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UAM Funds
Funds for the Informed Investor(SM)
IRA Capital Preservation Portfolio
Annual Report October 31, 2000
[LOGO OF UAM(R)]
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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
OCTOBER 31, 2000
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TABLE OF CONTENTS
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Shareholders' Letter .................................................... 1
Portfolio of Investments ................................................ 5
Statement of Assets and Liabilities ..................................... 11
Statement of Operations ................................................. 12
Statement of Changes in Net Assets ...................................... 13
Financial Highlights .................................................... 14
Notes to Financial Statements ........................................... 15
Report of Independent Accountants ....................................... 19
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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
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November 15, 2000
Dear Shareholders:
We are pleased to present you with this annual report for the UAM: IRA Capital
Preservation Portfolio, providing an overview of the market and an analysis and
evaluation of the portfolio. The portfolio, which is offered exclusively to IRA
and Keogh Plan investors, uses a wrapper agreement to seek stability of the
daily net asset value per share. This is our first full twelve-month report
since the portfolio opened on August 31, 1999, and we are pleased with the
response of the market to this new portfolio.
Economic and Market Conditions
There were several significant factors affecting the U.S. fixed income markets
over the past twelve months. The bulging budget surplus combined with
election-year politics manifested in a sweeping buyback program by the U.S.
Treasury. In an effort to reduce outstanding debt and lower the average interest
rate paid by the government on the bonds it has issued, the U.S. Treasury
focused the bulk of its purchases on longer dated Treasuries, causing supply to
dwindle and prices to rise. Meanwhile, as economic data hinted at increased
risks of inflation, the Federal Reserve raised the Fed Funds rate from 5.25% to
6.50% from November 16, 1999 through May 16, 2000. The yields for short and
medium term Treasuries continued to rise in the latter part of 1999 and early in
2000, with the erosion of Y2K fears, spreads in almost all sectors of fixed
income began widening causing a decline in prices for most bond investments.
With that backdrop, the Treasury yield curve inverted in January and became even
more extreme during the first half of the year.
Since the last Fed Funds rate hike at the May Federal Open Market Committee
("FOMC") meeting, there has been a series of economic reports all pointing to a
significant slowdown in growth. The third quarter saw positive returns in all
the major sectors of the fixed income universe as data consistently provided
evidence of an economic slowdown and a continued absence of inflation. Perhaps
the most notable outcome of the third quarter market activity was the change in
the shape of the yield curve, where by quarter end there was a positive sloping
relationship between the 10-year Treasury note and the 30-year Treasury bond for
the first time since January. This "disinversion" in the shape of the yield
curve was largely a result of perceived changes in the Treasury buyback program
based on expectations that the next administration's fiscal program will
eliminate a large portion of the budget surplus. Also supporting the return to a
more normal, positively sloped yield curve was increased evidence that the
economy is slowing to a more sustainable growth rate, possibly alleviating the
need for further increases in the Fed Funds rate.
By the end of October, forecasts that the Federal Reserve would shift to a
neutral bias at the next FOMC meeting were largely abandoned due to low
unemployment num-
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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
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bers and increasing wage pressure. Although the Fed could move to a neutral bias
over the next few months if economic data continues to support an economy
growing below potential, this does not necessarily imply a near-term rate cut.
Going forward, spread product -- the portfolio's primary investment -- should
provide excess returns over Treasury securities. We continue to believe that
institutional investors have invested cautiously during the period and have
additional capacity for fixed income investments. Therefore, the portfolio will
maintain its commitment to spread product and new deposits will be immediately
invested within our approved Triple-A sectors.
Investment Review
The portfolio has met its objective of preserving principal and maintaining a
stable net asset value per share with its NAV remaining steady at $10 per share
every day since inception. Over the twelve-month period, the portfolio has
significantly increased its diversification across the major sectors of the
Triple-A rated fixed income market. The initial small size of the portfolio
required the purchase of odd-lot securities, which are generally offered at
reduced prices from round-lots. The rise in interest rates through most of the
period plus the ability to buy bonds at cheaper than normal prices due to size
enabled the portfolio to purchase assets at attractive yields. At this time, the
portfolio has one wrapper agreement in place, which has served to successfully
maintain a stable daily net asset value per share. Throughout the period, the
average credit quality of the total portfolio remained at a solid AAA/Aaa as
measured by Standard & Poor's Rating Group and Moody's Investors Service,
respectively. After the initial start-up period, the portfolio duration has
remained relatively constant ending the year at 2.67 years as of October 31,
2000 to provide a stable return that will track market interest rates.
Investment Performance
While the twelve-month period was marked with volatility and changing economic
data, stable value investors continued to realize consistent positive returns.
The portfolio exceeded its benchmark, the Ryan 5 Year Master GIC Index, during
the six and twelve-month periods ending October 31, 2000. Since the portfolio
seeks a level of current income higher than that of money market funds, we are
pleased to report that the portfolio also outperformed the MFR Money Market
Index by a significant margin during these periods. The performance of the
portfolio (net of 1.00% expenses) versus the indices follows:
UAM:
Ira Capital
Preservation Ryan 5 Year MFR Money
Portfolio Master GIC Index Market Index
------------ ---------------- ------------
6 months ending 10/31/00 3.43% 3.23% 2.99%
12 months ending 10/31/00 6.80% 6.54% 5.68%
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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
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We will continue to invest the portfolio in the highest quality debt securities
combined with wrapper agreements to help stabilize the daily share price. With
our long-term perspective, stable value management experience and conservative
investment strategy, we seek to provide you with a level of current income
higher than that of money market funds, while attempting to preserve principal
and maintain a stable net asset value per share.
We thank you for your support of the UAM: IRA Capital Preservation Portfolio and
look forward to continuing to serve your retirement investment needs into the
future.
Sincerely,
/s/ Laura P. Dagan
Laura P. Dagan
Portfolio Manager
All performance presented in this report is historical and should not be
construed as a guarantee of future results. While this portfolio is not a Money
Market fund, it does seek to maintain a stable NAV through the use of wrapper
agreements. There can be no assurance that the portfolio will meet its stated
objectives and maintain a stable NAV. Therefore, if the portfolio does not meet
its objectives or is unable to purchase wrapper agreements, there can be no
assurance that the principal value of an investment will not fluctuate.
Subsequently, an investor's shares may be worth more or less than the 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.
Definition of Comparative Indices
---------------------------------
MFR Money Market Index is an average of all major money market fund yields,
published weekly for 7- and 30-day yields.
Ryan Labs 5 Year GIC Master Index is an unmanaged index with 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.
U.S. Three-Month Treasury Bill Average is the average return for all treasury
bills for the previous three month period.
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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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
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Growth of a $10,000 Investment
---------------------------------
AVERAGE ANNUAL TOTAL RETURN**
FOR PERIOD ENDED OCTOBER 31, 2000
---------------------------------
1 Year Since 8/31/99*
---------------------------------
6.80% 6.81%
---------------------------------
[GRAPH]
IRA U.S.Treas RYAN
8/31/99 10,000 10,000 10,000
Oct-99 10,112 10,084 10,106
Oct-00 10,800 10,681 10,661
Periods ended on October 31st
* Beginning of operations. Index comparisons begin on 8/31/99.
** If the adviser and/or portfolio service providers had not limited certain
expenses, the portfolio's total return would have been 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.
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.
4
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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
OCTOBER 31, 2000
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PORTFOLIO OF INVESTMENTS
RESIDENTIAL MORTGAGES - 36.5%
<TABLE>
<CAPTION>
Face
Amount Value
---------- ---------
<S> <C> <C>
Federal Home Loan Mortgage Corporation Pool #C00530
7.500%, 07/01/27 .................................................. $ 43,331 $ 43,304
Federal Home Loan Mortgage Corporation Pool #532898
8.750%, 12/01/08 .................................................. 37,145 38,468
Federal Home Loan Mortgage Corporation Ser T14, Cl A3
5.900%, 03/25/24 .................................................. 250,000 245,690
Federal Home Loan Mortgage Corporation Ser T17, Cl A5
7.160%, 07/25/29 .................................................. 112,000 109,232
Federal National Mortgage Association Pool #175261
8.000%, 11/01/01 ................................................... 6,206 6,317
Federal National Mortgage Association Pool #253000
8.000%, 10/01/29 ................................................... 1,581,073 1,601,599
Federal National Mortgage Association Pool #253002
9.000%, 07/01/26 ................................................... 337,937 351,080
Federal National Mortgage Association Pool #253136
9.000%, 04/01/25 ................................................... 206,719 213,048
Federal National Mortgage Association Pool #253137
9.500%, 09/01/24 ................................................... 164,349 172,229
Federal National Mortgage Association Pool #253138
10.000%, 02/01/19 .................................................. 161,999 169,866
Federal National Mortgage Association Pool #372602
8.500%, 06/01/25 ................................................... 143,092 146,177
Federal National Mortgage Association Pool #495062
7.000%, 05/01/29 ................................................... 173,654 170,235
Federal National Mortgage Association Pool #524217
8.500%, 07/01/26 ................................................... 333,191 341,477
Federal National Mortgage Association Pool #529306
8.500%, 08/01/26 ................................................... 166,758 170,905
Federal National Mortgage Association Pool #539604
9.000%, 07/01/27 ................................................... 968,350 1,006,171
Federal National Mortgage Association, Ser 1990-35, Cl E
9.500%, 04/25/20 ................................................... 79,481 83,060
Federal National Mortgage Association, Ser 1997-88, Cl B
9.000%, 11/18/24 ................................................... 882,978 910,147
Federal National Mortgage Association, Ser 1999-W5, Cl A5
6.470%, 02/25/29 ................................................... 1,000,000 922,529
Federal National Mortgage Association TBA
8.000%, 01/16/31 ................................................... 2,000,000 2,023,120
Residential Asset Securitization Trust, Ser 1998-A12 A5
6.750%, 11/25/28 ................................................... 48,424 47,757
----------
TOTAL RESIDENTIAL MORTGAGES
(Cost $8,711,004) .................................................. 8,772,411
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
OCTOBER 31, 2000
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COMMERCIAL MORTGAGES -- 10.5%
<TABLE>
<CAPTION>
Face
Amount Value
---------- ---------
<S> <C> <C>
Allied Capital Commercial Mortgage Trust, Ser 1998-1, Cl A
6.310%, 09/25/03 ................................................. $ 284,621 $ 281,138
FMAC Loan Receivables Trust, Ser 1998-A, Cl A2
6.500%, 09/15/20 ................................................. 34,939 33,157
Merrill Lynch Mortgage Investors, Ser 1998-C1 A1
6.310%, 11/15/26 ................................................. 160,616 157,035
Merrill Lynch Mortgage, Ser 1997-Cl A3
7.120%, 06/18/29 ................................................. 350,000 350,287
Midland Realty Acceptance, Ser 1996-C1 A2
7.475%, 08/25/28 ................................................. 768,000 774,655
Midland Realty Acceptance Corporate CMO, Ser 1996-C2, Cl A2
7.233%, 01/25/29 ................................................. 235,000 236,908
Morgan Stanley Capital I, Ser 1999-Life, Cl A1
6.970%, 10/15/08 ................................................. 317,806 317,318
Nomura Asset Securities Corporation, Ser 1994-MD1, Cl A1B
8.090%, 03/15/18 ................................................. 21,632 21,568
Prudential Securities Secured Financing, Ser 1995-MCF2, Cl A2
6.840%, 12/26/22 ................................................. 200,000 198,518
Prudential Securities Secured Financing, Ser 1999-C2, Cl A2
7.193%, 04/15/09 ................................................. 155,000 155,341
----------
TOTAL COMMERCIAL MORTGAGES
(Cost $2,445,714) ................................................ 2,525,925
----------
MORTGAGE RELATED -- 13.4%
Advanta Mortgage Loan Trust, Ser 2000-2 A3
7.760%, 05/25/18 ................................................. 500,000 505,275
Conseco Finance 1999-H Af4
7.320%, 12/15/29 ................................................. 105,000 103,915
Equicredit Funding Trust, Ser 1997-A A4
7.340%, 03/15/24 ................................................. 500,000 503,825
Equicredit Home Equity Loan Trust, Ser 1996-1Cl A3
6.190%, 12/15/10 ................................................. 98,035 97,745
FHLMC Structured Pass Through T-9 A3
6.660%, 07/25/15 ................................................. 100,000 99,217
Fleetwood Credit Grantor Trust, Ser 1993-A A
6.000%, 01/15/08 ................................................. 100,650 99,093
Independent National Mortgage Home Equity, Ser 1997-A Af3
6.700%, 12/25/25 ................................................. 200,000 198,308
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
OCTOBER 31, 2000
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MORTGAGE RELATED -- (Continued)
<TABLE>
<CAPTION>
Face
Amount Value
---------- ---------
<S> <C> <C>
Money Store Equity Trust, Ser 1998-B Af5
6.225%, 09/15/23 ................................................ $ 140,000 $ 137,182
Money Store Home Equity Loan Trust, Ser 1996-D, Cl A9
7.000%, 04/15/28 ................................................ 664,173 659,524
Money Store Home Equity Trust, Ser 1995-C A10
6.975%, 04/15/16 ................................................ 208,000 206,721
Money Store Home Equity Trust, Ser 1998-A Af5
6.370%, 12/15/23 ................................................ 275,000 271,854
Residential Funding Mortgage Securities, Ser 1999-Hi8 Ai2
7.030%, 07/25/10 ................................................ 350,000 348,229
----------
TOTAL MORTGAGE RELATED
(Cost $3,151,932) ............................................... 3,230,888
----------
ASSET-BACKED SECURITIES -- 31.0%
AUTO & TRANSPORTATION -- 9.0%
FELCO Funding II LLC, Ser 2000-1, Cl A4
7.720%, 12/15/05 ................................................ 500,000 511,515
Ford Credit Auto Owner Trust, Ser 1999-B, Cl A4
5.800%, 06/15/02 ................................................ 109,000 108,500
ONYX Acceptance Auto Trust, Ser 1998-1, Cl A
5.950%, 07/15/04 ................................................ 231,694 230,072
Provident Auto Lease ABS Trust, Ser 1999-1, Cl A3
7.260%, 01/14/12 ................................................ 349,890 352,028
World Omni Automobile Lease Securitization Trust III,
Ser 1997-B, Cl A-4
6.200%, 11/25/03 ................................................ 967,039 966,178
----------
2,168,293
----------
BOATS -- 1.4%
Cit Marine Trust, Ser 1999-A A2
5.800%, 04/15/10 ................................................ 170,000 166,651
CIT Marine Trust, Ser 1999-A, Cl A4
6.250%, 11/15/19 ................................................ 185,000 171,249
----------
337,900
----------
CONSUMER LENDING -- 0.4%
Green Tree Construction Trust, Ser 1998-A, Cl A1C
6.180%, 06/15/19 ................................................ 95,616 94,367
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
OCTOBER 31, 2000
--------------------------------------------------------------------------------
ASSET-BACKED SECURITIES -- (Continued)
<TABLE>
<CAPTION>
Face
Amount Value
---------- ---------
<S> <C> <C>
CORPORATES/YANKEES -- 3.3%
Pemex Finance
5.720%, 11/15/03 ................................................ $460,113 $449,949
6.125%, 11/15/03 ................................................ 60,667 59,461
6.300%, 05/15/10 ................................................ 300,000 280,596
--------
790,006
--------
EQUIPMENT LEASE -- 2.0%
CNH Equipment Trust, Ser 2000-A, Cl A2
6.800%, 08/15/03 ................................................ 125,000 124,971
Heller Equipment Asset Receivables Trust, Ser 1999-2, Cl A4
6.790%, 03/14/07 ................................................ 355,000 354,595
--------
479,566
--------
HOME EQUITY LOANS -- 13.4%
Advanta Home Equity Loan Trust, Ser 1993-1, Cl A2
5.950%, 05/25/09 ................................................ 88,358 86,182
Advanta Mortgage Loan Trust, Ser 1993-3, Cl A3
4.750%, 02/25/10 ................................................ 9,691 9,614
Advanta Mortgage Loan Trust, Ser 1997-4, Cl A4
6.660%, 03/25/22 ................................................ 30,758 30,490
Advanta Mortgage Loan Trust, Ser 1999-2, Cl A6
6.820%, 05/25/29 ................................................ 375,000 365,520
AFC Home Equity Loan Trust, Ser 1997-2, Cl 1A4
7.040%, 06/25/27 ................................................ 18,289 18,201
Conseco Finance, Ser 1999-H, Cl AF5
7.600%, 12/15/29 ................................................ 320,000 322,736
Countrywide Asset Backed Certificates, Ser 1999-2, Cl AF 4
6.780%, 11/25/27 ................................................ 415,000 392,034
Delta Funding Home Equity Loan Trust, Ser 1997-1, Cl A6
7.210%, 04/25/29 ................................................ 45,714 45,585
EQCC Home Equity Loan Trust, Ser 1999-1, Cl A3F
5.915%, 11/20/24 ................................................ 35,000 34,062
GE Capital Mortgage Services, Ser 1999-HE1, Cl A2
5.905%, 10/25/13 ................................................ 55,000 54,346
Green Tree Home Equity Loan Trust, Ser 1999-C, Cl A3
6.770%, 07/15/30 ................................................ 240,000 238,738
Indymac Home Equity Loan Asset Backed Trust, Ser 1999-A, Cl AF
6.540%, 04/25/29 ................................................ 99,329 97,215
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
OCTOBER 31, 2000
--------------------------------------------------------------------------------
ASSET-BACKED SECURITIES -- (Continued)
<TABLE>
<CAPTION>
Face
Amount Value
---------- ---------
<S> <C> <C>
Residential Asset Securities Corporation, Ser 1998-KS2, Cl A9
6.415%, 07/25/29 ................................................ $ 430,000 $ 413,497
Residential Asset Securities Corporation, Ser 1998-KS3, Cl AI3
5.910%, 08/25/22 ................................................ 30,000 29,439
Residential Asset Securities Corporation, Ser 1999-KS2, Cl AI7
7.390%, 06/25/28 ................................................ 35,000 34,376
Residential Asset Securities Corporation, Ser 1999-KS3, Cl A2
7.075%, 09/25/20 ................................................ 150,000 149,547
Saxon Asset Securities, Ser 1999-2, Cl AF4
6.445%, 08/25/26 ................................................ 310,000 299,779
Saxon Asset Securities, Ser 1999-3, Cl AF4
7.550%, 10/25/26 ................................................ 290,000 289,284
The Money Store Home Equity Trust, Ser 1997-B, Cl A5
6.825%, 07/15/21 ................................................ 3,012 3,004
UCFC Home Equity Loan, Ser 1994-A, Cl A3
6.100%, 07/10/18 ................................................ 23,689 23,587
UCFC Home Equity Loan, Ser 1997-A1, Cl A4
7.130%, 04/15/18 ................................................ 60,335 60,185
UCFC Home Equity Loan, Ser 1998-A, Cl A3
6.255%, 01/15/18 ................................................ 112,276 111,362
UCFC Home Equity Loan, Ser 1998-C, Cl A7
5.935%, 01/15/30 ................................................ 65,000 60,824
UCFC Home Equity Loan, Ser 1998-D, Cl AF1
6.105%, 04/15/13 ................................................ 66,361 66,132
----------
3,235,739
----------
MANUFACTURED HOUSING -- 0.5%
Green Tree Financial, Ser 1999-1, Cl A5
6.110%, 09/01/23 ................................................ 80,000 71,577
Oakwood Mortgage Investors, Ser 1998-B, Cl A4
6.350%, 03/15/17 ................................................ 50,000 48,495
----------
120,072
----------
RECREATION VEHICLES -- 1.0%
BankBoston RV Trust, Ser 1997-1, Cl A8
6.540%, 02/15/09 ................................................ 55,000 54,608
Fleetwood Credit Corp. Grantor Trust, Ser 1997-B, Cl A
6.400%, 05/15/13 ................................................ 182,183 181,046
----------
235,654
----------
TOTAL ASSET-BACKED SECURITIES
(Cost $7,319,627) ............................................... 7,461,597
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
OCTOBER 31, 2000
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SHORT-TERM INVESTMENTS -- 18.5%
<TABLE>
<CAPTION>
Face
Amount Value
---------- ---------
<S> <C> <C>
REPURCHASE AGREEMENTS -- 18.5%
Chase Securities, Inc. 6.35%, dated 10/31/00,
due 11/01/01, to be repurchased at $2,412,425,
collateralized by $1,806,646 of various
U.S. Treasury Obligations valued at $2,412,047 (b) .............. $ 2,412,000 $ 2,412,000
Chase Securities, Inc. 6.35%, dated 10/31/00,
due 11/01/01, to be repurchased at $2,043,360,
collateralized by $1,530,256 of various
U.S. Treasury Obligations valued at $2,043,040 (c) .............. 2,043,000 2,043,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $4,455,000) ............................................... 4,455,000
------------
TOTAL INVESTMENTS -- 109.9%
(Cost $26,083,277) (a) .......................................... 26,445,821
------------
WRAPPER AGREEMENT -- (1.4%)
CDC Financial Products*+ ........................................... (338,472)
------------
OTHER ASSETS AND LIABILITIES, NET -- (8.5%) ........................ (2,042,340)
------------
TOTAL NET ASSETS -- 100.0% ......................................... $ 24,065,009
============
</TABLE>
* The Wrapper Agreement obligates the Wrap provider to maintain the book
value of a portion of the portfolio's assets up to a specified maximum
dollar amount, upon the occurrence of certain specific events.
+ Fair-valued security
Cl Class
Ser Series
TBA Securities traded under delayed delivery commitments settling after October
31, 2000. Income on these securities will not be earned until settle date.
(a) The cost for federal income tax purposes was $26,083,277. At October 31,
2000, net unrealized appreciation for all securities based on tax cost was
$362,544. This consisted of aggregate gross unrealized appreciation for all
securities of $368,748, and aggregate gross unrealized depreciation for all
securities of $6,204.
(b) Repurchase Agreement is held in a segregated account maintained for
liquidity purposes pursuant to the Wrapper Agreement as disclosed in Note
A.
(c) All or a portion of this security was pledged as collateral for TBA
securities.
The accompanying notes are an integral part of the financial statements.
10
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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
OCTOBER 31, 2000
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
Assets
Investments, at Cost ........................................... $21,628,277
===========
Investments, at Value -- Note A ................................ $21,990,821
Repurchase Agreements, at Value -- Note A (Cost $4,455,000) .... 4,455,000
Cash ........................................................... 806
Principal and Interest Receivable .............................. 115,733
Receivable due from Investment Adviser -- Note B ............... 29,071
Other Assets ................................................... 27,538
-----------
Total Assets ................................................ 26,618,969
-----------
Liabilities
Investment Securities Purchased ................................ 2,017,813
Payable to Wrap Provider ....................................... 354,148
Payable for Portfolio Shares Redeemed .......................... 6,938
Payable for Administrative Fees -- Note C ...................... 8,837
Payable for Custodian Fees -- Note D ........................... 1,000
Payable for Trustees' Fees -- Note F ........................... 250
Payable for Distributions ...................................... 134,987
Other Liabilities .............................................. 29,987
-----------
Total Liabilities ........................................... 2,553,960
-----------
Net Assets ..................................................... $24,065,009
===========
Net Assets Consist of:
Paid in Capital ................................................ $24,081,734
Distribution in Excess of Net Investment Income ................ (14,303)
Unrealized Appreciation on Investments ......................... 362,544
Unrealized Depreciation on Wrapper Agreement ................... (393,108)
Accumulated Net Realized Gain on Investments ................... 28,142
-----------
Net Assets ..................................................... $24,065,009
===========
Institutional Class Shares
Shares Issued and Outstanding ($0.001 par value)
(Unlimited Shares Authorized) ............................... 2,406,501
Net Asset Value, Offering and Redemption Price Per Share ....... $10.00
======
The accompanying notes are an integral part of the financial statements.
11
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UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
FOR THE YEAR ENDED OCTOBER 31, 2000
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Investment Income
Interest ....................................................... $ 1,145,459
Crediting Rate Interest ........................................ 54,024
-----------
Total Income ................................................ 1,199,483
-----------
Expenses
Administrative Fees -- Note C .................................. 92,035
Investment Advisory Fees -- Note B ............................. 79,623
Printing Fees .................................................. 31,443
Wrapper Fees ................................................... 30,406
Audit Fees ..................................................... 20,726
Shareholder Servicing Fees -- Note G ........................... 15,420
Registration and Filing Fees ................................... 8,425
Custodian Fees -- Note D ....................................... 7,867
Trustees' Fees -- Note G ....................................... 2,967
Legal Fees ..................................................... 1,547
Other Expenses ................................................. 2,479
Investment Advisory Fees Waived -- Note B ...................... (79,623)
Expenses Assumed by the Advisor -- Note B ...................... (48,625)
-----------
Net Expenses Before Expense Offset ........................ 164,690
-----------
Expense Offset ................................................. (5,467)
-----------
Net Expenses After Expense Offset ......................... 159,223
-----------
Net Investment Income .......................................... 1,040,260
-----------
Net Realized Gain on Investments ............................... 28,142
-----------
Net Change in Unrealized Appreciation (Depreciation) on:
Investments ............................................... 352,740
Wrapper Agreement ......................................... (380,882)
-----------
Net Change in Unrealized Appreciation (Depreciation) ........... (28,142)
-----------
Net Gain (Loss) on Investments and Wrapper Agreement ........... --
-----------
Net Increase in Net Assets Resulting from Operations ........... $ 1,040,260
===========
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
August 31,
Year Ended 1999* to
October 31, October 31,
2000 1999
------------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income ............................................. $ 1,040,260 $ 5,458
Net Realized Gain ................................................. 28,142 2,422
Net Change in Unrealized Appreciation (Depreciation) .............. (28,142) (2,422)
------------ ------------
Net Increase in Net Assets Resulting from Operations .............. 1,040,260 5,458
------------ ------------
Distributions:
Net Investment Income ........................................... (1,040,260) (5,458)
In Excess of Net Investment Income .............................. (16,725) --
------------ ------------
Total Distributions .......................................... (1,056,985) (5,458)
Capital Share Transactions (1):
Issued ............................................................ 23,524,042 861,371
Redemption Fees-- Note I .......................................... 16,725 --
In Lieu of Cash Distributions ..................................... 864,793 5,458
Redeemed .......................................................... (1,190,655) --
------------ ------------
Net Increase from Capital Share Transactions ...................... 23,214,905 866,829
------------ ------------
Total Increase ............................................... 23,198,180 866,829
Net Assets:
Beginning of Period ............................................... 866,829 --
------------ ------------
End of Period (including distribution in excess of net
investment income of $(14,303) and net investment
income of $0, respectively) ..................................... $ 24,065,009 $ 866,829
============ ============
(1) Shares Issued and Redeemed
Shares Issued .................................................... 2,352,404 86,137
In Lieu of Cash Distributions .................................... 86,479 546
Shares Redeemed .................................................. (119,065) --
------------ ------------
Net Increase in Shares Outstanding ................................ 2,319,818 86,683
============ ============
</TABLE>
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Per Share Data & Ratios
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
August 31,
Year Ended 1999*** to
October 31, October 31,
2000 1999
------------- -------------
<S> <C> <C>
Net Asset Value, Beginning of Period .................... $ 10.00 $ 10.00
------- -------
Income from Investment Operations:
Net Investment Income ................................ 0.65 0.11
------- -------
Total from Investment Operations ..................... 0.65 0.11
------- -------
Redemption Fees ......................................... 0.01 --
------- -------
Distributions:
Net Investment Income ................................ (0.65) (0.11)
In Excess of Net Investment Income ................... (0.01) --
------- -------
Total Distributions .................................. (0.66) (0.11)
------- -------
Net Asset Value, End of Period .......................... $ 10.00 $ 10.00
======= =======
Total Return+ ........................................... 6.80% 1.12%**
======= =======
Ratios and Supplemental Data
Net Assets, End of Period (Thousands) ................... $24,065 $ 867
Ratio of Expenses to Average Net Assets ................. 1.03% 1.00%*
Ratio of Net Investment Income to Average Net Assets .... 6.53% 6.67%*
Portfolio Turnover Rate ................................. 72% 137%
</TABLE>
* Annualized
** Not annualized
*** Commencement of operations
+ Total return would have been lower had certain fees not been waived and
expenses assumed by the Adviser during the periods indicated.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
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 Ira Capital Preservation Portfolio, formerly the Dwight Capital
Preservation Portfolio (the "Portfolio"), a portfolio of UAM Funds Trust, is a
diversified open-end management investment company. At October 31, 2000, the UAM
Funds were comprised of 49 active portfolios. The information presented in the
financial statements pertains only to the Portfolio. The objective of the
Portfolio is to seek a level of current income higher than that of money market
funds, while attempting to preserve principal and maintain a stable net asset
value per share (NAV).
A. Significant Accounting Policies: The following significant accounting
policies are in conformity with accounting principles generally accepted in the
United States of America. Such policies are consistently followed by the
Portfolio in the preparation of its financial statements. Accounting principles
generally accepted in the United States of America 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: 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. 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, including the Wrapper Agreement, for which no
quotations are readily available is determined in good faith at fair value
following procedures approved by the Board of Trustees.
Wrapper Agreements generally will be equal to the difference between
the Book Value and Market Value (plus the crediting rate adjustment) on the
applicable covered assets and will either be reflected as an asset or
liability of the Portfolio. The Portfolio's Board of Trustees, in
performing its fair value determination of the Portfolio's Wrapper
Agreements, considers the credit worthiness and the ability of Wrap
Providers to pay amounts due under the Wrapper Agreements.
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.
15
<PAGE>
UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
--------------------------------------------------------------------------------
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. Wrapper Agreements: The Portfolio may enter into Wrapper Agreements
with insurance companies, banks or other financial institutions ("Wrap
Providers") that are rated, at the time of purchase, in one of the top two
rating categories by a rating agency. A Wrapper Agreement is a derivative
instrument that is designed to protect the Portfolio from investment losses
and under most circumstances permit the Portfolio to maintain a constant
NAV per share. There is no active trading market for Wrapper Agreements,
and none is expected to develop; therefore, they will be considered
illiquid.
Pursuant to the terms of the Wrapper Agreement, the investment adviser
will manage the Portfolio's securities to have an overall duration between
1.5 and 4.0 years. In addition, the terms of the Wrapper Agreement require
the Portfolio to maintain minimum cash and cash equivalent balances.
Throughout the term of the Wrapper Agreement, the Portfolio will pay the
Wrap Provider an annual fee of 0.21% of the Wrapper Agreement book value
balance.
The crediting rate used in computing book value is the actual interest
earned on the covered assets, or an index-based approximation thereof, plus
or minus an adjustment for an amount receivable from or payable to the Wrap
Provider based on fluctuations in the market value of the covered assets.
The premium due wrapper providers are offset against interest earned and
thus reduce the crediting rate. The crediting rate is calculated by a
formula specified in the Wrapper Agreement and is adjusted periodically.
16
<PAGE>
UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
--------------------------------------------------------------------------------
A default by the issuer of a Portfolio security or a Wrap Provider on
its obligations may result in a decrease in the value of the Portfolio
assets and, consequently, the shares. Wrapper Agreements generally do not
protect the Portfolio from loss if an issuer of Portfolio securities
defaults on payments of interest or principal. Additionally, a Portfolio
shareholder may realize more or less than the actual investment return on
the Portfolio securities depending upon the timing of the shareholder's
purchases and redemption of shares, as well as those of other shareholders.
5. Distributions to Shareholders: The Portfolio will declare daily and
distribute monthly substantially all of its net investment income. Any
realized net capital gains will be distributed at least annually. The
Portfolio may elect to retain net long term capital gains and pay income
tax thereon, which will result in Federal tax consequences to shareholders.
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 accounting principles generally accepted in the
United States of America. These differences are primarily due to differing
book and tax treatments in the timing of the recognition of gains or losses
on investments and net operating losses.
Permanent book and tax basis differences resulted in reclassifications
of a decrease of $2,422 to distributions in excess of net investment
income, and a decrease of $2,422 to accumulated net realized gain.
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.
6. 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. Interest income is recognized on an accrual basis.
Most expenses of the UAM Funds can be directly attributed to a particular
portfolio. Expenses that cannot be directly attributed are apportioned
among the portfolios of the UAM Funds based on 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, Dwight Asset Management Company. (the "Adviser"), a subsidiary of
United Asset Management Corporation ("UAM"), provides investment advisory
services to the Portfolio at a fee calculated at an annual rate of 0.50% of the
average daily net assets. The Adviser has voluntarily agreed to waive a portion
of its advisory fees and to assume expenses, if necessary, in order to keep the
Portfolio's total annual operating expenses, after the effect of expense offset
arrangements, from exceeding 1.00% of average daily net assets. Old Mutual, Plc.
gained control of United Asset Management on September 26, 2000.
17
<PAGE>
UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
--------------------------------------------------------------------------------
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 SEIInvestments Mutual Funds Services ("SEI"), a wholly-owned subsidiary of
SEIInvestments 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 $72,500, and a fee based on the number of active shareholder accounts.
For the year ended October 31, 2000, the Administrator was paid $92,035, of
which $38,998 was paid to SEI for their services, $14,792 to DST for their
services, and $7,894 to UAMSSC for their services.
D. Custodian: The Chase Manhattan Bank is custodian for the Portfolio's
assets and the assets are 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 other compensation with respect to the
Portfolio.
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 Trustee meetings, which is allocated proportionally among
the active portfolios of UAM Funds, plus a quarterly retainer of $200 for each
active portfolio of the UAM Funds.
G. Shareholder Servicing Fees: Certain brokers, dealers, banks, trust
companies and other financial representatives receive compensation from the UAM
Funds for providing a variety of services, including record keeping and
transaction processing. Such fees are based on the assets of the UAM Funds that
are serviced by the financial representative.
H. Purchases and Sales: For the year ended October 31, 2000, the Portfolio
made purchases of $17,234,249 and sales of $2,879,405 of investment securities
other than long-term U.S. Government and short-term securities. Purchases and
sales of long-term U.S. Government securities were $11,631,511 and $5,784,278,
respectively.
I. Other: The Portfolio retains a redemption fee of 2.00% on redemptions of
capital shares held for less than twelve months. For the year ended October 31,
2000, there were $16,725 in redemption fees retained.
At October 31, 2000, one record shareholder owned 72.0% of the aggregate
total shares outstanding of the Portfolio.
18
<PAGE>
UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
OCTOBER 31, 2000
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
UAM Funds Trust and Shareholders of
IRA Capital Preservation Portfolio
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of IRA Capital Preservation Portfolio
(formerly Dwight Capital Preservation Portfolio, the "Portfolio"), a portfolio
of UAM Funds Trust, at October 31, 2000, and the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Portfolio's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
December 20, 2000
19
<PAGE>
NOTES
<PAGE>
UAM FUNDS IRA CAPITAL PRESERVATION PORTFOLIO
--------------------------------------------------------------------------------
Officers and Trustees
James F. Orr, III 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
Vice President Assistant Secretary
--------------------------------------------------------------------------------
UAM Funds
P.O. Box 219081
Kansas City, MO 64121
(toll free)
1-877-UAM-LINK (826-5465)
www.uam.com
Investment Adviser
Dwight Asset Management Company
100 Bank Street
Suite 800
Burlington, VT 05401
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.
----------------------------------------
<PAGE>
[LOGO OF UAM FUNDS]
Supplement dated October 27, 2000, to the Annual Report of the Financials for
the IRA Capital Preservation Portfolio.
The Annual Report is hereby supplemented to reflect the following:
On October 27, 2000, there was a Special Meeting of Shareholders of the
Fund, at which the shareholders of the Portfolio voted on the listed
proposals. The following were the results of the vote:
<TABLE>
<CAPTION>
For: Against: Abstain:
---------- -------- --------
<S> <C> <C> <C>
1.To elect the Trustees/Directors.
01) John T. Bennett, Jr. ........................ 19,010,168 -- 451,579
02) Nancy J. Dunn................................ 19,032,354 -- 429,393
03) William A. Humenuk........................... 19,032,469 -- 429,278
04) Philip D. English............................ 19,032,469 -- 429,278
05) James F. Orr, III............................ 19,030,371 -- 431,371
2.To approve the proposed change of the investment objective of the Fund from
fundamental to non-fundamental.
N/A
3.To approve the proposed changes to the Fund's fundamental investment
restrictions.
a) Diversification of Investments:............... 1,075,424 -- 30,367
b) Borrowing:.................................... 1,075,424 -- 30,367
c) Issuing of Senior Securities:................. 1,075,424 -- 30,367
d) Underwriting:................................. 1,075,424 -- 30,367
e) Industry Concentration:....................... 1,075,424 -- 30,367
f) Investment in Real Estate:.................... 1,075,424 -- 30,367
g) Commodities:.................................. 1,075,424 -- 30,367
h) Lending:...................................... 1,075,424 -- 30,367
i) Illiquid Securities:.......................... 1,075,424 -- 30,367
j) Control or Management:........................ 1,075,424 -- 30,367
k) Unseasoned Issuers:........................... 1,075,424 -- 30,367
l) Borrowing exceeding 5%:....................... 1,075,424 -- 30,367
m) Pledging:..................................... 1,075,424 -- 30,367
n) Margin Purchases and Short Sales:............. 1,075,424 -- 30,367
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For: Against: Abstain:
--------- -------- --------
<S> <C> <C> <C>
o) Directors' Ownership of Shares:............... 1,075,424 -- 30,367
p) Interest in Oil, Gas or Other Mineral
Exploration or Development Programs:.......... 1,075,424 -- 30,367
q) Futures and Options........................... 1,075,424 -- 30,367
4.To ratify the selection of PricewaterhouseCoopers LLP as the independent
auditors.
1,317,338 21,743 8,147
5.To approve an Interim Investment Advisory Agreement between each Fund and
its investment adviser.
1,307,656 18,293 21,279
6.To approve an Investment Advisory Agreement between the Fund and its
investment adviser, subject to completion of the merger between United Asset
Management Corporation and Old Mutual Plc.
1,309,042 18,293 19,893
</TABLE>
[LOGO OF UAM FUNDS]
