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UAM Funds
Funds for the Informed Investor/sm/
FPA Crescent Portfolio
Semi-Annual Report September 30, 2000
[LOGO OF UAM]
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UAM FUNDS FPA CRESCENT PORTFOLIO
SEPTEMBER 30, 2000
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TABLE OF CONTENTS
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Shareholders' Letter .................................................... 1
Portfolio of Investments................................................. 9
Statement of Assets and Liabilities ..................................... 13
Statement of Operations ................................................. 14
Statement of Changes in Net Assets....................................... 15
Financial Highlights .................................................... 16
Notes to Financial Statements ........................................... 17
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October 24, 2000
Dear Fellow Shareholders:
During the third quarter ended September 30, 2000, the Crescent Portfolio
increased 6.8% and beat the major market averages. The Russell 2500 increased
2.4%, while the S&P 500 and Nasdaq Composite declined 1.0% and 7.4%,
respectively. From the market peaks reached in March, Crescent's relative
performance has proven more substantial.
The stock market has begun to reclaim some of its lost rationality as the second
quarter proved that a business' economic value has a place in modern portfolio
theory. A tremendous number of e-companies have seen declines of 90% or more as
investors have come to realize that those companies' prospects were not as
bright as originally hoped. We believe we are seeing a leadership change from
growth to value. Despite a recent rebound in many growth stocks early in the
third quarter, we do not believe that we have seen the market hit its nadir. The
stock market does not hit bottom without broader pessimism.
It is surprising to see that margin debt has only contracted 10% or so given the
kind of index declines we have seen. The technology laden Nasdaq has turned in
the worst performance, declining 44.5% from peak to trough. Yet, customer margin
debt reflects the continued stock market optimism and stands near $250 billion,
six times the level seen earlier in the decade and double the level reached just
two years ago.
Despite share price declines, many companies remain priced to perfection today
with little margin of safety. We believe IBM is a good example. It is valued
like a growth company, trading at 25x earnings at its $112.63 quarter-end price.
This lofty valuation exists, in part, because of the company's ability to hide
behind the cloak of Federal accounting regulations. IBM has had non-recurring
gains on sale of assets that they have used as a reduction to selling, general,
and administrative expense. Pension income has benefited reported earnings as
well. Both gains on sale of assets and pension income are a function of a strong
stock market and are not operating earnings. One cannot count on the recurring
nature of such income and therefore should value that portion of the earnings
stream at a deeply discounted value. IBM cannot continue to grow earnings at the
26% clip it has achieved over the past five years while revenues grow only at a
6% rate. Worse, operating cash
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flow is lower today than it was three years ago and that, in turn, is lower than
the operating cash flow reported five years ago. IBM's overstated earnings and
slow revenue growth are not indicative of a growth company. It is undeserving of
such a high P/E. We began to short IBM shares during the third quarter at an
average price of $121.13, and the position is equivalent to 0.6% of net assets.
The carnage seen in some sectors of the stock market has been significant. Take
a peek at some of these brand name examples not held in the Portfolio, their
stock declines from their 12-month highs, and their still lofty valuations.
Price/2000
Company Price Change Earnings Price Book
------- ------------ -------- ----------
Amazon ................... -66% Negative Negative
Etoys .................... -93% Negative Negative
Intel .................... -45% 24.6x 7.6x
Lucent ................... -63% 41.1x 3.7x
Microsoft ................ -49% 33.1x 7.0x
Compare the very high Price/Earnings and Price/Book ratios of the above
companies to the following recent purchases in our portfolio as of September 30,
2000. These companies reflect our desire not to buy companies "on the come." We
prefer to buy companies that have already come...and gone, but we expect to
return.
Price/2000 Percent of
Company Price Change Earnings Price Book Net Assets
------- ------------ -------- ---------- ----------
Celanese.................. -30% 19.5x 0.3x 3.6%
Lincare................... -27% 13.3x 2.9x 1.7%
Pittston Brinks........... -31% 14.1x 1.1x 3.5%
Ross Stores............... -40% 7.5x 2.6x 1.9%
The data listed above for our recent portfolio additions do not tell the whole
story. We reviewed Pittston Brinks in our second quarter letter so we will
review Celanese, Ross Stores, and Lincare in this missive.
Celanese is a world leading chemical company with number one or number two
market share in almost every product category. Hoechst, a German conglomerate,
purchased Celanese in 1987 and then spun it off to shareholders in late 1999.
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Celanese is suffering from a difficult chemical environment today. High oil
prices drive their raw material costs higher, constricting the margins of all
chemical companies. Because of this and some excess capacity in their various
product lines, Celanese has not captured the imagination of Wall Street. Its
stock trades at a 70% discount to stated book value of $55 (excluding intangible
assets the company still trades at a 44% discount). Once a more "normal" cost
environment is attained, our analysis shows that Celanese has the potential to
earn $3.50 - $4.00 per share --attractive earnings for a stock that trades at
just $17. We are not the only ones to find the stock attractive. Celanese's
management has put their money where their mouth is purchasing, since the
spin-off, more than $20 million worth of stock for themselves and repurchasing
9% of the shares outstanding. We expect that the stock will begin to move as
excess capacity is absorbed and oil prices decline or as time passes and the
company is able to achieve price increases. We cannot pinpoint the date when
this will happen but even if it takes four years to double our money, that would
still be a 19% compounded rate of return.
Lincare is one of two companies that dominate the respiratory therapy business,
i.e., the home delivery of oxygen. They have grown their revenues and earnings
24% and 21% respectively over the last five years. This has been achieved
despite frequent and dramatic Medicare cuts. They are the best company in the
industry with the fastest growth rate and the highest return on capital. They
have averaged a 23% return-on-equity over the past three years. The one
outstanding risk that we are cognizant of is the risk that plagues all health
care delivery companies from hospitals and nursing homes to respiratory therapy
companies -- government investigations. The government is always looking for
incidences of fraud. Lincare has put together a terrific internal compliance
program to control wanton actions. Nevertheless, it is a real risk. During the
quarter we purchased our position at $25.07, down from a high of $43.50, giving
us a current year price/earnings ratio of only 11.3x at our cost. We feel that
this provided us adequate downside protection and tremendous upside potential.
In fact, as of this writing the stock has traded above $40 and we have
substantially reduced our initial position. It now accounts for 1.0% of net
assets.
Ross Stores is one of the leading off-price apparel retailers. For the last five
years they have grown their revenues and earnings at a compounded rate of 14%
and 41% respectively. They have averaged an unleveraged 28% return on equity
(ROE). Given this terrific history how could this company be trading at 7.8x
2000's earn-
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ings estimate? Frankly, we do not know. A weak economy would certainly hurt the
company; however, Ross had half of their sales in California in the early 1990s
when the state went through a depression and yet did not lose money and still
earned a 15% ROE. Management has been actively repurchasing their shares, buying
19% of the outstanding over the last 7.5 years. It is not often that you can
find such an attractive business trading at such an attractive price.
As you can see from each of these three examples, although we are value
investors, we insist on owning growing businesses. Companies that are not
growing fail to attract the best employees and do not have the ability to
control their costs in the same fashion as a growing entity.
We have been increasing our exposure to the retail sector, after reducing it
earlier in the year. Retail stocks have underperformed the market in 2000 due to
slowing growth rates, higher energy costs, higher rent, and overcapacity in some
sectors. This has combined to give retail its lowest valuation as a group since
1987 (source: Sanford Bernstein). The companies that we have chosen to invest in
the retail sector include our four largest retail investments: Charming Shoppes
Convertible Notes, Consolidated Stores, Michaels Stores, and Ross Stores. If the
economy is indeed slowing, all retail will be impacted but so will the rest of
the stock market. We believe that the retail stocks that we own will outperform,
given their current valuations, should the economy weaken.
Technology purchases will be impacted by a weak economy as well. How could they
not? We have read that more than 50% of corporate capital budgets are spent on
technology. If technology slides further in a weakening economy, we intend to
have more of a presence in that sector than we have in the past. We expect to
accomplish this with the added help of our associate Dennis Bryan who has been a
very successful technology investor over the past decade, and a member First
Pacific Advisors' team since 1993.
Crescent currently reflects the lowest valuations that it has seen since its
inception and is dramatically cheaper than the comparative stock indexes below.
It is important to recognize that the companies we hold are not just cheap but,
as stated earlier, have been growing their earnings at double-digit rates.
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<TABLE>
<CAPTION>
Ratios Lehman Bros.
(Weighted Average) Crescent Russell 2500 S&P 500 Gov't/Corp.
------------------ -------- ------------ ------- -----------
<S> <C> <C> <C> <C>
Stocks
Price/Earnings TTM .............. 12.6x 24.6x 28.5x --
Price/Earnings 2000 est. .......... 9.6x 23.3x 27.6x --
Price/Book ....................... 1.2x 2.6x 5.2x --
Dividend Yield ................... 1.4% 1.4% 1.1% --
Bonds
Duration ......................... 2.4 years -- -- 5.4 years
Maturity ......................... 3.6 years -- -- 9.7 years
Yield ............................ 16.8% -- -- 6.8%
</TABLE>
Our ten largest equity positions represented 37.1% of the portfolio as of
September 30, 2000. Listed below are Crescent's ten largest holdings, excluding
short-term investments, as of September 30, 2000.
Common & Preferred Stocks
Fritz Companies
Consolidated Stores
Crown American Realty Trust 11% Preferred
Plains Resources
Celanese
Pittston Brinks
Michaels Stores
Bonds & Notes
Centertrust Retail Properties, 7.5% Convertible Notes, due 1/15/01
Charming Shoppes, 7.5% Convertible Notes, due 7/15/06
CKE Restaurants, 4.25% Convertible Notes, due 3/15/04
Crescent had the following net asset composition at September 30, 2000.
Common Stocks, Long .................................................. 61.0%
Preferred Stocks ..................................................... 4.7%
Bonds & Notes......................................................... 23.1%
Accrued Income ....................................................... 0.5%
Common Stocks, Short.................................................. (1.9%)
Cash & Other ......................................................... 12.6%
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Total ............................................................. 100.0%
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Our fixed-income portfolio has a 16.8% average yield-to-maturity. We will not
tell you that the portfolio is without risk but we do believe that the high
current yield justifies the risk assumed. Hutchinson Technology convertible
bonds were purchased at the end of the second quarter with an 18%
yield-to-maturity. Its yield-to-maturity is now 8.3% after appreciating 29.5%
during the quarter.
We maintain our commitment to own growing businesses with excellent free cash
flow and respectable returns on capital. We make this commitment with the caveat
that some companies we own will not have the desired free cash flow and returns
on capital at purchase. That is usually why the stock price has declined. We
frequently buy companies that have stumbled and we expect them to get back on
their horse and ride at a gait similar to what they have done in the past. We
will not own a Yahoo, AOL, etc. This does not mean that such businesses cannot
increase in value. They can and, in fact, have done so dramatically. However, we
do not understand the valuations paid. This does not mean that we cannot
understand the business. We think we do. We just do not know what the economics
will be ten years hence. To value a business, any business, one must present
value the future stream of cash flows. As analysts we must have conviction that
we know what the future cash flows will be. To try and determine the usually
foggy future, we must have a comfort level with a company's revenue growth,
future margins, and future capital needs. This is quite difficult to do for
companies that have stable businesses with long histories and impossible for us
to do with new businesses operating in a rapidly changing environment. We will
stick with what we know. It appears to have finally begun to pay off again in
the most recent quarter and we look forward to more of the same in the future.
/s/ Steven Romick
Steven Romick
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(Unaudited)
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<TABLE>
<CAPTION>
Balanced
FPA Benchmark
Crescent 60% Russell Lehman
Institutional 2500/40% LB Gov't/ Russell
Time Period Class Gov't/Corp Corporate 2500
----------- ------------- ------------ --------- ----
<S> <C> <C> <C> <C>
Period Ended September 30, 2000
Third Quarter 0.5% 2.7% 2.9% 2.4%
Year-to-Date -2.2 8.2% 7.2% 8.2%
------------------------------------------------------------------------------------
Year Ended December 31,
1999 ................. -6.3% 13.3% -2.2% 24.2%
1998 ................. 2.8% 4.0% 9.5% 0.4%
1997 ................. 22.0% 18.5% 9.8% 24.4%
1996 ................. 22.9% 12.6% 2.9% 19.0%
1995 ................. 26.0% 26.7% 19.2% 31.7%
1994 ................. 4.3% -2.0% -3.5% -1.1%
------------------------------------------------------------------------------------
From Inception 6/2/93*... 10.1% 12.1% 6.4% 15.4%
------------------------------------------------------------------------------------
</TABLE>
The data quoted represents past performance and is not indicative of future
performance. An investment in the fund may fluctuate so that an investor's
shares when redeemed may be worth more or less than their original cost. All
returns assume the reinvestment of dividends and distributions.
* Returns from inception are annualized. The annualized performance of the
Russell 2500 and Lehman Brothers Government/Corporate Indexes begins 6/1/93.
The total return of the Portfolio reflects fees waived and expenses assumed by
the Adviser. Without such fees waived and expenses assumed, the total return
would be lower.
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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(Unaudited)
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Definition of Comparative Indices
---------------------------------
Balanced Benchmark is a hypothetical combination of unmanaged indices comprised
of 60% Russell 2500 Index and 40% Lehman Government/Corporate Index, reflecting
the portfolio's neutral mix of 60% stocks and 40% bonds.
Lehman Government/Corporate Index is an unmanaged index of investment grade
bonds, including U.S. government treasury bonds, corporate bonds and yankee
bonds.
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.
Russell 2500 Index is an unmanaged index comprised of 2,500 stocks of U.S.
companies with small market capitalization.
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.
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.
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SEPTEMBER 30, 2000 (Unaudited)
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PORTFOLIO OF INVESTMENTS
LONG POSITIONS - 99.6.%*
COMMON STOCKS - 61.0%
Market
Shares Value
---------- -----------
AUTOMOTIVE -- 2.2%
Midas+ ............................ 59,400 $ 831,600
----------
CHEMICALS -- 3.6%
Celanese* ......................... 78,700 1,347,737
----------
FINANCIAL SERVICES -- 1.4%
Conseco ........................... 70,000 533,750
----------
HEALTH CARE -- 1.7%
Lincare Holdings* ................. 22,600 648,337
----------
LODGING & RESTAURANTS -- 3.0%
CKE Restaurants ................... 55,800 170,887
IHOP* ............................. 50,000 956,250
----------
1,127,137
----------
MANUFACTURING -- 7.3%
Coachmen Industries ............... 82,000 855,875
National R.V. Holdings* ........... 89,800 903,612
Recoton* .......................... 34,600 547,112
Skyline ........................... 19,700 419,856
----------
2,726,455
----------
MISCELLANEOUS BUSINESS SERVICES -- 1.6%
Remedy Temp* ...................... 50,000 596,875
----------
PETROLEUM & FUEL PRODUCTS -- 3.6%
Plains Resources* ................. 72,000 1,359,000
----------
REAL ESTATE -- 5.5%
Capital Automotive REIT ........... 65,000 845,000
Crown American Realty REIT ........ 17,000 103,063
Ventas REIT ....................... 225,000 1,125,000
----------
2,073,063
----------
The accompanying notes are an integral part of the financial statements.
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SEPTEMBER 30, 2000 (Unaudited)
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COMMON STOCKS - continued
Market
Shares Value
-------- ----------
RETAIL -- 12.5%
Consolidated Stores* ........... 141,000 $ 1,903,500
Michaels Stores* ............... 32,500 1,300,000
Payless ShoeSource* ............ 13,500 756,000
Ross Stores .................... 49,800 715,875
-----------
4,675,375
-----------
TECHNOLOGY -- 8.3%
Arrow Electronics* ............. 31,800 1,083,188
Galileo International .......... 27,500 426,250
NCR*+ .......................... 23,000 869,688
Storage Technology* ............ 55,000 745,938
-----------
3,125,064
-----------
TEXTILES & APPAREL -- 1.4%
Reebok International*+ ......... 28,000 526,750
-----------
TRANSPORTATION -- 8.8%
Fritz Companies* ............... 166,000 1,992,000
Pittston Brink's Group ......... 85,800 1,329,900
-----------
3,321,900
-----------
TOTAL COMMON STOCKS
(Cost $27,107,140) .......... 22,893,043
-----------
PREFERRED STOCKS -- 4.7%
REAL ESTATE -- 4.7%
Crown American Realty Trust
11.00% 07/31/07 Series A
REIT ......................... 39,500 1,520,750
Prime Retail 8.50% 12/31/49 Series
B Cv. REIT ..................... 63,000 224,438
-----------
1,745,188
-----------
TOTAL PREFERRED STOCKS
(Cost $3,255,402) ........... 1,745,188
-----------
The accompanying notes are an integral part of the financial statements.
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SEPTEMBER 30, 2000 (Unaudited)
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CORPORATE BONDS - 23.1%
Face Market
Amount Value
---------- ----------
ENTERTAINMENT & LEISURE -- 1.1%
Trump Atlantic City Associates
11.250%, 05/01/06 ................ $ 610,000 $ 420,900
----------
FINANCIAL SERVICES -- 1.2%
Conseco
7.875%, 12/15/00 ................. 450,000 436,500
----------
HEALTH CARE -- 1.4%
Triad Hospital Holdings, Sr. Sub Note
11.000%, 05/15/09 ................ 497,000 509,425
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LODGING & RESTAURANTS -- 4.0%
Advantica Restaurant Group
11.250%, 01/15/08 ................ 626,057 350,592
CKE Restaurants Cv.
4.250%, 03/15/04 ................. 2,516,000 1,147,925
----------
1,498,517
----------
REAL ESTATE -- 7.3%
Centertrust Retail Properties Cv.
7.500%, 01/15/01 ................. 2,807,000 2,743,843
----------
RETAIL -- 5.4%
Charming Shoppes Cv.
7.500%, 07/15/06 ................. 1,600,000 1,426,000
HomeBase Cv. #
5.250%, 11/01/04 ................. 1,114,000 618,270
----------
2,044,270
----------
TECHNOLOGY -- 2.7%
Hutchinson Technology Cv.
6.000%, 03/15/05 ................. 1,120,000 1,026,200
----------
TOTAL CORPORATE BONDS
(Cost $10,397,700) ............... 8,679,655
----------
The accompanying notes are an integral part of the financial statements.
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SEPTEMBER 30, 2000 (Unaudited)
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SHORT-TERM INVESTMENT -- 10.8%
Face Market
Amount/Shares Value
------------- ----------
REPURCHASE AGREEMENT -- 10.8%
Chase Securities, Inc., 6.40%, dated 09/29/00,
due 10/02/00, to be repurchased at $4,073,171,
collateralized by $4,046,497 of various
U.S. Treasury Notes, valued at $4,071,148
(Cost $4,071,000) ........................... $ 4,071,000 $4,071,000
----------
TOTAL LONG POSITIONS
(Cost $44,831,242) (a) ....................... 37,388,886
----------
SECURITIES SOLD SHORT -- (1.9%)
COMMON STOCKS -- (1.9%)
Astropower* ..................................... (3,000) (118,875)
Buca* ........................................... (12,000) (127,500)
Fpic Insurance Group* ........................... (4,000) (56,000)
International Business Machines ................. (2,000) (225,000)
Rayovac* ........................................ (2,500) (42,813)
WestPoint Stevens ............................... (11,500) (140,875)
----------
(711,063)
----------
TOTAL SECURITIES SOLD SHORT
(Total Proceeds $792,817) .................... (711,063)
----------
TOTAL INVESTMENTS -- 97.7%
(Cost $44,038,425) ........................... 36,677,823
----------
OTHER ASSETS AND LIABILITIES, NET -- 2.3% 862,052
----------
TOTAL NET ASSETS -- 100.0% ...................... $ 37,539,875
============
+ All, or a portion of these shares, were pledged to cover margin
requirements on open short sale transactions.
* Non-Income producing security
# 144A Security; certain conditions for public resale may exist.
Cv. Convertible
REIT Real Estate Investment Trust
(a) The cost for federal income tax purposes was $44,831,242. At September 30,
2000 net unrealized depreciation for all securities (excluding securities
sold short) based on tax cost was $7,442,356. This consisted of aggregate
gross unrealized appreciation for all securities of $2,812,539 and
aggregate gross unrealized depreciation for all securities of $10,254,895.
The accompanying notes are an integral part of the financial statements.
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SEPTEMBER 30, 2000 (Unaudited)
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STATEMENT OF ASSETS & LIABILITIES
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments, at Cost..................................................... $ 40,760,242
============
Investments, at Value -- Note A.......................................... $ 33,317,886
Repurchase Agreement, at Value (Cost $4,071,000) -- Note A............... 4,071,000
Cash..................................................................... 87,701
Deposits with Brokers for Securities Sold Short -- Note A................ 854,575
Receivable for Investments Sold.......................................... 295,099
Dividends and Interest Receivable........................................ 184,388
Receivable for Portfolio Shares Sold..................................... 3,943
Other Assets............................................................. 18,202
------------
Total Assets........................................................ 38,832,794
------------
Liabilities
Securities Sold Short, at Value (Proceeds $792,817) -- Note A............ 711,063
Payable for Investments Purchased........................................ 446,477
Payable for Investment Advisory Fees -- Note B........................... 26,363
Payable for Administrative Fees -- Note C................................ 20,728
Payable for Custodian Fees -- Note D..................................... 17,469
Payable for Portfolio Shares Redeemed.................................... 3,690
Payable for Distribution and Service Fees -- Note E...................... 369
Payable for Trustees' Fees -- Note F..................................... 152
Other Liabilities........................................................ 66,608
------------
Total Liabilities................................................... 1,292,919
------------
Net Assets............................................................... $ 37,539,875
============
Net Assets Consist of:
Paid in Capital.......................................................... 54,922,912
Undistributed Net Investment Income...................................... 684,301
Accumulated Net Realized Loss............................................ (10,706,736)
Unrealized Depreciation.................................................. (7,360,602)
------------
Net Assets............................................................... $ 37,539,875
============
Institutional Class Shares
Shares Issued and Outstanding (unlimited authorization, no par value).... $ 2,875,032
============
Net Asset Value, Offering and Redemption Price Per Share................. $13.06
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
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UAM FUNDS FPA CRESCENT PORTFOLIO
FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Interest ............................................................................. $ 683,091
Dividends ............................................................................ 431,870
-----------
Total Income .................................................................... 1,114,961
-----------
Expenses
Investment Advisory Fees--Note B ..................................................... 221,106
Administrative Fees--Note C .......................................................... 102,579
Short Sale Dividend Expense--Note A .................................................. 28,540
Shareholder Servicing Fees ........................................................... 24,000
Custodian Fees--Note D ............................................................... 16,437
Reports to Shareholders .............................................................. 14,999
Audit Fees ........................................................................... 9,000
Registration and Filing Fees ......................................................... 7,501
Legal Fees ........................................................................... 2,530
Trustees' Fees--Note F ............................................................... 1,601
Distribution and Service Plan Fees--Note E ........................................... 19
Other Expenses ....................................................................... 24,702
Investment Advisory Fees Waived--Note B .............................................. (17,620)
-----------
Net Expenses Before Expense Offset .............................................. 435,394
Expense Offset--Note A .......................................................... (4,824)
-----------
Net Expenses After Expense Offset ............................................... 430,570
-----------
Net Investment Income ................................................................ 684,391
-----------
Net Realized Gain (Loss) on:
Investments ..................................................................... (3,065,296)
Securities Sold Short ........................................................... 12,398
-----------
Net Realized Loss on Investments, Securities Sold Short and Written Options .......... (3,052,898)
-----------
Net Change in Unrealized Appreciation (Depreciation) on:
Investments ..................................................................... 4,430,758
Securities Sold Short ........................................................... 111,766
-----------
Net Change in Unrealized Appreciation (Depreciation) ................................. 4,542,524
-----------
Net Gain on Investments and Securities Sold Short .................................... 1,489,626
-----------
Net Increase in Net Assets Resulting from Operations ................................. $ 2,174,017
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 2000 March 31,
(Unaudited) 2000
------------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income ......................................... $ 684,391 $ 2,717,341
Net Realized Loss ............................................. (3,052,898) (8,896,413)
Net Change in Appreciation (Depreciation) ..................... 4,542,524 (2,775,163)
------------- -------------
Net Increase (Decrease) in Net Assets Resulting
from Operations .......................................... 2,174,017 (8,954,235)
------------- -------------
Distributions:
Net Investment Income:
Institutional Class ......................................... (519,208) (2,531,976)
Institutional Service Class ................................. -- (6,169)
Net Realized Gain:
Institutional Class ......................................... -- (6,555,505)
Institutional Service Class ................................. -- (125,615)
------------- -------------
Total Distributions ........................................... (519,208) (9,219,265)
------------- -------------
Capital Share Transactions: (A)
Institutional Class:
Issued ........................................................ 8,294,054 23,747,372
In Lieu of Cash Distributions ................................. 489,620 8,595,082
Redeemed ...................................................... (27,993,866) (132,928,343)
------------- -------------
Net Decrease from Institutional Class Shares .................. (19,210,192) (100,585,889)
------------- -------------
Institutional Service Class: (B)
Issued ........................................................ 91,558 341,967
In Lieu of Cash Distributions ................................. -- 131,619
Redeemed ...................................................... (173,966) (3,556,583)
------------- -------------
Net Decrease from Institutional Service Class Shares .......... (82,408) (3,082,997)
------------- -------------
Net Decrease from Capital Shares Transactions ................. (19,292,600) (103,668,886)
------------- -------------
Total Decrease ........................................... (17,637,791) (121,842,386)
------------- -------------
Net Assets:
Beginning of Period ........................................... 55,177,666 177,020,052
------------- -------------
End of Period (including undistributed net investment income of
$684,301 and $519,118, respectively) .................... $ 37,539,875 $ 55,177,666
============= =============
(A) Shares Issued and Redeemed:
Institutional Class:
Shares Issued ................................................. 375,942 1,709,819
In Lieu of Cash Distributions ................................. 39,304 605,205
Shares Redeemed ............................................... (1,943,560) (9,742,596)
------------- -------------
Net Decrease from Institutional Class Shares .................. (1,528,314) (7,427,572)
------------- -------------
Institutional Service Class: (B)
Shares Issued ................................................. 7,342 23,275
In Lieu of Cash Distributions ................................. -- 8,910
Shares Redeemed ............................................... (13,883) (258,922)
------------- -------------
Net Decrease from Institutional Service Class Shares .......... (6,541) (226,737)
============= =============
</TABLE>
(B) Institutional Service Class Shares fully liquidated its assets on May 1,
2000.
The accompanying notes are an integral part of the financial statements.
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UAM FUNDS FPA CRESCENT PORTFOLIO
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FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected Per Share Data & Ratios
For a Share Outstanding Throughout Each Period
Institutional Class
-------------------------------------------------------------------------------------
Six Months
Ended
September 30, Years Ended March 31,
2000++ ------------------------------------------------------------------
(Unaudited) 2000++ 1999++ 1998++ 1997 1996
------------- -------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period ....... $ 12.51 $ 14.67 $ 16.23 $ 13.46 $ 12.67 $ 11.23
---------- -------- ------- ---------- ---------- ----------
Income from Investment
Operations
Net Investment Income ... 0.28 0.32 0.56 0.55 0.31 0.40
Net Realized and
Unrealized Gain
(Loss) ............... 0.43 (1.49) (1.32) 2.88 2.16 2.29
---------- -------- ------- ---------- ---------- ----------
Total from Investment
Operations ........... 0.71 (1.17) (0.76) 3.43 2.47 2.69
---------- -------- ------- ---------- ---------- ----------
Distributions:
Net Investment Income ... (0.16) (0.35) (0.51) (0.40) (0.34) (0.37)
Net Realized Gain ....... -- (0.64) (0.29) (0.26) (1.34) (0.88)
---------- -------- ------- ---------- ---------- ----------
Total Distributions ..... (0.16) (0.99) (0.80) (0.66) (1.68) (1.25)
---------- -------- ------- ---------- ---------- ----------
Net Asset Value, End of
Period................ $ 13.06 $ 12.51 $ 14.67 $ 16.23 $ 13.46 $ 12.67
========== ======== ======= ========== ========== ==========
Total Return ................. 5.73%** (8.54)% (4.71)% 25.96% 20.61% 24.71%
========== ======== ======= ========== ========== ==========
Ratios and Supplemental Data
Net Assets, End of Period
(Thousands).............. $ 37,540 $ 55,096 $ 173,613 $ 247,833 $ 65,619 $ 22,025
Ratio of Expenses to Average
Net Assets .............. 1.84%* 1.49% 1.42% 1.45% 1.60% 1.59%
Ratio of Net Investment
Income to Average
Net Assets .............. 3.10%* 2.26% 3.67% 3.62% 2.77% 3.35%
Portfolio Turnover Rate ...... 13% 10% 36% 18% 45% 100%
</TABLE>
* Annualized
** Not Annualized
++ Per share amounts are based on average outstanding shares.
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 FPA Crescent Portfolio (the "Portfolio"), a portfolio of UAM Funds
Trust, is a diversified open-end management investment company. At September 30,
2000, the UAM Funds were comprised of 49 active portfolios. The information
presented in the financial statements pertains only to the Portfolio. The
Portfolio offered two separate classes of shares: Institutional Class Shares and
Institutional Service Class Shares ("Service Class Shares"). Effective May 1,
2000, Service Class Shares fully liquidated its assets. Both classes of shares
had identical voting rights (except Service Class shareholders had exclusive
voting rights with respect to matters relating to distribution and shareholder
servicing of such shares), dividend, liquidation and other rights. The objective
of the Portfolio is to provide a total return consistent with reasonable
investment risk through a combination of income and capital appreciation by
investing in a combination of equity securities and fixed income obligations.
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 by using the last reported bid
price. Fixed income securities are stated on the basis of valuation provided by
brokers and/or a pricing service which uses information with respect to
transactions in fixed income securities, quotations from dealers, market
transactions in comparable securities and various relationships between
securities in determining value. Securities quoted in foreign currencies are
translated into U.S. dollars at the current exchange rate. Short-term
investments with a maturity 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 Trustees.
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UAM FUNDS FPA CRESCENT PORTFOLIO
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2. Federal Income Taxes: It is the Portfolio's intention to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code and
to distribute all of its taxable income. Accordingly, no provision for Federal
income taxes is required in the financial statements.
3. Repurchase Agreements: In connection with transactions involving
repurchase agreements, the Portfolio's custodian bank takes possession of the
underlying securities ("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 in June and December. Any
realized net capital gains will be distributed at least annually. All
distributions are recorded on ex-dividend date. The Portfolio's distributions to
shareholders may exceed net investment company taxable income and net capital
gain, the excess, distributed from the Portfolio's assets, will generally be
treated as a tax-free return of capital and will result in a reduction of
shareholders' basis.
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-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.
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UAM FUNDS FPA CRESCENT PORTFOLIO
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5. Short Sales: The Portfolio may engage in short sales of securities. In a
short sale, the Portfolio sells stock which it does not own, making delivery
with securities "borrowed" from a broker. The Portfolio is then obligated to
replace the security borrowed by purchasing it at the market price at the time
of replacement. This price may or may not be less than the price at which the
security was sold by the Portfolio. Until the security is replaced, the
Portfolio is required to pay the lender any dividends or interest on securities
borrowed which accrue during the period. In order to borrow the security, the
Portfolio may also be required to pay fees which would decrease the proceeds of
the security sold. The proceeds of the short sale will be retained by the
broker, to the extent necessary to meet margin requirements, until the short
position is closed out.
The Portfolio may also deposit in a segregated account an amount of cash or
liquid assets equal to the difference between (a) the market value of the
securities sold short at the time they were sold short and (b) the value of the
collateral deposited with the broker in connection with the short sale (not
including the proceeds from the short sale). While the short position is open,
the Portfolio must maintain the segregated account daily, at such a level that
(1) the amount deposited in it plus the amount deposited with the broker as
collateral equals the current market value of the securities sold short and
(2) the amount deposited in it plus the amount deposited with the broker as
collateral is not less than the market value of the securities at the time they
were sold short.
The Portfolio will incur a loss as a result of the short sale if the price
of the security increases between the date of the short sale and date on which
the Portfolio replaces the borrowed security. The Portfolio will realize a gain
if the security declines in price between those dates. The amount of any gain
will be decreased and the amount of any loss will be increased by any fees the
Portfolio may be required to pay in connection with the short sale.
6. Futures and Options Contracts: The Portfolio may use futures and options
contracts to hedge against changes in the values of securities the Portfolio
owns or expects to purchase. The Portfolio may also write options on securities
it owns or in which it may invest to increase its current returns.
The potential risk to the Portfolio is that the change in value of futures
and options contracts may not correspond to the change in value of the hedged
instruments. In addition, losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparty to the contract is unable to perform.
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Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options are
valued at the last sale price, or if no sales are reported, the last bid price
for purchased options and the last ask price for written options.
7. 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 an accrual basis. Discounts and premiums on securities purchased
are amortized using the effective yield basis over their respective lives. Most
expenses of the UAM Funds can be directly attributed to a particular portfolio.
Expenses that cannot be directly 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 or 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, First Pacific Advisors, Inc. (the "Adviser"), an indirect
wholly-owned subsidiary of United Asset Management Corporation ("UAM"), provides
investment advisory services to the Portfolio at a fee calculated at an annual
rate of 1.00% of the average daily net assets.
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 0.093% 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.
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For the six months ended September 30, 2000, the Administrator was paid
$102,579, of which $24,571 was paid to SEI for their services, $30,000 to DST
for their services, and $24,000 to UAMSCC for their services.
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 a fee or other compensation with respect to the
Portfolio.
The Portfolio has adopted a Distribution and Service Plan (the "Plan") on
behalf of the Service Class Shares pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Under the Plan, the Service Class Shares may not incur
distribution and service fees which exceed an annual rate of 1.00% of the net
assets of that class of shares, however, the Board has currently limited
aggregate payments under the Plan to 0.40% per annum of the Service Class
Share's net assets. The Portfolio's Service Class Shares are not currently
making payments for distribution fees, however the Portfolio does pay service
fees at an annual rate of 0.25% of the average daily value of Service Class
Shares owned by clients of the Service Agents.
F. Trustees' Fees: Each Trustee, who is not an officer or affiliated
person, receives $3,000 per meeting attended plus reimbursement of expenses
incurred in attending Trustees 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 months ended September 30, 2000, the
Portfolio made purchases of $4,745,545 and sales of $20,613,965 of investment
securities other than long-term U.S. Government and short-term securities.
H. Other: At September 30, 2000, 38% of total shares outstanding were held
by 2 record shareholders each owning 10% or greater of the aggregate total
shares outstanding of Institutional Class Shares.
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UAM FUNDS FPA CRESCENT PORTFOLIO
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Officers and Trustees
Norton H. Reamer William H. Park
Trustee, President and Chairman Vice President
John T. Bennett, Jr. Gary L. French
Trustee Treasurer
Nancy J. Dunn Robert J. Della Croce
Trustee Assistant Treasurer
Philip D. English Linda T. Gibson, Esq.
Trustee Secretary
William A. Humenuk Martin J. Wolin, Esq
Trustee Assistant Secretary
James P. Pappas Theresa DelVecchio
Trustee Assistant Secretary
Peter M. Whitman, Jr.
Trustee
--------------------------------------------------------------------------------
UAM Funds
P.O. Box 219081
Kansas City, MO 64121
(toll free)
1-877-UAM-LINK (826-5465)
www.uam.com
Investment Adviser
First Pacific Advisors, Inc.
11400 West Olympic Boulevard
Suite 1200
Los Angeles, CA 90064
Distributor
UAM Fund Distributors, Inc.
211 Congress Street
Boston, MA 02110
----------------------------------------------------------
This report has been prepared for shareholders and may be
distributed to others only if preceded or accompanied by a
current prospectus.
----------------------------------------------------------
