<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. 42 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 43 /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)
----------------------------------------
Gary L. French, Treasurer
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)
[X] on May 1, 2000 pursuant to Paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a) (1)
[ ] on (date) pursuant to paragraph (a) (1)
[ ] 75 days after filing pursuant to Paragraph (a) (2)
[ ] on (date) pursuant to Paragraph (a) (2) of Rule 485
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 Advisor Class and Institutional Class prospectuses for Heitman Real Estate
Portfolio are included in this Post-Effective Amendment No. 42.
The Institutional Class and the Institutional Service Class prospectuses for IRA
Capital Preservation Portfolio are contained in Post-Effective Amendment No. 41,
filed on February 28, 2000.
The prospectus for the PIC Twenty Portfolio is contained in Post-Effective
Amendment No. 39, which was filed on December 28, 1999.
The prospectuses for the following portfolios are contained in Post-Effective
Amendment No. 35 to the Registration Statement, dated 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 Post-Effective Amendment No. 34 to this
Registration Statement, filed on July 28, 1999.
<PAGE>
UAM Funds
Funds for the Informed Investorsm
Heitman Real Estate Portfolio
Advisor Class Prospectus May 1, 2000
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
<PAGE>
Table Of Contents
<TABLE>
<S> <C>
Fund Summary ................................................................ 1
</TABLE>
<TABLE>
<S> <C>
What is the Objective of the Fund?......................................... 1
What are the Principal Investment Strategies of the Fund?.................. 1
What are the Principal Risks of the Fund?.................................. 2
How Has the Fund Performed?................................................ 3
What are the Fees and Expenses of the Fund?................................ 4
</TABLE>
<TABLE>
<S> <C>
Investing with the UAM Funds ................................................ 5
</TABLE>
<TABLE>
<S> <C>
Buying Shares.............................................................. 5
Redeeming Shares........................................................... 6
Exchanging Shares.......................................................... 8
Transaction Policies....................................................... 8
Account Policies........................................................... 11
</TABLE>
<TABLE>
<S> <C>
Additional Information About the Fund ...................................... 13
</TABLE>
<TABLE>
<S> <C>
Other Investment Practices and Strategies.................................. 13
Investment Management...................................................... 13
Shareholder Servicing Arrangements......................................... 14
Additional Classes......................................................... 15
</TABLE>
<TABLE>
<S> <C>
Financial Highlights ....................................................... 16
</TABLE>
<PAGE>
Fund Summary
WHAT IS THE OBJECTIVE OF THE FUND?
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The fund seeks high total return consistent with reasonable risk by in-
vesting primarily in equity securities of public companies principally en-
gaged in the real estate business. The fund may not change its investment
objective without shareholder approval.
WHAT ARE THE PRINCIPAL INVESTMENT STRATEGIES OF THE FUND?
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Normally, the fund seeks to achieve its objective by investing at least
65% of its total assets in common stocks of public companies principally
engaged in the real estate industry. The adviser considers a company
"principally engaged" in the real estate industry if it derives at least
50% of the fair market value of its assets, or at least 50% of its gross
income or net profits, from the ownership, construction, management, fi-
nancing or sale of real estate.
Under normal circumstances, the fund may invest approximately 60% to 90%
of its assets in real estate investment trusts (REITs). The fund antici-
pates that approximately 10% to 15% of the REITs it holds will have oper-
ating histories of less than three years. A REIT is a separately managed
trust that makes investments in various real estate businesses. An equity
REIT may own real estate and pass the income it receives from rents from
the properties, or the capital gain it receives from selling a building,
to its shareholders. A mortgage REIT specializes in lending money to
building developers and passes the interest income it receives from the
mortgages to shareholders. A hybrid REIT combines the characteristics of
equity and mortgage REITs. REITs may invest in real estate such as shop-
ping centers, office buildings, apartment complexes, hotels and casinos.
The fund may invest up to 35% of its total assets in equity securities of:
. Companies not principally engaged in the real estate business, but
which are engaged in businesses related to real estate, such as manu-
facturers and distributors of building supplies, financial institu-
tions that make or service mortgages; and
. Companies whose real estate assets are substantial relative to the
companies' stock market valuations, such as retailers, railroads and
paper and forest products companies.
The adviser analyzes and selects investments that it believes will provide
a relatively high and stable yield and are good prospects for future
1
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growth in dividends. The adviser considers companies that it expects will
generate good cash flow from the underlying properties, have proven man-
agement track records, and histories of increasing dividends. Most of
these companies specialize in one or two product types, such as office
buildings, shopping centers, industrial complexes, and hotels, or special-
ize in a particular geographic region. The adviser buys stocks that are
selling at a discount to its estimate of the market value of the under-
lying real estate. The adviser re-evaluates and considers selling stocks
that become overvalued or no longer contain these fundamental characteris-
tics.
WHAT ARE THE PRINCIPAL RISKS OF THE FUND?
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As with all mutual funds, at any time, your investment in the fund may be
worth more or less than the price that you originally paid for it. There
is also a possibility that the fund will not achieve its goal. This could
happen because its strategy failed to produce the intended results or be-
cause the adviser did not implement the fund's strategy properly. The
fund's shares are not bank deposits and are not guaranteed, endorsed or
insured by any financial institution, government authority or the FDIC.
You may lose money by investing in the fund.
As with all equity funds, the risks that could affect the value of the
fund's shares and the total return on your investment include the possi-
bility that the equity securities held by the fund will experience sudden,
unpredictable drops in value or long periods of decline in value. This may
occur because of factors that affect the securities markets generally,
such as adverse changes in economic conditions, the general outlook for
corporate earnings, interest rates or investor sentiment. Equity securi-
ties may also lose value because of factors affecting an entire industry
or sector, such as increases in production costs, or factors directly re-
lated to a specific company, such as decisions made by its management.
This risk is greater for small and medium sized companies, which tend to
be more vulnerable to adverse developments than larger companies.
Since the fund may concentrate it investments in the real estate industry,
developments in the real estate industry will greatly affect the value of
its shares. The fund may also experience greater price changes than a mu-
tual fund that has securities representing a broader range of industries.
The real estate industry is particularly sensitive to:
. Economic factors, such as interest rate changes or market recessions;
. Over-building in one particular area, changes in zoning laws, or
changes in neighborhood values;
. Increases in property taxes;
2
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. Casualty and condemnation losses; and
. Regulatory limitations on rents.
REITs may expose the fund to similar risks associated with direct investment
in real estate. REITs are more dependent upon specialized management skills,
have limited diversification and are, therefore, generally dependent on their
ability to generate cash flow to make distributions to shareholders.
HOW HAS THE FUND PERFORMED?
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The following information illustrates some of the risks of investing in
this class of the fund. The bar chart shows how the class's performance
has varied from year to year without sales loads. If sales loads were re-
flected, the fund's returns would be less than that shown. The average an-
nual return table compares the class's average annual returns to those of
a broad-based securities market index. Returns are based on past results
and are not an indication of future performance.
Calender Year Returns
[GRAPH]
1990 0
1991 0
1992 0
1993 0
1994 0
1995 0
1996 37.44%
1997 20.44%
1998 -15.54%
1999 -1.62%
During the periods shown in the chart for this class of the fund, the
highest return for a quarter was 19.35% (quarter ending 12/31/96) and the
lowest return for a quarter was -9.02% (quarter ending 09/30/98).
Average Annual Returns For Periods Ended 12/31/99
<TABLE>
<CAPTION>
Since
1 Year 5/15/95*
-------------------------------------------------------
<S> <C> <C>
Heitman Real Estate Portfolio -1.62% 10.06%
-------------------------------------------------------
Wilshire Real Estate Securities Index -3.19% 8.98%
-------------------------------------------------------
S&P 500 Index 21.04% 27.41%
</TABLE>
* Beginning of operations. Index comparisons begin on 4/30/95.
3
<PAGE>
WHAT ARE THE FEES AND EXPENSES OF THE FUND?
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Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
Heitman Real Estate Portfolio
----------------------------------------------------------------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed On
Purchases (As A Percentage Of The Offering
Price) 4.75%
----------------------------------------------------------------------------
Annual Fund Operating Expenses (expenses that are deducted from the assets
of the fund)
Management Fee 0.74%
----------------------------------------------------------------------------
Distribution and Service (12b-1) fees 0.50%
----------------------------------------------------------------------------
Other Expenses 0.51%
----------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.75%
</TABLE>
Example
This example can help you to compare the cost of investing in this fund to
the cost of investing in other mutual funds. The example assumes you in-
vest $10,000 in the fund 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, that you reinvested all
of your dividends and distributions and that you paid the total expenses
stated above throughout the period of your investment. Although your ac-
tual costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Heitman Real Estate Portfolio $644 $1,000 $1,379 $2,439
</TABLE>
4
<PAGE>
Investing with the UAM Funds
BUYING SHARES
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By Mail
You can open an account with the UAM Funds by sending a check or money or-
der and your account application to the UAM Funds. You should make your
check or money order payable to the "UAM Funds." The UAM Funds do not ac-
cept third-party checks. You can add to an existing account by sending a
check and, if possible, the "Invest by Mail" stub that accompanied your
statement to the UAM Funds. Be sure your check identifies clearly your
name, your account number and the UAM Fund into which you want to invest.
Regular Mail Address
UAM Funds
PO Box 219081
Kansas City, MO 64121
Express Mail Address
UAM Funds
210 West 10th Street
Kansas City, MO 64105
By Wire
To open an account by wire, first call 1-877-826-5465 for an account num-
ber and wire control number. Next, send your completed account application
to the UAM Funds. Finally, wire your money using the wiring instructions
set forth below. To add to an existing account by wire, call 1-877-826-
5465 to get a wire control number and wire your money to the UAM Funds.
Wiring Instructions
United Missouri Bank
ABA # 101000695
UAM Funds
DDA Acct. # 9870964163
Ref: fund name/account number/
account name/wire control number
By Automatic Investment Plan (Via Automated Clearing House or ACH)
You may not open an account via ACH. However, once you have established an
account, you can set up an automatic investment plan by mailing a com-
pleted application to the UAM Funds. To cancel or change a plan, write to
the UAM Funds. Allow up to 15 days to create the plan and 3 days to cancel
or change it.
5
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Minimum Investments
You can open an account with the fund with a minimum initial investment of
$5,000 ($500 for individual retirement accounts (IRAs) and $250 for
Spousal IRAs). You can buy additional shares for as little as $100.
Fund 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 ad-
ditional information.
<TABLE>
<CAPTION>
Trading Symbol CUSIP Number Fund Codes
-------------------------------------------------------------------------------------------
<S> <C> <C>
HTREX 902556810 891
</TABLE>
Rights Reserved by the UAM Funds
At any time and without notice, the UAM Funds may:
. Stop offering shares;
. Reject any purchase order; or
. Bar an investor engaged in a pattern of excessive trading from buying
shares. (Excessive trading can hurt performance by disrupting
management and by increasing expenses.)
REDEEMING SHARES
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By Mail
Send a letter to the UAM Funds specifying:
. The fund name;
. The account number;
. The dollar amount or number of shares you wish to redeem;
. The account name(s); and
. The address.
All registered share owner(s) in the exact name(s) and any special capac-
ity in which they are registered must sign the letter.
Certain shareholders may need to include additional documents to redeem
shares. Please see the Statement of Additional Information (SAI) if you
need more information.
Regular Mail Address
UAM Funds
PO Box 219081
Kansas City, MO 64121
6
<PAGE>
By Telephone
You may redeem shares over the phone by calling 1-877-826-5465. To partic-
ipate in this service and to receive your redemptions by wire, you must
complete the appropriate sections of the account application and mail it
to the UAM Funds.
Online
You can redeem shares on the Internet at www.uam.com. For login informa-
tion, including your personal identification number (PIN), please call 1-
877-826-5465.
By Systematic Withdrawal Plan (Via ACH)
If your account balance is at least $10,000, you may transfer as little as
$100 per month from your UAM Funds account to another financial institu-
tion. To participate in this service, you must complete the appropriate
sections of the account application and mail it to the UAM Funds.
Payment of Redemption Proceeds
Redemption proceeds can be mailed to your account address, sent to your
bank by ACH transfer or wired to your bank account (provided that your
bank information is already on file). The UAM Funds will pay for all
shares redeemed within seven days after they receive a redemption request
in proper form.
The UAM Funds may require that a bank or member firm of a national securi-
ties exchange guarantee signatures. A notary public cannot guarantee a
signature. Signature guarantees are for the protection of shareholders.
Before they grant a redemption request, the UAM Funds may require a share-
holder to furnish additional legal documents to insure proper authoriza-
tion.
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.
Rights Reserved by the UAM Funds
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 sus-
pend your right to redeem if:
. Trading on the New York Stock Exchange is restricted; or
. The Securities and Exchange Commission allows the UAM Funds to delay
redemptions.
7
<PAGE>
EXCHANGING SHARES
- -------------------------------------------------------------------------------
At no charge, you may exchange shares of one UAM Fund for shares of the
same class of any other UAM Fund by writing to or calling the UAM Funds.
You can also exchange shares of the UAM Funds on the Internet at
www.uam.com. For login information, including your personal identification
number (PIN), please call 1-877-826-5465. Before exchanging your shares,
please read the prospectus of the UAM Fund for which you want to exchange.
You may obtain any UAM Fund prospectus by calling 1-877-826-5465. You may
only exchange shares between accounts with identical registrations (i.e.,
the same names and addresses).
Rights Reserved by the UAM Funds
The UAM Funds may:
. Modify or cancel the exchange program at any time on 60 days' written
notice to shareholders;
. Reject any request for an exchange; or
. Limit or cancel a shareholder's exchange privilege, especially when an
investor is engaged in a pattern of excessive trading.
TRANSACTION POLICIES
- -------------------------------------------------------------------------------
Calculating Your Share Price
You may buy, sell or exchange shares of a UAM Fund on each day the New
York Stock Exchange is open at a price equal to its net asset value per
share (NAV) next computed after it receives and accepts your order. NAVs
are calculated as of the close of trading on the New York Stock Exchange
(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 trad-
ing on the New York Stock Exchange that day. Otherwise, you will receive
the NAV that is calculated at the close of trading on the following busi-
ness day.
The UAM Funds calculate their NAVs by adding the total value of their as-
sets, subtracting their liabilities and then dividing the result by the
number of shares outstanding. The UAM Funds use current market prices to
value their investments. However, the UAM Funds may value investments at
fair value when market prices are not readily available or when events oc-
cur that make established valuation methods (such as stock exchange clos-
ing prices) unreliable. The UAM Funds will determine an investment's fair
value according to methods established by their Boards. 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.
8
<PAGE>
Calculating Sales Charges
The fund's includes a sales load in the offering price at the time you buy
your shares. The amount of the sales load you pay will vary depending on
the amount you invest in the fund. The distributor will pay a large por-
tion of the sales charge it receives to the authorized broker responsible
for your purchase. You may calculate your sales charge using the following
table:
<TABLE>
<CAPTION>
As a % of As a % of Your
Your Investment Offering Price Investment
----------------------------------------------------
<S> <C> <C>
Up to $99,999 4.75% 4.99%
----------------------------------------------------
$100,000 to $249,999 4.00% 4.17%
----------------------------------------------------
$250,000 to $499,999 3.00% 3.09%
----------------------------------------------------
$500,000 to $999,999 2.00% 2.04%
----------------------------------------------------
$1,000,000 and over 1.00% 1.01%
</TABLE>
You may reduce the sales charge you incur when purchasing shares of the
fund as follows:
. You may sign a letter of intent, which lets you buy shares of the fund
over a 13-month period and receive the same sales charge as if all the
shares had been bought at the same time. However, you must agree to
buy no less than $100,000 of shares within the 13 month period. See
the SAI for more details.
. If you have given discretionary investment authority to certain serv-
ice agents or authorized brokers, you may not incur a sales charge.
See the SAI for more details.
Buying or Selling Shares through a Financial Intermediary
You may buy or sell shares of the UAM Funds through a financial intermedi-
ary (such as a financial planner or adviser). Generally, to buy or sell
shares at the NAV of any given day your financial intermediary must re-
ceive your order before the close of trading on the NYSE that day. Your
financial intermediary is responsible for transmitting all purchase and
redemption requests, investment information, documentation and money to
the UAM Funds on time. Your financial intermediary may charge additional
transaction fees for its services.
Certain financial intermediaries have agreements with the UAM Funds that
allow them to enter confirmed purchase or redemption orders on behalf of
clients and customers. Under this arrangement, the financial intermediary
must send your payment to the UAM Funds by the time they price their
shares on the following business day. If your financial intermediary fails
to do so, it may be responsible for any resulting fees or losses.
9
<PAGE>
In-Kind Transactions
Under certain conditions and at the UAM Funds' discretion, you may pay for
shares of a UAM Fund with securities instead of cash. In addition, the UAM
Funds may pay all or part of your redemption proceeds with securities in-
stead of cash.
Telephone Transactions
The UAM Funds will employ reasonable procedures to confirm that instruc-
tions communicated by telephone are genuine. The UAM Funds will not be re-
sponsible for any loss, liability, cost or expense for following instruc-
tions received by telephone that it reasonably believes to be genuine.
10
<PAGE>
ACCOUNT POLICIES
- -------------------------------------------------------------------------------
Small Accounts
The UAM Funds may redeem your shares without your permission if the value
of your account falls below 50% of the required minimum initial invest-
ment. This provision does not apply:
. To retirement accounts and certain other accounts; or
. When the value of your account falls because of market fluctuations
and not your redemptions.
The UAM Funds will notify you before liquidating your account and allow
you 60 days to increase the value of your account.
Distributions
Normally, the fund distributes its net investment income quarterly. In ad-
dition, the fund distributes its net capital gains once a year. The fund
will automatically reinvest dividends and distributions in additional
shares, unless you elect on your account application to receive them in
cash.
Federal Taxes
The following is a summary of the federal income tax consequences of in-
vesting in the fund. This summary does not apply to shares held in an in-
dividual retirement account or other tax-qualified plan, which are not
subject to current tax. Transactions relating to shares held in such ac-
counts may, however, be taxable at some time in the future. You should al-
ways consult your tax advisor for specific guidance regarding the tax ef-
fect of your investment in the UAM Funds.
Taxes on Distributions
The distributions of the fund will generally be taxable to shareholders as
ordinary income or capital gains. You will be subject to income tax on
these distributions regardless of whether they are paid in cash or rein-
vested in additional shares. The amount of tax you may pay on a distribu-
tion will be based on the amount of time the fund held its investments,
not how long you held your shares. Dividends and distributions of short-
term capital gains (capital gains relating to securities held for twelve
months or less) are generally taxable at the same rate as ordinary income.
Distributions of long-term capital gains (capital gains relating to secu-
rities held for more than twelve months) are generally taxable as long-
term capital gains. Once a year UAM Funds will send you a statement show-
ing
11
<PAGE>
the types and total amount of distributions you received during the previ-
ous year.
You should note that if you purchase shares just before a distribution,
the purchase price would reflect the amount of the upcoming distribution.
In this case, you would be taxed on the entire amount of the distribution
received, even though, as an economic matter, the distribution simply con-
stitutes a return of your investment. This is known as "buying into a div-
idend" and should be avoided.
Taxes on Exchanges and Redemptions
When you exchange or redeem shares in the fund, you may recognize a capi-
tal gain or loss for federal tax purposes. This gain or loss will be based
on the difference between the cost of your shares (tax basis) and the
amount you receive for them. To aid in computing your tax basis, you
should keep your account statements for the periods during which you held
shares.
Generally, your gain or loss will be long-term or short-term depending on
whether your holding period exceeds 12 months. However, any loss you real-
ize on shares held for less six months or less will be treated as a long-
term capital loss to the extent of any long-term capital gain distribu-
tions you received on the shares.
Backup Withholding
By law, the fund must withhold 31% of your distributions and proceeds if
you have not provided complete, correct taxpayer information.
State and Local Taxes
You may also have to pay state and local taxes on distributions and re-
demptions. However, state taxes may not apply to portions of distributions
that are attributable to interest on federal securities. As mentioned
above, you should always consult your tax advisor for specific guidance
regarding the tax effect of your investment in the fund.
12
<PAGE>
Additional Information About the Fund
OTHER INVESTMENT PRACTICES AND STRATEGIES
- -------------------------------------------------------------------------------
In addition to its principal investment strategies, the fund may use the
investment strategies described below. It may also employ investment prac-
tices that this prospectus does not describe, such as repurchase agree-
ments, when-issued and forward commitment transactions, lending of securi-
ties, borrowing and other techniques. For more information concerning any
of the fund's investment practices and their risks, you should read the
SAI.
Borrowing
The fund can borrow up to 33 1/3% of its total assets from banks and oth-
ers as a temporary measure for emergency purposes, to facilitate redemp-
tion requests or for other purposes that are consistent with its invest-
ment objective and strategies.
Short-Term Investing
At times, the adviser may decide to invest up to 100% of the fund'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 posi-
tion to reduce changes in the value of the shares of the fund that may re-
sult from adverse market, economic, political or other developments.
When the adviser pursues a temporary defensive strategy, the fund 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 fund from achieving its stated objectives.
INVESTMENT MANAGEMENT
- -------------------------------------------------------------------------------
Investment Adviser
Heitman/PRA Securities Advisors LLC, a Delaware limited liability company
located at 180 LaSalle Street, Suite 3600, Chicago, Illinois, 60601, is
the investment adviser to the fund. The adviser manages and supervises the
investment of the fund's assets on a discretionary basis. The adviser is
wholly owned by Heitman Financial LLC, an affiliate of United Asset Man-
agement Corporation. The adviser provides investment management services
to corporations, foundations, endowments, pension and
13
<PAGE>
profit sharing plans, trusts, estates and other institutions as well as
individuals. During the fiscal year ended December 31, 1999, the fund paid
the adviser 0.74% of its average net assets in management fees.
Portfolio Managers
A team of the adviser's investment professionals manages the investments
of the fund. For more information on the composition of that team, includ-
ing biographies of some of their members, please see the SAI.
SHAREHOLDER SERVICING ARRANGEMENTS
- --------------------------------------------------------------------------------
Brokers, dealers, banks, trust companies and other financial representa-
tives may receive compensation from the fund or their service providers
for providing a variety of services. This section briefly describes how
the financial representatives may get paid.
Distribution Plans
The fund has adopted a Distribution Plan and a Shareholder Services Plan
under Rule 12b-1 of the Investment Company Act of 1940 that permits it to
pay broker-dealers, financial institutions and other third parties for
marketing, distribution and shareholder services. The fund's 12b-1 plan
allows it to pay up to 1.00% of its average daily net assets annually for
these services. However, the fund is currently authorized to pay only
0.50% per year. Because Advisor 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.
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 attribut-
able 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 di-
rectly 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 represent-
atives. Periodically, the board of the UAM Funds reviews these arrange-
ments to ensure that the fees paid are appropriate to the services per-
formed. The UAM Funds do not pay these service fees on shares pur-
14
<PAGE>
chased 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 re-
spect to the UAM Funds.
The adviser may pay its affiliated companies for distribution and market-
ing services performed with respect to the UAM Funds.
ADDITIONAL CLASSES
- -------------------------------------------------------------------------------
The fund also offers Institutional Class shares, which do not have a sales
charge and do not pay marketing or shareholder servicing fees. Since the
Institutional Class shares have lower expenses, they are likely to perform
better than the Advisor Class.
15
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand the fi-
nancial performance of this class of the fund for the fiscal periods indi-
cated. Certain information contained in the table reflects the financial
results for a single share. The total returns in the table represent the
rate that an investor would have earned on an investment in this class of
the fund assuming all dividends and distributions were reinvested.
PricewaterhouseCoopers LLP has audited this information. The financial
statements and the unqualified opinion of PricewaterhouseCoopers LLP are
included in the annual report of the fund, which is available upon request
by calling the UAM Funds at 1-877-826-5465.
<TABLE>
<CAPTION>
Years Ended December 31, 1999 1998 1997 1996 1995+
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $8.62 $10.50 $10.98 $8.67 $8.00
------------------------------------------------------------------------------
Income from Investment
Operations:
Net Investment Income 0.39 0.25 0.35 0.31 0.23
Net Realized and
Unrealized Gain (Loss) (0.53) (1.86) 1.80 2.84 0.80
------------------------------------------------------------------------------
Total From Investment
Operations (0.14) (1.61) 2.15 3.15 1.03
------------------------------------------------------------------------------
Distributions:
Net Investment Income (0.44) (0.27) (0.35) (0.31) (0.23)
In Excess Of Net
Investment Income - - (0.04) (0.12) -
Net Realized Capital Gains - - (2.24) (0.41) -
Tax Return of Capital@ - - - - (0.13)
------------------------------------------------------------------------------
Total Distributions (0.44) (0.27) (2.63) (0.84) (0.36)
------------------------------------------------------------------------------
Net Asset Value, End of
Period $8.04 $8.62 $10.50 $10.98 $8.67
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total Return# (1.62)% (15.54)% 20.44% 37.44% 13.19%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Ratios and Supplemental
Data
Net Assets, End of Period
(Thousands) $29,502 $46,665 $85,222 $79,805 $5,520
Ratio of Expenses to
Average Net Assets 1.73% 1.73% 1.59% 1.73% 1.99%*++
Ratio of Net Investment
Income to Average Net
Assets 4.64% 2.65% 3.14% 3.91% 4.27%*++
Portfolio Turnover Rate 49% 80% 90% 60% 65%
</TABLE>
* Annualized
+ For the period May 15, 1995 (initial offering) to December 31, 1995.
@ Historically, the fund has distributed to its shareholders amounts
approximating dividends received from the REITs. A portion of such
distributions may be a return of capital.
# This result does not include the sales charge. If the charge had been
included, the return would have been lower.
++ During 1995, the adviser agreed to reimburse a portion of the Advisor
Share's expenses. Without reimbursement, the expense ratio would have
been 5.34% and the ratio of net investment income to average net assets
would have been 0.92%.
16
<PAGE>
Heitman Real Estate Portfolio
Investors who want more information about the fund should read the fund's
annual/semi-annual reports and the fund's SAI. The annual/semi-annual re-
ports of the fund provide additional information about its investments. In
the annual report, you will also find a discussion of the market condi-
tions and investment strategies that significantly affected the perfor-
mance of the fund during the last fiscal year. The SAI contains additional
detailed information about the fund and is incorporated by reference into
(legally part of) this prospectus.
Investors can receive free copies of the SAI, shareholder reports and
other information about the UAM Funds and can make shareholder inquiries
by writing to or calling:
UAM Funds
PO Box 219081
Kansas City, MO 64121
(Toll free) 1-877-UAM-LINK (826-5465)
www.uam.com
You can review and copy information about the fund (including the SAI) at
the Securities and Exchange Commission's Public Reference Room in Washing-
ton, D.C. You can get information on the operation of the Public Reference
Room by calling the Securities and Exchange Commission at 1-202-942-8090.
Reports and other information about the fund are available on the EDGAR
Database on the Securities and Exchange Commission's Internet site at
http://www.sec.gov. You may obtain copies of this information, after pay-
ing a duplicating fee, by electronic request at the following E-mail ad-
dress: [email protected], or by writing the Securities and Exchange Com-
mission's Public Reference Section, Washington, D.C. 20549-0102.
Investment Company Act of 1940 file number: 811-8544.
[LOGO]
<PAGE>
UAM Funds
Funds for the Informed Investorsm
Heitman Real Estate Portfolio
Institutional Class Prospectus May 1, 2000
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
<PAGE>
Table Of Contents
<TABLE>
<S> <C>
Fund Summary ............................................................... 1
What is the Objective of the Fund?....................................... 1
What are the Principal Investment Strategies of the Fund?................ 1
What are the Principal Risks?............................................ 2
How has the Fund Performed?.............................................. 3
What are the Fees and Expenses of the Fund?.............................. 4
Investing with the UAM Funds ............................................... 5
Buying Shares............................................................ 5
Redeeming Shares......................................................... 6
Exchanging Shares........................................................ 8
Transaction Policies..................................................... 8
Account Policies......................................................... 10
Additional Information About the Fund ..................................... 12
Other Investment Practices and Strategies................................ 12
Investment Management.................................................... 12
Shareholder Servicing Arrangements....................................... 13
Additional Classes....................................................... 13
Financial Highlights ...................................................... 14
</TABLE>
<PAGE>
Fund Summary
WHAT IS THE OBJECTIVE OF THE FUND?
- -------------------------------------------------------------------------------
The fund seeks high total return consistent with reasonable risk by in-
vesting primarily in equity securities of public companies principally en-
gaged in the real estate business. The fund may not change its investment
objective without shareholder approval.
WHAT ARE THE PRINCIPAL INVESTMENT STRATEGIES OF THE FUND?
- -------------------------------------------------------------------------------
Normally, the fund seeks to achieve its objective by investing at least
65% of its total assets in common stocks of public companies principally
engaged in the real estate industry. The adviser considers a company
"principally engaged" in the real estate industry if it derives at least
50% of the fair market value of its assets, or at least 50% of its gross
income or net profits, from the ownership, construction, management, fi-
nancing or sale of real estate.
Under normal circumstances, the fund may invest approximately 60% to 90%
of its assets in real estate investment trusts (REITs). The fund antici-
pates that approximately 10% to 15% of the REITs it holds will have oper-
ating histories of less than three years. A REIT is a separately managed
trust that makes investments in various real estate businesses. An equity
REIT may own real estate and pass the income it receives from rents from
the properties, or the capital gain it receives from selling a building,
to its shareholders. A mortgage REIT specializes in lending money to
building developers and passes the interest income it receives from the
mortgages to shareholders. A hybrid REIT combines the characteristics of
equity and mortgage REITs. REITs may invest in real estate such as shop-
ping centers, office buildings, apartment complexes, hotels and casinos.
The fund may invest up to 35% of its total assets in equity securities of:
. Companies not principally engaged in the real estate business, but
which are engaged in businesses related to real estate, such as manu-
facturers and distributors of building supplies, financial institu-
tions that make or service mortgages; and
. Companies whose real estate assets are substantial relative to the
companies' stock market valuations, such as retailers, railroads and
paper and forest products companies.
The adviser analyzes and selects investments that it believes will provide
a relatively high and stable yield and are good prospects for future
1
<PAGE>
growth in dividends. The adviser considers companies that it expects will
generate good cash flow from the underlying properties, have proven man-
agement track records, and histories of increasing dividends. Most of
these companies specialize in one or two product types, such as office
buildings, shopping centers, industrial complexes, and hotels, or special-
ize in a particular geographic region. The adviser buys stocks that are
selling at a discount to its estimate of the market value of the under-
lying real estate. The adviser re-evaluates and considers selling stocks
that become overvalued or no longer contain these fundamental characteris-
tics.
WHAT ARE THE PRINCIPAL RISKS OF THE FUND?
- -------------------------------------------------------------------------------
As with all mutual funds, at any time, your investment in the fund may be
worth more or less than the price that you originally paid for it. There
is also a possibility that the fund will not achieve its goal. This could
happen because its strategy failed to produce the intended results or be-
cause the adviser did not implement the fund's strategy properly. The
fund's shares are not bank deposits and are not guaranteed, endorsed or
insured by any financial institution, government authority or the FDIC.
You may lose money by investing in the fund.
As with all equity funds, the risks that could affect the value of the
fund's shares and the total return on your investment include the possi-
bility that the equity securities held by the fund will experience sudden,
unpredictable drops in value or long periods of decline in value. This may
occur because of factors that affect the securities markets generally,
such as adverse changes in economic conditions, the general outlook for
corporate earnings, interest rates or investor sentiment. Equity securi-
ties may also lose value because of factors affecting an entire industry
or sector, such as increases in production costs, or factors directly re-
lated to a specific company, such as decisions made by its management.
This risk is greater for small and medium sized companies, which tend to
be more vulnerable to adverse developments than larger companies.
Since the fund may concentrate it investments in the real estate industry,
developments in the real estate industry will greatly affect the value of
its shares. The fund may also experience greater price changes than a mu-
tual fund that has securities representing a broader range of industries.
The real estate industry is particularly sensitive to:
. Economic factors, such as interest rate changes or market recessions;
. Over-building in one particular area, changes in zoning laws, or
changes in neighborhood values;
. Increases in property taxes;
2
<PAGE>
. Casualty and condemnation losses; and
. Regulatory limitations on rents.
REITs may expose the fund to similar risks associated with direct invest-
ment in real estate. REITs are more dependent upon specialized management
skills, have limited diversification and are, therefore, generally depen-
dent on their ability to generate cash flow to make distributions to
shareholders.
HOW HAS THE FUND PERFORMED?
- -------------------------------------------------------------------------------
The following information illustrates some of the risks of investing in
this class of the fund. The bar chart shows how the class's performance
has varied from year to year. The average annual return table compares the
class's average annual returns to those of a broad-based securities market
index. Returns are based on past results and are not an indication of fu-
ture performance.
Calendar Year Returns
[GRAPH]
1990 -22.10%
1991 28.56%
1992 17.87%
1993 19.90%
1994 3.00%
1995 10.87%
1996 38.06%
1997 21.12%
1998 -15.12%
1999 -1.16%
During the periods shown in the chart for this class of the fund, the
highest return for a quarter was 23.02% (quarter ending 03/31/91) and the
lowest return for a quarter was -17.80% (quarter ending 09/30/90).
Average Annual Returns For Periods Ended 12/31/99
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
----------------------------------------------------------------
<S> <C> <C> <C>
Heitman Real Estate Portfolio -1.16% 9.24% 8.11%
----------------------------------------------------------------
Wilshire Real Estate Securities Index -3.19% 8.30% 4.12%
----------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 18.20%
</TABLE>
3
<PAGE>
WHAT ARE THE FEES AND EXPENSES OF THE FUND?
- -------------------------------------------------------------------------------
Shareholder Transaction Fees (fees paid directly from your investment)
This class of the fund is a no-load investment, which means there are no
fees or charges to buy or sell their shares, to reinvest dividends or to
exchange into other UAM Funds.
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
This class of the fund does have annual operating expenses and as a share-
holder you pay them indirectly. This table describes the fees and expenses
that you may pay if you buy and hold shares of the fund.
<TABLE>
<CAPTION>
Heitman Real Estate Portfolio
--------------------------------------------------------------------
<S> <C>
Management Fees 0.74%
--------------------------------------------------------------------
Other Expenses 0.51%
--------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.25%
</TABLE>
Example
This example can help you to compare the cost of investing in this fund to
the cost of investing in other mutual funds. The example assumes you in-
vest $10,000 in the fund 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, that you reinvested all
of your dividends and distributions and that you paid the total expenses
stated above throughout the period of your investment. Although your ac-
tual costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Heitman Real Estate Portfolio $127 $397 $686 $1,511
</TABLE>
4
<PAGE>
Investing with the UAM Funds
BUYING SHARES
- -------------------------------------------------------------------------------
By Mail
You can open an account with the UAM Funds by sending a check or money or-
der and your account application to the UAM Funds. You should make your
check or money order payable to the "UAM Funds." The UAM Funds do not ac-
cept third-party checks. You can add to an existing account by sending a
check and, if possible, the "Invest by Mail" stub that accompanied your
statement to the UAM Funds. Be sure your check identifies clearly your
name, your account number and the UAM Fund into which you want to invest.
Regular Mail Address
UAM Funds
PO Box 219081
Kansas City, MO 64121
Express Mail Address
UAM Funds
210 West 10th Street
Kansas City, MO 64105
By Wire
To open an account by wire, first call 1-877-826-5465 for an account num-
ber and wire control number. Next, send your completed account application
to the UAM Funds. Finally, wire your money using the wiring instructions
set forth below. To add to an existing account by wire, call 1-877-826-
5465 to get a wire control number and wire your money to the UAM Funds.
Wiring Instructions
United Missouri Bank
ABA # 101000695
UAM Funds
DDA Acct. # 9870964163
Ref: fund name/account number/
account name/wire control number
By Automatic Investment Plan (Via Automated Clearing House or ACH)
You may not open an account via ACH. However, once you have established an
account, you can set up an automatic investment plan by mailing a com-
pleted application to the UAM Funds. To cancel or change a plan, write to
the UAM Funds. Allow up to 15 days to create the plan and 3 days to cancel
or change it.
5
<PAGE>
Minimum Investments
You can open an account with the fund with a minimum initial investment of
$2,500 ($500 for individual retirement accounts (IRAs) and $250 for
Spousal IRAs). You can buy additional shares for as little as $100.
Fund 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 ad-
ditional information.
<TABLE>
<CAPTION>
Trading Symbol CUSIP Number Fund Codes
-------------------------------------------------------------------------------------------
<S> <C> <C>
PRREX 902556794 892
</TABLE>
Rights Reserved by the UAM Funds
At any time and without notice, the UAM Funds may:
. Stop offering shares;
. Reject any purchase order; or
. Bar an investor engaged in a pattern of excessive trading from buying
shares. (Excessive trading can hurt performance by disrupting manage-
ment and by increasing expenses.)
REDEEMING SHARES
- -------------------------------------------------------------------------------
By Mail
Send a letter to the UAM Funds specifying:
. The fund name;
. The account number;
. The dollar amount or number of shares you wish to redeem;
. The account name(s); and
. The address.
All registered share owner(s) in the exact name(s) and any special capac-
ity in which they are registered must sign the letter.
Certain shareholders may need to include additional documents to redeem
shares. Please see the Statement of Additional Information (SAI) if you
need more information.
Regular Mail Address
UAM Funds
PO Box 219081
Kansas City, MO 64121
6
<PAGE>
By Telephone
You may redeem shares over the phone by calling 1-877-826-5465. To partic-
ipate in this service and to receive your redemptions by wire, you must
complete the appropriate sections of the account application and mail it
to the UAM Funds.
Online
You can redeem shares on the Internet at www.uam.com. For login informa-
tion, including your personal identification number (PIN), please call 1-
877-826-5465.
By Systematic Withdrawal Plan (Via ACH)
If your account balance is at least $10,000, you may transfer as little as
$100 per month from your UAM Funds account to another financial institu-
tion. To participate in this service, you must complete the appropriate
sections of the account application and mail it to the UAM Funds.
Payment of Redemption Proceeds
Redemption proceeds can be mailed to your account address, sent to your
bank by ACH transfer or wired to your bank account (provided that your
bank information is already on file). The UAM Funds will pay for all
shares redeemed within seven days after they receive a redemption request
in proper form.
The UAM Funds may require that a bank or member firm of a national securi-
ties exchange guarantee signatures. A notary public cannot guarantee a
signature. Signature guarantees are for the protection of shareholders.
Before they grant a redemption request, the UAM Funds may require a share-
holder to furnish additional legal documents to insure proper authoriza-
tion.
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.
Rights Reserved by the UAM Funds
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 sus-
pend your right to redeem if:
. Trading on the New York Stock Exchange is restricted; or
. The Securities and Exchange Commission allows the UAM Funds to delay
redemptions.
7
<PAGE>
EXCHANGING SHARES
- -------------------------------------------------------------------------------
At no charge, you may exchange shares of one UAM Fund for shares of the
same class of any other UAM Fund by writing to or calling the UAM Funds.
You can also exchange shares of the UAM Funds on the Internet at
www.uam.com. For login information, including your personal identification
number (PIN), please call 1-877-826-5465. Before exchanging your shares,
please read the prospectus of the UAM Fund for which you want to exchange.
You may obtain any UAM Fund prospectus by calling 1-877-826-5465. You may
only exchange shares between accounts with identical registrations (i.e.,
the same names and addresses).
Rights Reserved by the UAM Funds
The UAM Funds may:
. Modify or cancel the exchange program at any time on 60 days' written
notice to shareholders;
. Reject any request for an exchange; or
. Limit or cancel a shareholder's exchange privilege, especially when an
investor is engaged in a pattern of excessive trading.
TRANSACTION POLICIES
- -------------------------------------------------------------------------------
Calculating Your Share Price
You may buy, sell or exchange shares of a UAM Fund on each day the New
York Stock Exchange is open at a price equal to its net asset value per
share (NAV) next computed after it receives and accepts your order. NAVs
are calculated as of the close of trading on the New York Stock Exchange
(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 trad-
ing on the New York Stock Exchange that day. Otherwise, you will receive
the NAV that is calculated at the close of trading on the following busi-
ness day.
The UAM Funds calculate their NAVs by adding the total value of their as-
sets, subtracting their liabilities and then dividing the result by the
number of shares outstanding. The UAM Funds use current market prices to
value their investments. However, the UAM Funds may value investments at
fair value when market prices are not readily available or when
8
<PAGE>
events occur that make established valuation methods (such as stock ex-
change closing prices) unreliable. The UAM Funds will determine an invest-
ment's fair value according to methods established by their Boards. The
UAM Funds value debt securities that are purchased with remaining maturi-
ties of 60 days or less at amortized cost, which approximates market val-
ue. 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 Financial Intermediary
You may buy or sell shares of the UAM Funds through a financial intermedi-
ary (such as a financial planner or adviser). Generally, to buy or sell
shares at the NAV of any given day your financial intermediary must re-
ceive your order before the close of trading on the NYSE that day. Your
financial intermediary is responsible for transmitting all purchase and
redemption requests, investment information, documentation and money to
the UAM Funds on time. Your financial intermediary may charge additional
transaction fees for its services.
Certain financial intermediaries have agreements with the UAM Funds that
allow them to enter confirmed purchase or redemption orders on behalf of
clients and customers. Under this arrangement, the financial intermediary
must send your payment to the UAM Funds by the time they price their
shares on the following business day. If your financial intermediary fails
to do so, it may be responsible for any resulting fees or losses.
In-Kind Transactions
Under certain conditions and at the UAM Funds' discretion, you may pay for
shares of a UAM Fund with securities instead of cash. In addition, the UAM
Funds may pay all or part of your redemption proceeds with securities in-
stead of cash.
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 in-
structions received by telephone that it reasonably believes to be
genuine.
9
<PAGE>
ACCOUNT POLICIES
- -------------------------------------------------------------------------------
Small Accounts
The UAM Funds may redeem your shares without your permission if the value
of your account falls below 50% of the required minimum initial invest-
ment. This provision does not apply:
. To retirement accounts and certain other accounts; or
. When the value of your account falls because of market fluctuations
and not your redemptions.
The UAM Funds will notify you before liquidating your account and allow
you 60 days to increase the value of your account.
Distributions
Normally, the fund distributes its net investment income quarterly. In ad-
dition, the fund distributes its net capital gains once a year. The fund
will automatically reinvest dividends and distributions in additional
shares, unless you elect on your account application to receive them in
cash.
Federal Taxes
The following is a summary of the federal income tax consequences of in-
vesting in the fund. This summary does not apply to shares held in an in-
dividual retirement account or other tax-qualified plan, which are not
subject to current tax. Transactions relating to shares held in such ac-
counts may, however, be taxable at some time in the future. You should al-
ways consult your tax advisor for specific guidance regarding the tax ef-
fect of your investment in the UAM Funds.
Taxes on Distributions
The distributions of the fund will generally be taxable to shareholders as
ordinary income or capital gains. You will be subject to income tax on
these distributions regardless of whether they are paid in cash or rein-
vested in additional shares. The amount of tax you may pay on a distribu-
tion will be based on the amount of time the fund held its investments,
not how long you held your shares. Dividends and distributions of short-
term capital gains (capital gains relating to securities held for twelve
months or less) are generally taxable at the same rate as ordinary income.
Distributions of long-term capital gains (capital gains relating to secu-
rities held for more than twelve months) are generally taxable as long-
term capital gains. Once a year UAM Funds will send you a statement show-
ing the types and total amount of distributions you received during the
previous year.
10
<PAGE>
You should note that if you purchase shares just before a distribution,
the purchase price would reflect the amount of the upcoming distribution.
In this case, you would be taxed on the entire amount of the distribution
received, even though, as an economic matter, the distribution simply con-
stitutes a return of your investment. This is known as "buying into a div-
idend" and should be avoided.
Taxes on Exchanges and Redemptions
When you exchange or redeem shares in the fund, you may recognize a capi-
tal gain or loss for federal tax purposes. This gain or loss will be based
on the difference between the cost of your shares (tax basis) and the
amount you receive for them. To aid in computing your tax basis, you
should keep your account statements for the periods during which you held
shares.
Generally, your gain or loss will be long-term or short-term depending on
whether your holding period exceeds 12 months. However, any loss you real-
ize on shares held for less six months or less will be treated as a long-
term capital loss to the extent of any long-term capital gain distribu-
tions you received on the shares.
Backup Withholding
By law, the fund must withhold 31% of your distributions and proceeds if
you have not provided complete, correct taxpayer information.
State and Local Taxes
You may also have to pay state and local taxes on distributions and re-
demptions. However, state taxes may not apply to portions of distributions
that are attributable to interest on federal securities. As mentioned
above, you should always consult your tax advisor for specific guidance
regarding the tax effect of your investment in the fund.
11
<PAGE>
Additional Information About the Fund
OTHER INVESTMENT PRACTICES AND STRATEGIES
- -------------------------------------------------------------------------------
In addition to its principal investment strategies, the fund may use the
investment strategies described below. It may also employ investment prac-
tices that this prospectus does not describe, such as repurchase agree-
ments, when-issued and forward commitment transactions, lending of securi-
ties, borrowing and other techniques. For more information concerning any
of the fund's investment practices and their risks, you should read the
SAI.
Borrowing
The fund can borrow up to 33 1/3% of its total assets from banks and oth-
ers as a temporary measure for emergency purposes, to facilitate redemp-
tion requests or for other purposes that are consistent with its invest-
ment objective and strategies.
Short-Term Investing
At times, the adviser may decide to invest up to 100% of the fund'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 posi-
tion to reduce changes in the value of the shares of the fund that may re-
sult from adverse market, economic, political or other developments.
When the adviser pursues a temporary defensive strategy, the fund 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 fund from achieving its stated objectives.
INVESTMENT MANAGEMENT
- -------------------------------------------------------------------------------
Investment Adviser
Heitman/PRA Securities Advisors LLC, a Delaware limited liability company
located at 180 LaSalle Street, Suite 3600, Chicago, Illinois, 60601, is
the investment adviser to the fund. The adviser manages and supervises the
investment of the fund's assets on a discretionary basis. The adviser is
wholly owned by Heitman Financial LLC, an affiliate of United Asset Man-
agement Corporation. The adviser provides investment management services
to corporations, foundations, endowments, pension and
12
<PAGE>
profit sharing plans, trusts, estates and other institutions as well as
individuals. During the fiscal year ended December 31, 1999, the fund paid
the adviser 0.74% of its average net assets in management fees.
Portfolio Managers
A team of the adviser's investment professionals manages the investments
of the fund. For more information on the composition of that team, includ-
ing biographies of some of their members, please see the SAI.
SHAREHOLDER SERVICING ARRANGEMENTS
- --------------------------------------------------------------------------------
Brokers, dealers, banks, trust companies and other financial representa-
tives may receive compensation from the UAM Funds or their service provid-
ers for providing a variety of services. This section briefly describes
how the financial representatives may get paid.
Shareholder Servicing
For providing certain services to their clients, financial representatives
may be paid a fee based on the assets of a fund 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 a
fund. In addition, your financial representatives may charge you other ac-
count fees for buying or redeeming shares of a fund or for servicing your
account. Your financial representative should provide you with a schedule
of its fees and services.
A fund may pay all or part of the fees paid to financial representatives.
Periodically, the funds' board reviews these arrangements to ensure that
the fees paid are appropriate to the services performed. A fund does not
pay these service fees on shares purchased directly. In addition, the ad-
viser and its affiliates may, at their own expense, pay financial repre-
sentatives for these services.
The adviser and its affiliates may, at their own expense, pay financial
representatives for distribution and marketing services performed with re-
spect to a fund. The adviser may pay its affiliated companies for distri-
bution and marketing services performed with respect to a fund.
ADDITIONAL CLASSES
- --------------------------------------------------------------------------------
The fund also offers Advisor Class shares, which impose a sales charge and
pay marketing or shareholder servicing fees. Since the Advisor Class
shares have higher expenses, their performance will be lower than the In-
stitutional Class.
13
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand the fi-
nancial performance of this class of the fund for the fiscal periods indi-
cated. Certain information contained in the table reflects the financial
results for a single share. The total returns in the table represent the
rate that an investor would have earned on an investment in this class of
the fund assuming all dividends and distributions were reinvested.
PricewaterhouseCoopers LLP has audited this information. The financial
statements and the unqualified opinion of PricewaterhouseCoopers LLP are
included in the annual report of the fund, which is available upon request
by calling the UAM Funds at 1-877-826-5465.
<TABLE>
<CAPTION>
Years Ended December 31, 1999 1998 1997 1996 1995
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $8.62 $10.49 $10.96 $ 8.65 $8.30
-----------------------------------------------------------------------------
Income from Investment
Operations:
Net Investment Income 0.43 0.32 0.40 0.37 0.33
Net Realized and Unrealized
Gain (Loss) (0.54) (1.88) 1.82 2.82 0.53
-----------------------------------------------------------------------------
Total From Investment
Operations (0.11) (1.56) 2.22 3.19 0.86
-----------------------------------------------------------------------------
Distributions:
Net Investment Income (0.47) (0.31) (0.40) (0.37) (0.33)
In Excess Of Net Investment
Income - - (0.05) (0.10) -
Net Realized Capital Gains - - (2.24) (0.41) -
Tax Return of Capital@ - - - - (0.18)
-----------------------------------------------------------------------------
Total Distributions (0.47) (0.31) (2.69) (0.88) (0.51)
-----------------------------------------------------------------------------
Net Asset Value, End of
Period $8.04 $ 8.62 $10.49 $10.96 $8.65
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Total Return (1.16)% (15.12)% 21.12% 38.06% 10.87%
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Ratios and Supplemental
Data
Net Assets, End of Period
(Thousands) $65,767 $79,717 $134,746 $129,275 $95,692
Ratio of Expenses to
Average Net Assets 1.25% 1.22% 1.09% 1.23% 1.29%
Ratio of Net Investment
Income to Average Net
Assets 5.12% 3.14% 3.57% 4.09% 3.97%
Fund Turnover Rate 49% 80% 90% 60% 65%
</TABLE>
@ Historically, the fund has distributed to its shareholders amounts
approximating dividends received from the REITs. A portion of such
distributions may be a return of capital.
14
<PAGE>
Heitman Real Estate Portfolio
Investors who want more information about the fund should read the fund's
annual/semi-annual reports and the fund's SAI. The annual/semi-annual re-
ports of the fund provide additional information about its investments. In
the annual report, you will also find a discussion of the market condi-
tions and investment strategies that significantly affected the perfor-
mance of the fund during the last fiscal year. The SAI contains additional
detailed information about the fund and is incorporated by reference into
(legally part of) this prospectus.
Investors can receive free copies of the SAI, shareholder reports and
other information about the UAM Funds and can make shareholder inquiries
by writing to or calling:
UAM Funds
PO Box 219081
Kansas City, MO 64121
(Toll free) 1-877-UAM-LINK (826-5465)
www.uam.com
You can review and copy information about the fund (including the SAI) at
the Securities and Exchange Commission's Public Reference Room in Washing-
ton, D.C. You can get information on the operation of the Public Reference
Room by calling the Securities and Exchange Commission at 1-202-942-8090.
Reports and other information about the fund are available on the EDGAR
Database on the Securities and Exchange Commission's Internet site at
http://www.sec.gov. You may obtain copies of this information, after pay-
ing a duplicating fee, by electronic request at the following E-mail ad-
dress: [email protected], or by writing the Securities and Exchange Com-
mission's Public Reference Section, Washington, D.C. 20549-0102.
Investment Company Act of 1940 file number: 811-8544.
[UAM LOGO APPEARS HERE]
<PAGE>
PART B
UAM FUNDS TRUST
The statement of additional information for Heitman Real Estate Portfolio is
included in this Post-Effective Amendment No. 42.
The statement of additional information for IRA Capital Preservation Portfolio
is contained in Post-Effective Amendment No. 41 to this Registration Statement,
filed on February 28, 2000.
The statement of additional information for PIC Twenty Portfolio is contained in
Post Effective Amendment No. 39 to this Registration Statement, filed on
December 28, 1999.
The statements of additional information for the following portfolios are
contained in Post-Effective Amendment No. 35 to the Registration Statement,
filed 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 Equity Portfolio
. MJI International Equity Portfolio
. Pell Rudman Mid-Cap Growth Portfolio
. TJ Core Equity Portfolio
The statement of additional information for FPA Crescent Portfolio is contained
in Post-Effective Amendment No. 34 to this Registration Statement, filed on July
28, 1999.
<PAGE>
UAM Funds Trust
PO Box 219081
Kansas City, MO 64121
(Toll free) 1-877-UAM-LINK (826-5465)
Heitman Real Estate Portfolio
Institutional Class Shares
Advisor Class Shares
Statement of Additional Information
May 1, 2000
This statement of additional information (SAI) is not a prospectus. However, you
should read it in conjunction with the prospectus of the portfolio dated May 1,
2000, as supplemented from time to time. You may obtain a prospectus for the
portfolio by contacting the UAM Funds at the address listed above.
The audited financial statements of the portfolio and the related report of
PricewaterhouseCoopers LLP, independent accountants of the portfolio, are
incorporated herein by reference in the section called "Financial Statements."
No other portions of the annual report are incorporated by reference.
<PAGE>
Table Of Contents
Description of Permitted Investments..........................................1
What Investment Strategies May the Portfolio Use?..........................1
Debt Securities............................................................1
Derivatives................................................................7
Equity Securities.........................................................15
Foreign Securities........................................................17
Investment Companies......................................................21
Repurchase Agreements.....................................................21
Restricted Securities.....................................................22
Securities Lending........................................................22
Short Sales...............................................................22
When Issued Transactions..................................................23
Investment Policies of the Portfolio.........................................24
Fundamental Investment Policies...........................................24
Non-Fundamental Investment Policies.......................................25
Management Of The Fund.......................................................26
Principal Shareholders.......................................................27
Investment Advisory and Other Services.......................................28
Investment Adviser........................................................28
Distributor...............................................................30
Service And Distribution Plans............................................30
Sales Compensation........................................................32
Administrative Services...................................................34
Custodian.................................................................36
Independent Accountants...................................................36
Code of Ethics............................................................36
Brokerage Allocation and Other Practices.....................................36
Selection of Brokers......................................................36
Simultaneous Transactions.................................................37
Brokerage Commissions.....................................................37
Capital Stock and Other Securities...........................................38
Purchase, Redemption and Pricing of Shares...................................39
Net Asset Value Per Share.................................................39
Purchase of Shares........................................................40
Redemption of Shares......................................................41
Exchange Privilege........................................................43
Transfer Of Shares........................................................43
Performance Calculations.....................................................43
Total Return..............................................................43
Yield.....................................................................44
Comparisons...............................................................45
Financial Statements.........................................................45
Glossary.....................................................................46
Bond Ratings.................................................................47
Moody's Investors Service, Inc............................................47
Standard & Poor's Ratings Services........................................49
Duff & Phelps Credit Rating Co............................................51
Fitch IBCA Ratings........................................................52
Comparative Benchmarks.......................................................54
<PAGE>
DESCRIPTION OF PERMITTED INVESTMENTS
What Investment Strategies May the Portfolio Use?
- --------------------------------------------------------------------------------
As noted in the prospectus, in addition to its principal investment
strategies, the portfolio currently intends to use the securities and
investment strategies listed below in seeking its objectives. This SAI
describes each of these investments/strategies and their risks. The
portfolio may not notify shareholders before employing new strategies,
unless it expects such strategies to become principal strategies. The
investments that are italicized are principal strategies and you can find
more information on these techniques in the portfolio's prospectus. You can
find more information concerning the limits on the portfolio's ability to
use these investments in "What Are the Investment Strategies of the
Portfolio?" In addition, since the description of permitted investments
contained in this SAI is a combined description of investment strategies of
all of the UAM Funds, certain matters described herein may not apply to the
portfolio.
. Debt securities
. Equity securities.
. Investment companies.
. Repurchase agreements.
. Restricted securities.
. Securities lending.
. When issued securities.
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.
Types of Debt Securities
U.S. Government Securities
U.S. government securities are securities that the U.S. Treasury has issued
(treasury securities) and securities that a federal agency or a
government-sponsored entity has issued (agency securities). Treasury
securities include treasury bills, which have initial maturities of less
than one year, 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 Securities" and "Other Asset-Backed Securities."
This SAI discusses mortgage-backed treasury and agency securities in detail
in "Mortgage-Backed Securities" 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
U.S. 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 U.S. Treasury;
. by the discretionary authority of the U.S. government to buy the
obligations of the agency; or
. by the credit of the sponsoring agency.
1
<PAGE>
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 at maturity or on 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 is stated.
Governmental entities, private insurers and the mortgage poolers may insure
or guarantee 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 full faith and
credit of the U.S. government backs them. GNMA guarantees the timely
payment of principal and interest on securities issued by 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. Like FNMA,
2
<PAGE>
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. For example, payments of
interest and principal are more frequent (usually monthly) 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, a 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 mortgages, 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
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 related
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.
3
<PAGE>
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 prepay
principal monthly. While whole mortgage loans may collateralize CMOs,
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, the portfolio may invest a portion of its
assets in the short-term securities listed below, U.S. government
securities and 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
. 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. The 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
4
<PAGE>
outstanding unsecured debt issue rated A or better by Moody's or by S&P.
See "Bond Ratings" for a description of commercial paper ratings.
Stripped Mortgage-Backed Securities
Stripped mortgage-backed securities are derivative multiple-class
mortgage-backed securities. Stripped mortgage-backed securities usually
have two classes that receive different proportions of interest and
principal distributions on a pool of mortgage assets. Typically, one class
will receive some of the interest and most of the principal, while the
other class will receive most of the interest and the remaining principal.
In extreme cases, one class will receive all of the interest ("interest
only" or "IO" class) while the other class will receive the entire
principal sensitive to the rate of principal payments (including
prepayments) on the underlying mortgage loans or mortgage-backed
securities. A rapid rate of principal payments may adversely affect the
yield to maturity of IOs. Slower than anticipated prepayments of principal
may adversely affect the yield to maturity of a PO. The yields and market
risk of interest only and principal only stripped mortgage-backed
securities, respectively, may be more volatile than those of other fixed
income securities, including traditional mortgage-backed securities.
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 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 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 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.
5
<PAGE>
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.
The 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 security 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 the 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 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.
6
<PAGE>
Extension Risk
The other side of prepayment risk occurs when interest rates are rising.
Rising interest rates can cause the 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 debt securities as compensation
for assuming risk, although short-term treasury securities, such as 3-month
treasury bills, are considered "risk free." Corporate securities offer
higher yields than treasury securities 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 treasury securities.
Changes in investor confidence regarding the certainty of interest and
principal payments of a corporate debt 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 portfolio currently use ratings compiled by Moody's Investor
Services ("Moody's"), Standard and Poor's Ratings Services ("S&P"), Duff &
Phelps Rating Co. and Fitch IBCA. Credit ratings are only an agency's
opinion, not an absolute standard of quality, and they do not reflect an
evaluation of market risk. The section "Bond Ratings" 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 portfolio is not obligated
to dispose of securities whose issuers subsequently are in default or which
are downgraded below the above-stated ratings.
Derivatives
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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 can
use
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derivatives to gain exposure to various markets in a cost efficient
manner, to reduce transaction costs or to remain fully invested. The
portfolio may also invest in derivatives to protect it 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, or custodian bank 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 sale price upon closing out the contract is less
than the original purchase price, the person closing out the contract will
realize a loss. If the sale price upon closing out the contract is more
than the original purchase price, the person closing out the contract will
realize a gain. The opposite is also true. If the purchase price upon
closing out the contract is more than the original sale price, the person
closing out the contract will realize a loss. If the purchase price upon
closing out the contract is less than the original sale price, the person
closing out the contract will realize a gain.
A portfolio may incur commission expenses when it opens or closes a futures
position.
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 exchange (exchange-traded-options) or may be customized
agreements between the parties (over-the-counter or "OTC options"). Like
futures, a financial intermediary,
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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:
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. 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; or
. In the case of an index, the portfolio of securities that corresponds
to the index.
The portfolio can cover a put option by:
. 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; or
. 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.
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The writing of a put option on a futures contract is similar to the
purchase of the futures contracts, except that, if the market price
declines, the portfolio would pay more than the market price for the
underlying instrument. 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.
Forward Foreign Currency Exchange Contracts
A forward foreign currency contract involves an obligation to purchase or
sell a specific amount of currency at a future date or date range at a
specific price. In the case of a cancelable forward contract, the holder
has the unilateral right to cancel the contract at maturity by paying a
specified fee. Forward foreign currency exchange contracts differ from
foreign currency futures contracts in certain respects. Unlike futures
contracts, forward contracts:
. Do not have standard maturity dates or amounts (i.e., the parties to
the contract may fix the maturity date and the amount).
. Are traded in the inter-bank markets conducted directly between
currency traders (usually large commercial banks) and their customers,
as opposed to futures contracts which are traded only on exchanges
regulated by the CFTC.
. Do not require an initial margin deposit.
. May be closed by entering into a closing transaction with the currency
trader who is a party to the original forward contract, as opposed to
a commodities exchange.
Foreign Currency Hedging Strategies
A "settlement hedge" or "transaction hedge" is designed to protect the
portfolio against an adverse change in foreign currency values between the
date a security is purchased or sold and the date on which payment is made
or received. Entering into a forward contract for the purchase or sale of
the amount of foreign currency involved in an underlying security
transaction for a fixed amount of U.S. dollars "locks in" the U.S. dollar
price of the security. The portfolio may also use forward contracts to
purchase or sell a foreign currency when it anticipates purchasing or
selling securities denominated in foreign currency, even if it has not yet
selected the specific investments.
The portfolio may use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. Such a
hedge, sometimes referred to as a "position hedge," would tend to offset
both positive and negative currency fluctuations, but would not offset
changes in security values caused by other factors. The portfolio could
also hedge the position by selling another currency expected to perform
similarly to the currency in which the portfolio's investment is
denominated. This type of hedge, sometimes referred to as a "proxy hedge,"
could offer advantages in terms of cost, yield, or efficiency, but
generally would not hedge currency exposure as effectively as a direct
hedge into U.S. dollars. Proxy hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities that the portfolio owns or intends to
purchase or sell. They simply establish a rate of exchange that one can
achieve at some future point in time. Additionally, these techniques tend
to minimize the risk of loss due to a decline in the value of the hedged
currency and to limit any potential gain that might result from the
increase in value of such currency.
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The portfolio may enter into forward contracts to shift its investment
exposure from one currency into another. Such transactions may call for the
delivery of one foreign currency in exchange for another foreign currency,
including currencies in which its securities are not then denominated. This
may include shifting exposure from U.S. dollars to a foreign currency, or
from one foreign currency to another foreign currency. This type of
strategy, sometimes known as a "cross-hedge," will tend to reduce or
eliminate exposure to the currency that is sold, and increase exposure to
the currency that is purchased. Cross-hedges protect against losses
resulting from a decline in the hedged currency, but will cause the
portfolio to assume the risk of fluctuations in the value of the currency
it purchases. Cross hedging transactions also involve the risk of imperfect
correlation between changes in the values of the currencies involved.
It is difficult to forecast with precision the market value of portfolio
securities at the expiration or maturity of a forward or futures contract.
Accordingly, the portfolio may have to purchase additional foreign currency
on the spot market if the market value of a security it is hedging is less
than the amount of foreign currency it is obligated to deliver. Conversely,
the portfolio may have to sell on the spot market some of the foreign
currency it received upon the sale of a security if the market value of
such security exceeds the amount of foreign currency it is obligated to
deliver.
Swaps, Caps, Collars 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 SEC. 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.
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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 involve 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 swap,
however, the principal amounts are exchanged at the beginning of the
contract and returned at the end of the contract. Changes in foreign
exchange rates and changes in interest rates, as described above may
negatively affect currency swaps.
Caps, Collars 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 expected.
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:
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. 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; and
. 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; and
. 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; or
. 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 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
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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; and
. 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 price of a derivative may vary from the settlement
price of that derivative at the end of trading on the 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 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-dealer with whom it has an open futures
contract or related option becomes insolvent or declares bankruptcy.
Equity Securities
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Types of Equity Securities
Common Stocks
Common stocks represent units of ownership in a company. Common stocks
usually carry voting rights and earn dividends. Unlike preferred stocks,
which are described below, dividends on common stocks are not fixed but are
declared at the discretion of the company's board of directors.
Preferred Stocks
Preferred stocks are also units of ownership in a company. Preferred stocks
normally have preference over common stock in the payment of dividends and
the liquidation of the company. However, in all other respects, preferred
stocks are subordinated to the liabilities of the issuer. Unlike common
stocks, preferred stocks are generally not entitled to vote on corporate
matters. Types of preferred stocks include adjustable-rate preferred stock,
fixed dividend preferred stock, perpetual preferred stock, and sinking fund
preferred stock. Generally, the market values of preferred stock with a
fixed dividend rate and no conversion element varies inversely with
interest rates and perceived credit risk.
Convertible Securities
Convertible Securities are securities that may be exchanged for, converted
into, or exercised to acquire a predetermined number of shares of the
issuer's common stock at a portfolio's option during a specified time
period (such as convertible preferred stocks, convertible debentures and
warrants). A convertible security is generally a fixed income security that
is
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senior to common stock in an issuer's capital structure, but is usually
subordinated to similar non-convertible securities. In exchange for the
conversion feature, many corporations will pay a lower rate of interest on
convertible securities than debt securities of the same corporation. In
general, the market value of a convertible security is at least the higher
of its "investment value" (i.e., its value as a fixed income security) or
its "conversion value" (i.e., its value upon conversion into its underlying
common stock).
Convertible securities are subject to the same risks as similar securities
without the convertible feature. The price of a convertible security is
more volatile during times of steady interest rates than other types of
debt securities. In addition, they are also influenced by the market value
of the security's underlying common stock. The price of a convertible
security tends to increase as the market value of the underlying stock
rises, whereas it tends to decrease as the market value of the underlying
common stock declines.
A synthetic convertible security is a combination investment in which a
portfolio purchases both (i) high-grade cash equivalents or a high grade
debt obligation of an issuer or U.S. Government securities and (ii) call
options or warrants on the common stock of the same or different issuer
with some or all of the anticipated interest income from the associated
debt obligation that is earned over the holding period of the option or
warrant.
While providing a fixed income stream (generally higher in yield than the
income derivable from common stock but lower than that afforded by a
similar non-convertible security), a convertible security also affords an
investor the opportunity, through its conversion feature, to participate in
the capital appreciation attendant upon a market price advance in the
convertible security's underlying common stock. A synthetic convertible
position has similar investment characteristics, but may differ with
respect to credit quality, time to maturity, trading characteristics, and
other factors. Because a portfolio will create synthetic convertible
positions only out of high grade fixed income securities, the credit rating
associated with a portfolio's synthetic convertible investments is
generally expected to be higher than that of the average convertible
security, many of which are rated below high grade. However, because the
options used to create synthetic convertible positions will generally have
expirations between one month and three years of the time of purchase, the
maturity of these positions will generally be shorter than average for
convertible securities. Since the option component of a convertible
security or synthetic convertible position is a wasting asset (in the sense
of losing "time value" as maturity approaches), a synthetic convertible
position may lose such value more rapidly than a convertible security of
longer maturity; however, the gain in option value due to appreciation of
the underlying stock may exceed such time value loss, the market price of
the option component generally reflects these differences in maturities,
and the Adviser and applicable sub-adviser take such differences into
account when evaluating such positions. When a synthetic convertible
position "matures" because of the expiration of the associated option, a
portfolio may extend the maturity by investing in a new option with longer
maturity on the common stock of the same or different issuer. If a
portfolio does not so extend the maturity of a position, it may continue to
hold the associated fixed income security.
Rights and Warrants
A right is a privilege granted to existing shareholders of a corporation to
subscribe to shares of a new issue of common stock before it is issued.
Rights normally have a short life, usually two to four weeks, are freely
transferable and entitle the holder to buy the new common stock at a lower
price than the public offering price. Warrants are securities that are
usually issued together with a debt security or preferred stock and that
give the holder the right to buy proportionate amount of common stock at a
specified price. Warrants are freely transferable and are traded on major
exchanges. Unlike rights, warrants normally have a life that is measured in
years and entitles the holder to buy common stock of a company at a price
that is usually higher than the market price at the time the warrant is
issued. Corporations often issue warrants to make the accompanying debt
security more attractive.
An investment in warrants and rights may entail greater risks than certain
other types of investments. Generally, rights and warrants do not carry the
right to receive dividends or exercise voting rights with respect to the
underlying securities, and they do not represent any rights in the assets
of the issuer. In addition, their value does not necessarily change with
the value of the underlying securities, and they cease to have value if
they are not exercised on or before their expiration date. Investing in
rights and warrants increases the potential profit or loss to be realized
from the investment as compared with investing the same amount in the
underlying securities.
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Risks of Investing in Equity Securities
General Risks of Investing in Stocks
While investing in stocks allows investors to participate in the benefits
of owning a company, such investors must accept the risks of ownership.
Unlike bondholders, who have preference to a company's earnings and cash
flow, preferred stockholders, followed by common stockholders in order of
priority, are entitled only to the residual amount after a company meets
its other obligations. For this reason, the value of a company's stock will
usually react more strongly to actual or perceived changes in the company's
financial condition or prospects than its debt obligations. Stockholders of
a company that fares poorly can lose money.
Stock markets tend to move in cycles with short or extended periods of
rising and falling stock prices. The value of a company's stock may fall
because of:
. Factors that directly relate to that company, such as decisions made
by its management or lower demand for the company's products or
services;
. Factors affecting an entire industry, such as increases in production
costs; and
. Changes in financial market conditions that are relatively unrelated
to the company or its industry, such as changes in interest rates,
currency exchange rates or inflation rates.
Because preferred stock is generally junior to debt securities and other
obligations of the issuer, deterioration in the credit quality of the
issuer will cause greater changes in the value of a preferred stock than in
a more senior debt security with similar stated yield characteristics.
Small and Medium-Sized Companies
Investors in small and medium-sized companies typically take on greater
risk and price volatility than they would by investing in larger, more
established companies. This increased risk may be due to the greater
business risks of their small or medium size, limited markets and financial
resources, narrow product lines and frequent lack of management depth. The
securities of small and medium companies are often traded in the
over-the-counter market and might not be traded in volumes typical of
securities traded on a national securities exchange. Thus, the securities
of small and medium capitalization companies are likely to be less liquid,
and subject to more abrupt or erratic market movements, than securities of
larger, more established companies.
Technology Companies
Stocks of technology companies have tended to be subject to greater
volatility than securities of companies that are not dependent upon or
associated with technological issues. Technology companies operate in
various industries. Since these industries frequently share common
characteristics, an event or issue affecting one industry may significantly
influence other, related industries. For example, technology companies may
be strongly affected by worldwide scientific or technological developments
and their products and services may be subject to governmental regulation
or adversely affected by governmental policies.
Foreign Securities
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Types of Foreign Securities
Foreign securities are debt and equity securities that are traded in
markets outside of the United States. The markets in which these securities
are located can be developed or emerging. People can invest in foreign
securities in a number of ways:
. They can invest directly in foreign securities denominated in a
foreign currency;
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. They can invest in American Depositary Receipts, European Depositary
Receipts and other similar global instruments; and
. They can invest in investment funds.
American Depositary Receipts (ADRs)
American Depositary Receipts (ADRs) are certificates evidencing ownership
of shares of a foreign issuer. These certificates are issued by depository
banks and generally trade on an established market in the United States or
elsewhere. A custodian bank or similar financial institution in the
issuer's home country holds the underlying shares in trust. The depository
bank may not have physical custody of the underlying securities at all
times and may charge fees for various services, including forwarding
dividends and interest and corporate actions. ADRs are alternatives to
directly purchasing the underlying foreign securities in their national
markets and currencies. However, ADRs continue to be subject to many of the
risks associated with investing directly in foreign securities. EDRs are
similar to ADRs, except that they are typically issued by European Banks or
trust companies.
Emerging Markets
An "emerging country" is generally a country that the International Bank
for Reconstruction and Development (World Bank) and the International
Finance Corporation would consider to be an emerging or developing country.
Typically, emerging markets are in countries that are in the process of
industrialization, with lower gross national products (GNP) than more
developed countries. There are currently over 130 countries that the
international financial community generally considers to be emerging or
developing countries, approximately 40 of which currently have stock
markets. These countries generally include every nation in the world except
the United States, Canada, Japan, Australia, New Zealand and most nations
located in Western Europe.
Investment Funds
Some emerging countries currently prohibit direct foreign investment in the
securities of their companies. Certain emerging countries, however, permit
indirect foreign investment in the securities of companies listed and
traded on their stock exchanges through investment funds that they have
specifically authorized. Investments in these investment funds are subject
to the provisions of the 1940 Act. Shareholders of a UAM Fund that invests
in such investment funds will bear not only their proportionate share of
the expenses of the UAM Fund (including operating expenses and the fees of
the adviser), but also will bear indirectly bear similar expenses of the
underlying investment funds. In addition, these investment funds may trade
at a premium over their net asset value.
Risks of Foreign Securities
Foreign securities, foreign currencies, and securities issued by U.S.
entities with substantial foreign operations may involve significant risks
in addition to the risks inherent in U.S. investments.
Political and Economic Factors
Local political, economic, regulatory, or social instability, military
action or unrest, or adverse diplomatic developments may affect the value
of foreign investments. Listed below are some of the more important
political and economic factors that could negatively affect an investment
in foreign securities:
. The economies of foreign countries may differ from the economy of the
United States in such areas as growth of gross national product, rate
of inflation, capital reinvestment, resource self-sufficiency, budget
deficits and national debt;
. Foreign governments sometimes participate to a significant degree,
through ownership interests or regulation, in their respective
economies. Actions by these governments could significantly influence
the market prices of securities and payment of dividends;
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. The economies of many foreign countries are dependent on international
trade and their trading partners and they could be severely affected
if their trading partners were to enact protective trade barriers and
economic conditions;
. The internal policies of a particular foreign country may be less
stable than in the United States. Other countries face significant
external political risks, such as possible claims of sovereignty by
other countries or tense and sometimes hostile border clashes; and
. A foreign government may act adversely to the interests of U.S.
investors, including expropriation or nationalization of assets,
confiscatory taxation and other restrictions on U.S. investment. A
country may restrict or control foreign investments in its securities
markets. These restrictions could limit the portfolio's ability to
invest in a particular country or make it very expensive for the
portfolio to invest in that country. Some countries require prior
governmental approval, limit the types or amount of securities or
companies in which a foreigner can invest. Other countries may
restrict the ability of foreign investors to repatriate their
investment income and capital gains.
Information and Supervision
There is generally less publicly available information about foreign
companies than companies based in the United States. For example, there are
often no reports and ratings published about foreign companies comparable
to the ones written about United States companies. Foreign companies are
typically not subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those
applicable to United States companies. The lack of comparable information
makes investment decisions concerning foreign countries more difficult and
less reliable than domestic companies.
Stock Exchange and Market Risk
The adviser anticipates that in most cases an exchange or over-the-counter
(OTC) market located outside of the United States will be the best
available market for foreign securities. Foreign stock markets, while
growing in volume and sophistication, are generally not as developed as the
markets in the United States. Foreign stocks markets tend to differ from
those in the United States in a number of ways:
. They are generally not as developed or efficient as, and more
volatile, than those in the United States;
. They have substantially less volume;
. Their securities tend to be less liquid and to experience rapid and
erratic price movements;
. Commissions on foreign stocks are generally higher and subject to set
minimum rates, as opposed to negotiated rates;
. Foreign security trading, settlement and custodial practices are often
less developed than those in U.S. markets; and
. They may have different settlement practices, which may cause delays
and increase the potential for failed settlements.
Foreign Currency Risk
While the UAM Funds denominate their net asset value in United States
dollars, the securities of foreign companies are frequently denominated in
foreign currencies. Thus, a change in the value of a foreign currency
against the United States dollar will result in a corresponding change in
value of securities denominated in that currency. Some of the factors that
may impair the investments denominated in a foreign currency are:
. It may be expensive to convert foreign currencies into United States
dollars and vice versa;
. Complex political and economic factors may significantly affect the
values of various currencies, including United States dollars, and
their exchange rates;
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. Government intervention may increase risks involved in purchasing or
selling foreign currency options, forward contracts and futures
contracts, since exchange rates may not be free to fluctuate in
response to other market forces;
. There may be no systematic reporting of last sale information for
foreign currencies or regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely
basis;
. Available quotation information is generally representative of very
large round-lot transactions in the inter-bank market and thus may not
reflect exchange rates for smaller odd-lot transactions (less than $1
million) where rates may be less favorable; and
. The inter-bank market in foreign currencies is a global,
around-the-clock market. To the extent that a market is closed while
the markets for the underlying currencies remain open, certain markets
may not always reflect significant price and rate movements.
Taxes
Certain foreign governments levy withholding taxes on dividend and interest
income. Although in some countries it is possible for the portfolio to
recover a portion of these taxes, the portion that cannot be recovered will
reduce the income the portfolio receives from its investments. The
portfolio does not expect such foreign withholding taxes to have a
significant impact on performance.
Emerging Markets
Investing in emerging markets may magnify the risks of foreign investing.
Security prices in emerging markets can be significantly more volatile than
those in more developed markets, reflecting the greater uncertainties of
investing in less established markets and economies. In particular,
countries with emerging markets may:
. Have relatively unstable governments;
. Present greater risks of nationalization of businesses, restrictions
on foreign ownership and prohibitions on the repatriation of assets;
. Offer less protection of property rights than more developed
countries; and
. Have economies that are based on only a few industries, may be highly
vulnerable to changes in local or global trade conditions, and may
suffer from extreme and volatile debt burdens or inflation rates.
Local securities markets may trade a small number of securities and may be
unable to respond effectively to increases in trading volume, potentially
making prompt liquidation of holdings difficult or impossible at times.
The Euro
The single currency for the European Economic and Monetary Union ("EMU"),
the Euro, is scheduled to replace the national currencies for participating
member countries over a period that began on January 1, 1999 and ends in
July 2002. At the end of that period, use of the Euro will be compulsory
and countries in the EMU will no longer maintain separate currencies in any
form. Until then, however, each country and issuers within each country are
free to choose whether to use the Euro.
On January 1, 1999, existing national currencies became denominations of
the Euro at fixed rates according to practices prescribed by the European
Monetary Institute and the Euro became available as a book-entry currency.
On or about that date, member states began conducting financial market
transactions in Euros and redenominating many investments, currency
balances and transfer mechanisms into Euros. The portfolio also anticipates
pricing, trading, settling and valuing investments whose nominal values
remain in their existing domestic currencies in Euros. Accordingly, the
portfolio expects the conversion to the Euro to impact investments in
countries that adopt the Euro in all aspects of the investment process,
including trading, foreign exchange, payments, settlements, cash accounts,
custody and accounting. Some of the uncertainties surrounding the
conversion to the Euro include:
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. Will the payment and operational systems of banks and other financial
institutions be ready by the scheduled launch date?
. Will the conversion to the Euro have legal consequences on outstanding
financial contracts that refer to existing currencies rather than
Euro?
. How will existing currencies be exchanged into Euro?
. Will suitable clearing and settlement payment systems for the new
currency be created?
Investment Companies
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The 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, the
portfolio would pay its proportionate share of those fees. Consequently,
shareholders of the 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 portfolio may invest up to 10% of its total
assets in the securities of other investment companies, but may not invest
more than 5% of its total assets in the securities of any one investment
company or acquire more than 3% of the outstanding securities of any one
investment company.
The SEC has granted an order that allows the 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;
and
. 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 portfolio will bear expenses of the UAM DSI Money Market Portfolio on
the same basis as all of its other shareholders.
Repurchase Agreements
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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 portfolio normally uses repurchase agreements to
earn income on assets that are not invested.
When the portfolio enters into a repurchase agreement it will:
. Pay for the underlying securities only upon physically receiving them
or upon evidence of their receipt in book-entry form; and
. 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 to "mark to the market"
on a daily basis).
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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
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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 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
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The portfolio may lend a portion of its total assets to broker- dealers or
other financial institutions. It may then reinvest the collateral it
receives in short-term securities and money market funds. When the
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);
. It must be able to terminate the loan at any time;
. It must receive reasonable interest on the loan (which may include the
portfolio investing any cash collateral in interest bearing short-term
investments); and
. It 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 will
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; and
. Experience delays in recovering its securities.
Short Sales
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Description of Short Sales
Selling a security short is when an investor sells a security it does not
own. To sell a security short an investor must borrow the security from
someone else to deliver to the buyer. The investor then replaces the
security it borrowed by purchasing it at the market price at or before the
time of replacement. Until it replaces the security, the investor repays
the person that lent it the security for any interest or dividends that may
have accrued during the period of the loan.
Investors typically sell securities short to:
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. Take advantage of an anticipated decline in prices.
. Protect a profit in a security it already owns.
A portfolio can lose money if the price of the security it sold short
increases between the date of the short sale and the date on which a
portfolio replaces the borrowed security. Likewise, a portfolio can profit
if the price of the security declines between those dates.
To borrow the security, a portfolio also may be required to pay a premium,
which would increase the cost of the security sold. A portfolio will incur
transaction costs in effecting short sales. A portfolio's gains and losses
will be decreased or increased, as the case may be, by the amount of the
premium, dividends, interest, or expenses a portfolio may be required to
pay in connection with a short sale.
The broker will retain the net proceeds of the short sale, to the extent
necessary to meet margin requirements, until the short position is closed
out.
Short Sales Against the Box
In addition, a portfolio may engage in short sales "against the box". In a
short sale against the box, a portfolio agrees to sell at a future date a
security that it either contemporaneously owns or has the right to acquire
at no extra cost. A portfolio will incur transaction costs to open,
maintain and close short sales against the box.
Restrictions on Short Sales
A portfolio will not short sell a security if:
. After giving effect to such short sale, the total market value of all
securities sold short would exceed 25% of the value of a portfolio net
assets.
. The market value of the securities of any single issuer that have been
sold short by a portfolio would exceed the two percent (2%) of the
value of a portfolio's net assets.
. Such securities would constitute more than two percent (2%) of any
class of the issuer's securities.
Whenever a portfolio sells a security short, its custodian segregates an
amount of cash or liquid securities equal to the difference between (a) the
market value of the securities sold short at the time they were sold short
and (b) any cash or U.S. Government securities a portfolio is required to
deposit with the broker in connection with the short sale (not including
the proceeds from the short sale). The segregated assets are marked to
market daily in an attempt to ensure that the amount deposited in the
segregated account plus the amount deposited with the broker is at least
equal to the market value of the securities at the time they were sold
short.
When Issued Transactions
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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 deliver securities until a later date. Typically, no
income 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.
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The portfolio uses when-issued, delayed-delivery and forward delivery
transactions to secure what it considers 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 segregate cash and liquid securities equal in value to
commitments for the when-issued, delayed-delivery or forward delivery
transaction. The portfolio will segregate additional liquid assets daily so
that the value of such assets is equal to the amount of its commitments.
INVESTMENT POLICIES OF THE PORTFOLIO
The portfolio will determine investment limitation percentages (with the
exception of a limitation relating to borrowing) immediately after and as a
result of its 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 Investment Policies
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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:
. As to 75% of the total assets of the portfolio, purchase securities
for the portfolio of any issuer, if immediately thereafter (i) more
than 5% of the portfolio's total assets (taken at market value) would
be invested in the securities of such issuer, or (ii) more than 10% of
the outstanding voting securities of any class of such issuer would be
held by the portfolio, provided that this limitation does not apply to
U.S. government securities.
. Act as a securities underwriter.
. Borrow, except that (i) the portfolio may borrow money for temporary
administrative purposes provided that the aggregate of all such
borrowings does not exceed 33 1/3% of the value of the portfolio's
total assets and is not for more than 60 days, and (ii) the portfolio
may enter into interest-rate futures contracts. The portfolio may not
borrow for the purpose of leveraging its investment portfolio. The
portfolio may not purchase additional securities while outstanding
borrowings exceed 5% of the value of its assets.
. Lend the portfolio securities of the portfolio in an amount in excess
of 33% of the total assets of the portfolio, taken at market value.
Any loans of portfolio securities will be made according to guidelines
established by the Securities and Exchange Commission and the board
members, including the borrower's maintaining collateral equal at all
times to the value of the securities loaned.
. Make investments in real estate (including real estate limited
partnership interests, but excluding readily marketable interest in
real estate investment trusts ("REITs") or readily marketable
securities of companies which invest in real estate) or commodities or
commodity contracts, although the portfolio may purchase securities of
issuers which deal in real estate and may purchase securities which
are secured by interests in real estate, and the portfolio may invest
in futures contracts and related options.
. Make loans, except that the portfolio may (i) purchase bonds,
debentures and other publicly-distributed securities of a like nature,
(ii) make loans in the form of call loans or loans maturing in not
more than one year which are
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secured by marketable collateral and are in amounts and on terms
similar to those currently in effect in the case of loans made by
national banks, (iii) enter into repurchase agreements with respect to
portfolio securities, and (iv) lend the portfolio securities of the
portfolio.
While the portfolio has the power to pledge its assets to secure
borrowings, the portfolio has no intention of pledging the assets of the
portfolio taken at market value in any amount in excess of 33 1/3 of the
portfolio's total assets taken at market value. The deposit of assets in
escrow in connection with the writing of covered put or call options and
the purchase of securities on a when-issued or delayed-delivery basis, and
collateral arrangements with respect to the purchase and sale of stock
options and stock index options and initial and variation margin for
futures contracts, are not deemed to be pledges of assets of the portfolio.
Also, although the portfolio has the power to make call loans, it has no
intention to do so.
Non-Fundamental Investment Policies
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The following limitations are non-fundamental, which means the portfolio
may change them without shareholder approval. The portfolio will not:
. Invest in puts, calls, straddles, spreads and any combination thereof,
except that (i) the portfolio may write covered put and call options
on securities and write and purchase put and call options on stock
indexes, and (ii) the portfolio may write covered put and call options
on U.S. Government securities.
. Make short sales whereby the dollar amount of short sales at any one
time shall exceed 25% of the net assets of the portfolio, or the value
of securities of any one issuer in which the portfolio is short
exceeds the lesser of 2% of the value of the portfolio's net assets or
2% of the value of securities of any class of any issuer, except that
the portfolio may make short sales against the box.
. Purchase illiquid securities for the portfolio, including repurchase
agreements maturing in more than seven days, options traded
"over-the-counter," securities lacking readily available market
quotations and securities which cannot be sold without registration or
the filing of a notification under federal or state securities laws,
if, as a result, more than 15% of the portfolio's net assets would
then be invested in such securities.
. Purchase securities for the portfolio of companies which together with
predecessors have a record of less than three years' continuous
operation, and equity securities of issuers which are not readily
marketable, if, as a result, more than 5% of the portfolio's net
assets would then be invested in such securities, except that this
restriction shall not apply to the purchase of securities of REITs.
. Purchase securities from or sell securities to any of its officers or
Board members, except with respect to its own shares and as is
permissible under applicable statutes, rules and regulations.
. Purchase securities of any other investment company, except in
connection with a merger, consolidation, acquisition or
reorganization, and except that the portfolio may purchase securities
of money market mutual funds to the extent permitted by applicable
law. This restriction shall not prohibit the portfolio from investing
in securities issued by REITs.
. Purchase securities on margin, except short-term credits as are
necessary for the purchase and sale of securities. For purposes of
this restriction, the deposit or payment of initial or variation
margin in connection with futures contracts or related options will
not be deemed to be a purchase of securities on margin by the
portfolio.
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 and a $2,000 meeting
fee. In addition, the Fund reimburses each independent board member for
travel and other
25
<PAGE>
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 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 51
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>
Aggregate
Aggregate Compensation From
Compensation From the Fund Complex
Name, Address, Date of Position Principal Occupations During the Past 5 the Fund as of as of December
Birth with Fund years December 31, 1999 31, 1999
------------------------ ---------- ------------------------------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
John T. Bennett, Jr. Board President of Squam Investment Management $9,294 $40,500
College Road-- RFD 3 Member Company, Inc. and Great Island Investment
Meredith, NH 03253 Company, Inc. (Investment Management);
1/26/29 President of Bennett Management Company
from 1988 to 1993.
------------------------ ---------- ------------------------------------------- -------------------- -------------------
Nancy J. Dunn Board Financial Officer of World Wildlife Fund $9,294 $40,500
1250 24th St., NW Member since January 1999 (nonprofit); Vice
Washington, DC 20037 President for Finance and Administration
8/14/51 and Treasurer of Radcliffe College
(Education) from 1991 to 1999.
------------------------ ---------- ------------------------------------------- -------------------- -------------------
William A. Humenuk Board Senior Vice President, General Counsel $9,294 $40,500
100 King Street West Member and Secretary of Lone Star Industries
P.O. Box 2440, LCD-1 Incorporated (cement and ready-mix
Hamilton Ontario, concrete company) from April 2000 to
Canada L8N-4J6 present; Executive Vice President and
4/21/42 Chief Administrative Officer of Philip
Services Corp. (ferrous scrap
processing, brokerage and industrial
outsourcing cervices) from June 1998 to
March 2000; Partner in the Philadelphia
office of the law firm Dechert Price &
Rhoads from July 1976 to June 1998;
formerly a Director of Hofler Corp.
------------------------ ---------- ------------------------------------------- -------------------- -------------------
Philip D. English Board President and Chief Executive Officer of $9,294 $40,500
16 West Madison Street Member Broventure Company, Inc. (Investment
Baltimore, MD 21201 Management); Chairman of the Board of
8/5/48 Chektec Corporation (Drugs) and Cyber
Scientific, Inc.
------------------------ ---------- ------------------------------------------- -------------------- -------------------
James P. Pappas* Board President of UAM Investment Services, 0 0
211 Congress Street Member Inc. since March 1999; Vice President UAM
Boston, MA 02110 Trust Company since January 1996;
2/24/53 Principal of UAM Fund Distributors, 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 Chairman, Chief Executive Officer and a 0 0
One International Place Member; Director of United Asset Management
Boston, MA 02110 President Corporation (financial services);
3/21/35 and Director, Partner or Trustee of each of
Chairman the Investment Companies of the Eaton
Vance Group of Mutual Funds (mutual
funds).
------------------------ ---------- ------------------------------------------- -------------------- -------------------
Peter M. Whitman, Jr.* Board President and Chief Investment Officer of 0 0
One Financial Center Member Dewey Square Investors Corporation
Boston, MA 02111 (investment management) since 1988;
7/1/43 Director and Chief Executive Officer of
H.T. Investors, Inc., formerly a
subsidiary of Dewey Square.
------------------------ ---------- ------------------------------------------- -------------------- -------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Aggregate
Aggregate Compensation From
Compensation From the Fund Complex
Name, Address, Date of Position Principal Occupations During the Past 5 the Fund as of as of December
Birth with Fund years December 31, 1999 31, 1999
------------------------ ---------- ------------------------------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
William H. Park Vice Executive Vice President and Chief 0 0
One International Place President Financial Officer of United Asset
Boston, MA 02110 Management Corporation (financial
9/19/47 services).
------------------------ ---------- ------------------------------------------- -------------------- -------------------
Martin J. Wolin Secretary Vice President and Associate General 0 0
211 Congress Street Counsel of UAMFSI (financial services)
Boston, MA 02110 since February 1998; Assistant General
9/15/67 Counsel of First Union Corporation
(financial services) from 1995 to 1998;
Attorney with Signature Financial Group,
Inc. (financial services) from 1994 to
1995.
------------------------ ---------- ------------------------------------------- -------------------- -------------------
Theresa DelVeccio Assistant Secretary of UAMFSI (financial Services) 0 0
211 Congress Street Secretary since February 1998; Secretary and
Boston, MA 02110 Compliance Officer of UAMFDI (broker
12/23/63 dealer) since February 2000; Assistant
Vice President of Scudder Kemper
Investments (financial services) from
May 1992 to February 1998.
------------------------ ---------- ------------------------------------------- -------------------- -------------------
Gary L. French Treasurer President of UAMFSI (financial services) 0 0
211 Congress Street and UAMFDI (broker dealer); Treasurer of
Boston, MA 02110 the Fidelity Group of Mutual Funds from
7/4/51 1991 to 1995 (mutual funds); held various
other offices with Fidelity Investments
(financial services) from November 1990
to March 1995.
------------------------ ---------- ------------------------------------------- -------------------- -------------------
Robert R. Flaherty Assistant Vice President of UAMFSI (financial 0 0
211 Congress Street Treasurer services); Manager of Fund Administration
Boston, MA 02110 and Compliance of Chase Global Fund
9/18/63 Services Company from 1995 to 1996;
Senior Manager of Deloitte & Touche LLP
(accounting firm) from 1985 to 1995,
------------------------ ---------- ------------------------------------------- -------------------- -------------------
Robert J. DellaCroce Assistant Director, Mutual Fund Operations - SEI 0 0
SEI Investments Treasurer Investments (financial services); Senior
One Freedom Valley Rd. Manager at Arthur Andersen (accounting
Oaks, PA 19456 firm) prior to 1994.
12/17/63
</TABLE>
PRINCIPAL SHAREHOLDERS
As of April 18, 2000, the following persons or organizations held of record
or beneficially 5% or more of the shares of a portfolio:
<TABLE>
<CAPTION>
Percentage of Shares
Name and Address of Shareholder Owned Class
========================================================================================================
<S> <C> <C>
Charles Schwab & Company Inc. 41.68% Advisor Class Shares
Special Custody Acct FBO CUST REINV
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
-------------------------------------------------------------------------------------------------------
United Nations Joint Staff Pension Plan 38.94% Institutional Class Shares
Investment Management Service
United Nations Room S-0702
New York, NY 10017
-------------------------------------------------------------------------------------------------------
Charles Schwab & Company Inc. 15.73% Institutional Class Shares
Reinvest Account
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
-------------------------------------------------------------------------------------------------------
National Financial Securities Corp. 9.02% Institutional Class Shares
FBO LCM
200 Liberty Street LBBY 5
New York, NY 10281-5500
-------------------------------------------------------------------------------------------------------
HAWCO 8.07% Institutional Class Shares
c/o Hawaiian Trust Co
Client Mutual Funds 769
PO Box 1930
Honolulu HI 96805-1930
-------------------------------------------------------------------------------------------------------
</TABLE>
Any shareholder listed above as owning 25% or more of the outstanding
shares of a portfolio may be presumed to "control" (as that term is defined
in the 1940 Act) the portfolio. Shareholders controlling the portfolio
could have the ability to vote a majority of the shares of the portfolio on
any matter requiring the approval of shareholders of the portfolio. As of
April 18, 2000, the directors and officers of the Fund owned less than 1%
of the outstanding shares of the portfolio.
INVESTMENT ADVISORY AND OTHER SERVICES
27
<PAGE>
Investment Adviser
- --------------------------------------------------------------------------------
Heitman/PRA Securities Advisors LLC, located at 180 LaSalle Street, Suite
3600, Chicago, Illinois, 60601, is the investment adviser to the fund. The
adviser is a subsidiary of UAM and provides investment management services
to corporations, pension and profit-sharing plans, 401(k) and thrift plans,
trusts, estates and other institutions and individuals.
The adviser is a subsidiary of UAM. 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 more than 50 UAM
Affiliated Firms. UAM believes that permitting UAM Affiliated Firms to
retain control over their investment advisory decisions is necessary to
allow them to continue to provide investment management services that are
intended to meet the particular needs of their respective clients.
Accordingly, after acquisition by UAM, UAM Affiliated Firms continue to
operate under their own firm name, with their own leadership and individual
investment philosophy and approach. Each UAM Affiliated Firm manages its
own business independently on a day-to-day basis. Investment strategies
employed and securities selected by UAM Affiliated Firms are separately
chosen by each of them. Several UAM Affiliated Firms also act as investment
advisers to separate series or portfolios of the UAM Funds Complex.
Portfolio Managers
A team of investment professionals is primarily responsible for the
day-to-day management of the portfolio. The investment professionals of the
adviser that comprise the team and a description of their business
experience during the past five years are provided below.
Timothy J. Pire, CFA, is president of the adviser with responsibility for
portfolio management, research, and analysis of the publicly traded real
estate securities and implementation of the investment strategy through
portfolio management. Prior to joining the adviser, Mr. Pire served as vice
president and research analyst with PRA Securities Advisors, L.P. from 1992
to 1994.
Reagan A. Pratt is vice president of the adviser with responsibility for
portfolio management, research, and analysis of the publicly traded real
estate securities and implementation of the investment strategy through
portfolio management. Prior to joining the adviser, Mr. Pratt served as
vice president of investment research for Heitman Capital Management in
Chicago from 1994 to 1997.
Larry S. Antonatos is vice president of the adviser with responsibility for
portfolio management, research, and analysis of the publicly traded real
estate securities and implementation of the investment strategy through
portfolio management. Mr. Antonatos also oversees the adviser's trading
positions. Prior to joining the adviser, Mr. Antonatos served as associate
director with Fitch Investors Service, L.P. in New York City (1997-1998)
and as a portfolio manager with Equitable Real Estate Investment
Management, Inc. in Chicago from 1992 to 1997.
Philosophy and Style
The adviser believes that, over the long term, publicly traded real estate
securities' performance is determined by the underlying real estate assets,
real estate market cycles and management's ability to operate and invest in
these assets during each market cycle. The adviser's primary objective is
to generate long-term, superior, risk-adjusted returns by identifying and
investing in publicly traded real estate companies which demonstrate the
highest probability of growing cash flow per share without undue risk to
achieve such growth. As a value-oriented manager, the adviser is committed
to a strategy of investing in companies which offer growth at a reasonable
price.
28
<PAGE>
Investment Advisory Agreement
This section summarizes some of the important provisions of the Investment
Advisory Agreement. The Fund has filed the Investment Advisory Agreement
with the SEC as part of its registration statement on Form N-1A.
Service Performed by Adviser
The adviser:
. Manages the investment and reinvestment of the portfolio's assets;
. Continuously reviews, supervises and administers the investment
program of the portfolio; and
. Determines what portion of the portfolio's assets will be invested in
securities and what portion will consist of cash.
Limitation of Liability
In the absence of (1) willful misfeasance, bad faith, or gross negligence
on the part of the adviser in the performance of its obligations and duties
under the Investment Advisory Agreement, (2) reckless disregard by the
adviser of its obligations and duties under the Investment 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 Investment Advisory Agreement.
Continuing an Investment Advisory Agreement
The Investment Advisory Agreement continues in effect for periods of one
year so long as such continuance is specifically approved at least
annually:
. By a majority of those Board Members who are not parties to the
Investment Advisory Agreement or interested persons of any such party;
and
. By a majority of the Board Members or by a majority of the
shareholders of the portfolio.
Terminating an Investment Advisory Agreement
The Fund may terminate an Investment Advisory Agreement at any time,
without the payment of any penalty if:
. A majority of the portfolio's shareholders vote to do so or a majority
of Board Members vote to do so; and
. It gives the adviser 60 days' written notice.
The adviser may terminate the Investment Advisory Agreement at any time,
without the payment of any penalty, upon 90 days' written notice to the
Fund.
An Investment Advisory Agreement will automatically and immediately
terminate if it is assigned.
Advisory Fees
For its services, the portfolio pays its adviser a fee equal to 0.75% of
the first $100 million and 0.65% on assets in excess of $100 million of the
average daily net assets of the portfolio. Due to the effect of fee waivers
by the adviser, the actual percentage of average net assets that the
portfolio pays in any given year may be different from the rate set forth
in its contract with the adviser. For the last three fiscal years, the
portfolio paid the following in management fees to the adviser:
29
<PAGE>
Investment Advisory Fees Paid
---------------------------------------------------------------------------
1999 $858,702
---------------------------------------------------------------------------
1998 $1,185,717
---------------------------------------------------------------------------
1997 $1,489,121
---------------------------------------------------------------------------
Distributor
- --------------------------------------------------------------------------------
UAMFDI serves as 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,
an affiliate of UAM, is located at 211 Congress Street, Boston,
Massachusetts 02110.
UAMFDI receives no compensation for its services as distributor of the
Institutional Class Shares. In order to compensate financial services firms
that sell the portfolio's Advisor Class Shares, any amounts UAMFSI may
receive under the Service and Distribution Plan are passed through in their
entirety to third parties. At the discretion of UAMFDI, the entire sales
charge it receives for distribution of the Advisor Class Shares may at
times be reallowed to authorized dealers responsible for the sale.
ACG provides distribution services to the Fund with respect to Advisor
Class shares of the portfolio. ACG sells Advisor Class Shares as agent for
the Fund and has agreed to use all reasonable efforts to secure purchasers
for the Advisor Class Shares and to pay expenses of printing and
distributing prospectuses, statements of additional information, reports,
and any other literature and advertising necessary to sell shares. ACG is
located at 2300 Contra Costa Blvd, Suite 425, Pleasant Hill, CA 94523-3967.
Service And Distribution Plans
- --------------------------------------------------------------------------------
The portfolio has adopted a Shareholder Servicing Plan and a Distribution
Plan (the "Plans") for their Advisor Class Shares pursuant to Rule 12b-1
under the 1940 Act.
Shareholder Servicing Plan
The Shareholder Servicing Plan (Service Plan) permits the portfolio to
compensate broker-dealers or other financial institutions (Service Agents)
that have agreed with UAMFDI to provide administrative support services to
Advisor Class shareholders that are their customers. Under the Service
Plan, Advisor 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 Advisor Class Shares to the Distributors, 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 Advisor Class Shares as the SEC construes such term under
Rule 12b-1. Services for which Advisor 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.
30
<PAGE>
. 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.
. 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 Advisor Class Shares. Under the Distribution Plan, Advisor
Class Shares may pay distribution fees at the maximum annual rate of 0.50%
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 Advisor 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 Advisor Class Shares to pay distribution and service fees
at the maximum annual rate of 0.50% of the class' average daily net assets
for the year. The Fund's governing board has limited the amount the Advisor
Class may pay under the Plans to 0.25% of the class' average daily net
assets for the year, and may increase such amount to the plan maximum at
any time. For the fiscal year ended December 31, 1999, the portfolio paid
$195,007 in distribution and shareholder servicing fees.
The Fund will not reimburse UAMFDI 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.
31
<PAGE>
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 Advisor Class shareholders and that there is a
reasonable likelihood of the Plans providing a benefit to the class. The
board has determined that the 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 Advisor 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 non-interested board members who may or may not be
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.
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.
Sales Compensation
- --------------------------------------------------------------------------------
Sales Charges
Shareholders of the portfolio incur a sales charge when they purchase
Advisor Class shares. The amount of the sales charge is contingent upon the
amount of the shareholder's investment, as described in the table below.
The reduced charges are applicable to purchases of at least $100,000. A
group of "related investors" such as immediate family members, may received
the reduced charge.
<TABLE>
<CAPTION>
Dealer Concession as a %
Your Investment As a % of Offering Price As a % of Your Investment of Offering Price
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Up to $99,999 4.75% 4.99% 4.00%
--------------------------------------------------------------------------------------------------------------------
$100,000 to $249,999 4.00% 4.17% 3.50%
--------------------------------------------------------------------------------------------------------------------
$250,000 to $499,999 3.00% 3.09% 2.50%
--------------------------------------------------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% 1.75%
--------------------------------------------------------------------------------------------------------------------
$1,000,000 and over 1.00% 1.01% 0.75%
--------------------------------------------------------------------------------------------------------------------
</TABLE>
Letter of Intent
Shareholders may purchase shares of the portfolio at a reduced sales charge
by executing a letter of intent to purchase no less than $100,000 of shares
of the portfolio within a 13-month period. The shareholder will be charged
the sales charge applicable to each purchase made pursuant to a letter of
intent as if the total dollar amount were being bought in a single
transaction. Purchases made within a 90-day period prior to the letter of
intent may be included in the minimum calculation; however, in such case
the date of the earliest of such purchases marks the commencement of the
13-month period.
32
<PAGE>
A shareholder may include toward completion of a letter of intent the
current value of all of the shareholder's shares of the portfolio held of
record as of the date of the letter of intent, plus the current value as of
such date of all of such shares held by any "related person" as eligible to
join with the investor in a single purchase.
A letter of intent does not bind the investor to purchase the specified
amount. Shares equivalent to 2% of the specified amount will, however, be
taken from the initial purchase (or, if necessary, subsequent purchases)
and held in escrow in the investor's account as collateral against the
higher sales charge which would apply if the total purchase is not
completed within the allotted time. The escrowed shares will be released
when the aggregate purchase specified under the Letter of Intent is
completed, or if it is not completed, when the balance of the higher sales
charge is, upon notice, remitted by the investor. All dividends and capital
gains distributions with respect to the escrowed shares will be credited to
the investor's account.
Special Programs
Shareholders may also purchase Advisor Class shares without a sales charge
if they participate in one of the following special programs:
. Purchase shares through a registered investment advisers exercising
discretionary investment authority with respect to the purchase of
portfolio shares.
. If they are a Service Agent that charges account management fees.
. If they are a registered representative or employee (and their spouses
and minor children) of any Authorized Broker or Service Agent; trust
departments of financial institutions; other investment companies in
connection with the sale to the portfolio of cash and securities owned
by such other investment companies.
. If they established a separate account maintained by an insurance
company that is exempt from registration under Section 3(c)(11) of the
1940 Act.
. If they are a member of an organization that make recommendations to
or permit group solicitations in connection with the purchase of
shares of the Fund.
. If they maintain an "eligible employee benefit plans" of employers who
have at least 2,000 U.S. employees to whom such a plan is made
available and, regardless of the number of employees, if such plan is
established and maintained by any Authorized Broker or Service Agent.
An "eligible employee benefit plan" means any plan or arrangement,
whether or not tax qualified, which provides for the purchase of Fund
shares. Sales of shares to such plans must be made in connection with
a payroll deduction system of plan funding or other system acceptable
to the Distributor.
Purchases may also be made at net asset value, without a sales charge,
provided that such purchases are placed through a Service Agent and such
purchases are made by the following:
. Investment advisers or financial planners who place trades for their
own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services.
. Clients of such investment advisers or financial planners who place
trades for their own accounts if the accounts are linked to the master
account of such investment adviser or financial planner on the books
and records of the Service Agent; and
. Retirement and deferred compensation plans and trusts used to fund
those plans, including, but not limited to, those defined in section
401(a), 403(b) or 457 of the Internal Revenue Code and "rabbi trusts."
Additional Compensation to Dealers
At the discretion of the Distributor, the entire sales charge it receives
for distribution of the Advisor Class shares may at times be reallowed to
authorized dealers responsible for the sale. When more than 90% of the
sales charge is reallowed, such dealers may be deemed to be underwriters,
as that term is defined in the Securities Act of 1933. The Distributor may
also, at their own expense, provide additional compensation to dealers in
connection with the sale of
33
<PAGE>
shares of the portfolio. This compensation may only be available to those
dealers whose representatives have sold or are expected to sell significant
amounts of shares of the portfolio. This compensation may include:
. Financial assistance to dealers in connection with conferences, sales
or training programs for their employees.
. Seminars for the public.
. Advertising, sales companies and/or shareholder services and programs
regarding the portfolio.
. Various other dealer-sponsored programs or events.
. Travel expenses, including lodging, incurred in connection with trips
taken by registered representatives and members of their families for
meetings or seminars of a business nature.
Dealers are not permitted to use sales of the portfolio's shares to qualify
for this compensation to the extent prohibited by the laws of any state or
any self-regulatory agency, such as the National Association of Securities
Dealers, Inc., none of this additional compensation is paid for by the
portfolio or its shareholders.
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.
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.
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 Board Members 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.
34
<PAGE>
. 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 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
. A fee calculated at the annual rate of 0.43% of the portfolio net
assets.
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
. $5,000 for each additional operational class; plus
. 0.03% of their pro rata share of the combined assets of the UAM
Funds Complex.
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.
For the last three fiscal years the portfolio paid the following in
administration and sub-administration fees:
Administration Fee *
---------------------------------------------------------------------------
1999 $360,836
---------------------------------------------------------------------------
1998 $260,996
---------------------------------------------------------------------------
1997 $213,711
. Effective March 1, 1998, UAMFSI became the fund's administrator. Prior
to March 1, 1998, another firm provided administrative services to the
fund.
35
<PAGE>
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 Accountants
- --------------------------------------------------------------------------------
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts
02110, serves as independent accountant for the Fund.
Code of Ethics
- --------------------------------------------------------------------------------
The Fund, its distributor and its investment advisers have adopted a codes
of ethics under to Rule 17j-1 of the 1940 Act that permit personnel subject
to their particular code of ethics to invest in securities, including
securities that may be purchased or held by a portfolio.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Selection of Brokers
- --------------------------------------------------------------------------------
The Investment Advisory Agreement authorizes the adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the portfolio. The Investment 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 Investment 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. During the fiscal year ended December 31, 1999,
the adviser directed $68,624,747 of the portfolio's brokerage transactions
to Direct Access Brokerage Services in exchange for certain research
services. Commissions paid on those transactions were $125,343.
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
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
36
<PAGE>
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, the portfolio
will not pay brokerage commissions for such purchases. When a debt security
is bought from an underwriter, the purchase price will usually include an
underwriting commission or concession. The purchase price for securities
bought from dealers serving as market makers will similarly include the
dealer's mark up or reflect a dealer's mark down. When 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.
Commissions Paid
For the last three fiscal years, the portfolio paid the brokerage
commissions set forth below. Significant differences are due to increases
or decreases in the portfolio's net assets.
Brokerage Commissions
---------------------------------------------------------------------------
1999 $229,996
---------------------------------------------------------------------------
1998 $355,571
---------------------------------------------------------------------------
1997 $90,657
---------------------------------------------------------------------------
CAPITAL STOCK AND OTHER SECURITIES
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 Fund changed its
name to "UAM Funds Trust." The Fund's principal executive office is located
at 211 Congress Street, Boston, MA 02110; however, shareholders should
direct all correspondence to the address listed on the cover of this SAI.
The portfolio is a diversified series of the Fund. This 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).
Description Of Shares And Voting Rights
The Fund's Agreement and Declaration of Trust permits the Fund to issue an
unlimited number of shares of beneficial interest, without par value. The
Board has the power to designate one or more series (portfolios) or classes
of shares of
37
<PAGE>
beneficial interest without shareholder approval. The Board has authorized
three classes of shares: Institutional Class, Institutional Service Class,
and Advisor Class. Not all of the portfolios issue all of the classes.
Description of Shares
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 the Fund have noncumulative voting rights, which
means that the holders of more than 50% of the shares voting for the
election of board members can elect 100% of the board 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 Board.
If the Fund is liquidated, the shareholders of each portfolio or any class
thereof are entitled to receive the net assets belonging to that portfolio,
or in the case of a class, belonging to that portfolio and allocable to
that class. The Fund will distribute is net assets to its shareholders in
proportion to the number of shares of that portfolio or class thereof held
by them and recorded on the books of the Fund. A majority of the Board may
authorize the liquidation of any portfolio or class at any time.
The Fund will not hold annual meetings except when required to by the 1940
Act or other applicable law.
Class Differences
The Board has authorized three classes of shares, Institutional,
Institutional Service and Advisor. The three classes represent interests in
the same assets of the portfolio and, except as discussed below, are
identical in all respects.
. Institutional Service Shares bear certain expenses related to
shareholder servicing and the distribution of such shares and have
exclusive voting rights with respect to matters relating to such
distribution expenditures.
. Advisor 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.
Advisor Shares also charge a sales load on purchases.
. Each class of shares has different exchange privileges.
Distribution and shareholder servicing fees reduce a class's:
. Net income;
. Dividends; and
. NAV to the extent the portfolio has undistributed net income.
Dividend and Distribution Options
There are three ways for shareholders to receive dividends and capital
gains:
. Income dividends and capital gains distributions are reinvested in
additional shares at net asset value;
. Income dividends are paid in cash and capital gains distributions are
reinvested in additional shares at NAV; and
. Income dividends and capital gains distributions are paid in cash.
Unless the shareholder elects otherwise in writing, the fund will
automatically reinvest all dividends in additional shares of the portfolio
at NAV (as of the business day following the record date). Shareholders may
change their dividend and distributions option by writing to the fund at
least three days before the record date for income dividend or capital gain
distribution.
The fund sends account statements to shareholders whenever it pays an
income dividend or capital gains distribution.
38
<PAGE>
Federal Taxes
The portfolio intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, and to distribute out its income
to shareholders each year so that the portfolio itself generally will be
relieved of federal income and excise taxes. If the portfolio were to fail
to make sufficient distributions in a year, it would be subject to
corporate income taxes and/or excise taxes. In addition, if the shortfall
were large enough, the portfolio could be disqualified as a regulated
investment company. If the portfolio were to fail to so qualify: (1) it
would be taxed at regular corporate rates without any deduction for
distributions to shareholder; and (2) its shareholders would be taxed as if
they received ordinary dividends, although corporate shareholders could be
eligible for the dividends received deduction.
The portfolio's dividends that are paid to its corporate shareholders and
are attributable to qualifying dividends it received from U.S. domestic
corporations may be eligible, in the hands of such shareholders, for the
corporate dividends received deduction, subject to certain holding period
requirements and debt financing limitations.
At December 31, 1999, the portfolio had a capital loss carryover of
approximately $26,026 for federal income tax purposes that will expire on
December 31, 2006.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Net Asset Value Per Share
- --------------------------------------------------------------------------------
Calculating NAV
The purchase and redemption price of the shares of the portfolio is equal
to its NAV. The portfolio calculates its NAV 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; and
. 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.
The 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, Presidents' 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 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
39
<PAGE>
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
- --------------------------------------------------------------------------------
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.
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 "How the Fund Values it Assets"
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; and
. 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.
40
<PAGE>
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"); and
. Any other necessary legal documents for estates, trusts,
guardianships, custodianships, corporations, pension and profit
sharing plans and other organizations.
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 this manner, you
must submit a written request signed by each shareholder, with each
signature guaranteed.
. Redeem shares represented by a certificate.
The Fund and 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.
Redemptions-In-Kind
If the governing board determines that it would be detrimental to the best
interests of remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay redemption proceeds in whole or in part by
a distribution in-kind of liquid securities held by the portfolio in lieu
of cash in conformity with applicable rules of the SEC. Investors may incur
brokerage charges on the sale of portfolio securities received in payment
of redemptions.
The Fund has made an election with the SEC to pay in cash all redemptions
requested by any shareholder of record limited in amount during any 90-day
period to the lesser of $250,000 or 1% of the net assets of the Fund at the
beginning of such period. Such commitment is irrevocable without the prior
approval of the SEC. Redemptions in excess of the above limits may be paid
in whole or in part, in investment securities or in cash, as the Board may
deem advisable; however, payment will be made wholly in cash unless the
governing board believes that economic or market conditions exist which
would make such a practice detrimental to the best interests of the Fund.
If the portfolio pays redemption proceeds with securities instead of cash,
it will value such securities as set forth under "How the Fund
41
<PAGE>
Values its Assets." A redeeming shareholder would normally incur brokerage
expenses if these securities were converted to cash.
Signature Guarantees
The Fund requires signature guarantees for certain types of documents,
including:
. Written requests for redemption;
. Separate instruments for assignment ("stock power"), which should
specify the total number of shares to be redeemed; and
. 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;
. when 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; or
. for such other periods as the Commission may permit.
Exchange Privilege
- --------------------------------------------------------------------------------
The exchange privilege is only available with respect to portfolios that
are qualified for sale in the shareholder's state of residence. Exchanges
are based on the respective net asset values of the shares involved. The
Institutional Class and Institutional Service Class shares of UAM Funds do
not charge a sales commission or charge of any kind for exchanges.
Neither the Fund nor any of its service providers will be responsible for
the authenticity of the exchange instructions received by telephone. The
governing board of the Fund may restrict the exchange privilege at any
time. Such
42
<PAGE>
instructions may include limiting the amount or frequency of exchanges and
may be for the purpose of assuring such exchanges do not disadvantage the
Fund and its shareholders.
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.
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 portfolio calculates
its current yield and average annual total return information according to
the methods required by the SEC. The performance is calculated separately
for each Class of the portfolio. Dividends paid by the portfolio with
respect to each Class will be calculated in the same manner at the same
time on the same day and will be in the same amount, except that
distribution and service fees 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 the 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 Service 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
43
<PAGE>
Where:
P = a hypothetical initial payment of $10,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1, 5 or 10 year periods at the end of
the 1, 5 or 10 year periods (or fractional portion thereof).
Set forth in the table below are the portfolio's average annual returns for
the one-year period and the five-year period ended December 31, 1999 and
the shorter of the ten-year period ended December 31, 1999 or the period
from the portfolio's inception date through December 31, 1999.
<TABLE>
<CAPTION>
One Year Five Years Since Inception Inception Date
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional Class -1.16% 9.24% 8.11% 3/13/89
--------------------------------------------------------------------------------
Advisor Class -1.62% N/A 10.06% 05/15/95
--------------------------------------------------------------------------------
</TABLE>
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 mutual 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 Adviser 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.
Set forth in the table below are the yields for certain of the portfolios
for the 30-day period December 31, 1999.
30-Day Yield
---------------------------------------------------------------------------
Advisor Class 5.18%
---------------------------------------------------------------------------
Institutional Class 6.10%
---------------------------------------------------------------------------
44
<PAGE>
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 this SAI. This information may also be included in
sales literature and advertising.
To help investors better evaluate how an investment in the portfolio might
satisfy their investment objective, advertisements regarding the Fund may
discuss various measures of Fund performance as reported by various
financial publications. Advertisements may also compare performance (as
calculated above) to performance as reported by other investments, indices
and averages. Please see "Comparative Benchmarks" 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 indices and averages are generally unmanaged;
. 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; and
. that shareholders cannot invest directly in such indices or averages.
In addition, there can be no assurance that the portfolio will continue
this performance as compared to such other averages.
FINANCIAL STATEMENTS
The following documents are included in the portfolio's December 31, 1999
Annual Report:
. Financial statements for the fiscal year ended December 31, 1999;
. Financial highlights for the respective periods presented; and
. The report of PricewaterhouseCoopers LLP.
Each of the above-referenced documents is incorporated by reference into
this SAI. However, no other parts of the portfolio's Annual Reports are
incorporated by reference herein. Shareholders may get copies of the
portfolio's Annual Reports free of charge by calling the UAM Funds at the
telephone number appearing on the front page of this SAI.
GLOSSARY
All terms that this SAI does not otherwise define, have the same meaning in
the SAI as they do in the prospectus(es) of the portfolios.
1933 Act means the Securities Act of 1933, as amended.
1934 Act means the Securities Exchange Act of 1934, as amended.
<PAGE>
1940 Act means the Investment Company Act of 1940, as amended.
Adviser means the investment adviser of the portfolio.
Board Member refers to a single member of the Fund's Board.
Board refers to the Fund's Board of Trustees as a group.
SEI is SEI Investments Mutual Funds Services, the Fund's sub-administrator.
Distribution Plan refers to the Distribution Plan the Fund has adopted for
its Service Class Shares pursuant to Rule 12b-1 under the 1940 Act.
Fund refers to UAM Funds Trust.
Governing Board, see Board.
NAV is the net asset value per share of a portfolio.
NYSE is the New York Stock Exchange. Also known as "The Exchange" or "The
Big Board," the NYSE is located on Wall Street and is the largest exchange
in the United States.
Plan member refers to 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.
Plans refers to the Distribution and Shareholder Servicing Plans the Fund
has adopted for its Advisor Class Shares pursuant to Rule 12b-1 under the
1940 Act.
SEC is the Securities and Exchange Commission. The SEC is the federal
agency that administers most of the federal securities laws in the United
States. In particular, the SEC administers the 1933 ACT, the 1940 ACT and
the 1934 ACT.
Service Plan refers to the Shareholder Servicing Plan the Fund has adopted
for its Service Class Shares pursuant to Rule 12b-1 under the 1940 Act.
Service Class means the Institutional Service Class shares or Adviser Class
shares of a portfolio.
UAM Funds Complex includes UAM Funds, Inc., UAM Funds Trust, UAM Funds Inc.
II and all of their portfolios.
UAM is United Asset Management Corporation.
UAMFDI is UAM Fund Distributors, Inc., the Fund's distributor.
UAMFSI is UAM Fund Services, Inc., the Fund's administrator.
UAMSSC is UAM Fund Shareholder Servicing Center, the Fund's
sub-shareholder-servicing agent.
BOND RATINGS
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 stocks.
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.
46
<PAGE>
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 that 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 that 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 period of time may be small.
caa An issue that 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 that 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.
plus (+) or Moody's applies numerical modifiers 1, 2, and 3 in each
minus 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 that 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 that are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise
what are generally known as high grade bonds. They are
rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater
amplitude or there may be other elements present that make
the long-term risks appear somewhat larger than the Aaa
securities.
A Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and
interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment
sometime in the future.
Baa Bonds that 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.
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<PAGE>
B Bonds that 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 that 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 that are rated Ca represent obligations that 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.
Con. (...) (This rating applies only to U.S. Tax-Exempt Municipals)
Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of
projects under construction, (b) earnings of projects
unseasoned in operating experience, (c) rentals that begin
when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical
rating denotes probable credit stature upon completion of
construction or elimination of basis of condition.
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:
. Leading market positions in well-established
industries.
. Conservative capitalization structure with
moderate reliance on debt and ample asset
protection.
. Broad 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.
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<PAGE>
Not Prime Issuers rated Not Prime do not fall within any of
the Prime rating categories.
Standard & Poor's Ratings Services
- --------------------------------------------------------------------------------
Long-Term Issue Credit Ratings
Issue credit ratings are based, in varying degrees, on the following
considerations:
1. 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;
2. Nature of and provisions of the obligation;
3. 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.
The issue rating definitions are expressed in terms of default risk.
As such, they pertain to senior obligations of an entity. Junior
obligations are typically rated lower than senior obligations, to
reflect the lower priority in bankruptcy, as noted above. Accordingly,
in the case of junior debt, the rating may not conform exactly with
the category definition.
AAA An obligation rated 'AAA' has 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 obligor to meet its financial
commitment on the obligation.
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.
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<PAGE>
C A subordinated debt or preferred stock obligation rated 'C'
is CURRENTLY HIGHLY VULNERABLE to non-payment. The 'C'
rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action taken, but
payments on this obligation are being continued. A 'C' will
also be assigned to a preferred stock issue in arrears on
dividends or sinking fund payments, but that is currently
paying.
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.
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.
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 obligation as a matter of policy.
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.
Short-Term Issue Credit 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 obligations 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.
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.
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<PAGE>
Local Currency and Foreign Currency Risks
Country risks considerations are a standard part of Standard & Poor's
analysis for credit ratings on any issuer or issue. Currency of repayment
is a key factor in this analysis. An obligor's capacity to repay foreign
currency obligations may be lower than its capacity to repay obligations in
its local currency due to the sovereign government's own relatively lower
capacity to repay external versus domestic debt. These sovereign risk
considerations are incorporated in the debt ratings assigned to specific
issues. Foreign currency issuer ratings are also distinguished from local
currency issuer ratings to identity those instances where sovereign risks
make them different for the same issuer.
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
AA- 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
BB- obligations 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 met 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.
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.
D-1- High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection
factors. Risk factors are very small.
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<PAGE>
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 of
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.
BBB 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.
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<PAGE>
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.
DDD,DD,D Default. The ratings of obligations in this category are
based on their prospects for achieving partial or full
recovery in a reorganization or liquidation of the obligor.
While expected recovery values are highly speculative and
cannot be estimated with any precision, the following serve
as general guidelines. "DDD" obligations have the highest
potential for recovery, around 90%-100% of outstanding
amounts and accrued interest. "D" indicates potential
recoveries in the range of 50%-90%, and "D" the lowest
recovery potential, i.e., below 50%.
Entities rated in this category have defaulted on some
or all of their obligations. Entities rated "DDD" have the
highest prospect for resumption of performance or continued
operation with or without a formal reorganization process.
Entities rated "DD" and "D" are generally undergoing a
formal reorganization or liquidation process; those rated
"DD" are likely to satisfy a higher portion of their
outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations.
International Short-Term Credit Ratings
F1 Highest credit quality. Indicates the Best 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. Uncertain 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 that is highly uncertain
and 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.
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<PAGE>
Comparative Benchmarks
(alphabetically)
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.
Financial publications: Business Week, Changing Times, Financial World,
Forbes, Fortune, Money, Barron's, Consumer's Digest, Financial Times,
Global Investor, Investor's Daily, Lipper, Inc., Morningstar, Inc., The New
York Times, Personal Investor, The 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 Index - an average of all major money
market fund yields, published weekly for 7- and 30-day yields.
IFC Investable Composite Index - an unmanaged market
capitalization-weighted index maintained by the International Finance
Corporation. This index consists of over 890 companies in 26 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 Brothers Indices:
------------------------
Lehman Brothers 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 $100 million for U.S. government issues and $25 million for
others.
Lehman Brothers Corporate Bond Index - an unmanaged index of all publicly
issued, fixed-rate, nonconvertible investment grade domestic corporate
debt. Also included are yankee bonds, which are dollar-denominated SEC
registered public, nonconvertible debt issued or guaranteed by foreign
sovereign governments, municipalities, or governmental agencies, or
international agencies.
Lehman Brothers 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 corporations, and
corporate debt guaranteed by the U.S. government). In addition to the
aggregate index, sub-indices cover intermediate and long term issues.
Lehman Brothers Government/Corporate Bond 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 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.
54
<PAGE>
Lehman Brothers High Yield Bond Index - an unmanaged index of fixed rate,
non-investment grade debt. All bonds included in the index are dollar
denominated, nonconvertible, have at least one year remaining to maturity
and an outstanding par value of at least $100 million.
Lehman Brothers Intermediate Government/Corporate Index - an unmanaged
fixed income, market value-weighted index that combines the Lehman Brothers
Government Bond Index (intermediate-term sub-index) and four corporate bond
sectors.
Lehman Brothers Mortgage-Backed Securities Index - an unmanaged index of
all fixed-rate securities backed by mortgage pools of Government National
Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation
(FHLMC), and Federal National Mortgage Association (FNMA).
Lipper, Inc./Lipper Indices/Lipper Averages
-------------------------------------------
The Lipper Indices are equally weighted indices for typically the 30
largest mutual funds within their respective portfolio investment
objectives. The indices are currently grouped in six categories: U.S.
Diversified Equity with 12 indices; Equity with 27 indices, Taxable
Fixed-Income with 20 indices, Tax-Exempt Fixed-Income with 28 indices,
Closed-End Funds with 16 indices, and Variable Annuity Funds with 18
indices.
In September, 1999, Lipper, Inc. introduced its new portfolio-based mutual
fund classification method in which peer comparisons are based upon
characteristics of the specific stocks in the underlying funds, rather than
upon a broader investment objective stated in a prospectus. Certain of
Lipper, Inc.'s classifications for general equity funds' investment
objectives were changed while other equity objectives remain unchanged.
Changing investment objectives include Capital Appreciation Funds, Growth
Funds, Mid-Cap Funds, Small-Cap Funds, Micro-Cap Funds, Growth & Income
Funds, and Equity Income Funds. Unchanged investment objectives include
Sector Equity Funds, World Equity Funds, Mixed Equity Funds, and certain
other funds including all Fixed Income Funds and S&P(R) Index Funds.
Criteria for the Lipper Indices are: 1) component funds are largest in
group; 2) number of component funds remains the same (30); 3) component
funds are defined annually; 4) can be linked historically; and 5) are used
as a benchmark for fund performance.
Criteria for the Lipper Averages are: 1) includes all funds in the group in
existence for the period; 2) number of component funds always changes; 3)
universes are dynamic due to revisions for new funds, mergers,
liquidations, etc.; and 4) will be inaccurate if historical averages are
linked.
Certain Lipper, Inc. indices/averages used by the UAM Funds may include,
but are not limited to, the following:
Lipper Short-Intermediate 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 one
to five years or less. (Taxable Fixed-Income category)
Lipper Balanced Fund Index - an unmanaged index of open-end equity funds
whose primary objective is to conserve principal by maintaining at all
times a balanced portfolio of both stocks and bonds. Typically, the
stock/bond ratio ranges around 60%/40%. (Equity category)
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. (Equity category)
Lipper Equity Mid Cap Fund Index - an unmanaged index of funds that by
prospectus or portfolio practice invest primarily in companies with market
capitalizations less than $5 billion at the time of purchase. (Equity
category)
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. (Equity
category)
Lipper Growth Fund Index - an unmanaged index composed of the 30 largest
funds by asset size which invest in companies with long-term earnings
expected to grow significantly faster than the earnings of the stocks
represented in the major unmanaged stock indices.
(Equity category)
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<PAGE>
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).
Merrill Lynch 1-3 Year Treasury Index - an unmanaged index composed of U.S.
treasury securities with maturities from 1 to 3 years.
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.
Nikkei Stock Average - a price weighted index of 225 selected leading
stocks listed on the First Section of the Tokyo Stock Exchange.
New York Stock Exchange composite or component indices --
capitalization-weighted unmanaged indices of all industrial, utilities,
transportation and finance stocks listed on the New York Stock Exchange.
Russell U.S. Equity Indices:
----------------------------
Russell 3000(R)Index - measures the performance of the 3,000 largest U.S.
companies based on total market capitalization, which represents
approximately 98% of the investable U.S. equity market.
Russell 1000(R) Index - an unmanaged index which measures the performance
of the 1,000 largest companies in the Russell 3000 Index, which represents
approximately 92% of the total market capitalization of the Russell 3000
Index.
Russell 2000(R) Index -- an unmanaged index which measures the performance
of the 2,000 smallest companies in the Russell 3000 Index, which represents
approximately 8% of the total market capitalization of the Russell 3000
Index.
Russell Top 200(TM) Index - measures the performance of the 200 largest
companies in the Russell 1000 Index, which represents approximately 74% of
the total market capitalization of the Russell 1000 Index.
Russell Mid-Cap(TM) Index -- measures the performance of the 800 smallest
companies in the Russell 1000 Index, which represents approximately 26% of
the total market capitalization of the Russell 1000 Index.
Russell 2500(TM) Index - an unmanaged index which measures the performance
of the 2,5000 smallest companies in the Russell 3000 Index, which
represents approximately 17% of the total market capitalization of the
Russell 3000 Index.
Russell 3000(R) Growth Index - measures the performance of those Russell
3000 Index companies with higher price-to-book ratios and higher forecasted
growth values. The stocks in this index are also members of either the
Russell 1000 Growth or the Russell 2000 Growth indexes.
Russell 3000(R) Value Index - measures the performance of those Russell
3000 Index companies with lower price-to-book ratios and lower forecasted
growth values. The stocks in this index are also members of either the
Russell 1000 Value or the Russell 2000 Value indexes.
Russell 1000(R) Growth Index - measures the performance of those Russell
1000 companies with higher price-to-book ratios and higher forecasted
growth values.
Russell 1000(R) Value Index - measures the performance of those Russell
1000 with lower price-to-book ratios and lower forecasted growth values.
Russell 2000(R) Growth Index - measures the performance of those Russell
2000 companies with higher price-to-book ratios and higher forecasted
growth values.
56
<PAGE>
Russell 2000(R) Value Index - measures the performance of those Russell
2000 companies with lower price-to-book ratios and lower forecasted growth
values.
Russell Top 200(TM) Growth Index - measures the performance of those
Russell Top 200 companies with higher price-to-book ratios and higher
forecasted growth values. The stocks re also members of the Russell 1000
Growth index.
Russell Top 200(TM) Value Index - measures the performance of those Russell
Top 200 companies with lower price-to-book ratios and lower forecasted
growth values. The stocks are also members of the Russell 1000 Value index.
Russell Midcap(TM) Growth Index - measures the performance of those Russell
Midcap companies with higher price-to-book ratios and higher forecasted
growth values. The stocks are also members of the Russell 1000 Growth
index.
Russell Midcap(TM) Value Index - measures the performance of those Russell
Midcap companies with lower price-to-book ratios and lower forecasted
growth values. The stocks are also members of the Russell 1000 Value index.
Russell 2500(TM) Growth Index - measures the performance of those Russell
2500 companies with higher price-to-book ratios and higher forecasted
growth values.
Russell 2500(TM) Value Index - measures the performance of those Russell
2500 companies with lower price-to-book ratios and lower forecasted growth
values.
Ryan Labs 5 Year GIC Master Index - an arithmetic mean of market rates of
$1 million GIC contracts held for five years. The market rates are
representative of a diversified, investment grade portfolio of contracts
issued by credit worthy insurance companies. The index is unmanaged and
does not reflect any transaction costs. Direct investment in the index is
not possible.
Standard & Poor's U.S. Indices:
-------------------------------
In October, 1999, Standard & Poor's and Morgan Stanley Capital
International launched a new global industry classification standard
consisting of 10 economic sectors aggregated from 23 industry groups, 59
industries, and 123 sub-industries covering almost 6,000 companies
globally. The new classification standard will be used with all of their
respective indices. Features of the new classification include 10 economic
sectors, rather than the 11 S&P currently uses. Sector and industry
gradations are less severe. Rather than jumping from 11 sectors to 115
industries under the former S&P system, the new system progresses from 10
sectors through 23 industry groups, 50 industries and 123 sub-industries.
S&P 500 Index - an unmanaged index composed of 400 industrial stocks, 40
financial stocks, 40 utilities stocks and 20 transportation stocks. Widely
regarded as the standard for measuring large-cap U.S. stock market
performance. It is used by 97% of U.S. money managers and pension plan
sponsors. More than $1 trillion is indexed to the S&P 500.
S&P MidCap 400 Index -- consists of 400 domestic stocks chosen for market
size, liquidity, and industry group representation. It is a market-value
weighted index with each stock affecting the index in proportion to its
market value. It is used by over 95% of U.S. managers and pension plan
sponsors. More than $25 billion is indexed to the S&P MidCap 400.
S&P Small Cap 600 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. It is gaining wide
acceptance as the preferred benchmark for both active and passive
management due to its low turnover and greater liquidity. Approximately $8
billion is indexed to the S&P SmallCap 600.
S&P SuperComposite 1500 - combines the S&P 500, MidCap 400, and SmallCap
600 indices, representing 87% of the total U.S. equity market
capitalization.
S&P 100 Index - known by its ticker symbol OEX, this index measures large
company U.S. stock market performance. This market capitalization-weighted
index is made up of 100 major, blue chip stocks across diverse industry
groups.
S&P/BARRA Growth and Value Indices - are constructed by dividing the
securities in the S&P 500 Index according to price-to-book ratio. The Value
index contains the companies with the lower price-to-book ratios; while the
companies with the higher price-to-book ratios are contained in the Growth
index.
57
<PAGE>
S&P REIT Composite Index - launched in 1997, this benchmark tracks the
market performance of U.S. Real Estate Investment Trusts, known as REITS.
The REIT Composite consists of 100 REITs chosen for their liquidity and
importance in representing a diversified real estate portfolio. The Index
covers over 80% of the securitized U.S. real estate market.
S&P 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.
Standard & Poor's CANADA Indices:
---------------------------------
S&P/TSE Canadian MidCap Index - measures the performance of the mid-size
company segment of the Canadian equity market.
S&P/TSE Canadian SmallCap Index - Measures the small company segment of the
Canadian equity market.
Standard & Poor's Global Indices:
---------------------------------
S&P Global 1200 Index - aims to provide investors with an investable
portfolio. This index, which covers 29 countries and consists of seven
regional components, offers global investors an easily accessible, tradable
set of stocks and particularly suits the new generation of index products,
such as exchange-traded funds (ETFs).
S&P Euro and S&P Euro Plus Indices - the S&P Euro Index covers the Eurobloc
countries; the Euro Plus Index includes the Euro markets as well as
Denmark, Norway, Sweden and Switzerland. The S&P Euro Plus Index contains
200 constituents, and the S&P Euro Index, a subset of Euro Plus, contains
160 constituents. Both indices provide geographic and economic diversity
over 11 industry sectors.
S&P/TSE 60 Index - developed with the Toronto Stock Exchange, is designed
as the new Canadian large cap benchmark and will ultimately replace the
Toronto 35 and the TSE 100.
S&P/TOPIX 150 - includes 150 highly liquid securities selected from each
major sector of the Tokyo market. It is designed specifically to give
portfolio managers and derivative traders an index that is broad enough to
provide representation of the market, but narrow enough to ensure
liquidity.
S&P Asia Pacific 100 Index - includes highly liquid securities from each
major economic sector of major Asia-Pacific equity markets. Seven countries
-- Australia, Hong Kong, Korea, Malaysia, New Zealand, Singapore, and
Taiwan -- are represented in the new index.
S&P Latin America 40 Index -part of the S&P Global 1200 Index, includes
highly liquid securities from major economic sectors of Mexican and South
American equity markets. Companies from Mexico, Brazil, Argentina, and
Chile are represented in the new index.
S&P United Kingdom 150 Index - includes 150 highly liquid securities
selected from each of the new S&P sectors. The S&P UK 150 is designed to be
broad enough to provide representation of the market, but narrow enough to
ensure liquidity.
Salomon Smith Barney Global excluding U.S. Equity Index - an unmanaged
index 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 of 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.
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.
58
<PAGE>
Target Large Company Value Index - an index comprised of large companies
with market capitalizations currently extending down to approximately $1.9
billion that are monitored using a variety of relative value criteria in
order to capture the most attractive value opportunities available. A high
quality profile is required and companies undergoing adverse financial
pressures are eliminated.
U.S. Three-Month Treasury Bill Average - the average return for all
treasury bills for the previous three month period.
Value Line Composite Index -- 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 the 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.
59
<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 41 = Post-Effective Amendment No.
41 filed on February 28, 2000; PEA 39 = Post-Effective Amendment No. 39 filed on
December 28, 1999; PEA 35 = Post-Effective Amendment No. 35 filed on August 9,
1999; 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; PEA17 = Post-Effective Amendment No. 17 filed on December 15, 1997, PEA16
= Post-Effective Amendment No. 16 filed on July 10, 1997.
<TABLE>
<CAPTION>
Incorporated by
Exhibit Reference to (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
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 Provident Investment Counsel PEA 39
15. 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 Shares) PEA 19
4. Amendment to Distribution Agreement between Registrant and ACG Capital Corporation dated as PEA 29
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Incorporated by
Exhibit Reference to (Location):
- ------- -----------
<S> <C> <C>
of March 31, 1999
5. A. Form of Selling Dealer Agreement-Institutional Service Class Shares filed herewith
B. Form of Selling Dealer Agreement-Institutional Class Shares filed herewith
C. Form of Broker Services Agreement-Institutional Service Class Shares filed herewith
D. Form of Broker Services Agreement-Institutional Class Shares filed herewith
F. Trustees' and Officers' Contracts and Programs Not applicable
G. 1. Global Custody Agreement PEA 16
H. 1. Fund Administration Agreement PEA 27
2. Fund Administration Agreement Fee Schedule PEA 30
3. Mutual Funds Service Agreement PEA 41
I. Opinions and Consents of Counsel PEA 34, PEA 39, PEA 41,
filed herewith
J. Consent of Independent Auditors PEA 34, PEA 35, PEA 39,
PEA 41, filed herewith
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. Amended and Restated Rule 18f-3 Multiple Class Plan PEA 24
O. Powers of Attorney PEA 24, PEA 27
P. Code of Ethics filed herewith
</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.
<PAGE>
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.
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:
Investment Adviser File No.
- ------------------ --------
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
Provident Investment Counsel, Inc. 801-47993
Tom Johnson Investment Management, Inc. 801-42549
<TABLE>
<CAPTION>
Positions and Offices with Pell Rudman Positions and Offices with
Name and Principal Business Address Trust Company, N.A. Pell 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
100 Federal Street Pell, 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.,
Provident Investment Counsel, 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).
<PAGE>
(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).
(d) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The books, accounts and other documents required by Section 31(a) under the
Investment Company Act of 1940, as amended, and the rules promulgated thereunder
will be maintained in the physical possession of the Registrant, the
Registrant's Advisers, the Registrant's Administrator (UAM Fund Services, Inc.,
211 Congress Street, 4th Floor, Boston, MA 02110), Sub-Administrative Agent (SEI
Investments Mutual Funds Services, 530 East Swedesford Road, Wayne, PA
19087-1658), Sub-Shareholder Servicing Agent (UAM Shareholder Services Center,
Inc., 825 Duportail Road, Wayne, PA 19087), the Registrant's Sub-Transfer Agent
(DST Systems, Inc., 210 West 10th Street, Kansas City, MO 64105), and the
Registrant's Custodian Bank (The Chase Manhattan Bank 4 Chase MetroTech Center,
Brooklyn, New York, 11245).
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 registrant certifies that it meets all of the requirement for
effectiveness of this registration statement under Rule 485(b) under the
Securities Act and 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 28th day of April, 2000.
UAM FUNDS TRUST
/s/Martin J. Wolin
--------------------
Martin J. Wolin
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 28th day of April, 2000.
*
- ----------------------------------
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. French
- ----------------------------------
Gary L. French, Treasurer
/s/Gary L. French
- -----------------
* Gary L. French
(Attorney-in-Fact)
<PAGE>
UAM FUNDS TRUST
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
E.5 A. Form of Selling Dealer Agreement-Institutional Service Class Shares
B. Form of Selling Dealer Agreement-Institutional Class Shares
C. Form of Broker Services Agreement-Institutional Service Class Shares
D. Form of Broker Services Agreement-Institutional Class Shares
I. Opinion and Consent of Counsel
J. Consent of PricewaterhouseCoopers LLP
P. Code of Ethics
</TABLE>
<PAGE>
UAM FUND DISTRIBUTORS, INC.
211 Congress Street
Boston, Massachusetts 02110
----------------------------------------------
SELLING DEALER AGREEMENT
UAM FUNDS, INC., UAM FUNDS, INC. II AND UAM FUNDS TRUST
(Institutional Service Class Shares)
----------------------------------------------
Dealer:
Gentlemen:
We invite you, as a selected dealer, to participate as principal in the
distribution of the Institutional Service Class Shares (the "Shares") of the
Portfolios of UAM Funds, Inc. and of UAM Funds Trust (each Portfolio is referred
to herein as the "Fund") with respect to which we have been retained to act as
exclusive national distributor and which are offered for sale pursuant to
currently effective federal Prospectuses describing such Shares.
OFFERING PRICE TO PUBLIC:
- -------------------------
Orders for Shares received from you and accepted by the Fund, will be at
the public offering price applicable to each order as set forth in that Fund's
Prospectus relating to such Shares. The manner of computing the net asset value
of Shares, the public offering price and the effective time of orders received
from you are described in the Prospectuses for the Shares. We reserve the
right, at any time and without notice, to suspend the sale of Fund Shares.
SALES, ORDERS AND CONFIRMATIONS:
- --------------------------------
In offering Fund Shares to the public or otherwise, you shall act as dealer
for your own account, and in no transaction shall you have any authority to act
as agent for the Fund, for any other selected dealer or for us. No person is
authorized to make any representation concerning the Shares or any Fund except
those contained in the relevant and current Prospectus and in written
information issued by the Fund or by us as a supplement to such Prospectus. In
purchasing Fund Shares, you shall rely solely on such representations contained
in the Prospectus and in such written supplemental information.
All sales are made subject to confirmation and orders are subject to
acceptance or rejection by the Fund in its sole discretion. Your orders must be
wired, telephoned or written to the Fund as provided in the relevant and current
Prospectus. You agree to place orders for the same number of Shares sold by you
at the price at which such Shares are sold. You agree that you will not
purchase Shares except for investment or for the purpose of covering purchase
orders already received and that you will not, as principal, sell Fund Shares
unless purchased by you from the Fund under the terms hereof. You also agree
that you will not withhold placing with us orders received from your customers
so as to profit yourself from such withholding.
<PAGE>
Each of your orders shall be confirmed by you in writing on the same day.
PAYMENT AND ISSUANCE OF CERTIFICATES:
- -------------------------------------
The Shares purchased by you hereunder shall be paid for in full at the
public offering price, by check payable to the Fund, at its office, within three
business days after our acceptance of your order. If not so paid, we reserve
the right to cancel the sale and to hold you responsible for any loss sustained
by us or the Fund (including lost profit) in consequence. Certificates
representing the Shares will not be issued.
REDEMPTIONS:
- ------------
The relevant Prospectus describes the provisions whereby a Fund, under all
ordinary circumstances, will redeem Shares held by shareholders on demand. You
agree that you will not make any representations to shareholders relating to the
redemption of their Shares other than the statements contained in the relevant
and current Prospectus, and the underlying organizational documents of the Fund,
to which it refers, and that you will quote as the redemption price only the
price determined by the Fund. You shall not repurchase any Shares from your
customers at a price below that next quoted by the Fund for redemption. You may
hold such repurchased Shares for investment purposes or submit such Shares to
the Fund for redemption.
DISTRIBUTION AND/OR SERVICE FEES:
- ---------------------------------
We expect you to provide distribution and marketing services (the
"Services") in the promotion of the sale of the Shares of such Fund and the
retention of assets by such Fund and/or services and assistance to your
customers who own Fund Shares, including but not limited to, answering routine
inquiries regarding the Shares or a Fund or the status of a customer's account
and providing information to customers relating to maintaining their investment
in the Fund.
12b-1 Plans:
------------
For your Services in respect of Shares of any Fund that has a
Distribution Plan under Rule 12b-1 (a "12b-1 Plan") of the Investment
Company Act of 1940 (the "1940 Act"), you will receive a fee (the "12b-1
Fee"), as established by us and the Fund from time to time, pursuant to the
provisions of the 12b-1 Plan of such Fund relating to such Shares, subject
to the further provisions of this Agreement, the terms of the then current
and applicable Prospectus relating to such Shares and the provisions of the
relevant 12b-1 Plan. The 12b-1 Fee in respect of Shares of a particular
Fund shall be based on the net asset value of such Shares held in the
accounts of your customers, provided that such Shares so held have an
aggregate net asset value of at least the minimum amount established by us
from time to time. Such 12b-1 Fee shall consist of a distribution fee
component, if any, and/or a service fee component, if any, the rates of
which shall be as provided in the schedule of fees set forth in Appendix A
attached hereto, as the same may be amended by a Fund or by us at any time
and from time to time by notice thereof to you; provided, however, that in
no event shall the rate of any such component be in excess of the current
rates set forth in the then current and applicable Prospectus relating to
such Shares and the provisions of the relevant 12b-1 Plan.
<PAGE>
We reserve the right, at any time, without notice, to modify, suspend or
terminate payments hereunder, or any component of such payments, either with
respect to one or more Funds or classes of Shares or generally with respect to
the Funds and the Shares; and the payment of 12b-1 Fees hereunder shall be
automatically suspended or terminated if and to the extent that payments under
the relevant 12b-1 Plan are suspended or terminated, or automatically reduced if
and to the extent that the corresponding rates of payments to be made under the
relevant 12b-1 Plan are reduced. Any such action may be for any reason
whatsoever or no reason at all; and you agree that you shall not be entitled to
any payments for any period after the effective date of any such suspension or
termination, nor shall you be entitled to any payments after the effective date
of any such modification or reduction except as may be calculated pursuant to a
modified or reduced schedule of fees substituted for the previously effective
schedule.
You understand and agree that we merely administer and forward payments
pursuant to the 12b-1 Plans of the Funds and that we shall have no liability to
you for such payments. Accordingly, you agree that anything to the contrary
herein notwithstanding (i) we shall have no liability to you, and you shall have
no recourse whatsoever against us or our assets, for any payment for which
provision is made in this Agreement, and (ii) your sole recourse, if any, in
respect of any such payment for which provision is made in this Agreement shall
be against the respective Fund.
LEGAL COMPLIANCE:
- ----------------
This Agreement and any transaction with, or payments to, you pursuant to
the terms hereof is conditioned on each party's representation to the other
party that, as of the date of this Agreement it is, and at all times during the
effectiveness of this Agreement it will be, a registered broker-dealer under the
Securities Exchange Act of 1934, as amended, and qualified under applicable
state securities laws in each jurisdiction in which the actions contemplated to
be taken by it under this Agreement require it to be qualified to act as a
broker-dealer in securities, and a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"). Each party agrees to
notify the other promptly in writing and immediately suspend sales of Shares if
this representation ceases to be true. Each party also agrees that it will
comply with the rules of the NASD including, in particular, Sections 2, 21(c)
and 26 of Article III of its Rules of Fair Practice, as amended, and that each
party will maintain adequate records with respect to its transactions with the
other and the Funds.
BLUE SKY MATTERS:
- -----------------
We shall have no obligation or responsibility with respect to your right to
sell Shares in any state or jurisdiction. We may furnish you with information
identifying the states and jurisdictions where the Shares of a Fund are
qualified for sale; and you will not transact orders for Shares except in such
states and jurisdictions as identified by us.
LITERATURE:
- -----------
We will furnish you with copies of each Fund's relevant Prospectus and
sales literature (if any) and other information made publicly available by us or
the Fund which relate to the Fund or the Shares of such Fund, in reasonable
quantities upon your request. You agree to deliver a copy
<PAGE>
of the current and relevant Prospectus in accordance with the provisions of the
Securities Act of 1933 to each purchaser of Shares. We shall file Fund sales
literature and promotional material with the NASD as required. You may not
publish or use any sales literature or promotional materials with respect to the
Shares, the Funds or any Fund without our prior review and written approval.
NOTICES AND COMMUNICATIONS:
- ---------------------------
All communications from you (other than purchase and sale orders) should be
addressed to us at 211 Congress Street, Boston, Massachusetts 02110, Attention:
Compliance Officer. Any notice from us to you shall be deemed to have been duly
given if mailed or telegraphed to you at the address set forth below. Each of
us may change the address to which notices shall be sent by notice to the other
in accordance with the terms hereof.
TERMINATION:
- ------------
This Agreement may be terminated by either party at any time by written
notice to that effect and will terminate without notice upon the appointment of
a trustee for you under the Securities Investor Protection Act, or any other act
of insolvency by you. Notwithstanding the termination of this Agreement, you
shall remain liable for any amounts otherwise owing to us or the Funds and for
your portion of any transfer tax or other liability which may be asserted or
assessed against the Fund, or us.
AMENDMENT:
- ----------
This Agreement may be amended or revised to modify, suspend or terminate
payments hereunder as provided in the section above entitled "Distribution
and/or Service Fees" or to amend Appendix A as provided in said section. This
Agreement may be otherwise amended or revised at any time by us upon notice to
you and you will be deemed to have accepted any such other amendment or revision
upon placing any subsequent order for Shares.
GENERAL:
- --------
Your acceptance hereof will constitute an obligation on your part to
observe all the terms and conditions hereof. In the event that you breach any
of the terms and conditions of this Agreement, you will indemnify us, the Funds,
and our affiliates for any damages, losses, costs and expenses (including
reasonable attorneys' fees and expenses) arising out of or relating to such
breach. In the event that we breach any of the terms and conditions of this
Agreement, we will indemnify you and your affiliates for any damages, losses,
costs and expenses (including reasonable attorneys' fees and expenses) arising
out of or relating to such breach. Nothing contained herein shall constitute
you, us and any dealers an association or partnership. All references in this
Agreement to the "Prospectus" refer to the then current and relevant version of
the Prospectus of the particular Fund or Funds concerned and include the
Statement of Additional Information incorporated by reference therein and any
stickers or supplements thereto.
<PAGE>
This Agreement is to be construed in accordance with the laws of The
Commonwealth of Massachusetts
Please confirm this Agreement by dating and executing, by your duly
authorized representative, one copy of this Agreement below and return it to us.
Keep the enclosed duplicate copy for your records.
UAM FUND DISTRIBUTORS, INC.
BY:_____________________________________
(Name of Officer and Title)
<PAGE>
SELECTED DEALER AGREEMENT ACCEPTANCE
- ------------------------------------
UAM FUND DISTRIBUTORS, INC.
The undersigned hereby confirms its acceptance of, and agreement to the
terms of, the foregoing Selected Dealer Agreement and acknowledges that any
purchase of Fund Shares made during the effectiveness of this Agreement is
subject to all the applicable terms and conditions set forth in this Agreement,
and agrees to pay for the shares at the price and upon the terms and conditions
stated in the Agreement. The undersigned hereby acknowledges receipt of
Prospectuses relating to the Fund Shares and confirms that, in executing this
Selected Dealer Agreement, it has relied on such Prospectuses and not on any
other statement whatsoever, written or oral.
INVESTMENT DEALER PLEASE SIGN HERE AND COMPLETE BELOW
________________________________________
(Full Corporate Name of Broker-Dealer)
By:_____________________________________
(Name of Officer and Title)
________________________________________
(Broker-Dealer's Tax Identification No,)
________________________________________
(Notice Address -- Please include name
of compliance contact)
Date:___________________________________
<PAGE>
Revised 5/99
APPENDIX A
SCHEDULE OF FEES
12B-1 FEES
A separate fee for each Fund will be determined quarterly based on the
annual rates set forth below.
<TABLE>
<CAPTION>
Distribution Service
Name of Fund Component Component
- ------------ ------------- ----------
<S> <C> <C>
DSI Disciplined Value Portfolio (IS) 0.00% 0.25%
IRA Capital Preservation Portfolio (IS) * 0.00% 0.25%
FMA Small Company Portfolio (IS) 0.15% 0.25%
MJI International Equity Portfolio (IS) 0.00% 0.25%
NWQ Balanced Portfolio (IS) 0.15% 0.25%
NWQ Special Equity Portfolio (IS) 0.15% 0.25%
Sirach Bond Portfolio (IS) 0.00% 0.25%
Sirach Equity Portfolio (IS) 0.00% 0.25%
Sirach Growth Portfolio (IS) 0.00% 0.25%
Sirach Special Equity Portfolio (IS) 0.00% 0.25%
TJ Core Equity Portfolio (IS) 0.00% 0.25%
</TABLE>
* This Portfolio has a redemption fee and is offered only to IRA accounts.
<PAGE>
UAM FUND DISTRIBUTORS, INC.
---------------------------
UAM Fund Distributors, Inc., the distributor of the UAM Funds, Inc. and UAM
Funds Trust (collectively, the "Funds"), is a member of the National Securities
Clearing Corporation ("NSCC") Fund/Serv. Accordingly, transactions in shares of
portfolios of the Funds may be processed through Fund/Serv. If you are
interested in utilizing Fund/Serv, please provide the information requested
below.
Firm Name: ____________________________________
Address: ____________________________________
____________________________________
____________________________________
NSCC Dealer #: _________________________
NSCC Dealer Alpha Code: _________________________
NSCC Clearing #: _________________________
Phone Number: _________________________
Fax Number: _________________________
Mutual Fund Contact: _________________________
UAM Fund Distributors, Inc. has also executed and filed with the NSCC the
Investment Company Institute's ("ICI") Standard Networking Agreement. Provided
your firm has also executed and filed such agreement, Networking may be
utilized. If your firm wishes to utilize Networking, please complete the below
acknowledgment. By completing this acknowledgment, you agree that your firm
will participate in Networking under the terms of the ICI Standard Agreement.
Acknowledgment
Firm: ____________________________
By: _____________________________
Name:
Title:
Date:
<PAGE>
UAM FUND DISTRIBUTORS, INC
211 Congress Street
Boston, Massachusetts 02110
---------------------------------------
SELLING DEALER AGREEMENT
UAM FUNDS, INC. AND UAM FUNDS TRUST
(Institutional Class Shares)
---------------------------------------
Dealer:
Gentlemen:
We invite you, as a selected dealer, to participate as principal in the
distribution of the Institutional Class Shares (the "Shares") of the Portfolios
of UAM Funds, Inc., UAM Funds, Inc. II and of UAM Funds Trust (each Portfolio is
referred to herein as the "Fund") with respect to which we have been retained to
act as exclusive national distributor and which are offered for sale pursuant to
currently effective federal Prospectuses describing such Shares.
OFFERING PRICE TO PUBLIC:
- -------------------------
Orders for Shares received from you and accepted by the Fund, will be at
the public offering price applicable to each order as set forth in that Fund's
Prospectus relating to such Shares. The manner of computing the net asset value
of Shares, the public offering price and the effective time of orders received
from you are described in the Prospectuses for the Shares. We reserve the
right, at any time and without notice, to suspend the sale of Fund Shares.
SALES, ORDERS AND CONFIRMATIONS:
- --------------------------------
In offering Fund Shares to the public or otherwise, you shall act as dealer
for your own account, and in no transaction shall you have any authority to act
as agent for the Fund, for any other selected dealer or for us. No person is
authorized to make any representation concerning the Shares or any Fund except
those contained in the relevant and current Prospectus and in written
information issued by the Fund or by us as a supplement to such Prospectus. In
purchasing Fund Shares, you shall rely solely on such representations contained
in the Prospectus and in such written supplemental information.
All sales are made subject to confirmation and orders are subject to
acceptance or rejection by the Fund in its sole discretion. Your orders must be
wired, telephoned or written to the Fund as provided in the relevant and current
Prospectus. You agree to place orders for the same number of Shares sold by you
at the price at which such Shares are sold. You agree that you will not
purchase Shares except for investment or for the purpose of covering purchase
<PAGE>
orders already received and that you will not, as principal, sell Fund Shares
unless purchased by you from the Fund under the terms hereof. You also agree
that you will not withhold placing with us orders received from your customers
so as to profit yourself from such withholding. Each of your orders shall be
confirmed by you in writing on the same day.
PAYMENT AND ISSUANCE OF CERTIFICATES:
- -------------------------------------
The Shares purchased by you hereunder shall be paid for in full at the
public offering price, by check payable to the Fund, at its office, within three
business days after our acceptance of your order. If not so paid, we reserve
the right to cancel the sale and to hold you responsible for any loss sustained
by us or the Fund (including lost profit) in consequence. Certificates
representing the Shares will not be issued.
REDEMPTIONS:
- ------------
The relevant Prospectus describes the provisions whereby a Fund, under all
ordinary circumstances, will redeem Shares held by shareholders on demand. You
agree that you will not make any representations to shareholders relating to the
redemption of their Shares other than the statements contained in the relevant
and current Prospectus, and the underlying organizational documents of the Fund,
to which it refers, and that you will quote as the redemption price only the
price determined by the Fund. You shall not repurchase any Shares from your
customers at a price below that next quoted by the Fund for redemption. You may
hold such repurchased Shares for investment purposes or submit such Shares to
the Fund for redemption.
DISTRIBUTION AND/OR SERVICE FEES :
- ----------------------------------
We expect you to provide distribution and marketing services (the
"Services") in the promotion of the sale of the Shares of such Fund and the
retention of assets by such Fund and/or services and assistance to your
customers who own Fund Shares, including but not limited to, answering routine
inquiries regarding the Shares or a Fund or the status of a customer's account
and providing information to customers relating to maintaining their investment
in the Fund. Certain of the managers (the "Managers") of the Funds may, from
time to time, determine to provide support for the distribution and marketing
of, and/or the provision of services to the holders of, the Shares in the form
of payments or additional payments to selected broker-dealers who enter into
Selling Dealer Agreements with us. Accordingly, for your Services in respect of
Shares of any Fund the Manager of which has determined to provide such support
and has adopted a Supplemental Plan (a "Supplemental Plan"), you will receive a
supplemental fee (the "Supplemental Fees"), as established by each particular
Manager from time to time, subject to the further provisions of this Agreement,
the terms of the then current and applicable Prospectus relating to such Shares
and the instructions received by us from such Manager. The Supplemental Fees,
if any, in respect of Shares of a particular Fund may be based on such factors
as initial and/or current purchase prices or net asset values of such Shares
acquired by or held in the accounts of your customers or certain customers and
the periods for which such shares have been held and may be subject to such
other minimums as may be established by the Managers or by us from time to time.
Such Supplemental Fees shall be as provided in the schedule of fees set forth in
Appendix A attached hereto, as the same may be amended by us at any time and
from
<PAGE>
time to time by notice thereof to you; provided, however, that in no event shall
the rate be in excess of the current rates set forth in any form of subsequent
notice furnished to you by us or on our behalf, or by the Manager or the Fund.
We reserve the right, at any time, without notice, to modify, suspend or
terminate payments hereunder, or any component of such payments, either with
respect to one or more Funds or classes of Shares or generally with respect to
the Funds and the Shares; and the payment of Supplemental Fees hereunder shall
be automatically suspended or terminated if and to the extent that payments from
the relevant Manager are suspended or terminated, or automatically reduced if
and to the extent that the corresponding rates of payments to be made from the
relevant Manager are reduced. Any such action may be for any reason whatsoever
or no reason at all; and you agree that you shall not be entitled to any
payments for any period after the effective date of any such suspension or
termination, nor shall you be entitled to any payments after the effective date
of any such modification or reduction except as may be calculated pursuant to a
modified or reduced schedule of fees substituted for the previously effective
schedule.
You understand and agree that we merely administer and forward payments
pursuant to the Supplemental Plans of the Managers and that we shall have no
liability to you for such payments. Accordingly, you agree that anything to the
contrary herein notwithstanding (i) we shall have no liability to you, and you
shall have no recourse whatsoever against us or our assets, for any payment for
which provision is made in this Agreement, and (ii) your sole recourse, if any,
in respect of any such payment for which provision is made in this Agreement
shall be against the respective Manager.
LEGAL COMPLIANCE:
- ----------------
This Agreement and any transaction with, or payments to, you pursuant to
the terms hereof is conditioned on each party's representation to the other
party that, as of the date of this Agreement it is, and at all times during the
effectiveness of this Agreement it will be, a registered broker-dealer under the
Securities Exchange Act of 1934, as amended, and qualified under applicable
state securities laws in each jurisdiction in which the actions contemplated to
be taken by it under this Agreement require it to be qualified to act as a
broker-dealer in securities, and a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"). Each party agrees to
notify the other promptly in writing and immediately suspend sales of Shares if
this representation ceases to be true. Each party also agrees that it will
comply with the rules of the NASD including, in particular, Sections 2, 21(c)
and 26 of Article III of its Rules of Fair Practice, as amended, and that each
party will maintain adequate records with respect to its transactions with the
other and the Funds.
BLUE SKY MATTERS:
- -----------------
We shall have no obligation or responsibility with respect to your right to
sell Shares in any state or jurisdiction. We may furnish you with information
identifying the states and jurisdictions where the Shares of a Fund are
qualified for sale; and you will not transact orders for Shares except in such
states and jurisdictions as identified by us.
<PAGE>
LITERATURE:
- -----------
We will furnish you with copies of each Fund's relevant Prospectus and
sales literature (if any) and other information made publicly available by us or
the Fund which relate to the Fund or the Shares of such Fund, in reasonable
quantities upon your request. You agree to deliver a copy of the current and
relevant Prospectus in accordance with the provisions of the Securities Act of
1933 to each purchaser of Shares. We shall file Fund sales literature and
promotional material with the NASD as required. You may not publish or use any
sales literature or promotional materials with respect to the Shares, the Funds
or any Fund without our prior review and written approval.
NOTICES AND COMMUNICATIONS:
- ---------------------------
All communications from you (other than purchase and sale orders) should be
addressed to us at 211 Congress Street, Boston, Massachusetts 02110, Attention:
Compliance Officer. Any notice from us to you shall be deemed to have been duly
given if mailed or telegraphed to you at the address set forth below. Each of
us may change the address to which notices shall be sent by notice to the other
in accordance with the terms hereof.
TERMINATION:
- ------------
This Agreement may be terminated by either party at any time by written
notice to that effect and will terminate without notice upon the appointment of
a trustee for you under the Securities Investor Protection Act, or any other act
of insolvency by you. Notwithstanding the termination of this Agreement, you
shall remain liable for any amounts otherwise owing to us or the Funds and for
your portion of any transfer tax or other liability which may be asserted or
assessed against the Fund, or us.
AMENDMENT:
- ----------
This Agreement may be amended or revised to modify, suspend or terminate
payments hereunder as provided in the section above entitled "Distribution
and/or Service Fees" or to amend Appendix A as provided in said section. This
Agreement may be otherwise amended or revised at any time by us upon notice to
you and you will be deemed to have accepted any such other amendment or revision
upon placing any subsequent order for Shares.
GENERAL:
- --------
Your acceptance hereof will constitute an obligation on your part to
observe all the terms and conditions hereof. In the event that you breach any
of the terms and conditions of this Agreement, you will indemnify us, the Funds,
and our affiliates for any damages, losses, costs and expenses (including
reasonable attorneys' fees and expenses) arising out of or relating to such
breach. In the event that we breach any of the terms and conditions of this
Agreement, we will indemnify you and your affiliates for any damages, losses,
costs and expenses (including reasonable attorneys' fees and expenses) arising
out of or relating to such breach. Nothing
<PAGE>
contained herein shall constitute you, us and any dealers an association or
partnership. All references in this Agreement to the "Prospectus" refer to the
then current and relevant version of the Prospectus of the particular Fund or
Funds concerned and include the Statement of Additional Information incorporated
by reference therein and any stickers or supplements thereto.
This Agreement is to be construed in accordance with the laws of The
Commonwealth of Massachusetts.
Please confirm this Agreement by dating and executing, by your duly
authorized representative, one copy of this Agreement below and return it to us.
Keep the enclosed duplicate copy for your records.
UAM FUND DISTRIBUTORS, INC.
BY:
----------------------------
(Name of Officer and Title)
<PAGE>
SELECTED DEALER AGREEMENT ACCEPTANCE
------------------------------------
UAM FUND DISTRIBUTORS, INC.
The undersigned hereby confirms its acceptance of, and agreement to the
terms of, the foregoing Selected Dealer Agreement and acknowledges that any
purchase of Fund Shares made during the effectiveness of this Agreement is
subject to all the applicable terms and conditions set forth in this Agreement,
and agrees to pay for the shares at the price and upon the terms and conditions
stated in the Agreement. The undersigned hereby acknowledges receipt of
Prospectuses relating to the Fund Shares and confirms that, in executing this
Selected Dealer Agreement, it has relied on such Prospectuses and not on any
other statement whatsoever, written or oral.
PLEASE SIGN HERE AND COMPLETE BELOW
----------------------------------------
(Full Corporate Name of Broker-Dealer)
By:
-------------------------------------
(Name of Officer and Title)
----------------------------------------
(Broker-Dealer's Tax Identification No,)
----------------------------------------
(Notice Address -- Please include name
of compliance contact)
Date:
-----------------------------------
<PAGE>
APPENDIX A
SCHEDULE OF FEES
SUPPLEMENTAL FEES
(CERTAIN DEFINED CONTRIBUTION PLANS ONLY)
Supplemental fees for sales of shares in the Funds set forth below will be
determined quarterly as of the end of each calendar quarter. Supplemental fees
will consist of the following:
(i) Once a Plan becomes a shareholder of the UAM Funds, a payment at an annual
rate of 20 basis points applied to the average daily net assets in the
account (excluding money market assets which will be paid at an annual rate
of 5 basis points of average daily net assets for such funds) for that
calendar quarter. These payments will be made after the completion of each
calendar quarter, based on the average daily net assets in the respective
accounts. Amounts related to investments for partial quarters will be pro-
rated based on the number of calendar days that the Plan is a shareholder
during that quarter.
(ii) Balances in a shareholder account exchanged into another shareholder
account or into another Portfolio of the Funds will continue to accrue and
be paid at the applicable rate, but in no event will any such payment
exceed the rate that would have been applicable had such exchange not
occurred.
A-1
<PAGE>
Revised 9/99
Name of Fund
- ------------
Acadian Emerging Markets Portfolio (I) *
Analytic Defensive Equity Fund
Analytic Enhanced Equity Fund
Analytic Master Fixed Income Fund
Analytic Short-Term Government Fund
BHM&S Total Return Bond Portfolio (I)
Cambiar Opportunity Portfolio (I)
C&B Balanced Portfolio (I)
C&B Equity Portfolio (I) *
C&B Equity Portfolio for Taxable Investors(I)
C&B Mid Cap Equity Portfolio (I)
Chicago Asset Management Intermediate Bond Portfolio (I)
Chicago Asset Management Value/Contrarian Portfolio (I)
Clipper Focus Portfolio (I)
DSI Balanced Portfolio (I)
DSI Disciplined Value Portfolio (I)
DSI Limited Maturity Bond Portfolio (I)
DSI Money Market Portfolio (I)
DSI Small Cap Value Portfolio (I)
IRA Capital Preservation Portfolio (I) * +
FMA Small Company Portfolio (I)
FPA Crescent Portfolio (I)
Hanson Equity Portfolio (I)
Heitman Real Estate Portfolio (I)
ICM Small Company Portfolio (I)
Jacobs International Octagon Portfolio (I)
McKee Domestic Equity Portfolio (I)
McKee International Equity Portfolio (I)
McKee Small Cap Equity Portfolio (I)
A-2
<PAGE>
McKee U.S. Government Portfolio (I)
MJI International Equity Portfolio (I)
NWQ Special Equity Portfolio (I)
Pell Rudman Mid-Cap Growth Portfolio (I)
Rice, Hall, James Small Cap Portfolio (I)
Rice, Hall, James Small/Mid Cap Portfolio (I)
Sirach Bond Portfolio (I)
Sirach Equity Portfolio (I)
Sirach Growth Portfolio (I)
Sirach Special Equity Portfolio (I)
Sirach Strategic Balanced Portfolio (I)
Sterling Partners' Balanced Portfolio (I)
Sterling Partners' Equity Portfolio (I)
Sterling Partners' Small Cap Value Portfolio (I)
TS&W Balanced Portfolio (I)
TS&W Equity Portfolio (I)
TS&W Fixed Income Portfolio (I)
TS&W International Equity Portfolio (I) *
* Please note that these Portfolios have a redemption fee.
+ This Portfolio is offered to IRA accounts only.
A-3
<PAGE>
UAM FUND DISTRIBUTORS, INC.
---------------------------
UAM Fund Distributors, Inc., the distributor of the UAM Funds, Inc. and UAM
Funds Trust (collectively, the "Funds"), is a member of the National Securities
Clearing Corporation ("NSCC") Fund/Serv. Accordingly, transactions in shares of
portfolios of the Funds may be processed through Fund/Serv. If you are
interested in utilizing Fund/Serv, please provide the information requested
below.
Firm Name: ____________________________________
Address: ____________________________________
____________________________________
____________________________________
NSCC Dealer #: ________________________
NSCC Dealer Alpha Code: ________________________
NSCC Clearing #: ________________________
Phone Number: ________________________
Fax Number: ________________________
Mutual Fund Contact: ________________________
UAM Fund Distributors, Inc. has also executed and filed with the NSCC the
Investment Company Institute's ("ICI") Standard Networking Agreement. Provided
your firm has also executed and filed such agreement, Networking may be
utilized. If your firm wishes to utilize Networking, please complete the below
acknowledgment. By completing this acknowledgment, you agree that your firm
will participate in Networking under the terms of the ICI Standard Agreement.
Acknowledgment
Firm: ____________________________
By: _____________________________
Name:
Title:
Date:
A-4
<PAGE>
UAM FUND DISTRIBUTORS, INC.
211 Congress Street
Boston, Massachusetts 02110
- --------------------------------------------------------------------------------
BROKER SERVICES AGREEMENT
UAM FUNDS, INC., UAM FUNDS, INC. II AND UAM FUNDS TRUST
(Institutional Service Class Shares)
- --------------------------------------------------------------------------------
Broker:____________________________________
Gentlemen:
We offer to make available to your customers, through you acting as
broker or agent on behalf of such customers, Institutional Service Class Shares
(the "Shares") of the Portfolios of UAM Funds, Inc., UAM Funds, Inc. II and of
UAM Funds Trust (each Portfolio is referred to herein as the "Fund") with
respect to which we have been retained to act as exclusive national distributor
and which are offered for sale pursuant to currently effective federal
Prospectuses describing such Shares.
CUSTOMERS:
- ----------
The customers whom you assist in purchasing, or for whom you purchase,
Shares are for all purposes your customers and not our customers. Subject to the
further provisions of this Agreement, the applicable provisions of the
Prospectuses for the Shares, federal and state securities laws and the rules of
the NASD, we may sell Shares to your customers through you and upon your order.
OFFERING PRICE TO PUBLIC:
- -------------------------
Orders for Shares received from you and accepted by the Fund, will be
at the public offering price applicable to each order as set forth in that
Fund's Prospectus relating to such Shares. The manner of computing the net asset
value of Shares, the public offering price and the effective time of orders
received from you are described in the Prospectuses for the Shares. We reserve
the right, at any time and without notice, to suspend the sale of Fund Shares.
SALES, ORDERS AND CONFIRMATIONS:
- --------------------------------
In purchasing Fund Shares for customers or otherwise, you shall not act
as dealer for your own account, and in no transaction shall you have any
authority to act as agent for the Fund, for any other selected dealer or for us.
No person is authorized to make any representation concerning the Shares or any
Fund except those contained in the relevant and current Prospectus and in
written information issued by the Fund or by us as a supplement to such
Prospectus. In purchasing Fund Shares, you shall rely solely on such
representations contained in the Prospectus and in such written supplemental
information.
All sales are made subject to confirmation and orders are subject to
acceptance or rejection by the Fund in its sole discretion. Your orders must be
wired, telephoned or written to the Fund as provided in the relevant and current
Prospectus. You agree to place orders solely upon receipt of orders for the same
number of Shares and at the same price from your customers and for your
customers' accounts, and that you will not otherwise purchase
<PAGE>
Shares except for investment. You will not, as principal, purchase or sell Fund
Shares, but will act solely as agent for your customers in all transactions
initiated by you, and as between you and your customers, your customers will be
the beneficial owners of the Shares. Each of your orders shall be confirmed by
you in writing on the same day. The procedures relating to the handling of
orders shall be subject to such further instructions as we may issue from time
to time.
PAYMENT AND ISSUANCE OF CERTIFICATES:
- -------------------------------------
The Shares purchased by you on behalf of your customers hereunder shall
be paid for in full at the public offering price, by check payable to the Fund,
at its office, within three business days after our acceptance of your order. If
not so paid, we reserve the right to cancel the sale and to hold you responsible
for any loss sustained by us or the Fund (including lost profit) in consequence.
Certificates representing the Shares will not be issued.
REDEMPTIONS:
- ------------
The relevant Prospectus describes the provisions whereby a Fund, under
all ordinary circumstances, will redeem Shares held by shareholders on demand.
You agree that you will not make any representations to shareholders relating to
the redemption of their Shares other than the statements contained in the
relevant and current Prospectus, and the underlying organizational documents of
the Fund, to which it refers, and that you will quote as the redemption price
only the price determined by the Fund.
SERVICE FEES:
- -------------
We expect you to provide services and assistance (the "Services") to
your customers who own Fund Shares, including but not limited to, answering
routine inquiries regarding the Shares or a Fund or the status of a customer's
account and providing information to customers relating to maintaining their
investment in the Fund.
12b-1 Plans:
For your Services in respect of Shares of any Fund that has a
Distribution Plan under Rule 12b-1 (a "12b-1 Plan") of the Investment
Company Act of 1940 (the "1940 Act"), you will receive a fee (the
"12b-1 Fee"), as established by us and the Fund from time to time,
pursuant to the provisions of the 12b-1 Plan of such Fund relating to
such Shares, subject to the further provisions of this Agreement, the
terms of the then current and applicable Prospectus relating to such
Shares and the provisions of the relevant 12b-1 Plan. The 12b-1 Fee in
respect of Shares of a particular Fund shall be based on the net asset
value of such Shares held in the accounts of your customers, provided
that such Shares so held have an aggregate net asset value of at least
the minimum amount established by us from time to time. Such 12b-1 Fee
shall consist of a distribution fee component, if any, and/or a service
fee component, if any, the rates of which shall be as provided in the
schedule of fees set forth in Appendix A attached hereto, as the same
may be amended by a Fund or by us at any time and from time to time by
notice thereof to you; provided, however, that in no event shall the
rate of any such component be in excess of the current rates set forth
in the then current and applicable Prospectus relating to such Shares
and the provisions of the relevant 12b-1 Plan.
We reserve the right, at any time, without notice, to modify,
suspend or terminate payments hereunder, or any component of such
payments, either with respect to one or more Funds or classes of Shares
or generally with respect to the Funds and the Shares; and the payment
of 12b-1 Fees hereunder shall be automatically suspended or terminated
if and to the extent that payments under the relevant 12b-1 Plan are
suspended or terminated, or automatically reduced if and to the extent
that the corresponding rates of payments to be made under the relevant
12b-1 Plan are reduced. Any such action may be for any reason
whatsoever or no reason at all; and you agree that you shall not be
entitled to any payments for any period after the effective date of any
such suspension or termination, nor shall you be entitled to any
payments
2
<PAGE>
after the effective date of any such modification or reduction except
as may be calculated pursuant to a modified or reduced schedule of
fees substituted for the previously effective schedule.
You understand and agree that we merely administer and forward
payments pursuant to the 12b-1 Plans of the Funds and that we shall
have no liability to you for such payments. Accordingly, you agree that
anything to the contrary herein notwithstanding (i) we shall have no
liability to you, and you shall have no recourse whatsoever against us
or our assets, for any payment for which provision is made in this
Agreement, and (ii) your sole recourse, if any, in respect of any such
payment for which provision is made in this Agreement shall be against
the respective Fund or Manager, as the case may be.
LEGAL COMPLIANCE:
- -----------------
This Agreement and any transaction with, or payments to, you pursuant
to the terms hereof is conditioned on your representations to us that, as of the
date of this Agreement (i) you are, and at all times during its effectiveness
you will be, a registered broker-dealer under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"), or that the 1934 Act does
not require you to be so registered and such a member; and (ii) you are, and at
all times during its effectiveness you will be, qualified under applicable state
securities laws in each jurisdiction in which the actions contemplated to be
taken by you under this Agreement require you to be qualified to act as a dealer
in securities. You agree to notify us promptly in writing and immediately
suspend sales of Shares if this representation ceases to be true. You also agree
that you will comply with the rules of the NASD including, in particular,
Sections 2, 21(c) and 26 of Article III of its Rules of Fair Practice, as
amended, or, if you are not required to be a member of the NASD, with the
applicable rules and regulations of any organization, agency or authority having
jurisdiction in such matters; and, further, you agree that you will maintain
adequate records with respect to your transactions with us and the Funds.
BLUE SKY MATTERS:
- -----------------
We shall have no obligation or responsibility with respect to your
right to sell Shares in any state or jurisdiction. We may furnish you with
information identifying the states and jurisdictions where the Shares of a Fund
are qualified for sale; and you will not transact orders for Shares except in
such states and jurisdictions as identified by us.
LITERATURE:
- -----------
We will furnish you with copies of each Fund's relevant Prospectus and
sales literature (if any) and other information made publicly available by us or
the Fund which relate to the Fund or the Shares of such Fund, in reasonable
quantities upon your request. You agree to deliver a copy of the current and
relevant Prospectus in accordance with the provisions of the Securities Act of
1933 to each purchaser of Shares. We shall file Fund sales literature and
promotional material with the NASD as required. You may not publish or use any
sales literature or promotional materials with respect to the Shares, the Funds
or any Fund without our prior review and written approval.
NOTICES AND COMMUNICATIONS:
- ---------------------------
All communications from you (other than purchase and sale orders)
should be addressed to us at 211 Congress Street, Boston, Massachusetts 02110,
Attention: Compliance Officer. Any notice from us to you shall be deemed to have
been duly given if mailed or telegraphed to you at the address set forth below.
Each of us may change the address to which notices shall be sent by notice to
the other in accordance with the terms hereof.
TERMINATION:
- ------------
3
<PAGE>
This Agreement may be terminated by either party at any time by written
notice to that effect and will terminate without notice upon the appointment of
a trustee for you under the Securities Investor Protection Act, or any other act
of insolvency by you. Notwithstanding the termination of this Agreement, you
shall remain liable for any amounts otherwise owing to us or the Funds and for
your portion of any transfer tax or other liability which may be asserted or
assessed against the Fund, or us.
AMENDMENT:
- ----------
This Agreement may be amended or revised to modify, suspend or
terminate payments hereunder as provided in the section above entitled "Service
Fees" or to amend Appendix A as provided in said section. This Agreement may be
otherwise amended or revised at any time by us upon notice to you and you will
be deemed to have accepted any such other amendment or revision upon placing any
subsequent order for Shares.
GENERAL:
- --------
Your acceptance hereof will constitute an obligation on your part to
observe all the terms and conditions hereof. In the event that you breach any of
the terms and conditions of this Agreement, you will indemnify us, the Funds,
and our affiliates for any damages, losses, costs and expenses (including
reasonable attorneys' fees and expenses) arising out of or relating to such
breach. In the event that we breach any of the terms and conditions of this
Agreement, we will indemnify you and your affiliates for any damages, losses,
costs and expenses (including reasonable attorneys' fees and expenses) arising
out of or relating to such breach. Nothing contained herein shall constitute
you, us and any brokers or dealers an association or partnership. All references
in this Agreement to the "Prospectus" refer to the then current and relevant
version of the Prospectus of the particular Fund or Funds concerned and include
the Statement of Additional Information incorporated by reference therein and
any stickers or supplements thereto.
This Agreement is to be construed in accordance with the laws of The
Commonwealth of Massachusetts.
Please confirm this Agreement by dating and executing, by your duly
authorized representative, one copy of this Agreement below and return it to us.
Keep the enclosed duplicate copy for your records.
UAM FUND DISTRIBUTORS, INC.
BY:__________________________________
(Name of Officer and Title)
4
<PAGE>
BROKER SERVICES AGREEMENT ACCEPTANCE
------------------------------------
UAM FUND DISTRIBUTORS, INC.
The undersigned hereby confirms its acceptance of, and agreement to the
terms of, the foregoing Broker Services Agreement and acknowledges that any
purchase of Fund Shares made during the effectiveness of this Agreement is
subject to all the applicable terms and conditions set forth in this Agreement,
and agrees to pay for the shares at the price and upon the terms and conditions
stated in the Agreement. The undersigned hereby acknowledges receipt of
Prospectuses relating to the Fund Shares and confirms that, in executing this
Broker Services Agreement, it has relied on such Prospectuses and not on any
other statement whatsoever, written or oral.
PLEASE SIGN HERE AND COMPLETE BELOW
----------------------------------------------------------------
(Full Corporate Name of Broker)
By:
-------------------------------------------------------------
(Name of Officer and Title)
-------------------------------------------------------------
(Broker's Tax Identification No.)
-------------------------------------------------------------
(Notice Address -- Please include name of compliance contact)
Date:
-----------------------------------------------------------
5
<PAGE>
9/99
APPENDIX A
SCHEDULE OF FEES
12B-1 FEES
A separate fee for each Fund will be determined quarterly based on the
annual rates set forth below.
Distribution Service
Name of Fund Component Component
- ------------ --------- ---------
Clipper Focus Portfolio (IS) 0.00% 0.25%
DSI Disciplined Value Portfolio (IS) 0.00% 0.25%
IRA Capital Preservation Portfolio (IS) * 0.00% 0.25%
FMA Small Company Portfolio (IS) 0.15% 0.25%
MJI International Equity Portfolio (IS) 0.00% 0.25%
NWQ Special Equity Portfolio (IS) 0.15% 0.25%
Sirach Bond Portfolio (IS) 0.00% 0.25%
Sirach Equity Portfolio (IS) 0.00% 0.25%
Sirach Growth Portfolio (IS) 0.00% 0.25%
Sirach Special Equity Portfolio (IS) 0.00% 0.25%
TJ Core Equity Portfolio (IS) 0.00% 0.25%
* This Portfolio has a redemption fee and is offered only to IRA accounts.
A-6
<PAGE>
UAM FUND DISTRIBUTORS, INC.
211 Congress Street
Boston, Massachusetts 02110
- --------------------------------------------------------------------------------
BROKER SERVICES AGREEMENT
UAM FUNDS, INC., UAM FUNDS, INC. II AND UAM FUNDS TRUST
(Institutional Class Shares)
- --------------------------------------------------------------------------------
Broker:_______________________________
Gentlemen:
We offer to make available to your customers, through you acting as
broker or agent on behalf of such customers, Institutional Class Shares (the
"Shares") of the Portfolios of UAM Funds, Inc., UAM Funds, Inc. II and of UAM
Funds Trust (each Portfolio is referred to herein as the "Fund") with respect to
which we have been retained to act as exclusive national distributor and which
are offered for sale pursuant to currently effective federal Prospectuses
describing such Shares.
CUSTOMERS:
- ----------
The customers whom you assist in purchasing, or for whom you purchase,
Shares are for all purposes your customers and not our customers. Subject to the
further provisions of this Agreement, the applicable provisions of the
Prospectuses for the Shares, federal and state securities laws and the rules of
the NASD, we may sell Shares to your customers through you and upon your order.
OFFERING PRICE TO PUBLIC:
- -------------------------
Orders for Shares received from you and accepted by the Fund, will be
at the public offering price applicable to each order as set forth in that
Fund's Prospectus relating to such Shares. The manner of computing the net asset
value of Shares, the public offering price and the effective time of orders
received from you are described in the Prospectuses for the Shares. We reserve
the right, at any time and without notice, to suspend the sale of Fund Shares.
SALES, ORDERS AND CONFIRMATIONS:
- --------------------------------
In purchasing Fund Shares for customers or otherwise, you shall not act
as dealer for your own account, and in no transaction shall you have any
authority to act as agent for the Fund, for any other selected dealer or for us.
No person is authorized to make any representation concerning the Shares or any
Fund except those contained in the relevant and current Prospectus and in
written information issued by the Fund or by us as a supplement to such
Prospectus. In purchasing Fund Shares, you shall rely solely on such
representations contained in the Prospectus and in such written supplemental
information.
All sales are made subject to confirmation and orders are subject to
acceptance or rejection by the Fund in its sole discretion. Your orders must be
wired, telephoned or written to the Fund as provided in the relevant and current
Prospectus. You agree to place orders solely upon receipt of orders for the same
number of Shares and at
1
<PAGE>
the same price from your customers and for your customers' accounts, and that
you will not otherwise purchase Shares except for investment. You will not, as
principal, purchase or sell Fund Shares, but will act solely as agent for your
customers in all transactions initiated by you, and as between you and your
customers, your customers will be the beneficial owners of the Shares. Each of
your orders shall be confirmed by you in writing on the same day. The procedures
relating to the handling of orders shall be subject to such further instructions
as we may issue from time to time.
PAYMENT AND ISSUANCE OF CERTIFICATES:
- -------------------------------------
The Shares purchased by you on behalf of your customers hereunder shall
be paid for in full at the public offering price, by check payable to the Fund,
at its office, within three business days after our acceptance of your order. If
not so paid, we reserve the right to cancel the sale and to hold you responsible
for any loss sustained by us or the Fund (including lost profit) in consequence.
Certificates representing the Shares will not be issued.
REDEMPTIONS:
- ------------
The relevant Prospectus describes the provisions whereby a Fund, under
all ordinary circumstances, will redeem Shares held by shareholders on demand.
You agree that you will not make any representations to shareholders relating to
the redemption of their Shares other than the statements contained in the
relevant and current Prospectus, and the underlying organizational documents of
the Fund, to which it refers, and that you will quote as the redemption price
only the price determined by the Fund.
SERVICE FEES:
- -------------
We expect you to provide services and assistance (the "Services") to
your customers who own Fund Shares, including but not limited to, answering
routine inquiries regarding the Shares or a Fund or the status of a customer's
account and providing information to customers relating to maintaining their
investment in the Fund. Certain of the managers (the "Managers") of the Funds
may, from time to time, determine to provide additional support for the
distribution and marketing of, and/or the provision of services to the holders
of, the Shares in the form of payments or additional payments to selected
broker-dealers who enter into Services Agreements with us. Accordingly, for your
Services in respect of Shares of any Fund the Manager of which has determined to
provide such additional support and has adopted a Supplemental Plan (a
"Supplemental Plan"), you will receive a supplemental fee (the "Supplemental
Fees"), as established by each particular Manager from time to time, subject to
the further provisions of this Agreement, the terms of the then current and
applicable Prospectus relating to such Shares and the instructions received by
us from such Manager. The Supplemental Fees, if any, in respect of Shares of a
particular Fund may be based on such factors as initial and/or current purchase
prices or net asset values of such Shares acquired by or held in the accounts of
your customers or certain customers and the periods for which such shares have
been held and may be subject to such other minimums as may be established by the
Managers or by us from time to time. Such Supplemental Fees shall be at the
rates of which shall be as provided in the schedule of fees set forth in
Appendix A attached hereto, as the same may be amended by us at any time and
from time to time by notice thereof to you; provided, however, that in no event
shall any such fees be in excess of the current rates set forth in any form of
subsequent notice furnished to you by us or on our behalf, or by the Manager or
the Fund.
We reserve the right, at any time, without notice, to modify, suspend
or terminate payments hereunder, or any component of such payments, either with
respect to one or more Funds or classes of Shares or generally with respect to
the Funds and the Shares; and the payment of Supplemental Fees hereunder shall
be automatically suspended or terminated if and to the extent that payments from
the relevant Manager are suspended or terminated, or automatically reduced if
and to the extent that the corresponding rates of payments to be made from the
relevant Manager are reduced. Any such action may be for any reason whatsoever
or no reason at all; and you agree that you shall not be entitled to any
payments for any period after the effective date of any such suspension or
termination, nor shall you be entitled to any payments after the effective date
of any such modification or reduction except as may be calculated pursuant to a
modified or reduced schedule of fees substituted for the previously effective
schedule.
2
<PAGE>
You understand and agree that we merely administer and forward payments
pursuant to the Supplemental Plans of the Managers and that we shall have no
liability to you for such payments. Accordingly, you agree that anything to the
contrary herein notwithstanding (i) we shall have no liability to you, and you
shall have no recourse whatsoever against us or our assets, for any payment for
which provision is made in this Agreement, and (ii) your sole recourse, if any,
in respect of any such payment for which provision is made in this Agreement
shall be against the respective Fund or Manager, as the case may be.
LEGAL COMPLIANCE:
- ----------------
This Agreement and any transaction with, or payments to, you pursuant
to the terms hereof is conditioned on your representations to us that, as of the
date of this Agreement (i) you are, and at all times during its effectiveness
you will be, a registered broker-dealer under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"), or that the 1934 Act does
not require you to be so registered and such a member; and (ii) you are, and at
all times during its effectiveness you will be, qualified under applicable state
securities laws in each jurisdiction in which the actions contemplated to be
taken by you under this Agreement require you to be qualified to act as a dealer
in securities. You agree to notify us promptly in writing and immediately
suspend sales of Shares if this representation ceases to be true. You also agree
that you will comply with the rules of the NASD including, in particular,
Sections 2, 21(c) and 26 of Article III of its Rules of Fair Practice, as
amended, or, if you are not required to be a member of the NASD, with the
applicable rules and regulations of any organization, agency or authority having
jurisdiction in such matters; and, further, you agree that you will maintain
adequate records with respect to your transactions with us and the Funds.
BLUE SKY MATTERS:
- -----------------
We shall have no obligation or responsibility with respect to your
right to sell Shares in any state or jurisdiction. We may furnish you with
information identifying the states and jurisdictions where the Shares of a Fund
are qualified for sale; and you will not transact orders for Shares except in
such states and jurisdictions as identified by us.
LITERATURE:
- -----------
We will furnish you with copies of each Fund's relevant Prospectus and
sales literature (if any) and other information made publicly available by us or
the Fund which relate to the Fund or the Shares of such Fund, in reasonable
quantities upon your request. You agree to deliver a copy of the current and
relevant Prospectus in accordance with the provisions of the Securities Act of
1933 to each purchaser of Shares. We shall file Fund sales literature and
promotional material with the NASD as required. You may not publish or use any
sales literature or promotional materials with respect to the Shares, the Funds
or any Fund without our prior review and written approval.
NOTICES AND COMMUNICATIONS:
- ---------------------------
All communications from you (other than purchase and sale orders)
should be addressed to us at 211 Congress Street, Boston, Massachusetts 02110,
Attention: Compliance Officer. Any notice from us to you shall be deemed to have
been duly given if mailed or telegraphed to you at the address set forth below.
Each of us may change the address to which notices shall be sent by notice to
the other in accordance with the terms hereof.
TERMINATION:
- ------------
This Agreement may be terminated by either party at any time by written
notice to that effect and will terminate without notice upon the appointment of
a trustee for you under the Securities Investor Protection Act, or any other act
of insolvency by you. Notwithstanding the termination of this Agreement, you
shall remain liable for
3
<PAGE>
any amounts otherwise owing to us or the Funds and for your portion of any
transfer tax or other liability which may be asserted or assessed against the
Fund, or us.
AMENDMENT:
- ----------
This Agreement may be amended or revised to modify, suspend or
terminate payments hereunder as provided in the section above entitled "Service
Fees" or to amend Appendix A as provided in said section. This Agreement may be
otherwise amended or revised at any time by us upon notice to you and you will
be deemed to have accepted any such other amendment or revision upon placing any
subsequent order for Shares.
GENERAL:
- --------
Your acceptance hereof will constitute an obligation on your part to
observe all the terms and conditions hereof. In the event that you breach any of
the terms and conditions of this Agreement, you will indemnify us, the Funds,
and our affiliates for any damages, losses, costs and expenses (including
reasonable attorneys' fees and expenses) arising out of or relating to such
breach. In the event that we breach any of the terms and conditions of this
Agreement, we will indemnify you and your affiliates for any damages, losses,
costs and expenses (including reasonable attorneys' fees and expenses) arising
out of or relating to such breach. Nothing contained herein shall constitute
you, us and any brokers or dealers an association or partnership. All references
in this Agreement to the "Prospectus" refer to the then current and relevant
version of the Prospectus of the particular Fund or Funds concerned and include
the Statement of Additional Information incorporated by reference therein and
any stickers or supplements thereto.
This Agreement is to be construed in accordance with the laws of The
Commonwealth of Massachusetts.
Please confirm this Agreement by dating and executing, by your duly
authorized representative, one copy of this Agreement below and return it to us.
Keep the enclosed duplicate copy for your records.
UAM FUND DISTRIBUTORS, INC.
BY: ____________________________________
(Name of Officer and Title)
4
<PAGE>
BROKER SERVICES AGREEMENT ACCEPTANCE
------------------------------------
UAM FUND DISTRIBUTORS, INC.
The undersigned hereby confirms its acceptance of, and agreement to the
terms of, the foregoing Broker Services Agreement and acknowledges that any
purchase of Fund Shares made during the effectiveness of this Agreement is
subject to all the applicable terms and conditions set forth in this Agreement,
and agrees to pay for the shares at the price and upon the terms and conditions
stated in the Agreement. The undersigned hereby acknowledges receipt of
Prospectuses relating to the Fund Shares and confirms that, in executing this
Broker Services Agreement, it has relied on such Prospectuses and not on any
other statement whatsoever, written or oral.
PLEASE SIGN HERE AND COMPLETE BELOW
----------------------------------------------------------------
(Full Corporate Name of Broker)
By:
-------------------------------------------------------------
(Name of Officer and Title)
-------------------------------------------------------------
(Broker's Tax Identification No,)
-------------------------------------------------------------
(Notice Address -- Please include name of compliance contact)
Date:
-----------------------------------------------------------
5
<PAGE>
APPENDIX A
SCHEDULE OF FEES
SUPPLEMENTAL FEES
Supplemental fees for sales of shares in the Funds set forth below will be
determined quarterly as of the end of each calendar quarter. Supplemental fees
will consist of the following:
(i) Once an account becomes a shareholder of the UAM Funds, a payment at an
annual rate of 20 basis points applied to the average daily net assets in
the account (excluding money market assets which will be paid at an annual
rate of 5 basis points of average daily net assets for such funds) for that
calendar quarter. These payments will be made after the completion of each
calendar quarter, based on the average daily net assets in the respective
accounts. Amounts related to investments for partial quarters will be
pro-rated based on the number of calendar days that the account is a
shareholder during that quarter.
(ii) Balances in a shareholder account exchanged into another shareholder
account or into another Portfolio of the Funds will continue to accrue and
be paid at the applicable rate, but in no event will any such payment
exceed the rate that would have been applicable had such exchange not
occurred.
A-1
<PAGE>
Name of Fund
- ------------
Acadian Emerging Markets Portfolio (I) *
Analytic Defensive Equity Fund (I)
Analytic Enhanced Equity Fund (I)
Analytic Master Fixed Income Fund (I)
Analytic Short-Term Government Fund (I)
BHM&S Total Return Bond Portfolio (I)
Cambiar Opportunity Portfolio (I)
C&B Balanced Portfolio (I)
C&B Equity Portfolio (I)
C&B Equity Portfolio for Taxable Investors (I) *
C&B Mid Cap Equity Portfolio (I)
Chicago Asset Management Intermediate Bond Portfolio (I)
Chicago Asset Management Value/Contrarian Portfolio (I)
Clipper Focus Portfolio (I)
DSI Balanced Portfolio (I)
DSI Disciplined Value Portfolio (I)
DSI Limited Maturity Bond Portfolio (I)
DSI Money Market Portfolio (I)
DSI Small Cap Value Portfolio (I)
IRA Capital Preservation Portfolio (I) * +
FMA Small Company Portfolio (I)
FPA Crescent Portfolio (I)
Hanson Equity Portfolio (I)
Heitman Real Estate Portfolio (I)
A-2
<PAGE>
Jacobs International Octagon Portfolio (I)
McKee Domestic Equity Portfolio (I)
McKee International Equity Portfolio (I) *
McKee Small Cap Equity Portfolio (I) *
McKee U.S. Government Portfolio (I) *
MJI International Equity Portfolio (I)
NWQ Special Equity Portfolio (I)
Pell Rudman Mid-Cap Growth Portfolio (I)
Rice, Hall, James Small Cap Portfolio (I)
Rice, Hall, James Small/Mid Cap Portfolio (I)
Sirach Bond Portfolio (I)
Sirach Equity Portfolio (I)
Sirach Growth Portfolio (I)
Sirach Special Equity Portfolio (I)
Sirach Strategic Balanced Portfolio (I)
Sterling Partners' Balanced Portfolio (I)
Sterling Partners' Equity Portfolio (I)
Sterling Partners' Small Cap Value Portfolio (I)
TS&W Balanced Portfolio (I)
TS&W Equity Portfolio (I)
TS&W Fixed Income Portfolio (I)
TS&W International Equity Portfolio (I) *
* Please note that these Portfolios have a redemption fee.
+ This Portfolio is offered to IRA accounts only.
A-3
<PAGE>
UAM FUND DISTRIBUTORS, INC.
---------------------------
UAM Fund Distributors, Inc., the distributor of the UAM Funds, Inc. and UAM
Funds Trust (collectively, the "Funds"), is a member of the National Securities
Clearing Corporation ("NSCC") Fund/Serv. Accordingly, transactions in shares of
portfolios of the Funds may be processed through Fund/Serv. If you are
interested in utilizing Fund/Serv, please provide the information requested
below.
Firm Name: ____________________________________
Address: ____________________________________
____________________________________
____________________________________
NSCC Dealer #: ______________________
NSCC Dealer Alpha Code: _______________________
NSCC Clearing #: _______________________
Phone Number: _______________________
Fax Number: _______________________
Mutual Fund Contact: _______________________
UAM Fund Distributors, Inc. has also executed and filed with the NSCC the
Investment Company Institute's ("ICI") Standard Networking Agreement. Provided
your firm has also executed and filed such agreement, Networking may be
utilized. If your firm wishes to utilize Networking, please complete the below
acknowledgment. By completing this acknowledgment, you agree that your firm will
participate in Networking under the terms of the ICI Standard Agreement.
Acknowledgment
Firm: ____________________________
A-4
<PAGE>
By: _____________________________
Name:
Title:
Date:
A-5
<PAGE>
April 25, 2000
RE: UAM Funds Trust - Shares of Beneficial Interest
Ladies and Gentlemen:
We have acted as counsel for UAM Funds Trust, a Delaware business trust
("UAM"), in connection with the registration by UAM of shares of beneficial
interest without par value of its Heitman Real Estate Portfolio (the
"Portfolio"). The Agreement and Declaration of Trust of UAM authorizes the
issuance of an unlimited number of shares of beneficial interest, which are
divided into multiple series and classes (each a "Class" and collectively
"Classes"). The shares of beneficial interest designated into each such series
are referred to herein as the "Shares." You have asked for our opinion on
certain matters relating to the Shares of the Portfolio.
We have reviewed UAM's Agreement and Declaration of Trust and By-laws,
resolutions of UAM's Board of Trustees ("Board"), certificates of public
officials and of UAM's officers and such other legal and factual matters as we
have deemed appropriate. We have also reviewed UAM's Registration Statement on
Form N-1A under the Securities Act of 1933 (the "Registration Statement"), as
amended through Post-Effective Amendment No. 42 thereto.
This opinion is based exclusively on the Delaware Business Trust Act
and the federal law of the United States of America.
We have assumed the following for purposes of this opinion:
1. The shares of beneficial interest have been issued in accordance
with the Agreement and Declaration of Trust and By-laws of UAM
and resolutions of UAM's Board relating to the creation,
authorization and issuance of the Shares.
2. Prior to the issuance of any future Shares, the Board (a) will
duly authorize the issuance of such future Shares, (b) will
determine with respect to each class of such future Shares the
preferences, limitations and relative rights applicable thereto
and (c) if such future Shares are classified into separate
series, will duly take the action necessary to create such series
and to determine the relative designations, preferences,
limitations and relative rights thereof.
3. With respect to the future Shares, there will be compliance
with the terms, conditions and restrictions applicable to the
issuance of such Shares that are set forth in (i) UAM's Agreement
and Declaration
<PAGE>
UAM Funds Trust
April 25, 2000
Page 2
of Trust and By-laws, each as amended as of the date of such
issuance, and (ii) the applicable future series designations.
4. The Board will not change the preferences, limitations or
relative rights of any class or series of Shares after any shares
of such class or series have been issued.
Based upon the foregoing, we are of the opinion that the Shares of the
Portfolio will be, when issued in accordance with, and sold for the
consideration described in the Registration Statement, validly issued, fully
paid and non-assessable by UAM, and that the holders of the Portfolio's Shares
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the general
corporation law of the State of Delaware (except that we express no opinion as
to such holders who are also trustees of UAM).
We consent to the filing of this opinion with Post-Effective Amendment
No. 42 to the Registration Statement to be filed by UAM with the Securities and
Exchange Commission.
Sincerely yours,
/s/ Drinker Biddle & Reath LLP
Drinker Biddle & Reath LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form N-1A of our report dated February 15, 2000, relating to the
financial statements and financial highlights which appears in the December 31,
1999 Annual Report to Shareholders of Heitman Real Estate Portfolio, which is
also incorporated by reference into the Registration Statement. We also consent
to the references to us under the headings "Financial Highlights", "Independent
Accountants" and "Financial Statements" in such Registration Statement.
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 26, 2000
<PAGE>
CODE OF ETHICS
OF
THE UAM FUNDS
PREAMBLE
- --------
This Code of Ethics is being adopted in compliance with the requirements of
Rule 17j-1 (the "Rule") adopted by the United States Securities and Exchange
Commission under the Investment Company Act of 1940 (the "Act") to effectuate
the purposes and objectives of that Rule. The Rule makes it unlawful for certain
persons, including any officer or Board member of UAM Funds, Inc., UAM Funds
Trust or UAM Funds, Inc. II (together, the "Fund") in connection with the
purchase or sale by such person of a security held or to be acquired by the
Fund1:
1. To employ a device, scheme or artifice to defraud the Fund;
2. To make to the Fund any untrue statement of a material fact or
omit to state to the Fund a material fact necessary in order to
make the statements made, in light of the circumstances in which
they are made, not misleading;
3. To engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon the Fund; or
4. To engage in a manipulative practice with respect to the Fund.
The Rule also requires that the Fund and each adviser to the Fund adopt a
written code of ethics containing provisions reasonably necessary to prevent
persons from engaging in acts in violation of the above standard and use
reasonable diligence and institute procedures reasonably necessary, to prevent
violations of the Code.
This Code of Ethics is adopted by the Board of Directors of the Fund2 in
compliance with the Rule. This Code of Ethics is based upon the principle that
the Directors and officers of the Fund, and certain affiliated persons of the
Fund and its investment advisers, owe a fiduciary duty to, among others, the
shareholders of the Fund to conduct their affairs, including their personal
securities transactions, in such manner to avoid (i) serving their own personal
interests ahead of shareholders; (ii) taking inappropriate advantage of their
position with the Fund; and (iii) any actual or potential conflicts of interest
or any abuse of their position of trust and responsibility. This fiduciary duty
includes the duty of the investment advisers to the portfolios of the Fund to
report violations of this Code of Ethics to the Fund's Compliance Officer. This
Code may not be the only source of potential restrictions when conducting
personal securities transactions and transactions on behalf of the Fund. If
there are any questions with respect to other potentially applicable
restrictions, contract the Funds' Compliance Officer.
A. DEFINITIONS
1. "Access person" means any director/trustee, officer, general partner
or advisory person of the Fund.
2. "Advisory person" means (a) any employee of the Fund who, in
connection with his regular functions or duties, normally makes,
participates in, or obtains current information regarding
- ---------------------
1 A security is deemed to be "held or to be acquired" if within the most
recent fifteen (15) days it (i) is or has been held by the Fund, or (ii) is
being or has been considered by the Fund or its investment adviser for purchase
by the Fund.
2 Reference to a "Board of Directors" or a "Director" herein shall also
refer to a "Board of Trustees" or a "Trustee", as appropriate.
<PAGE>
the purchase or sale of a security by the Fund, or whose functions
relate to the making of any recommendations with respect to such
purchases or sales; and (b) any natural person in a control
relationship to the Fund who obtains information concerning
recommendations made to the Fund with regard to the purchase or sale
of a security by the Fund.
3. "Affiliated company" means a company which is an affiliated person.
4. "Affiliated person" of another person means (a) any person directly or
indirectly owning, controlling, or holding with power to vote, 5 per
centrum or more of the outstanding voting securities or such other
person; (b) any person 5 per centrum or more of whose outstanding
voting securities are directly or indirectly owned, controlled, or
held with power to vote, by such other person; (c) any person directly
or indirectly controlling, controlled by, or under common control
with, such other person; (d) any officer, director/trustee, partner,
copartner, or employee of such other person; (e) if such other person
is an investment company, any investment adviser thereof or any member
of an advisory board thereof; and (f) if such other person is an
unincorporated investment company not having a Board of Directors, the
depositor thereof.
5. A security is "being considered for purchase or sale" or is "being
purchased or sold" when a recommendation to purchase or sell the
security has been made and communicated, which includes when the Fund
has a pending "buy" or "sell" order with respect to a security, and,
with respect to the person making the recommendation, when such person
seriously considers making such a recommendation. "Purchase or sale of
a security" includes the writing of an option to purchase or sell a
security.
6. "Beneficial ownership" shall be as defined in, and interpreted in the
same manner as it would be in determining whether a person is subject
to the provisions of, Section 16 of the Securities Exchange Act of
1934 and the rules and regulations thereunder which, generally
speaking, encompasses those situations where the beneficial owner has
the right to enjoy some economic benefit from the ownership of the
security. A person is normally regarded as the beneficial owner of
securities held in the name of his or her spouse or minor children
living in his or her household.
7. "Control" means the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely the
result of an official position with such company. Any person who owns
beneficially, either directly or through one or more controlled
companies, more than 25 per centrum of the voting securities of a
company shall be presumed to control such company. Any person who does
not so own more than 25 per centrum of the voting securities of any
company shall be presumed not to control such company. A natural
person shall be presumed not to be a controlled person.
8. "Disinterested director/trustee" means a director/trustee who is not:
an affiliated person (as defined above) of the Fund; a member of the
immediate family of any natural person who is an affiliated person of
the Fund; an interested person (as defined below) of the Fund, any
investment adviser of the Fund or any principal underwriter for the
Fund.
9. "Interested Person" of another person means--
(a) when used with respect to an investment company--
(i) any affiliated person of such company,
(ii) any member of the immediate family of any natural person
who is an affiliated person of such company,
-2-
<PAGE>
(iii) any interested person of any investment adviser of or
principal underwriter for such company,
(iv) any person or partner or employee of any person who at any
time since the beginning of the last two completed fiscal
years of such company has acted as legal counsel for such
company,
(v) any broker or dealer registered under the Securities
Exchange Act of 1934 or any affiliated person of such a
broker or dealer, and
(vi) any natural person whom the Commission by order shall have
determined to be an interested person by reason of having
had, at any time since the beginning of the last two
completed fiscal years of such company, a material business
or professional relationship with such company or with the
principal executive officer of such company or with any
other investment company having the same investment adviser
or principal underwriter or with the principal executive
officer of such other investment company:
Provided, That no person shall be deemed to be an interested person of
an investment company solely by reason of (aa) his being a member of
its Board of Directors or advisory board or an owner of its
securities, or (bb) his membership in the immediate family of any
person specified in clause (aa) of this proviso.
10. "Investment Personnel" means (a) any portfolio manager of the Fund as
defined in (12) below; and (b) securities analysts, traders and other
personnel who provide information and advice to the portfolio manager
or who help execute the portfolio manager's decisions.
11. "Person" means a natural person or a company.
12. "Portfolio Manager" means an employee of the investment adviser or
sub-investment adviser of the Fund entrusted with the direct
responsibility and authority to make investment decisions affecting an
investment company.
13. "Security" means any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in
any profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit
for a security, fractional undivided interest in oil, gas, or other
mineral rights, any put, call, straddle, option, or privilege on any
security (including a certificate of deposit) or on any group or index
of securities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered
into on a national securities exchange relating to foreign currency,
or, in general, any interest or instrument commonly known as a
"security," or any certificate of interest or participation in,
temporary or interim certificate for, receipt for, guarantee of, or
warrant or right to subscribe to or purchase, any of the foregoing.
14. "Security" shall not include securities issued by the government of
the United States or by federal agencies and which are direct
obligations of the United States, bankers' acceptances, bank
certificates of deposit, commercial paper and shares of unaffiliated
registered open-end investment companies (mutual funds).
B. PROHIBITED TRANSACTIONS
1. Access Persons
-3-
<PAGE>
(a) No access person shall engage in any act, practice or course of
conduct, which would violate the provisions of Rule 17j-1 set forth
above.
The Fund's portfolios are managed by subsidiaries of or organizations
otherwise affiliated with United Asset Management Corporation (the
"Management Companies"). Under the organizational structure of the
Management Companies, the entities maintain separate offices,
independent operations and autonomy when making investment decisions.
In view of these circumstances, advisory personnel of the Management
Companies who are defined as "access persons" under the Act, under
normal circumstances would have no knowledge of proposed securities
transactions, pending "buy" or "sell" orders in a security, or the
execution or withdrawal of an order for any other portfolio in the UAM
Family of Funds for which a different Management Company serves as
investment adviser. To restrict the flow of investment information
related to the portfolios of the Fund, the Fund prohibits access
persons at a Management Company from disclosing pending "buy" or
"sell" orders for a portfolio of the Fund to any employees of any
other Management Company until the order is executed or withdrawn. The
Management Companies shall implement procedures designed to achieve
employee awareness of this prohibition.
(b) No access person shall:
(i) purchase or sell, directly or indirectly, any security in
which he has or by reason of such transaction acquires, any
direct or indirect beneficial ownership and which to his or
her actual knowledge at the time of such purchase or sale:
----------------
(A) is being considered for purchase or sale by the Fund,
or
(B) is being purchased or sold by any portfolio of the
Fund; or
(ii) disclose to other persons the securities activities engaged
in or contemplated for the various portfolios of the Fund.
2. Investment Personnel
No investment personnel shall:
(a) accept any gift or other thing of more than de minimis value from any
person or entity that does business with or on behalf of the Fund; for
the purpose of this Code de minimis shall be considered to be the
annual receipt of gifts from the same source valued at $250 or less
per individual recipient, when the gifts are in relation to the
conduct of the Fund's business;
(b) acquire securities, other than fixed income securities, in an initial
public offering, in order to preclude any possibility of such person
profiting from their positions with the Fund;
(c) purchase any securities in a private placement, without prior approval
of the Compliance Officer of the Management Company or other officer
designated by the Board of Directors. Any person authorized to
purchase securities in a private placement shall disclose that
investment when they play a part in any Fund's subsequent
consideration of an investment in the issuer. In such circumstances,
the Fund's decision to purchase securities of the issuer shall be
subject to independent review by investment personnel with no personal
interest in the issuer;
-4-
<PAGE>
(d) profit in the purchase and sale, or sale and purchase, of the same (or
equivalent) securities within sixty (60) calendar days. Trades made in
violation of this prohibition should be unwound, if possible.
Otherwise, any profits realized on such short-term trades shall be
subject to disgorgement to the appropriate portfolio of the investment
company.
Exceptions: The Compliance Officer of the Management Company may allow
exceptions to this policy on a case-by-case basis when the abusive
practices that the policy is designed to prevent, such as frontrunning or
conflicts of interest, are not present and the equity of the situation
strongly supports an exemption. An example is the involuntary sale of
securities due to unforeseen corporate activity such as a merger. [See ss.C
below]. The ban on short-term trading profits is specifically designed to
deter potential conflicts of interest and frontrunning transactions, which
typically involve a quick trading pattern to capitalize on a short-lived
market impact of a trade by one of the Fund's portfolios. The Management
Company shall consider the policy reasons for the ban on short-term trades,
as stated herein, in determining when an exception to the prohibition is
permissible. The granting of an exception to this prohibition shall be
permissible if the securities involved in the transaction are not (i) being
considered for purchase or sale by the portfolio of the Fund that serves as
the basis of the individual's "investment personnel" status or (ii) being
purchased or sold by the portfolio of the Fund that serves as the basis of
the individual's "investment personnel" status and, are not economically
related to such securities; exceptions granted under this provision are
conditioned upon receipt by a duly authorized officer of the Management
Company of a report (Exhibit D) of the transaction and certification by the
respective investment personnel that the transaction is in compliance with
this Code of Ethics (see Exhibit D).
(e) serve on the Board of Directors of any publicly traded company without
prior authorization of the President or other duly authorized officer
of the Fund. Any such authorization shall be based upon a
determination that the board service would be consistent with the
interests of the Fund and its shareholders. Authorization of board
service shall be subject to the implementation by the Management
Company of "Chinese Wall" or other procedures to isolate such
investment personnel from the investment personnel making decisions
about trading in that company's securities.
3. Portfolio Managers
(a) No portfolio manager shall:
(i) buy or sell a security within seven (7) calendar days before and
within two (2) calendar days after any portfolio of the Fund that he
or she manages trades in that security. Any trades made within the
proscribed period shall be unwound, if possible. Otherwise, any
profits realized on trades within the proscribed period shall be
disgorged to the appropriate portfolio of the Fund.
C. EXEMPTED TRANSACTIONS
The prohibitions of Sections B(1)(b), B(2)(d) and B(3)(a) shall not apply to:
1. purchases or sales effected in any account over which the access
person has no direct or indirect influence or control;
2. purchases or sales which are non-volitional on the part of either the
access person or the Fund;
-5-
<PAGE>
3. purchases which are part of an automatic dividend reinvestment plan;
4. purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired;
5. purchases or sales of securities which are not eligible for purchase
by the Fund and which are not related economically to securities
purchased, sold or held by the Fund;
6. transactions which appear upon reasonable inquiry and investigation to
present no reasonable likelihood of harm to the Fund and which are
otherwise in accordance with Rule 17j-1; For example, such
transactions would normally include purchases or sales of:
(a) securities of companies with a market capitalization in excess of
$1 billion;
(b) up to $25,000 principal amount of a fixed income security or 100
shares of an equity security within any three-consecutive month
period (all trades within a three-consecutive month period shall
be integrated to determine the availability of this exemption);
(c) up to 1,000 shares of a security which is being considered for
purchase or sale by a Fund (but not then being purchased or sold)
if the issuer has a market capitalization of over $1 billion and
if the proposed acquisition or disposition by the Fund is less
than one percent of the class outstanding as shown by the most
recent report or statement published by the issuer, or less than
one percent of the average weekly reported volume of trading in
such securities on all national securities exchanges and/or
reported through the automated quotation system of a registered
securities association, during the four calendar weeks prior to
the individual's personal securities transaction; or
(d) any amount of securities if the proposed acquisition or
disposition by the Fund is in the amount of 1,000 or less shares
and the security is listed on a national securities exchange or
the National Association of Securities Dealers Automated
Quotation System.
D. COMPLIANCE PROCEDURES
1. Pre-clearance
All access persons shall receive prior written approval (Exhibit E)
from the Compliance Officer of the Management Company for the
respective portfolios of the Fund, or other officer designated by the
Board of Directors before purchasing or selling securities.
Procedures implemented herein to pre-clear the securities transactions
of access persons shall not apply to a director/trustee of the Fund
who is not an "interested person" of the Fund as defined in this Code,
except where such director/trustee knew or, in the ordinary course of
fulfilling his official duties as a director/trustee of the Fund,
should have known that during the 15-day period immediately preceding
or after the date of the transaction in a security by the
director/trustee, such security is or was purchased or sold by the
Fund or such purchase or sale by the Fund is or was considered by the
Fund.
Purchases or sales by access persons who are employees of United Asset
Management Corporation are not subject to the pre-clearance procedures
set forth herein, provided that such persons are required to pre-clear
proposed transactions in securities pursuant to a Code of Ethics.
-6-
<PAGE>
Purchases or sales by access persons who are employees of the
administrator or subadministrator for the Fund are not subject to the
pre-clearance procedures set forth herein, provided that such persons
are required to pre-clear proposed transactions in securities pursuant
to a Code of Ethics.
Purchases or sales of securities which are not eligible for purchase
or sale by the Fund or any portfolio of the Fund that serves as the
basis of the individual's "access person" status shall be entitled to
clearance automatically from the Compliance Officer of the Fund. This
provision shall not relieve any access person from compliance with
pre-clearance procedures.
2. Disclosure of Personal Holdings
All investment personnel shall disclose to the Compliance Officer of
the Management Company all personal securities holdings upon the later
of commencement of employment or adoption of this Code of Ethics and
thereafter on an annual basis as of December 31. This initial report
shall be made on the form attached as Exhibit A and shall be delivered
to the Compliance Officer of the Management Company and, upon request,
to the Compliance Officer of the Fund.
3. Certification of Compliance with Code of Ethics
(a) Every access person shall certify annually that:
(i) they have read and understand the Code of Ethics and
recognize that they are subject thereto;
(ii) they have complied with the requirements of the Code of
Ethics; and
(iii) they have reported all personal securities transactions
required to be reported pursuant to the requirements of the
Code of Ethics.
The annual report shall be made on the form attached as Exhibit B and
delivered to the Compliance Officers of the Fund and the Management
Company.
4. Reporting Requirements
(a) Every access person shall report to the Compliance Officer of the
Fund and the Management Company the information described in,
Sub-paragraph (4)(b) of this Section with respect to transactions
in any security in which such person has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership
in the security; provided, however, that an access person shall
not be required to make a report with respect to transactions
effected for any account over which such person does not have any
direct or indirect influence.
(b) Reports required to be made under this Paragraph (4) shall be
made not later than 10 days after the end of the calendar quarter
in which the transaction to which the report relates was
effected. Every access person shall be required to submit a
report for all periods, including those periods in which no
securities transactions were effected. A report shall be made on
the form attached hereto as Exhibit C or on any other form
containing the following information:
-7-
<PAGE>
(i) the date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
(ii) the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(iii) the price at which the transaction was effected; and
(iv) the name of the broker, dealer or bank with or through whom
the transaction was effected.
Duplicate copies of the broker confirmation of all personal
transactions and copies of periodic statements for all
securities accounts may be appended to Exhibit C to fulfill
the reporting requirement.
(c) Any such report may contain a statement that the report shall not
be construed as an admission by the person making such report
that he or she has any direct or indirect beneficial ownership in
the security to which the report relates.
(d) The Compliance Officer of the Fund shall notify each access
person that he or she is subject to these reporting requirements,
and shall deliver a copy of this Code of Ethics to each such
person upon request.
(e) Reports submitted to the Fund pursuant to this Code of Ethics
shall be confidential and shall be provided only to the officers
and Directors of the Fund, Fund counsel or regulatory authorities
upon appropriate request.
(f) Each director/trustee who is not an "interested person" of the
Fund as defined in the Act need only report a transaction in a
security if such director/trustee, at the time of that
transaction knew, or, in the ordinary course of fulfilling his
official duties as a director/trustee, should have known that,
during the 15-day period immediately preceding or after the date
of the transaction by the director/trustee, such security was
purchased or sold by the Fund or was being considered for
purchase by the Fund or by its investment adviser or
sub-investment adviser. Such reports will include the information
described in Sub-paragraph (4)(b) of this Section.
5. Conflict of Interest
Every access person, except officers and Directors of the Fund, shall
notify the Compliance Officer of the Management Company of any
personal conflict of interest relationship which may involve the Fund,
such as the existence of any economic relationship between their
transactions and securities held or to be acquired by any portfolio of
the Fund. Officer and Directors of the Fund shall notify the
Compliance Officer of the Fund of any personal conflict of interest
relationship which may involve the Fund. Such notification shall occur
in the pre-clearance process.
E. REPORTING OF VIOLATIONS TO THE BOARD OF DIRECTORS
1. The Compliance Officer of the Fund shall promptly report to the Board
of Directors all apparent violations of this Code of Ethics and the
reporting requirements thereunder.
2. When the Compliance Officer of the Fund finds that a transaction
otherwise reportable to the Board of Directors under Paragraph (1) of
this Section could not reasonably be found to have resulted
-8-
<PAGE>
in a fraud, deceit or manipulative practice in violation of Rule 17j-
1(a), he may, in his discretion, lodge a written memorandum of such
finding and the reasons therefor with the reports made pursuant to
this Code of Ethics, in lieu of reporting the transaction to the Board
of Directors.
3. The Board of Directors, or a Committee of Directors created by the
Board of Directors for that purpose, shall consider reports made to
the Board of Directors hereunder and shall determine whether or not
this Code of Ethics has been violated and what sanctions, if any,
should be imposed.
F. ANNUAL REPORTING TO THE BOARD OF DIRECTORS
1. The Compliance Officer of the Fund shall prepare an annual report
relating to this Code of Ethics to the Board of Directors. Such annual
report shall:
(a) summarize existing procedures concerning personal investing and
any changes in the procedures made during the past year;
(b) identify any violations requiring significant remedial action
during the past year; and
(c) identify any recommended changes in the existing restrictions or
procedures based upon the Fund's experience under its Code of
Ethics, evolving industry practices or developments in applicable
laws or regulations.
G. SANCTIONS
Upon discovering a violation of this Code, the Board of Directors may
impose such sanctions as they deem appropriate, including, among other
things, a letter of censure or suspension or termination of the
employment of the violator.
H. RETENTION OF RECORDS
The Fund shall maintain the following records as required under Rule
17j-l; reports received by a Management Company on behalf of the Fund
shall be maintained as required under Rule 17j-l:
(a) a copy of any Code of Ethics in effect within the most recent
five years;
(b) a list of all persons required to make reports hereunder within
the most recent five years, as shall be updated by the Compliance
Officer of the Fund;
(c) a copy of each report made by an access person hereunder for a
period of five years from the end of the fiscal year in which it
was made;
(d) each memorandum made by the Compliance Officer of the Fund
hereunder, for a period of five years from the end of the fiscal
year in which it was made; and
(e) a record of any violation hereof and any action taken as a result
of such violation, for a period of five years following the end
of the fiscal year in which the violation occurred.
Dated: December 14, 1995.
-9-
<PAGE>
Revised: January 23, 1997
September 23, 1998
April 6, 1999
-10-
<PAGE>
Exhibit A
THE UAM FUNDS
CODE OF ETHICS
INITIAL REPORT OF ACCESS PERSON
To the Compliance Officer of the Management Company on behalf of The UAM Funds
("the Fund"):
1. I hereby acknowledge receipt of a copy of the Code of Ethics for The UAM
Funds (the "Fund").
2. I have read and understand the Code and recognize that I am subject
thereto as an "access person" of the Fund.
3. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may
involve the Fund, such as any economic relationship between my
transactions and securities held or to be acquired by the Fund or any of
its portfolios.
4. As of the date below I had a direct or indirect beneficial ownership in
the following securities:
<TABLE>
<CAPTION>
==========================================================================================================
SECURITY No. of PRICE OF TYPE OF BROKER, DEALER DATE ACCOUNT
SHARES SHARES PURCHASE OR BANK ESTABLISHED
(include (Direct or Indirect) THROUGH WHOM
interest rate EFFECTED
and maturity
date, if
applicable)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
==========================================================================================================
</TABLE>
Do not report transactions in direct obligations of the U.S. government,
---
bankers' acceptances, bank certificates of deposit, commercial paper, high
quality short-term debt instruments and unaffiliated registered open-end
investment companies (mutual funds).
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control, (ii) excludes other transactions not required to
be reported, and (iii) is not an admission that I have or had any direct or
indirect beneficial ownership in the securities listed above.
Date: ______________________ Signature: _____________________________________
(First date of access Access Person
person status)
Name: _____________________________________
Title: _____________________________________
Date: ______________________ Signature: _____________________________________
Compliance Officer
Name: _____________________________________
Title: _____________________________________
-11-
<PAGE>
-12-
<PAGE>
Exhibit B
THE UAM FUNDS
ACCESS PERSONS
Securities Transactions Report For the Calendar Quarter Ended: _________
To the Compliance Officer of the Management Company on behalf of The UAM Funds
("the Fund"):
During the quarter referred to above, the following transactions were effected
in securities of which I had, or by reason of such transaction acquired, direct
or indirect beneficial ownership, and which are required to be reported pursuant
to the Code of Ethics adopted by the Fund.
<TABLE>
<CAPTION>
====================================================================================================================
NATURE OF BROKER, DEALER OR
SECURITY PRICE OF SHARES TRANSACTION BANK THROUGH WHOM DATE ACCOUNT
DATE OF No. of (Purchase, Sale, EFFECTED ESTABLISHED
(include interest TRANSACTION SHARES Other)
rate and maturity
date, if
applicable)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
====================================================================================================================
</TABLE>
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control, (ii) excludes other transactions not required to
be reported, and (iii) is not an admission that I have or had any direct or
indirect beneficial ownership in the securities listed above.
Except as noted on the reverse side of this report, I hereby certify that I have
no knowledge of the existence of any personal conflict of interest relationship
which may involve the Fund, such as the existence of any economic relationship
between my transactions and securities held or to be acquired by the Fund or any
of its portfolios.
Do not report transactions in direct obligations of the U.S. government,
bankers' acceptances, bank certificates of deposit, commercial paper, high
quality short-term debt instruments and unaffiliated registered open-end
investment companies (mutual funds).
Directors who are not interested persons of the Fund are not required to make a
report except where such director/trustee knew or should have known that during
the 15-day period immediately preceding or after the date of the transaction in
a security by the director/trustee, such security is or was purchased or sold by
the Fund or such purchase or sale by the Fund is or was considered by the Fund
or an adviser.
Date: ______________________ Signature: _____________________________________
(First date of access Access Person
person status)
Name: _____________________________________
Title: _____________________________________
Date: ______________________ Signature: _____________________________________
Compliance Officer
Name: _____________________________________
Title: _____________________________________
<PAGE>
Exhibit C
THE UAM FUNDS
ACCESS PERSONS
Securities Transactions Report For the Calendar Quarter Ended: _________
To the Compliance Officer of The UAM Funds ("the Fund") (with a copy to the
Compliance Officer of the Management Company):
During the quarter referred to above, the following transactions were
effected in securities of which I had, or by reason of such transaction
acquired, direct or indirect beneficial ownership, and which are required to be
reported pursuant to the Code of Ethics adopted by the Fund.
<TABLE>
<CAPTION>
===============================================================================================================================
SECURITY DATE OF No. of DOLLAR NATURE OF PRICE BROKER/DEALER
TRANSACTION SHARES AMOUNT OF TRANSACTION OR BANK THROUGH
TRANSACTION (Purchase, Sale, WHOM EFFECTED
Other)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
===============================================================================================================================
</TABLE>
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) excludes other transactions not
required to be reported, and (iii) is not an admission that I have or had any
direct or indirect beneficial ownership in the securities listed above.
Except as noted on the reverse side of this report, I hereby certify that
I have no knowledge of the existence of any personal conflict of interest
relationship which may involve the Fund, such as the existence of any economic
relationship between my transactions and securities held or to be acquired by
the Fund or any of its Series.
NOTE: Do not report transactions in U.S. Government securities, bankers'
---- ---
acceptances, bank certificates of deposit, commercial paper and unaffiliated
registered open-end investment companies (mutual funds).
Directors who are not interested persons of the Fund are not required to
make a report except where such director/trustee knew or should have known that
during the 15-day period immediately preceding or after the date of the
transaction in a security by the director/trustee, such security is or was
purchased or sold by the Fund or such purchase or sale by the Fund is or was
considered by the Fund or an adviser.
Date: ______________________ Signature: ______________________________________
Print Name:___________________________
Title:________________________________
Employer's Name:______________________
Date: ______________________ Signature: ______________________________________
Compliance Officer
<PAGE>
Exhibit D
THE UAM FUNDS
INVESTMENT PERSONNEL
Securities Transactions Report Relating to Short-Term Trading
(see Section B(2)(d), Code of Ethics)
For the Sixty-Day Period from to :
To the Compliance Officer of the Management Company on behalf of The UAM Funds
("the Fund"):
During the 60 calendar day period referred to above, the following
purchases and sales, or sales and purchases, of the same (or equivalent)
securities were effected or are proposed to be effected in securities of which I
have, or by reason of such transaction acquired, direct or indirect beneficial
ownership.
<TABLE>
<CAPTION>
===============================================================================================================================
SECURITY DATE OF No. of DOLLAR NATURE OF PRICE BROKER/DEALER
TRANSACTION SHARES AMOUNT OF TRANSACTION (OR OR BANK THROUGH
(OR PROPOSED TRANSACTION (Purchase, Sale, PROPOSED WHOM EFFECTED
TRANSACTION) Other) PRICE)
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<S> <C> <C> <C> <C> <C> <C>
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===============================================================================================================================
</TABLE>
This report (i) excludes transactions with respect to which I have or had
no direct or indirect influence or control, (ii) excludes other transactions not
required to be reported, and (iii) is not an admission that I have or had any
direct or indirect beneficial ownership in the securities listed above.
With respect to the (1) portfolio of the Fund that serves as the basis
for my "investment personnel" status with the Fund (the "Portfolio"); and (2)
transactions in the securities set forth in the table above, I hereby certify
that:
(a) I have no knowledge of the existence of any personal conflict of
interest relationship which may involve the Portfolio, such as
frontrunning transactions or the existence of any economic
relationship between my transactions and securities held or to be
acquired by the Portfolio;
(b) such securities, including securities that are economically
related to such securities, involved in the transaction are not
(i) being considered for purchase or sale by the Portfolio, or
(ii) being purchased or sold by the Portfolio; and
<PAGE>
(c) are in compliance with the Code of Ethics of the Fund.
Date: ___________________ Signature: ____________________________________
Print Name:_________________________
Title:______________________________
Employer's Name:____________________
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In accordance with the provisions of Section B(2)(d) of the Code of Ethics of
the Fund, the transaction proposed to be effected as set forth in this Report
is:
Authorized: [ ]
Unauthorized: [ ]
Date: ___________________ Signature: ____________________________________
Compliance Officer
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<PAGE>
Exhibit E
THE UAM FUNDS
ACCESS PERSONS
Personal Securities Transactions Pre-clearance Form
(see Section D(1), Code of Ethics)
To the Compliance Officer of the Management Company on behalf of The UAM Funds
("the Fund"):
I hereby request pre-clearance of the following proposed transactions:
<TABLE>
<CAPTION>
===================================================================================================================
SECURITY NO. OF DOLLAR NATURE OF PRICE BROKER/ AUTHORIZED
SHARES AMOUNT OF TRANSACTION (OR PROPOSED DEALER
(include TRANSACTION (Purchase, PRICE) OR BANK THROUGH
interest rate Sale, WHOM EFFECTED
and maturity Other)
date, if YES NO
applicable)
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<S> <C> <C> <C> <C> <C> <C>
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===================================================================================================================
</TABLE>
Date: ______________________ Signature: _____________________________________
(First date of access Access Person
person status)
Name: _____________________________________
Title: _____________________________________
Date: ______________________ Signature: _____________________________________
Compliance Officer
Name: _____________________________________
Title: _____________________________________
-17-
