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UAM Funds
Funds for the Informed Investor/sm/
NWQ Special Equity Portfolio
Semi-Annual Report April 30, 2000
[LOGO OF UAM]
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UAM FUNDS NWQ SPECIAL EQUITY PORTFOLIO
APRIL 30, 2000
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TABLE OF CONTENTS
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Shareholders' Letter............................................... 1
Portfolio of Investments........................................... 4
Statement of Assets and Liabilities................................ 7
Statement of Operations............................................ 8
Statement of Changes in Net Assets................................. 9
Financial Highlights............................................... 10
Notes to Financial Statements...................................... 12
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UAM FUNDS NWQ SPECIAL EQUITY PORTFOLIO
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April 30, 2000
Dear Shareholders:
The NWQ Special Equity Portfolio closed the six-month period ended April 30th
with the Institutional class and Service class gaining 5.18% and 4.92%,
respectively. Results compared with the overall market (S&P 500 Index) return of
7.20%, while significantly underperforming the S&P Midcap 400 Index return of
21.26%. The Lipper Multi-cap Value Funds average returned 3.88% for the same
period.
The performance of the market, and more specifically the Midcap Index, reflects
the very speculative stock market environment that has existed the past few
months. Driven predominantly by biotechnology, Internet start-ups, and
technology-related companies (areas of the market we tend to avoid given their
lofty valuations), most of the major stock indexes reached new highs in March
before selling-off precipitously by the end of April. The NASDAQ composite, a
barometer for the performance of technology stocks, has lost nearly 24 percent
of its value since its highs achieved on March 10th. The speculative bubble that
led many stocks higher burst as investors began to recognize that the
expectations for many of these companies had gone beyond extreme, leading to
historically wide valuation disparities between growth and value stocks. As a
result, money-flows began pouring out of technology stocks and into more
intrinsically cheap value issues. Also helping to propel the rotation were
stable core inflation rates, declining bond yields, and an increasing confidence
exhibited by many "old economy" companies in their own ability to deliver
sustainable long-term earnings growth. This is reflected in the willingness of
many of these companies to repurchase record amounts of their shares. We feel
that many companies selling near book value, the quantity of announced leverage
buy-outs, mergers, and acquisitions has increased significantly.
Despite our limited exposure to speculative stocks, our performance was strong,
particularly relative to the value indices. The Special Equity Portfolio's
performance was bolstered due to the strong returns of several holdings, in
diverse sectors of the portfolio. Particularly strong performers the past six
months were our holdings in AT&T Liberty Media Group, Columbia HCA Healthcare,
Quantum Corp. Hard Disk Drive Group, as well as oil service firms BJ Services,
Noble Affiliates, Ocean Energy, and Tosco Corp. Aetna Corp. was up over 15
percent after the company announced that it would take specific steps to
increase shareholder value, including selling off assets. This response came
after the company received an unsolicited takeover offer. We feel that with many
stocks selling at depressed valuations, and corporate managers concerned with
increasing shareholder value, we believe that the current market environment may
yet hold similar developments in the near term.
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UAM FUNDS NWQ SPECIAL EQUITY PORTFOLIO
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While it is still too early to tell if we have reached an inflection point for
value investing, we are encouraged by the signs we are seeing. Furthermore, we
believe the portfolio is positioned to withstand much of the downside
performance common in a volatile market. During the recent turbulence in the
market, the performance of the Special Equity Portfolio was basically flat,
while the market (S&P 500) dipped nearly 5 percent. Recent activity in the
portfolio includes reducing our overweighted positions in telecommunication and
media companies AT&T Liberty Media Group, NTL Inc., CoreComm Limited, and Cox
Communications given their tremendous capital appreciation last year. We
eliminated our positions in Bank One Corp., Galileo International, Lyondell
Chemical, UnumProvident Corp., and Waste Management. Recent portfolio purchases
include Applied Power, Conoco Inc., USX Marathon Group, and consumer products
company, Sara Lee Corp. As of April 30, 2000 the portfolio held (as a percent of
market value) 97.0% equities and 2.9% cash equivalents.
Sincerely,
/s/ Jon D. Bosse
Jon D. Bosse, CFA
Managing Director
NWQ Investment Management Company, Inc.
Ten Largest Equity Holdings
(as a percentage of the Portfolio)
<TABLE>
<S> <C>
1. Telephone & Data Systems Inc. (4.3%) 6. MediaOne Group (3.2%)
2. NTL Inc. (4.3%) 7. Hartford Financial Services Group (3.2%)
3. CoreComm Inc. (3.6%) 8. Noble Affiliates Inc. (2.8%)
4. AT&T Liberty Media Group (3.5%) 9. Ford Motor (2.5%)
5. Tenet Healthcare Corp. (3.2%) 10. E.W. Scripps (2.5%)
</TABLE>
All performance presented in this report is historical and should not be
construed as a guarantee of future results. The investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. A portfolio's
performance assumes the reinvestment of all dividends and capital gains.
There are no assurances that a portfolio will meet its stated objectives.
A portfolio's holdings and allocations are subject to change because
it is actively managed and should not be considered recommendations
to buy individual securities.
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UAM FUNDS NWQ SPECIAL EQUITY PORTFOLIO
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Definition of the Comparative Indices
-------------------------------------
Lipper Mutual Fund Averages are equally weighted benchmarks comprised of mutual
funds with similar investment objectives.
S&P 500 Index is an unmanaged index comprised of stocks representing major U.S.
market industries, including 400 industrial stocks, 40 financial stocks, 40
utility stocks and 20 transportation stocks.
S&P Midcap 400 Index is an unmanaged index comprised of 400 domestic stocks
representative of medium-sized market capitalizations.
Index returns assume reinvestment of dividends and, unlike a portfolio's
returns, do not reflect any fees or expenses. If such fees and expenses were
included in the index returns, the performance would have been lower.
Please note that one cannot invest directly in an unmanaged index.
3
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UAM FUNDS NWQ SPECIAL EQUITY PORTFOLIO
APRIL 30, 2000 (Unaudited)
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PORTFOLIO OF INVESTMENTS
COMMON STOCKS - 97.0%
<TABLE>
<CAPTION>
Shares Value
------- --------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 17.1%
Alberto Culver, Cl A................................. 15,000 $ 339,375
AT&T Liberty Media Group, Cl A*...................... 16,538 825,866
Dillard's, Cl A...................................... 18,600 259,238
E.W. Scripps, Cl A (The)............................. 12,500 583,594
Ford Motor........................................... 10,800 590,625
Hasbro............................................... 27,500 438,281
Mandalay Resort Group*............................... 17,500 330,312
MediaOne Group*...................................... 10,000 756,250
----------
4,123,541
----------
CONSUMER STAPLES -- 6.5%
Loews................................................ 9,700 534,713
Nabisco Group Holdings............................... 29,000 373,375
Philip Morris........................................ 18,800 411,250
Sara Lee............................................. 16,800 252,000
----------
1,571,338
----------
ENERGY -- 10.0%
BJ Services*......................................... 3,100 217,775
Conoco, Cl B......................................... 20,200 502,475
Noble Affiliates..................................... 18,000 649,125
Ocean Energy*........................................ 18,319 237,002
Tosco................................................ 16,400 525,825
USX-Marathon Group................................... 12,000 279,750
----------
2,411,952
----------
FINANCIAL SERVICES -- 20.5%
Bank of America...................................... 8,667 424,683
Chase Manhattan Bank................................. 6,800 490,025
Countrywide Credit Industries........................ 17,600 486,200
First Union.......................................... 9,500 302,812
Hartford Financial Services Group.................... 14,300 746,281
Heller Financial..................................... 28,000 544,250
</TABLE>
The accompanying notes are an integral part of the financial statements.
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UAM FUNDS NWQ SPECIAL EQUITY PORTFOLIO
APRIL 30, 2000 (Unaudited)
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COMMON STOCKS - continued
<TABLE>
<CAPTION>
Shares Value
--------- -----------
<S> <C> <C>
FINANCIAL SERVICES -- continued
Indymac Mortgage Holdings................ 31,000 $ 404,937
MGIC Investment.......................... 9,900 473,344
Torchmark................................ 23,000 576,437
Waddell & Reed Financial, Cl A........... 18,481 492,057
------------
4,941,026
------------
HEALTH -- 9.5%
Aetna.................................... 8,800 509,300
Columbia/HCA Healthcare.................. 20,000 568,750
Pharmacia................................ 8,853 442,097
Tenet Healthcare*........................ 30,000 765,000
------------
2,285,147
------------
MATERIALS AND PROCESSING -- 5.1%
Packaging of America*.................... 42,000 498,750
Praxair.................................. 13,000 577,687
Smurfit-Stone Container*................. 9,900 150,975
------------
1,227,412
------------
PRODUCER DURABLES -- 6.0%
Cnh Global N.V........................... 33,100 446,850
Ingersoll-Rand........................... 6,000 281,625
Parker-Hannifin.......................... 7,700 358,050
York International....................... 15,000 361,875
------------
1,448,400
------------
TECHNOLOGY -- 4.2%
Applied Power............................ 10,900 312,013
Quantum Dlt & Storage*................... 20,000 235,000
Quantum Hard Diskdrive*.................. 40,000 467,500
------------
1,014,513
------------
TELECOMMUNICATIONS -- 5.5%
ALLTEL................................... 7,000 466,375
CoreComm*................................ 28,700 861,000
------------
1,327,375
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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UAM FUNDS NWQ SPECIAL EQUITY PORTFOLIO
APRIL 30, 2000 (Unaudited)
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COMMON STOCKS - continued
<TABLE>
<CAPTION>
Shares Value
------------ -------------
<S> <C> <C>
TRANSPORTATION -- 2.8%
Delta Air Lines....................................... 6,800 $ 358,700
Lear*................................................. 10,500 314,344
-------------
673,044
-------------
UTILITIES -- 9.8%
Cox Communications, Cl A*.............................. 8,100 346,781
NTL*................................................... 13,125 1,004,063
Telephone & Data Systems............................... 10,000 1,020,000
-------------
2,370,844
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TOTAL COMMON STOCKS
(Cost $20,933,195)...................................... 23,394,592
-------------
SHORT-TERM INVESTMENT -- 1.0%
Face
Amount
------------
REPURCHASE AGREEMENT -- 1.0%
Chase Securities, Inc. 5.65%, dated 04/28/00, due
05/01/00, to be repurchased at $229,108,
collateralized by $250,972 of a U.S. Treasury Note
valued at $229,005 (Cost $229,000)...................... $229,000 229,000
-------------
TOTAL INVESTMENTS -- 98.0%
(Cost $21,162,195) (a).................................. 23,623,592
-------------
OTHER ASSETS AND LIABILITIES, NET -- 2.0%................ 488,679
-------------
TOTAL NET ASSETS -- 100.0%............................... $24,112,271
=============
</TABLE>
* Non-Income Producing Security
Cl Class
(a) The cost for federal income tax purposes was $21,162,195. At April 30, 2000,
net unrealized appreciation for all securities based on tax cost was
$2,461,397. This consisted of aggregate gross unrealized appreciation for
all securities of $4,831,134, and gross unrealized depreciation for all
securities of $2,369,737.
The accompanying notes are an integral part of the financial statements.
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UAM FUNDS NWQ SPECIAL EQUITY PORTFOLIO
APRIL 30, 2000 (Unaudited)
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STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<S> <C>
Assets
Investments, at Cost....................................... $21,162,195
===========
Investments, at Value - Note A............................. $23,623,592
Cash....................................................... 192
Receivable for Investments Sold............................ 411,766
Receivable for Portfolio Shares Sold....................... 60,773
Dividends and Interest Receivable.......................... 24,602
Other Assets............................................... 19,277
-----------
Total Assets............................................. 24,140,202
-----------
Liabilities
Payable for Investment Advisory Fees - Note B.............. 6,687
Payable for Administrative Fees - Note C................... 4,642
Payable for Custodian Fees - Note D........................ 3,226
Payable for Distribution and Service Fees - Note E......... 1,912
Other Liabilities.......................................... 11,464
-----------
Total Liabilities........................................ 27,931
-----------
Net Assets................................................. $24,112,271
===========
Net Assets Consist of:
Paid in Capital............................................ 20,624,639
Undistributed Net Investment Income........................ 2,101
Accumulated Net Realized Gain.............................. 1,024,134
Unrealized Appreciation.................................... 2,461,397
-----------
Net Assets................................................. $24,112,271
===========
Institutional Class Shares
Net Assets................................................. $18,304,268
Shares Issued and Outstanding ($0.001 par value)
(Authorized 25,000,000).................................. 1,486,165
Net Asset Value, Offering and Redemption Price Per Share... $12.32
===========
Institutional Service Class Shares
Net Assets................................................. $ 5,808,003
Shares Issued and Outstanding ($0.001 par value)
(Authorized 10,000,000).................................. 474,409
Net Asset Value, Offering and Redemption Price Per Share... $12.24
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
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UAM FUNDS NWQ SPECIAL EQUITY PORTFOLIO
FOR THE SIX MONTHS ENDED
APRIL 30, 2000 (Unaudited)
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STATEMENT OF OPERATIONS
<TABLE>
<S> <C>
Investment Income
Dividends........................................................................ $ 138,651
Interest......................................................................... 28,453
----------
Total Income................................................................... 167,104
----------
Expenses
Investment Advisory Fees - Note B................................................ 97,324
Administrative Fees - Note C..................................................... 58,508
Distribution and Service Fees - Note E........................................... 11,720
Registration and Filing Fees..................................................... 11,552
Audit Fees....................................................................... 6,288
Printing Fees.................................................................... 6,061
Custodian Fees - Note D.......................................................... 3,134
Directors' Fees - Note F......................................................... 1,294
Legal Fees....................................................................... 923
Other Expenses................................................................... 7,767
Investment Advisory Fees Waived - Note B......................................... (60,593)
----------
Net Expenses Before Expense Offset............................................. 143,978
----------
Expense Offset - Note A.......................................................... (584)
----------
Net Expenses After Expense Offset.............................................. 143,394
----------
Net Investment Income............................................................ 23,710
----------
Net Realized Gain on Investments................................................. 1,070,926
Net Change in Unrealized Appreciation (Depreciation)
of Investments................................................................. 82,065
----------
Net Gain on Investments.......................................................... 1,152,991
----------
Net Increase in Net Assets Resulting from Operations............................. $1,176,701
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
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STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
April 30, 2000 October 31,
(Unaudited) 1999
------------------ --------------
<S> <C> <C>
Increase in Net Assets
Operations:
Net Investment Income................................. $ 23,710 $ 33,546
Net Realized Gain..................................... 1,070,926 198,664
Net Change in Unrealized Appreciation (Depreciation).. 82,065 3,470,623
--------------- --------------
Net Increase in Net Assets Resulting from
Operations.......................................... 1,176,701 3,702,833
--------------- --------------
Distributions:
Net Investment Income:
Institutional Class................................... (36,034 (39,254)
Institutional Service Class........................... (892 --
Net Realized Gain:
Institutional Class................................... (144,151 (72,678)
Institutional Service Class........................... (54,545 (26,294)
--------------- --------------
Total Distributions................................. (235,622 (138,226)
--------------- --------------
Capital Share Transactions (Note I):
Institutional Class:
Issued................................................ 1,748,359 3,055,473
In Lieu of Cash Distributions......................... 180,185 111,770
Redeemed.............................................. (722,398 (3,565,829)
--------------- --------------
Net Increase (Decrease) from Institutional Class
Shares............................................... 1,206,146 (398,586)
--------------- -------------
Institutional Service Class:
Issued................................................ 388,014 716,554
In Lieu of Cash Distributions......................... 55,329 26,240
Redeemed.............................................. (1,098,676 (456,306)
--------------- -------------
Net Increase (Decrease) from Institutional Service
Class Shares......................................... (655,333 286,488
--------------- -------------
Net Increase (Decrease) from Capital Share
Transactions......................................... 550,813 (112,098)
--------------- -------------
Total Increase....................................... 1,491,892 3,452,509
--------------- -------------
Net Assets:
Beginning of Period................................... 22,620,379 19,167,870
--------------- -------------
End of Period (including undistributed net investment
income of $2,101 and $15,317, respectively)......... $ 24,112,271 $ 22,620,379
=============== =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
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FINANCIAL HIGHLIGHTS
Selected Per Share Data & Ratios
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Institutional Class Shares
--------------------------------------------
Six Months Year November 4,
Ended Ended 1997*** to
April 30, 2000 October 31, October 31,
(Unaudited) 1999 1998
-------------- ----------- -----------
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period................................ $ 11.84 $ 10.01 $ 10.00
------- ------- -------
Income from Investment Operations
Net Investment Income.............................. 0.02 0.03 0.02
Net Realized and Unrealized Gain (Loss)............ 0.59 1.88 (0.01)@
------- ------- -------
Total from Investment Operations................... 0.61 1.91 0.01
------- ------- -------
Distributions
Net Investment Income.............................. (0.03) (0.03) --
Net Realized Gain.................................. (0.10) (0.05) --
------- ------- -------
Total Distributions................................ (0.13) (0.08) --
------- ------- -------
Net Asset Value,
End of Period...................................... $ 12.32 $ 11.84 $ 10.01
======= ======= =======
Total Return+...................................... 5.18%** 19.33% 0.10%**
======= ======= =======
Ratios and Supplemental Data
Net Assets, End of Period (Thousands).............. $18,304 $16,406 $14,167
Ratio of Expenses to Average Net Assets............ 1.15%* 1.22% 1.16%*
Ratio of Net Investment Income
to Average Net Assets............................. 0.31%* 0.26% 0.42%*
Portfolio Turnover Rate............................ 33% 26% 23%
</TABLE>
* Annualized
** Not Annualized
*** Commencement of Operations
+ Total return would have been lower had the Adviser not waived and assumed
certain expenses during the periods indicated.
@ The amounts shown for a share outstanding throughout the period do not
accord with aggregate net losses on investments for the period because of
the timing of sales and repurchases of the portfolio shares in relation to
fluctuating market value of the investments in the Portfolio.
The accompanying notes are an integral part of the financial statements.
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FINANCIAL HIGHLIGHTS
Selected Per Share Data & Ratios
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Institutional Service Class Shares
-----------------------------------------------
Six Months Year November 7,
Ended Ended 1997*** to
April 30, 2000 October 31, October 31,
(Unaudited) 1999 1998
-------------- ----------- ------------
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period.................................. $ 11.77 $ 9.96 $ 9.90
------- ------- ------
Income from Investment Operations
Net Investment Loss................................. (0.01) (0.02) (0.01)
Net Realized and Unrealized Gain (Loss)............. 0.58 1.88 0.07@
------- ------- ------
Total from Investment Operations.................... 0.57 1.86 0.06
------- ------- ------
Distributions
Net Investment Income............................... -- -- --
Net Realized Gain................................... (0.10) (0.05) --
------- ------- ------
Total Distributions................................. (0.10) (0.05) --
------- ------- ------
Net Asset Value,
End of Period....................................... $ 12.24 $ 11.77 $ 9.96
======= ======= ======
Total Return+......................................... 4.92%** 18.79% 0.61%**
======= ======= ======
Ratios and Supplemental Data
Net Assets, End of Period (Thousands)................. $ 5,808 $ 6,215 $5,001
Ratio of Expenses to Average Net Assets............... 1.55%* 1.62% 1.56%*
Ratio of Net Investment Loss
to Average Net Assets................................ (0.10)%* (0.14)% (0.16)%*
Portfolio Turnover Rate............................... 33% 26% 23%
</TABLE>
* Annualized
** Not Annualized
*** Initial Offering of Institutional Service Class Shares
+ Total return would have been lower had the Adviser not waived and assumed
certain expenses during the periods indicated.
@ The amounts shown for a share outstanding throughout the period do not
accord with aggregate net losses on investments for the period because of
the timing of sales and repurchases of the portfolio shares in relation to
fluctuating market value of the investments in the Portfolio.
The accompanying notes are an integral part of the financial statements.
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NOTES TO FINANCIAL STATEMENTS (Unaudited)
UAM Funds, Inc., UAM Funds, Inc. II and UAM Funds Trust (collectively the
"UAM Funds") are registered under the Investment Company Act of 1940, as
amended. The NWQ Special Equity Portfolio (the "Portfolio"), a portfolio of UAM
Funds, Inc., is a diversified, open-end management investment company. At April
30, 2000, the UAM Funds were composed of 49 active portfolios. The information
presented in the financial statements pertains only to the Portfolio. The
Portfolio currently offers two separate classes of shares-Institutional Class
Shares and Institutional Service Class Shares ("Service Class Shares"). Both
classes of shares have identical voting rights (except Service Class
shareholders have exclusive voting rights with respect to matters relating to
distributions and shareholder servicing of such shares), dividend, liquidation
and other rights. The objective of the Portfolio is to seek long-term capital
appreciation by investing primarily in the common stock and other equity
securities of companies which, in the Adviser's opinion, are undervalued at the
time of purchase and offer the potential for above-average capital appreciation.
A. Significant Accounting Policies: The following significant accounting
policies are in conformity with generally accepted accounting principles. Such
policies are consistently followed by the Portfolio in the preparation of its
financial statements. Generally accepted accounting principles may require
Management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results may differ from
those estimates.
1. Security Valuation: Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sale price from the exchange where the security is primarily traded.
If no sales are reported, as in the case of some securities traded over-the-
counter, the market value is determined using the last reported bid price.
Short-term investments with maturities of sixty days or less at time of
purchase are valued at amortized cost, if it approximates market value. The
value of other assets and securities for which no quotations are readily
available is determined in good faith at fair value following procedures
approved by the Board of Directors.
2. Federal Income Taxes: It is the Portfolio's intention to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code
and to distribute all of its taxable income. Accordingly, no provision for
Federal income taxes is required in the financial statements.
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3. Repurchase Agreements: In connection with transactions involving
repurchase agreements, the Portfolio's custodian bank takes possession of the
underlying securities ("collateral"), the value of which exceeds the principal
amount of the repurchase transaction, including accrued interest. To the
extent that any repurchase transaction exceeds one business day, the value of
the collateral is monitored on a daily basis to determine the adequacy of the
collateral. In the event of default on the obligation to repurchase, the
Portfolio has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. In the event of default or bankruptcy by the
counterparty to the agreement, realization and/or retention of the collateral
or proceeds may be subject to legal proceedings.
Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission, the UAM Funds may transfer their daily uninvested cash balances
into a joint trading account which invests in one or more repurchase
agreements. This joint repurchase agreement is covered by the same collateral
requirements as discussed above.
4. Distributions to Shareholders: The Portfolio will distribute
substantially all of its net investment income quarterly. Any realized net
capital gains will be distributed annually. All distributions are recorded on
ex-dividend date.
The amount and character of income and capital gain distributions to be
paid are determined in accordance with Federal income tax regulations which
may differ from generally accepted accounting principles.
Permanent book and tax basis differences relating to shareholder
distributions may result in reclassifications to undistributed net investment
income (loss), accumulated net realized gain (loss) and paid in capital.
Permanent book-tax differences, if any, are not included in ending
undistributed net investment income (loss) for the purpose of calculating net
investment income (loss) per share in the financial highlights.
5. Other: Security transactions are accounted for on trade date, the date
the trade is executed. Costs used in determining realized gains or losses on
the sale of investment securities are based on the specific identification
method. Dividend income is recorded on the ex-dividend date. Interest income
is recognized on the accrual basis. Most expenses of the UAM Funds can be
directly attributed to a particular portfolio. Expenses that cannot be
directly
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attributed to a portfolio or share class are apportioned among the portfolios
of the UAM Funds based on their relative net assets. Income, expenses (other
than class specific expenses) and realized and unrealized gains and losses are
allocated to each class of shares based upon their relative net assets.
Custodian fees for the Portfolio are shown gross of expense offsets, if any,
for custodian balance credits.
B. Investment Advisory Services: Under the terms of an investment advisory
agreement, NWQ Investment Management Company (the "Adviser"), a subsidiary of
United Asset Management Corporation ("UAM"), provides investment advisory
services to the Portfolio for a monthly fee calculated at an annual rate of
0.85% of average daily net assets.
The Adviser has voluntarily agreed to waive a portion of its advisory fees and
to assume expenses, if necessary, in order to keep the total annual operating
expenses, after the effect of expense offset arrangements, from exceeding 1.25%
of average net assets of the Portfolio's Institutional Class Shares and 1.65% of
the average net assets of the Portfolio's Institutional Service Class Shares.
C. Administrative Services: UAM Fund Services, Inc. (the "Administrator"), a
wholly-owned subsidiary of UAM, provides and oversees administrative, fund
accounting, dividend disbursing, shareholder servicing and transfer agent
services to the Portfolio under a Fund Administration Agreement (the
"Agreement"). The Administrator has entered into separate Service Agreements
with SEI Investments Mutual Funds Services ("SEI"), a wholly-owned subsidiary of
SEI Investments Company, DST Systems, Inc. ("DST"), and UAM Shareholder Service
Center ("UAMSSC"), an affiliate of UAM, to assist in providing certain services
to the Portfolio.
Pursuant to the Agreement, the Portfolio pays the Administrator 0.073% per
annum of the average daily net assets of the Portfolio, an annual base fee of no
more than $94,250, and a fee based on the number of active shareholder accounts.
For the six months ended April 30, 2000, the Administrator was paid $58,508,
of which $23,305 was paid to SEI for their services, $12,887 to DST for their
services, and $5,799 to UAMSSC for their services.
Prior to November 1, 1999, Chase Global Fund Services Company served as the
Portfolio's Sub-Administrator.
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D. Custodian: The Chase Manhattan Bank is custodian for the Portfolio's assets
held in accordance with the custodian agreement.
E. Distribution Services: UAM Fund Distributors, Inc. (the "Distributor"), a
wholly-owned subsidiary of UAM, distributes the shares of the Portfolio. The
Distributor does not receive any fee or any other compensation with respect to
the Portfolio.
The Portfolio has adopted a Distribution and Service Plan (the "Plan") on
behalf of the Service Class Shares pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Under the Plan, the Service Class Shares may not incur
distribution and service fees which exceed an annual rate of 0.75% of average
net assets of that class of shares, however, the Board has currently limited
aggregate payments under the Plans to 0.50% per annum of the Service Class
Share's average net assets. The Portfolio's Service Class Shares are currently
making payments for distribution fees at 0.15% of average daily net assets.
In addition, the Portfolio's Service Class Shares pay service fees at an
annual rate of 0.25% of the average daily value of the Portfolio's Service Class
Shares owned by clients of the Service Agents.
F. Directors' Fees: Each Director, who is not an officer or affiliated person,
receives $2,000 per meeting attended plus reimbursement of expenses incurred in
attending Board meetings which is allocated proportionally among the active
portfolios of UAM Funds, plus a quarterly retainer of $150 for each active
portfolio of the UAM Funds.
G. Purchases and Sales: For the six month period ended April 30, 2000,
purchases and sales of investment securities other than long-term U.S.
Government securities and short-term securities were $7,948,597 and $7,281,315,
respectively.
There were no purchases or sales of long-term U.S. Government securities.
H. Line of Credit: The Portfolio, along with certain other Portfolios of UAM
Funds, collectively entered into an agreement which enables them to participate
in a $100 million unsecured line of credit with several banks. Borrowings will
be made solely to temporarily finance the repurchase of capital shares. Interest
is charged to each participating portfolio based on its borrowings at a rate per
annum equal to the Federal Funds rate plus 0.50%. In addition, a commitment fee
of 0.08% per annum,
15
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UAM FUNDS NWQ SPECIAL EQUITY PORTFOLIO
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payable at the end of each calendar quarter, is accrued by each participating
portfolio based on its average daily unused portion of the line of credit.
During the six months ended April 30, 2000, the Portfolio had no borrowings
under the agreement.
I. Capital Share Transactions: Transactions in capital shares for the
Portfolio, by class, were as follows:
<TABLE>
<CAPTION>
Institutional Class Shares Institutional Service Class Shares
------------------------------ -------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
April 30, 2000 October 31, April 30, 2000 October 31,
(Unaudited) 1999 (Unaudited) 1999
--------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Shares Issued.................. 147,325 262,370 33,199 63,377
In Lieu of Cash Distributions.. 15,040 10,788 4,661 2,611
Shares Redeemed................ (61,412) (303,710) (91,258) (40,115)
------- -------- ------- -------
Net Increase (Decrease) from
Capital Share Transactions.... 100,953 (30,552) (53,398) 25,873
======= ======== ======= =======
</TABLE>
J. Other:
At April 30, 2000, the percentage of total shares outstanding held by record
shareholders each owning 10% or greater of the aggregate total shares
outstanding for the Portfolio was as follows:
No. of %
Shareholders Ownership
------------ ---------
Institutional Class......................... 2 78%
Institutional Service Class................. 3 97%
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UAM FUNDS NWQ SPECIAL EQUITY PORTFOLIO
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Officers and Directors
Norton H. Reamer William H. Park
Director, President and Chairman Vice President
John T. Bennett, Jr. Gary L. French
Director Treasurer
Nancy J. Dunn Robert R. Flaherty
Director Assistant Treasurer
Philip D. English Robert J. Della Croce
Director Assistant Treasurer
William A. Humenuk Martin J. Wolin, Esq.
Director Secretary
James P. Pappas Theresa DelVecchio
Director Assistant Secretary
Peter M. Whitman, Jr.
Director
--------------------------------------------------------------------------------
UAM Funds
P.O. Box 219081
Kansas City, MO 64121
(toll free)
1-877-UAM-LINK (826-5465)
www.uam.com
Investment Adviser
NWQ Investment Management Company
2049 Century Park East, 4th Floor
Los Angeles, CA 90067
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
This report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus.
