' Midcap 400 Index -- consists of 400 domestic stocks chosen
for market size (medium market capitalization of approximately $700 million),
liquidity, and industry group representation. It is a market-value weighted
index with each stock affecting the index in proportion to its market value.
Standard & Poors' 500 Stock Index- an unmanaged index composed of 400
industrial stocks, 40 financial stocks, 40 utilities stocks and 20
transportation stocks.
Standard & Poors' Barra Value Index - is constructed by dividing the
securities in the S&P 500 Index according to price-to-book ratio. This index
contains the securities with the lower price-to-book ratios; the securities
with the higher price-to-book ratios are contained in the Standard & Poor's
Barra Growth Index.
Standard & Poors' Utilities Stock Price Index - a market capitalization
weighted index representing three utility groups and, with the three groups,
43 of the largest utility companies listed on the New York Stock Exchange,
including 23 electric power companies, 12 natural gas distributors and 8
telephone companies.
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.
U.S. Three-Month Treasury Bill Average - the average return for all treasury
bills for the previous three month period.
Value Line -- composed of over 1,600 stocks in the Value Line Investment
Survey.
Wilshire Real Estate Securities Index - a market capitalization weighted index
of publicly traded real estate securities, including real estate investment
trusts, real estate operating companies and partnerships. The index is used
by he institutional investment community as a broad measure of the performance
of public real estate equity for asset allocation and performance comparison.
Wilshire REIT Index - includes 112 real estate investment trusts (REITs) but
excludes seven real estate operating companies that are included in the
Wilshire Real Estate Securities Index..
Note: With respect to the comparative measures of performance for equity
securities described herein, comparisons of performance assume reinvestment of
dividends, except as otherwise stated.
B-4
<PAGE>
PART C
UAM FUNDS TRUST
OTHER INFORMATION
ITEM 23. 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 references are used: PEA 34 = Post-Effective Amendment No.
34 filed on July 28, 1999, PEA 30 = Post-Effective Amendment No. 30 filed on
April 23, 1999, PEA 29 = Post-Effective Amendment No. 29 filed on April 12,
1999, PEA 27 = Post-Effective Amendment No. 27 filed on February 5, 1999, PEA 24
= Post Effective Amendment No. 24 filed on July 10, 1998; PEA 19 = Post-
Effective Amendment No. 19 filed on February 3, 1998; PEA 17 = Post-Effective
Amendment No. 17 filed on December 15, 1997, PEA 16 = Post-Effective Amendment
No. 16 filed on July 10, 1997.
<TABLE>
<CAPTION>
Incorporated by
Reference to
Exhibit (Location):
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A.1. Agreement and Declaration of Trust PEA 24
- ---------------------------------------------------------------------------------------------------------------------------
2. Certificate of Trust PEA 24
- ---------------------------------------------------------------------------------------------------------------------------
3. Certificate of Amendment to Certificate of Trust PEA 24
- ---------------------------------------------------------------------------------------------------------------------------
B.1. By-Laws PEA 24
- ---------------------------------------------------------------------------------------------------------------------------
2. Amendment to By-Laws dated December 10, 1998 PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
C.1. Form of Specimen Share Certificate PEA 24
- ---------------------------------------------------------------------------------------------------------------------------
2. The rights of security holders are defined in the Registrant's Agreement and Declaration of PEA 24
Trust and By-Laws
- ---------------------------------------------------------------------------------------------------------------------------
D.1. Investment Advisory Agreement between Registrant and Barrow, Hanley, Mewhinney & Strauss PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
2. Investment Advisory Agreement between Registrant and Cambiar Investors, Inc. PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
3. Investment Advisory Agreement between Registrant and Chicago Asset Management Company PEA 27
(Intermediate Bond Portfolio)
- ---------------------------------------------------------------------------------------------------------------------------
4. Investment Advisory Agreement between Registrant and Chicago Asset Management Company PEA 27
(Value/Contrarian Portfolio)
- ---------------------------------------------------------------------------------------------------------------------------
5. Investment Advisory Agreement between Registrant and Dwight Asset Management Company PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
6. Investment Advisory Agreement between Registrant and Dwight Asset Management Company To be filed by
amendment
- ---------------------------------------------------------------------------------------------------------------------------
7. Investment Advisory Agreement between Registrant and First Pacific Advisors, Inc. PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
8. Investment Advisory Agreement between Registrant and Hanson Investment Management Company PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
9. Investment Advisory Agreement between Registrant and Heitman/PRA Securities Advisors, Inc. PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
10. Investment Advisory Agreement between Registrant and Jacobs Asset Management, L.P. PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
11. Investment Advisory Agreement between Registrant and Murray Johnstone International Limited PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
12. Investment Advisory Agreement between Registrant and Pacific Financial Research, Inc. PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
13. Investment Advisory Agreement between Registrant and Pell Rudman Trust Company, N.A. PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
14. Investment Advisory Agreement between Registrant and Tom Johnson Investment Management PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
E.1. Distribution Agreement between Registrant and UAM Fund Distributors PEA 24
- ---------------------------------------------------------------------------------------------------------------------------
2. Distribution Agreement between Registrant and UAM Fund Distributors, Inc. dated as of March PEA 29
31, 1999 (Advisor Class Shares)
- ---------------------------------------------------------------------------------------------------------------------------
2. Distribution Agreement between Registrant and ACG Capital Corporation (Advisor Class PEA 19
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Shares)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
4. Amendment to Distribution Agreement between Registrant and ACG Capital Corporation dated as PEA 29
of March 31, 1999
- ---------------------------------------------------------------------------------------------------------------------------
5. Selling Dealer Agreement PEA 24
- ---------------------------------------------------------------------------------------------------------------------------
F. Trustees' and Officers' Contracts and Programs Not applicable
- ---------------------------------------------------------------------------------------------------------------------------
G.1. Global Custody Agreement PEA 16
- ---------------------------------------------------------------------------------------------------------------------------
H.1. Fund Administration Agreement PEA 27
- ---------------------------------------------------------------------------------------------------------------------------
Fund Administration Agreement Fee Schedule PEA 30
- ---------------------------------------------------------------------------------------------------------------------------
2. Mutual Funds Service Agreement PEA 16
- ---------------------------------------------------------------------------------------------------------------------------
I. Opinions and Consents of Counsel PEA 34, to be
filed by
amendment
- ---------------------------------------------------------------------------------------------------------------------------
J. Consent of Independent Auditors Not applicable
- ---------------------------------------------------------------------------------------------------------------------------
K. Other Financial Statements Not applicable
- ---------------------------------------------------------------------------------------------------------------------------
L. Purchase Agreement PEA 24
- ---------------------------------------------------------------------------------------------------------------------------
M.1. Distribution Plan PEA 24
- ---------------------------------------------------------------------------------------------------------------------------
2. Shareholder Services Plan PEA 24
- ---------------------------------------------------------------------------------------------------------------------------
3. Service Agreement PEA 24
- ---------------------------------------------------------------------------------------------------------------------------
N. Financial Data Schedule Not applicable
- ---------------------------------------------------------------------------------------------------------------------------
O. Amended and Restated Rule 18f-3 Multiple Class Plan PEA 24
---------------------------------------------------------------------------------------------------------------------------
P. Powers of Attorney PEA 24, PEA 27
</TABLE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
Not applicable.
ITEM 25. 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 trustee, 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.
Provisions for indemnification of UAM Fund Services, Inc. are contained in
Section 6 of its Fund Administration Agreement with the Registrant.
Provisions for indemnification of the Registrant's investment advisers are
contained in Section 7 of their respective Investment Advisory Agreements with
the Registrant.
Provisions for indemnification of Registrant's principal underwriter, UAM Fund
Distributors, Inc., are contained in its Distribution Agreement with the
Registrant.
Provisions for indemnification of Registrant's custodian, The Chase Manhattan
Bank, are contained in Section 12 of its Fund Global Custody Agreement with the
Registrant.
<PAGE>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the caption "Investment Adviser" in the Prospectuses
constituting Part A of this Registration Statement and "Investment Adviser" in
Part B of this Registration Statement. Except for information with respect to
Pell Rudman Trust Company, N.A., the information required by this Item 26 with
respect to each director, officer, or partner of each other investment adviser
of the Registrant is incorporated by reference to the 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, under the file
numbers indicated:
<TABLE>
<CAPTION>
Investment Adviser File No.
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Barrow, Hanley, Mewhinney & Strauss, Inc. 801-31237
- -----------------------------------------------------------------------------------------------------------------------------
Cambiar Investors, Inc. 801-09538
- -----------------------------------------------------------------------------------------------------------------------------
Chicago Asset Management Company 801-20197
- -----------------------------------------------------------------------------------------------------------------------------
Dwight Asset Management Company 801-45304
- -----------------------------------------------------------------------------------------------------------------------------
First Pacific Advisors, Inc. 801-39512
- -----------------------------------------------------------------------------------------------------------------------------
Hanson Investment Management Company 801-14817
- -----------------------------------------------------------------------------------------------------------------------------
Heitman/PRA Securities Advisors, Inc. 801-48252
- -----------------------------------------------------------------------------------------------------------------------------
Jacobs Asset Management, L.P. 801-49790
- -----------------------------------------------------------------------------------------------------------------------------
Murray Johnstone International Ltd. 801-34926
- -----------------------------------------------------------------------------------------------------------------------------
Pacific Financial Research, Inc. 801-54352
- -----------------------------------------------------------------------------------------------------------------------------
Tom Johnson Investment Management, Inc. 801-42549
</TABLE>
<TABLE>
<CAPTION>
Positions and Offices with Pell Rudman Positions and Offices with Pell
Name and Principal Business Address Trust Company, N.A. Rudman & Co., Inc.
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Jeffrey S. Thomas Director Chief Financial Officer of
100 Federal Street Pell, Rudman & Co., Inc.
Boston, Massachusetts
- -------------------------------------------------------------------------------------------------------------------------------
Edward I. Rudman Director Chairman and President of Pell,
100 Federal Street Rudman & Co., Inc.
Boston, Massachusetts
- -------------------------------------------------------------------------------------------------------------------------------
James S. McDonald Director Executive Vice President of
100 Federal Street Pell, Rudman & Co., Inc.
Boston, Massachusetts
- -------------------------------------------------------------------------------------------------------------------------------
Susan W. Hunnewell Director Senior Vice President of Pell,
100 Federal Street Rudman & Co., Inc.
Boston, Massachusetts
</TABLE>
Barrow, Hanley, Mewhinney & Strauss, Inc., Cambiar Investors, Inc., Chicago
Asset Management Company, Dwight Asset Management Company, First Pacific
Advisors, Inc., Hanson Investment Management Company, Heitman/PRA Securities
Advisors, Inc., Jacobs Asset Management, L.P., Murray Johnstone International
Ltd., Pacific Financial Research, Inc., Pell Rudman Trust Company, N.A., and Tom
Johnson Investment Management, Inc., are affiliates of United Asset Management
Corporation ("UAM"), a Delaware corporation owning firms engaged primarily in
institutional investment management.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) UAM Fund Distributors, Inc. ("UAMFDI") acts as distributor of the
registrant's shares. ACG Capital Corporation ("ACG") also acts as
distributor of the Heitman Real Estate Portfolio Advisor Class Shares.
(b) The information required with respect to each director and officer of
UAMFDI is incorporated by reference to Schedule A of Form BD filed pursuant
to the Securities and Exchange Act of 1934 (SEC File No. 8-41126).
(c) The information required with respect to each Director and officer of ACG
is incorporated by reference to Schedule A of Form BD filed pursuant to the
Securities and Exchange Act of 1934 (SEC File No. 8-47813).
<PAGE>
(d) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the Rules promulgated thereunder, are
maintained as follows:
<TABLE>
<CAPTION>
Name and Address of Service Provider Relationship with Registrant
- ------------------------------------------------------------------------------------------------------------
<S> <C>
The Chase Manhattan Bank Custodian bank
4 Chase MetroTech Center
Brooklyn, New York, 11245
- ------------------------------------------------------------------------------------------------------------
Chase Global Funds Services Company Sub-administrator
73 Tremont Street
Boston, Massachusetts 02108
- ------------------------------------------------------------------------------------------------------------
UAM Fund Services, Inc. Administrator
211 Congress Street, 4th Floor
Boston, Massachusetts 02110
- ------------------------------------------------------------------------------------------------------------
UAM Shareholder Services Center, Inc. Sub-shareholder servicing agent
825 Duportail Road
Wayne, PA 19087
- ------------------------------------------------------------------------------------------------------------
DST Systems, Inc. Sub-transfer agent
210 West 10th Street
Kansas City, Missouri 64105
</TABLE>
The registrant's investment advisers will also maintain physical possession of
certain of 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.
ITEM 29. MANAGEMENT SERVICES
Not Applicable.
ITEM 30. UNDERTAKINGS
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment Company
Act, the regisrant has duly caused this registration statement to be signed on
its behalf by the undersigned, duly authorized, in the City of Boston, and State
of Massachusetts on the 15th day of August, 1999.
UAM FUNDS TRUST
/s/ Michael E. DeFao, Esq.
----------------------------
Michael E. DeFao, Esq.
Secretary
Pursuant to the requirements of the Securities Act, this registration statement
has been signed below by the following persons in the capacities indicated on
this 15th day of August, 1999.
*
- -------------------------------
Norton H. Reamer, Chairman and
President
*
- ------------------------------
John T. Bennett, Jr., Trustee
*
- ------------------------------
Nancy J. Dunn, Trustee
*
- ------------------------------
Philip D. English, Trustee
*
- ------------------------------
William A. Humenuk, Trustee
*
- ------------------------------
James P. Pappas, Trustee
*
- ------------------------------
Peter M. Whitman, Jr., Trustee
/s/Gary L. Fench
- ------------------------------
Gary L. French, Treasurer
/s/ Michael E. DeFao, Esq.
- ------------------------------
* Michael E. DeFao, Esq.
(Attorney-in-Fact)
