UNDISCOVERED MANAGERS FUNDS
SUPPLEMENT TO
PROSPECTUS DATED MARCH 16, 1998
In the section of the Prospectus entitled "The Funds -- Hidden Value
Fund" (pp. 11-12), the fourth and fifth paragraphs and tables are replaced in
their entirety with the following:
The gross investment performance for the period from January 1, 1988 to
December 31, 1997 of the single discretionary, fee-paying pooled
account managed by Kaplan Associates and its predecessor with
investment objectives, policies and strategies substantially similar to
that of the Hidden Value Fund has been attested to by Deloitte & Touche
LLP for use in connection with the registration statement of the Trust
under the Securities Act. For all periods presented, the investment
performance has been calculated using a time-weighted rate of return
methodology that is based on geometrically linked monthly returns that
employ a modified Dietz formula which weighs each cash flow by the
amount of time it is held in the account. This investment performance
(i) represents total return, assuming reinvestment of all dividends and
proceeds from capital transactions, and (ii) has been adjusted for
actual fees and expenses incurred by the pooled account. The method for
calculating performance produces a different result than if the
performance information were calculated using the SEC's method for
calculating the total return of a mutual fund. The investment
performance net of actual fees and expenses incurred by the accounts is
presented in the table below. The benchmark index to which the pooled
account is compared is the Russell Midcap Index (the "Russell Midcap").
The Russell Midcap is an unmanaged index representing the performance
of the 800 smallest of the 1000 largest U.S.-domiciled corporations,
ranked by market capitalization. Although used as a benchmark, the
Russell Midcap's performance may not be comparable to the performance
of the pooled account since, unlike the performance of the pooled
account, the Russell Midcap's performance has not been adjusted for any
fees or expenses.
The information provided does not represent the performance of the
Hidden Value Fund, which commenced operations on December 29, 1997 and
has a limited performance record of its own. The following information
should not be considered a prediction of future performance of the
Hidden Value Fund. The Hidden Value Fund's performance may be higher or
lower than that shown below. If the performance information were to
reflect the estimated fees and expenses of the Hidden Value Fund, the
total returns would be lower than those shown below. For more
information about the performance data, see "All Funds--Past
Performance of Certain Sub-Advisers" below.
-1-
<PAGE>
- --------------------------------------------------------------------------------
Mid Cap Equity
Pooled Account*(%) Russell Midcap(%)
- --------------------------------------------------------------------------------
1997 33.53 29.00
1996 34.30 19.00
1995 32.23 34.46
1994 5.13 (2.08)
1993 14.98 14.29
1992 6.70 16.37
1991 23.48 41.53
1990 (11.32) (11.49)
1989 21.48 26.26
1988 29.84 19.80
- --------------------------------------------------------------------------------
* The performance information represents the average quarterly returns for a
single pooled account, which is the only account managed in this style by
Kaplan Associates and its predecessor.
- --------------------------------------------------------------------------------
Mid Cap Equity
Pooled Account*(%) Russell Midcap(%)
- --------------------------------------------------------------------------------
Average Annual Returns
- --------------------------------------------------------------------------------
1 Year 33.53 29.00
3 Years 33.35 27.32
5 Years 23.44 18.23
10 Years 18.11 17.68
- --------------------------------------------------------------------------------
Cumulative Returns
- --------------------------------------------------------------------------------
1 Year 33.53 29.00
3 Years 137.13 106.41
5 Years 186.64 131.00
10 Years 428.24 409.33
- --------------------------------------------------------------------------------
* The performance information represents the average quarterly returns for a
single pooled account, which is the only account managed in this style by
Kaplan Associates and its predecessor.
-2-
<PAGE>
In the section of the Prospectus entitled "The Funds -- Core Equity
Fund" (pp. 13-14), the fourth and fifth paragraphs and tables are replaced in
their entirety with the following:
The gross investment performance for the period from January 1, 1988 to
December 31, 1997 of all discretionary, fee-paying accounts managed by
Waite & Associates L.L.C. and its predecessors with investment
objectives, policies and strategies substantially similar to that of
the Core Equity Fund has been attested to by KPMG Peat Marwick LLP for
use in connection with the registration statement of the Trust under
the Securities Act, in accordance with standards established by the
Association for Investment Management and Research. This investment
performance (i) represents total return, assuming reinvestment of all
dividends and proceeds from capital transactions, and (ii) has been
adjusted for actual fees and expenses incurred by the accounts. The
method for calculating performance produces a different result than if
the performance information were calculated using the SEC's method for
calculating the total return of a mutual fund. The investment
performance net of actual fees and expenses incurred by the accounts is
presented in the table below. The benchmark index to which the accounts
are compared is the Standard & Poor's 500 Index (the "S&P 500"). The
S&P 500 is an unmanaged index representing the performance of 500 major
companies, most of which are listed on the New York Stock Exchange.
Although used as a benchmark, the S&P 500's performance may not be
comparable to the performance of the accounts since, unlike the
performance of the accounts, the S&P 500's performance has not been
adjusted for any fees or expenses.
The information provided does not represent the performance of the Core
Equity Fund, which commenced operations on December 29, 1997 and has a
limited performance record of its own. The following information should
not be considered a prediction of future performance of the Core Equity
Fund. The Core Equity Fund's performance may be higher or lower than
that shown below. If the performance information were to reflect the
estimated fees and expenses of the Core Equity Fund, the total returns
would be lower than those shown. For more information about the
performance data, see "All Funds--Past Performance of Certain
Sub-Advisers" below.
-3-
<PAGE>
-----------------------------------------------------------------------
Accounts(%) S&P 500(%)
-----------------------------------------------------------------------
1997 38.75 33.36
1996 27.15 22.97
1995 42.19 37.59
1994 0.02 1.32
1993 11.89 10.08
1992 7.28 7.61
1991 21.69 30.45
1990 1.94 (3.09)
1989 20.43 31.55
1988 11.48 16.57
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Accounts(%) S&P 500(%)
-----------------------------------------------------------------------
Average Annual Returns
-----------------------------------------------------------------------
1 Year 38.75 33.36
3 Years 35.87 31.16
5 Years 22.93 20.27
10 Years 17.50 18.04
-----------------------------------------------------------------------
Cumulative Returns
-----------------------------------------------------------------------
1 Year 38.75 33.36
3 Years 150.85 125.64
5 Years 180.73 151.67
10 Years 401.59 425.07
-----------------------------------------------------------------------
-4-
Dated: April 3, 1998
