undiscovered
managers(TM)
[GRAPHIC]
SEMI-ANNUAL REPORT
- -----------------------------------------
February 28, 1999
Undiscovered Managers
Behavioral Growth Fund
Undiscovered Managers
Behavioral Value Fund
Undiscovered Managers
Behavioral Long/Short Fund
Undiscovered Managers
REIT Fund
Undiscovered Managers
Special Small Cap Fund
Undiscovered Managers
Small Cap Value Fund
Undiscovered Managers
Hidden Value Fund
Undiscovered Managers
All Cap Value Fund
Undiscovered Managers
Core Equity Fund
UM International Small Cap Equity Fund
UM International Equity Fund
<PAGE>
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Investment Adviser
Undiscovered Managers, LLC
700 North Pearl, Suite 1700
Dallas, Texas 75201
Distributor
First Data Distributors, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
Legal Counsel
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Transfer Agent
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
Independent Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, Massachusetts 02110
Custodians
The Bank of New York
48 Wall Street
New York, New York 10286
Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540
The report and the financial statements contained herein are submitted for
the general information of the shareholders of Undiscovered Managers
Funds. The report is not authorized for distribution to prospective
investors in Undiscovered Managers Funds unless preceded or accompanied by
the current prospectus.
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<PAGE>
undiscovered
managers(TM)
To Our Shareholders:
The last 15 months have been very exciting for Undiscovered Managers. We have
sold more than $135 million in mutual fund shares since the beginning of 1998
and recently added four new funds to our family. Undiscovered Managers
Behavioral Value Fund and Undiscovered Managers Behavioral Long/Short Fund offer
institutional investors access to two additional Behavioral Finance-based funds.
These Funds are managed by Fuller & Thaler Asset Management, Inc. We also began
a partnership with Unibank Securities, Inc. The successful portfolio management
team of this newest sub-advisor oversees our two new international funds, UM
International Equity Fund and UM International Small Cap Equity Fund.
We are very pleased with the addition of these new funds, as well as with the
performance of our seven original funds. Undiscovered Managers REIT Fund was
ranked number one in the country for REIT funds investing exclusively in
domestic equity REITs for the year ending December 31, 1998.* For the same
period, Undiscovered Managers Behavioral Growth Fund was ranked third out of 213
funds in Morningstar's Small Blend Category. ** All told, five of our seven
original funds ranked in the top quartile of performance for their respective
asset classes as measured by Morningstar for the one-year period ending December
31, 1998.***
All of these milestones illustrate our continued commitment to high quality
institutional money management services through our family of mutual funds. Our
achievements during the past 15 months are a tribute to our exceptional
sub-advisors, the team at Undiscovered Managers, LLC, and especially our
shareholders.
Thank you for your continued interest and participation. If you have any
questions about this report or about the Funds, please do not hesitate to call
us at (888)-242-3514.
Sincerely,
/s/ Mark P. Hurley
President and Chief Executive Officer
Undiscovered Managers, LLC
*Source: Lipper Analytical Services
**Source: Morningstar Principia Pro for Mutual Funds January 1999 release. As of
12/31/98, among small blend funds with one year annualized total returns,
Undiscovered Managers Behavioral Growth Fund ranked 3rd out of the total 213
funds. The Small Blend Category includes small cap funds that buy stocks that
span the entire range of the small cap market.
***Source: Morningstar Principia Pro for Mutual Funds January 1999 release.
<PAGE>
undiscovered
managers(TM)
BEHAVIORAL GROWTH FUND
Portfolio of Investments -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
COMMON STOCKS - 95.39%
Apparel - 2.10%
18,800 Quiksilver, Inc. *.................... $ 638,025
-----------
Building and Construction - 1.46%
12,100 Centex Corp........................... 445,431
-----------
Computers - 22.36%
23,900 American Management Systems, Inc. *... 797,663
19,000 Bell & Howell Co. *................... 629,375
2,100 CNET, Inc. *.......................... 240,713
16,000 Compuware Corp. *..................... 895,000
10,700 Lexmark International Group, Inc. -
Class A *............................ 1,104,106
52,500 Mylex Corp. *......................... 603,750
7,900 NeoMagic Corp. *...................... 85,913
30,050 Progress Software Corp. *............. 924,037
16,200 Project Software, Inc. *.............. 392,850
64,600 Sybase, Inc. *........................ 524,875
17,700 Xircom, Inc *......................... 601,800
-----------
6,800,082
-----------
Consumer Products - 2.94%
28,350 Fossil, Inc. *........................ 893,025
-----------
Containers/Packaging - 2.11%
15,300 Ball Corp............................. 640,687
-----------
Electronics - 16.54%
32,600 Optical Coating Laboratory, Inc....... 1,043,200
29,800 QLogic Corp. *........................ 1,732,125
21,900 RF Micro Devices, Inc. *.............. 1,686,300
18,700 Semtech Corp. *....................... 568,012
-----------
5,029,637
-----------
Finance - 1.70%
10,800 Delphi Financial Group - Class A *.... 517,725
-----------
Food and Beverages - 1.82%
16,100 Robert Mondavi Corp. - Class A *...... 553,438
-----------
Leisure - 3.20%
12,600 Galileo International, Inc............ 636,300
52,200 Players International, Inc. *......... 336,037
-----------
972,337
-----------
Machinery - 1.85%
8,300 Sundstrand Corp....................... 561,806
-----------
Pharmaceuticals - 7.03%
14,600 Allergan, Inc......................... 1,189,900
21,900 IDEC Pharmaceuticals Corp. *.......... 948,544
-----------
2,138,444
-----------
Recreation - 1.92%
18,000 Fleetwood Enterprises, Inc............ 583,875
-----------
Retail - 18.43%
20,100 AnnTaylor Stores Corp. *.............. 760,031
23,500 Best Buy Co., Inc. *.................. 2,179,625
30,600 Global DirectMail Corp. *............. 502,988
27,000 Micro Warehouse, Inc. *............... 533,250
32,700 TJX Companies, Inc.................... 933,994
21,000 Zale Corp. *.......................... 695,625
-----------
5,605,513
-----------
Telecommunications - 7.34%
15,700 Carrier Access Corp. *................ 620,150
27,300 General Instrument Corp. *............ 798,525
28,675 Superior TeleCom, Inc................. 811,861
-----------
2,230,536
-----------
Transportation - 4.59%
22,900 Hunt (JB) Transport Services, Inc..... 538,150
31,100 MotivePower Industries, Inc........... 857,194
-----------
1,395,344
-----------
Total Common Stocks................... 29,005,905
(Cost $24,573,734) -----------
Total Investments - 95.39%.......................... 29,005,905
(Cost $24,573,734) -----------
Net Other Assets and Liabilities - 4.61%............ 1,403,204
-----------
Net Assets - 100.00%................................ $30,409,109
===========
- ----------
* Non-income producing security
See Notes to Financial Statements.
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2
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<PAGE>
undiscovered
managers(TM)
BEHAVIORAL VALUE FUND
Portfolio of Investments -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
COMMON STOCKS - 94.34%
Automobile - 2.02%
600 Superior Industries International, Inc. $ 14,850
-----------
Aerospace and Defense - 2.04%
2,200 Mesa Air Group, Inc. *................ 14,988
-----------
Building and Construction - 1.67%
300 Rayonier, Inc......................... 12,281
-----------
Business Services - 0.89%
1,100 Corporate Express, Inc. *............. 5,913
100 Precision Response Corp. *............ 650
-----------
6,563
-----------
Chemicals - 2.18%
900 Engelhard Corp........................ 16,031
-----------
Computers - 9.59%
5,800 Concurrent Computer Corp.............. 25,556
2,400 HCIA, Inc. *.......................... 9,300
1,200 Rational Software Corp. *............. 35,625
-----------
70,481
-----------
Consumer Products - 4.33%
2,500 Acclaim Entertainment, Inc. *......... 19,531
700 Tupperware Corp....................... 12,250
-----------
31,781
-----------
Containers/Packaging - 2.57%
600 Chesapeake Corp....................... 18,900
-----------
Entertainment - 1.12%
4,700 Aldila, Inc. *........................ 8,225
-----------
Electronics - 5.29%
800 Digi International, Inc. *............ 5,200
3,000 Integrated Device Technology, Inc. *.. 19,313
1,100 Three-Five Systems, Inc. *............ 14,369
-----------
38,882
-----------
Finance - 9.48%
3,400 Computer Network
Technology Corp. *.................... 40,375
2,200 Phoenix Investment Partners, Ltd...... 16,362
300 The PMI Group, Inc.................... 12,938
-----------
69,675
-----------
Health Care - 1.94%
2,400 MedPartners, Inc. *................... 14,250
-----------
Insurance - 3.87%
600 Horace Mann Educators Corp............ 14,063
900 TIG Holdings, Inc..................... 14,400
-----------
28,463
-----------
Leisure - 4.00%
1,600 Callaway Golf Co...................... 17,400
1,400 Midway Games, Inc. *.................. 11,987
-----------
29,387
-----------
Manufacturing - 5.32%
1,700 Burlington Industries, Inc. *......... 10,519
1,200 Foamex International, Inc. *.......... 11,550
800 Smith (A.O.) Corp..................... 17,050
-----------
39,119
-----------
Medical Services - 0.71%
1,000 Beverly Enterprises, Inc. *........... 5,188
-----------
Oil, Gas and Petroleum - 2.67%
700 ASARCO, Inc........................... 9,888
1,600 EEX Corp.............................. 9,700
-----------
19,588
-----------
Restaurants - 7.17%
1,600 Avado Brands, Inc..................... 10,900
1,900 Darden Restaurants, Inc............... 41,800
-----------
52,700
-----------
Retail - 17.91%
1,100 Fingerhut Cos., Inc................... 27,019
700 Footstar, Inc. *...................... 17,850
600 The Limited, Inc...................... 21,300
1,500 Pier 1 Imports, Inc................... 12,937
1,400 REX Stores Corp. *.................... 18,025
500 Ross Stores, Inc...................... 22,875
4,000 Successories, Inc. *.................. 11,500
-----------
131,506
-----------
Technology - 1.56%
1,500 Mosaix, Inc. *........................ 11,437
-----------
Telecommunications - 2.96%
2,000 InterVoice, Inc. *.................... 21,750
-----------
Textiles - 1.97%
300 VF Corp............................... 14,437
-----------
See Notes to Financial Statements.
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3
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<PAGE>
undiscovered
managers(TM)
BEHAVIORAL VALUE FUND
Portfolio of Investments (continued) -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
Transportation - 3.08%
600 Landstar System, Inc. *............... $ 22,631
-----------
Total Common Stocks................... 693,113
(Cost $747,637) -----------
Total Investments - 94.34%.......................... 693,113
(Cost $747,637) -----------
Net Other Assets and Liabilities - 5.66% ........... 41,561
-----------
Net Assets - 100.00% ............................... 734,674
===========
- ----------
* Non-income producing security
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
4
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<PAGE>
undiscovered
managers(TM)
BEHAVIORAL LONG/SHORT FUND
Portfolio of Investments -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
COMMON STOCKS - 56.03%
Aerospace and Defense - 0.62%
4,500 Mesa Air Group, Inc. *................ $30,656
-----------
Automobile - 0.50%
1,000 Superior Industries International, Inc. 24,750
-----------
Building and Construction - 1.34%
800 Centex Corp........................... 29,450
900 Rayonier, Inc......................... 36,844
-----------
66,294
-----------
Business Machines - 1.46%
700 Lexmark International
Group, Inc. - Class A *............... 72,231
-----------
Business Services - 1.01%
1,600 Global DirectMail Corp. *............. 26,300
3,700 Precision Response Corp. *............ 24,050
-----------
50,350
-----------
Chemicals - 0.54%
1,500 Engelhard Corp........................ 26,719
-----------
Computers - 7.29%
1,700 American Management Systems, Inc. *... 56,738
1,000 Bell & Howell Co. *................... 33,125
100 CNET, Inc. *.......................... 11,463
800 Compuware Corp. *..................... 44,750
1,800 Progress Software Corp. *............. 55,350
1,100 Project Software, Inc. *.............. 26,675
2,500 Rational Software Corp. *............. 74,219
3,100 Sybase, Inc. *........................ 25,187
1,000 Xircom, Inc. *........................ 34,000
-----------
361,507
-----------
Consumer Products - 2.96%
4,900 Acclaim Entertainment, Inc. *......... 38,281
1,600 Fossil, Inc. *........................ 50,400
1,100 Quiksilver, Inc. *.................... 37,331
1,200 Tupperware Corp....................... 21,000
-----------
147,012
-----------
Containers/Packaging - 1.31%
800 Ball Corp............................. 33,500
1,000 Chesapeake Corp....................... 31,500
-----------
65,000
-----------
Electronics - 7.05%
1,600 Digi International, Inc. *............ 10,400
6,300 Integrated Device Technology, Inc. *.. 40,556
1,800 Optical Coating Laboratory, Inc....... 57,600
1,400 Qlogic Corp. *........................ 81,375
1,600 RF Micro Devices, Inc. *.............. 123,200
1,200 Semtech Corp. *....................... 36,450
-----------
349,581
-----------
Finance - 3.10%
6,700 Computer Network
Technology Corp. *.................... 79,562
600 Delphi Financial Group, Inc. - Class A * 28,762
3,200 Phoenix Investment Partners, Ltd...... 23,800
500 The PMI Group, Inc.................... 21,562
-----------
153,686
-----------
Food and Beverages - 0.83%
1,200 Robert Mondavi Corp., Class A *....... 41,250
-----------
Leisure - 1.69%
2,700 Callaway Golf Co...................... 29,362
600 Galileo International, Inc............ 30,300
2,800 Midway Games, Inc. *.................. 23,975
-----------
83,637
-----------
Machinery - 0.95%
700 Sundstrand Corp....................... 47,381
-----------
Manufacturing - 1.77%
1,700 ASARCO, Inc........................... 24,013
2,600 Burlington Industries, Inc. *......... 16,088
1,400 Foamex International, Inc. *.......... 13,475
1,600 Smith (A.O.) Corp..................... 34,100
-----------
87,676
-----------
Medical Services - 0.15%
1,400 Beverly Enterprises, Inc. *........... 7,263
-----------
Oil, Gas and Petroleum - 0.28%
2,300 EEX Corp.............................. 13,944
-----------
Pharmaceuticals - 2.36%
800 Allergan, Inc......................... 65,200
1,200 IDEC Pharmaceuticals Corp. *.......... 51,975
-----------
117,175
-----------
Recreation - 0.65%
1,000 Fleetwood Enterprises, Inc............ 32,437
-----------
Restaurants - 1.94%
3,500 Avado Brands, Inc..................... 23,844
3,300 Darden Restaurants, Inc............... 72,600
-----------
96,444
-----------
See Notes to Financial Statements
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5
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<PAGE>
undiscovered
managers(TM)
BEHAVIORAL LONG/SHORT FUND
Portfolio of Investments (continued) -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
Retail - 9.96%
1,100 AnnTaylor Stores Corp. *.............. $ 41,594
1,500 Best Buy Co., Inc. *.................. 139,125
2,000 Fingerhut Cos., Inc................... 49,125
1,000 Footstar, Inc. *...................... 25,500
1,200 The Limited, Inc...................... 42,600
1,300 Micro Warehouse, Inc. *............... 25,675
3,200 Pier 1 Imports, Inc................... 27,600
2,700 REX Stores Corp. *.................... 34,762
700 Ross Stores, Inc...................... 32,025
1,500 TJX Companies, Inc.................... 42,844
1,000 Zale Corp. *.......................... 33,125
-----------
493,975
-----------
Technology - 1.96%
9,700 Concurrent Computer Corp. *........... 42,741
3,400 Mosaix, Inc. *........................ 25,925
2,500 Mylex Corp. *......................... 28,750
-----------
97,416
-----------
Telecommunications - 3.74%
700 Carrier Access Corp. *................ 27,650
1,500 General Instrument Corp. *............ 43,875
5,600 InterVoice, Inc. *.................... 60,900
1,875 Superior TeleCom, Inc................. 53,086
-----------
185,511
-----------
Transportation - 2.57%
1,600 Hunt (JB) Transport Services, Inc..... 37,600
1,000 Landstar System, Inc. *............... 37,719
1,900 MotivePower Industries, Inc........... 52,369
-----------
127,688
-----------
Total Common Stocks................... 2,779,583
(Cost $2,971,910) -----------
Total Investments - 56.03%.......................... 2,779,583
(Cost $2,971,910) -----------
Net Other Assets and Liabilities - 43.97%........... 2,181,068
-----------
Net Assets - 100.00%................................ $ 4,960,651
===========
- ----------
* Non-income producing security
Value
Shares (Note 2)
- ------ --------
SECURITIES SOLD SHORT
Common Stocks
(1,500) Advent Software, Inc.................. $ (69,188)
(1,000) Amazon.com, Inc....................... (128,125)
(1,000) Bally's Total Fitness Holding Corp.... (22,500)
(1,800) Beringer Wine Estate Holdings, Inc.... (72,563)
(2,300) Charles Schwab Corp................... (171,494)
(3,000) Coulter Pharmaceuticals, Inc.......... (61,125)
(400) eBay, Inc............................. (133,600)
(3,400) E-Trade Group, Inc.................... (155,975)
(1,300) Exodus Communications, Inc............ (95,388)
(1,400) Fair Issac & Co., Inc................. (64,400)
(1,800) Henry Schein, Inc..................... (46,125)
(1,900) HNC Software, Inc..................... (51,063)
(1,500) Kohl's Corp........................... (103,500)
(1,500) Lason, Inc............................ (81,281)
(2,100) Media Arts Group, Inc................. (28,612)
(2,000) Metzler Group, Inc.................... (85,000)
(2,300) NCO Group, Inc........................ (71,875)
(700) Network Solutions, Inc................ (127,050)
(3,600) Peregrine Systems, Inc................ (92,250)
(2,800) Profit Recovery Group
International, Inc.................... (92,400)
(2,500) Quintiles Transnational Corp.......... (107,812)
(4,000) Safeskin Corp......................... (93,000)
(2,800) Siebel Systems, Inc................... (123,200)
(3,750) Staples, Inc.......................... (110,273)
(1,000) Starbucks Corp........................ (52,875)
(1,700) Sunrise Assisted Living, Inc.......... (65,663)
(3,700) Sylvan Learning Systems, Inc.......... (123,025)
(3,300) Tower Automotive, Inc................. (61,462)
(2,300) Vitesse Semiconductor Corp............ (105,656)
(2,800) Wild Oats Market, Inc................. (74,900)
-----------
Total Securities Sold Short........... (2,671,380)
(Proceeds $2,618,902) -----------
See Notes to Financial Statements.
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6
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<PAGE>
undiscovered
managers(TM)
REIT FUND
Portfolio of Investments -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
COMMON STOCKS - 95.84%
Apartments - 30.66%
34,200 Archstone Communities Trust........... $ 669,038
24,400 Avalonbay Communities, Inc............ 770,125
11,900 Chateau Communities, Inc.............. 335,431
8,200 Equity Residential Properties Trust... 336,200
19,200 Home Properties of New York, Inc...... 471,600
26,000 Irvine Apartment Communities, Inc..... 854,750
21,000 Manufactured Home
Communities, Inc...................... 488,250
19,100 Post Properties, Inc.................. 681,631
26,600 Sun Communities, Inc.................. 836,237
-----------
5,443,262
-----------
Diversified - 9.00%
33,900 Duke Realty Investments, Inc.......... 739,444
24,000 Spieker Properties, Inc............... 858,000
-----------
1,597,444
-----------
Hotels, Lodging, and Restaurants - 10.44%
14,500 Felcor Lodging Trust, Inc............. 342,563
52,627 Host Marriott Corp.................... 569,029
58,200 Innkeepers USA Trust.................. 603,825
28,400 LaSalle Hotel Properties.............. 339,025
-----------
1,854,442
-----------
Industrial - 7.02%
30,300 ProLogis Trust........................ 628,725
26,700 PS Business Parks, Inc................ 617,438
-----------
1,246,163
-----------
Neighborhood Shopping Centers - 9.11%
13,050 Kimco Realty Corp..................... 495,084
21,800 Regency Realty Corp................... 441,450
19,800 Vornado Realty Trust.................. 680,625
-----------
1,617,159
-----------
Office Properties - 12.47%
25,600 CarrAmerica Realty Corp............... 550,400
23,400 Cousins Properties, Inc............... 677,138
15,300 Crescent Real Estate Equities Co...... 319,387
25,900 Equity Office Properties Trust........ 666,925
-----------
2,213,850
-----------
Outlet Centers - 2.55%
14,800 Chelsea GCA Realty, Inc............... 452,325
-----------
Regional Malls - 7.90%
13,500 Simon Property Group, Inc............. 343,406
25,250 The Macerich Co....................... 612,313
35,900 Taubman Centers, Inc.................. 446,506
-----------
1,402,225
-----------
Storage - 6.69%
23,700 Public Storage, Inc................... 604,350
20,650 Storage USA, Inc...................... 584,653
-----------
1,189,003
-----------
Total Common Stocks................... 17,015,873
(Cost $18,219,759) -----------
Total Investments - 95.84%.......................... 17,015,873
(Cost $18,219,759) -----------
Net Other Assets and Liabilities - 4.16%............ 737,785
-----------
Net Assets - 100.00%................................ $17,753,658
===========
- ----------
REIT Real Estate Investment Trust
See Notes to Financial Statements.
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7
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<PAGE>
undiscovered
managers(TM)
SPECIAL SMALL CAP FUND
Portfolio of Investments -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
COMMON STOCKS - 97.49%
Automobile - 8.00%
33,600 Midas, Inc............................ $ 1,062,600
800 Strattec Security Corp. *............. 25,200
45,700 TBC Corp. *........................... 259,919
-----------
1,347,719
-----------
Building Materials - 1.49%
1,000 Congoleum Corp., Class A *............ 6,875
22,800 Justin Industries, Inc................ 243,675
-----------
250,550
-----------
Capital Goods - 8.87%
10,900 Alltrista Corp. *..................... 261,600
18,200 Jacobs Engineering Group, Inc. *...... 720,038
17,100 Lawson Products, Inc.................. 360,169
31,900 Royal Appliance Manufacturing Co. *... 123,612
3,800 Stimsonite Corp. *.................... 27,550
-----------
1,492,969
-----------
Chemicals - 12.68%
92,200 Ethyl Corp............................ 449,475
28,400 Georgia Gulf Corp..................... 429,550
47,500 Lawter International, Inc............. 338,437
7,600 NCH Corp.............................. 383,800
39,700 Octel Corp. *......................... 533,469
-----------
2,134,731
-----------
Consumer Products/Services - 3.59%
20,500 Information Resources, Inc. *......... 171,688
43,600 Wolverine World Wide, Inc............. 433,275
-----------
604,963
-----------
Electronics - 13.38%
43,600 CommScope, Inc. *..................... 809,325
19,300 ESCO Electronics Corp. *.............. 199,031
3,400 Franklin Electric Co., Inc............ 210,800
38,800 MagneTek, Inc. *...................... 421,950
19,100 Varian Associates, Inc................ 611,200
-----------
2,252,306
-----------
Energy and Utilities - 6.31%
8,500 Castle Energy Corp.................... 137,063
37,700 Costilla Energy, Inc. *............... 117,813
21,300 Illinova Corp......................... 505,875
31,500 Seitel, Inc. *........................ 301,219
-----------
1,061,970
-----------
Finance - 12.41%
37,418 ADVANTA Corp., Class A................ 437,323
7,800 Echelon International Corp., Inc. *... 161,850
14,800 First Bancorp......................... 370,925
1,900 Fund American
Enterprises Holdings, Inc............. 249,850
13,900 PFF Bancorp, Inc. *................... 243,250
16,200 Penn-America Group, Inc............... 180,225
11,100 Presidential Life Corp................ 197,719
8,544 Queens County Bancorp, Inc............ 248,310
-----------
2,089,452
-----------
Food and Beverages - 1.30%
3,900 Coca-Cola Bottling Co. Consolidated... 218,400
-----------
Health Care Services - 2.86%
7,100 CorVel Corp. *........................ 252,050
11,700 Morrison Health Care, Inc............. 228,881
-----------
480,931
-----------
Leisure - 6.57%
55,100 Handleman Co. *....................... 712,856
7,500 Jackpot Enterprises, Inc. *........... 64,687
18,900 Scientific Games Holdings Corp. *..... 329,568
-----------
1,107,111
-----------
Medical Products - 2.93%
20,800 Invacare Corp......................... 494,000
-----------
Publishing - 2.02%
23,500 Cadmus Communications Corp............ 340,750
-----------
Restaurants - 2.07%
49,900 Host Marriot Services Corp. *......... 349,300
-----------
Textiles - 3.01%
40,900 Guilford Mills, Inc................... 506,138
-----------
Transportation - 10.00%
29,100 Arnold Industries, Inc................ 443,775
15,700 Landstar System, Inc. *............... 592,184
23,650 Midwest Express Holdings, Inc. *...... 635,594
1,100 Transport Corp. of America, Inc. *.... 12,512
-----------
1,684,065
-----------
Total Common Stocks................... 16,415,355
(Cost $18,419,228) -----------
Total Investments - 97.49%.......................... 16,415,355
(Cost $18,419,228) -----------
Net Other Assets and Liabilities - 2.51%............ 421,906
-----------
Net Assets - 100.00%................................ $16,837,261
===========
- ----------
* Non-income producing security
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8
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<PAGE>
undiscovered
managers(TM)
SMALL CAP VALUE FUND
Portfolio of Investments -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
COMMON STOCKS - 96.47%
Aerospace and Defense - 4.39%
18,000 Aviation Sales Co. *.................. $ 815,625
-----------
Automobile - 3.95%
12,500 ASA Holdings, Inc..................... 419,531
17,000 Wynn's International, Inc............. 314,500
-----------
734,031
-----------
Basic Materials - 5.05%
14,000 Chase Industries, Inc. *.............. 112,875
15,000 Reliance Steel & Aluminum Co.......... 383,438
25,000 Timken Co............................. 442,187
-----------
938,500
-----------
Building and Construction - 5.70%
23,000 Holophane Corp. *..................... 529,000
23,000 NCI Building Systems, Inc. *.......... 529,000
-----------
1,058,000
-----------
Business Services - 1.59%
21,000 BancTec, Inc. *....................... 295,313
-----------
Capital Goods - 8.97%
20,000 GP Strategies Corp. *................. 328,750
16,000 Instron Corp.......................... 274,000
5,000 Lydall, Inc. *........................ 47,500
28,000 MTS Systems Corp...................... 351,750
8,000 Oak Industries, Inc. *................ 253,500
10,000 Regal-Beloit Corp..................... 195,000
13,000 Robbins & Myers, Inc.................. 214,500
-----------
1,665,000
-----------
Chemicals - 2.85%
21,000 Cambrex Corp.......................... 502,688
3,600 CPAC, Inc. *.......................... 26,100
-----------
528,788
-----------
Conglomerates - 3.05%
33,000 Stewart & Stevenson Services, Inc..... 276,375
15,000 United Dominion Industries, Ltd....... 289,687
-----------
566,062
-----------
Electronics - 13.93%
20,000 C & D Technologies, Inc............... 480,000
15,000 Dallas Semiconductor Corp............. 530,625
24,000 Kollmorgen Corp....................... 360,000
36,000 Paxar Corp. *......................... 306,000
33,000 Quixote Corp.......................... 410,438
23,000 Silicon Valley Group, Inc. *.......... 306,187
22,900 TSI, Inc.............................. 194,650
-----------
2,587,900
-----------
Finance - 8.28%
10,500 CNB Bancshares, Inc................... 421,969
20,000 D & N Financial Corp.................. 490,000
7,500 SJNB Financial Corp................... 206,250
20,000 UST Corp.............................. 418,750
-----------
1,536,969
-----------
Food and Beverage - 2.27%
23,700 Ralcorp Holdings, Inc. *.............. 422,156
-----------
Furniture - 2.23%
12,700 Chromcraft Revington, Inc. *.......... 181,769
13,200 Virco Manufacturing Corp.............. 232,650
-----------
414,419
-----------
Insurance - 4.06%
29,000 Frontier Insurance Group, Inc......... 380,625
11,000 RenaissanceRe Holdings, Ltd........... 374,000
-----------
754,625
-----------
Leisure - 2.51%
23,000 Coachmen Industries, Inc.............. 465,750
-----------
Medical Services - 0.17%
1,700 Vallen Corp. *........................ 31,875
-----------
Oil, Gas, and Petroleum - 2.79%
36,000 Key Production Co., Inc. *............ 231,750
38,000 Trico Marine Services, Inc. *......... 171,000
26,000 Vintage Petroleum, Inc................ 115,375
-----------
518,125
-----------
Real Estate Investment Trust - 2.38%
22,000 Pacific Gulf Properties, Inc.......... 442,750
-----------
Restaurants - 3.49%
25,000 Applebee's International, Inc......... 648,438
-----------
Retail - 12.73%
31,000 Barry (R.G.) Corp. *.................. 275,125
30,000 Dress Barn, Inc. *.................... 390,000
21,000 Group 1 Automotive, Inc. *............ 528,937
32,000 Maxwell Shoe Co., Inc. *.............. 416,000
32,000 Sport Supply Group, Inc. *............ 274,000
18,000 St John Knits, Inc.................... 480,375
-----------
2,364,437
-----------
Technology - 2.22%
17,000 MAPICS, Inc. *........................ 183,812
16,000 Marshall Industries *................. 228,000
-----------
411,812
-----------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
9
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
SMALL CAP VALUE FUND
Portfolio of Investments -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
Telecommunications - 3.86%
18,000 Aliant Communications, Inc............ $717,750
-----------
Total Common Stocks................... 17,918,325
(Cost $20,879,956) -----------
Total Investments - 96.47%.......................... 17,918,325
(Cost $20,879,956) -----------
Net Other Assets and Liabilities - 3.53%............ 655,824
-----------
Net Assets - 100.00%................................ $18,574,149
===========
- ----------
* Non-income producing security
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
HIDDEN VALUE FUND
Portfolio of Investments -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
COMMON STOCKS - 94.26%
Advertising - 3.28%
1,300 Young & Rubicam, Inc. *............... $ 49,075
-----------
Airlines - 1.93%
1,035 KLM Royal Dutch Air................... 28,980
-----------
Automobile - 3.19%
800 Dana Corp............................. 30,200
307 SPX Corp. *........................... 17,537
-----------
47,737
-----------
Basic Materials - 6.69%
600 Carpenter Technology Corp............. 15,563
1,000 Timken Co............................. 17,687
1,100 Trinity Industries, Inc............... 36,231
700 Union Carbide Corp.................... 30,800
-----------
100,281
-----------
Buildings and Construction - 2.37%
1,800 Champion Enterprises, Inc. *.......... 35,438
-----------
Business Services - 4.56%
1,500 BancTec, Inc. *....................... 21,094
2,500 Reynolds & Reynolds Co., Class A...... 47,187
-----------
68,281
-----------
Capital Goods - 5.64%
1,200 Case Corp............................. 23,400
1,200 Flowserve Corp........................ 19,875
1,300 Oak Industries, Inc. *................ 41,194
-----------
84,469
-----------
Chemicals and Allied Products - 1.92%
1,200 Cambrex Corp.......................... 28,725
-----------
Computers - 1.35%
700 Seagate Technology, Inc. *............ 20,256
-----------
Conglomerates - 9.95%
1,800 Federal Signal Corp................... 42,188
1,600 Lancaster Colony Corp................. 44,000
800 TRW, Inc.............................. 37,800
1,300 United Dominion Industries, Ltd....... 25,106
-----------
149,094
-----------
Electronics - 9.04%
1,700 Esterline Technologies Corp. *........ 29,113
2,000 LSI Logic Corp. *..................... 51,875
700 Raychem Corp.......................... 15,969
1,200 Varian Associates, Inc................ 38,400
-----------
135,357
-----------
Finance - 8.40%
1,500 Charter One Financial, Inc............ 43,219
900 Fleet Financial Group, Inc............ 38,644
600 Union Planters Corp................... 27,112
800 UST Corp.............................. 16,750
-----------
125,725
-----------
Insurance - 2.87%
600 Ohio Casualty Corp.................... 24,225
1,000 Old Republic International Corp....... 18,813
-----------
43,038
-----------
Machinery - 4.71%
1,400 Robbins & Myers, Inc.................. 23,100
700 Sundstrand Corp....................... 47,381
-----------
70,481
-----------
Medical Supplies - 2.55%
1,500 DENTSPLY International, Inc........... 38,250
Oil, Gas, and Petroleum - 4.74%
1,700 Tidewater, Inc........................ 31,981
1,100 Unocal Corp........................... 31,006
1,800 Vintage Petroleum, Inc................ 7,987
-----------
70,974
-----------
Publishing - 4.89%
600 Gannett Co., Inc...................... 38,100
700 Knight-Ridder, Inc.................... 35,131
-----------
73,231
-----------
Real Estate Investment Trust - 2.32%
1,200 Mack-Cali Realty Corp................. 34,725
-----------
Retail - 5.08%
800 BJ's Wholesale Club, Inc. *........... 34,850
900 Ross Stores, Inc...................... 41,175
-----------
76,025
-----------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
11
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
HIDDEN VALUE FUND
Portfolio of Investments -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
Technology - 2.23%
500 Marshall Industries *................. $ 7,125
2,500 National Semiconductor Corp. *........ 26,250
-----------
33,375
-----------
Telecommunications - 6.55%
1,700 Aliant Communications, Inc............ 67,788
2,000 Andrew Corp. *........................ 30,250
-----------
98,038
-----------
Total Common Stocks................... 1,411,555
(Cost $1,623,274) -----------
Total Investments - 94.26%.......................... 1,411,555
(Cost $1,623,274) -----------
Net Other Assets and Liabilities - 5.74%............ 85,968
-----------
Net Assets - 100.00%................................ $ 1,497,523
===========
- ----------
* Non-income producing security
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
ALL CAP VALUE FUND
Portfolio of Investments -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
COMMON STOCKS - 94.18%
Automobile - 7.16%
850 Federal Signal Corp................... $ 19,922
400 Ford Motor Company.................... 23,725
-----------
43,647
-----------
Banks - 4.84%
250 Chase Manhattan Corp.................. 19,906
180 First Union Corp...................... 9,596
-----------
29,502
-----------
Chemicals and Allied Products - 4.41%
300 Eastman Kodak Co...................... 19,856
135 PPG Industries, Inc................... 7,028
-----------
26,884
-----------
Computers - 11.15%
400 Compaq Computer Corp.................. 14,100
195 Sun Microsystems, Inc. *.............. 18,976
340 Sunstrand Corp........................ 23,014
400 Unisys Corp. *........................ 11,925
-----------
68,015
-----------
Consumer Products - 3.09%
500 PepsiCo, Inc.......................... 18,813
-----------
Entertainment - 3.03%
500 Hasbro, Inc........................... 18,500
-----------
Finance - 12.15%
200 American Express Co................... 21,700
350 Citigroup, Inc........................ 20,562
280 Freddie Mac........................... 16,485
200 Merrill Lynch & Co., Inc.............. 15,350
-----------
74,097
-----------
Health Care Services - 11.40%
270 Abbott Laboratories................... 12,538
275 American Home Products Corp........... 16,362
550 Becton, Dickinson & Co................ 18,425
450 United Healthcare Corp................ 22,191
-----------
69,516
-----------
Hotels and Restaurants - 3.05%
300 Tricon Global Restaurants, Inc. *..... 18,600
-----------
Oil, Gas and Petroleum - 5.93%
240 BP Amoco Plc, ADR..................... 20,400
325 Schlumberger, Ltd..................... 15,783
-----------
36,183
-----------
Packaging - 2.28%
250 Weyerhaeuser Co....................... 13,938
-----------
Publishing - 8.00%
250 Gannett Co., Inc...................... 15,875
325 Knight-Ridder, Inc.................... 16,311
200 Reuters Group Plc, ADR................ 16,600
-----------
48,786
-----------
Retail - 5.38%
1,200 K Mart Corp. *........................ 21,000
350 Liz Claiborne, Inc.................... 11,791
-----------
32,791
-----------
Technology - 10.27%
230 FDX Corp. *........................... 21,965
65 International Business Machines Corp.. 11,050
150 United Technologies Corp.............. 18,581
200 Xerox Corp............................ 11,038
-----------
62,634
-----------
Telecommunications - 2.04%
190 Ameritech Corp........................ 12,421
-----------
Total Common Stocks................... 574,327
(Cost $505,626) -----------
Total Investments - 94.18%.......................... 574,327
(Cost $505,626) -----------
Net Other Assets and Liabilities - 5.82%............ 35,498
-----------
Net Assets - 100.00%................................ $ 609,825
===========
- ----------
* Non-income producing security
ADR American Depositary Receipt
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
13
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
CORE EQUITY FUND
Portfolio of Investments -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
COMMON STOCKS - 94.79%
Automotive - 3.31%
2,000 General Motors Corp................... $ 165,125
-----------
Banks - 13.68%
3,100 BankAmerica Corp...................... 202,469
5,900 Bank of New York Co., Inc............. 206,131
5,400 U.S. Bancorp.......................... 174,488
2,700 Wells Fargo Co........................ 99,225
-----------
682,313
-----------
Consumer Products - 13.41%
2,300 General Electric Co................... 230,719
1,500 Hershey Foods Corp.................... 93,375
1,500 Kimberly-Clark Corp................... 70,875
4,900 PepsiCo, Inc.......................... 184,362
1,000 Proctor & Gamble Co................... 89,500
-----------
668,831
-----------
Diversified - 2.20%
1,500 American General Corp................. 109,875
-----------
Finance - 4.21%
3,000 Fannie Mae............................ 210,000
-----------
Health Care Services - 5.01%
4,200 American Home Products Corp., Inc..... 249,900
-----------
Insurance - 8.01%
2,300 American International Group, Inc..... 262,056
2,300 Chubb Corp............................ 137,425
-----------
399,481
-----------
Machinery - 2.38%
2,500 Ingersoll-Rand Co..................... 118,750
-----------
Manufacturing - 2.84%
1,600 Caterpillar, Inc...................... 72,900
1,000 Illinois Tool Works, Inc.............. 68,750
-----------
141,650
-----------
Office Products - 2.15%
2,000 Avery Dennison Corp................... 107,375
-----------
Oil, Gas and Petroleum - 3.84%
2,300 Mobil Corp............................ 191,331
-----------
Retail - 14.91%
3,100 Costco Companies, Inc. *.............. 248,969
4,500 Dayton Hudson Corp.................... 281,531
3,600 May Department Stores Co.............. 213,300
-----------
743,800
-----------
Telecommunications - 10.92%
1,200 AT & T Corp........................... 98,550
3,800 Bell Atlantic Corp.................... 218,263
1,900 Intel Corp............................ 227,881
-----------
544,694
-----------
Technology - 4.21%
3,800 Xerox Corp............................ 209,713
-----------
Utilities - 3.71%
1,700 FPL Group, Inc........................ 87,444
2,300 Texas Utilities Co.................... 97,606
-----------
185,050
-----------
Total Common Stocks................... 4,727,888
(Cost $4,415,028) -----------
Total Investments - 94.79%.......................... 4,727,888
(Cost $4,415,028) -----------
Net Other Assets and Liabilities - 5.21%............ 259,859
-----------
Net Assets - 100.00%................................ $ 4,987,747
===========
- ----------
* Non-income producing security
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
INTERNATIONAL SMALL CAP EQUITY FUND
Portfolio of Investments -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
COMMON STOCKS - 90.45%
Advertising - 9.56%
56,000 Cordiant Communications Group Plc..... $ 137,333
600 Publicis SA........................... 100,902
360 PublicGroupe SA....................... 166,494
51,000 Saatchi & Saatchi Plc................. 138,223
-----------
542,952
-----------
Apparel - 2.34%
34,000 Ittierre Holding Spa.................. 79,227
200 Jil Sander AG......................... 53,858
-----------
133,085
-----------
Automobile - 2.22%
9,700 Brembo Spa............................ 126,342
-----------
Business Services - 6.64%
51,700 Corporate Services.................... 132,658
325 Creyf's N.V........................... 89,306
14,800 Semcon AB............................. 155,485
-----------
377,449
-----------
Commercial Services - 1.70%
9,820 Prosegur, CIA de Seguridad SA *....... 96,495
-----------
Computers - 9.48%
8,250 IBS AB *.............................. 149,157
4,000 Landis Group NV *..................... 98,923
6,200 Prokom Software GDR................... 105,090
4,600 Scala Business Solutions NV *......... 38,173
2,300 Topcall International AG.............. 147,132
-----------
538,475
-----------
Electronics - 6.20%
350 Gretag-Macbeth Holding AG............. 96,034
10,500 Ideal Group SA *...................... 200,316
230 SEZ Holding AG *...................... 55,726
-----------
352,076
-----------
Entertainment - 12.55%
4,600 Ceske Radiokomunikace *............... 142,600
545 E-Pub (Holdings)...................... 245,605
2,800 Investec-Consultoria Internacional, SA 98,484
1,500 Jet Multimedia........................ 147,726
620 UBI Soft Entertainment SA............. 78,369
-----------
712,784
-----------
Finance - 1.08%
6,000 Flanders Language Valley Fund *....... 61,200
-----------
Food & Beverages - 3.68%
570 Belvedere SA *........................ 48,868
590 Selecta Group......................... 160,257
-----------
209,125
-----------
Hotels and Restaurants - 1.06%
1,500 Flo (Groupe) *........................ 59,997
-----------
Industrial - 2.63%
530 BWT AG................................ 110,976
2,000 Fugro N.V............................. 38,690
-----------
149,666
-----------
Insurance - 2.40%
3,700 Mapfre Vida Seguros................... 136,443
-----------
Machinery - 7.22%
3,120 Boewe Systec AG....................... 104,561
16,000 Carraro Spa........................... 73,511
1,200 Prolion Holding N.V. *................ 95,758
9,200 Toolex International N.V. *........... 136,514
-----------
410,344
-----------
Manufacturing - 4.50%
3,100 Eurobike AG........................... 42,933
3,480 Vossloh AG............................ 94,096
3,900 Xeikon N.V. ADR *..................... 118,463
-----------
255,492
-----------
Medical - 6.03%
240 Athens Medical Care SA *.............. 5,649
40,000 Chemunex SA *......................... 47,923
5,200 Pharming Group NV *................... 46,296
1,500 QIAGEN N.V. *......................... 108,816
1,250 Rhoen-Klinikum AG..................... 133,959
-----------
342,643
-----------
Miscellaneous - 2.09%
7,200 Funespana SA *........................ 118,946
-----------
Retail - 1.63%
1,150 TAG Heuer International SA............ 92,678
-----------
Specialty Chemicals - 1.14%
30 Gurit-Heberlein AG.................... 64,817
-----------
Technology - 1.81%
1,200 Swisslog Holding AG................... 102,713
-----------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
15
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
INTERNATIONAL SMALL CAP EQUITY FUND
Portfolio of Investments (continued) -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
Telecommunications - 1.46%
70,000 Scoot.com Plc *....................... $ 33,116
7,700 Granger Telecom Plc GDR *............. 50,050
-----------
83,166
-----------
Transportation - 3.03%
1,150 Fraikin............................... 69,142
4,000 Kononklijke Frans..................... 102,661
-----------
171,803
-----------
Total Common Stocks................... 5,138,691
(Cost $5,246,247) -----------
Total Investments - 90.45%.......................... 5,138,691
(Cost $5,246,247) -----------
Net Other Assets and Liabilities - 9.55%............ 542,327
-----------
Net Assets - 100.00%................................ $ 5,681,018
===========
- ----------
* Non-income producing security
ADR American Depositary Receipt
GDR Global Depositary Receipt
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
INTERNATIONAL SMALL CAP EQUITY FUND
Portfolio of Investments (continued) -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
COMMON STOCKS - 94.28%
Automobile - 1.56%
2,000 Honda Motor Co., Ltd.................. $ 77,017
-----------
Banks - 11.68%
1,500 Banco Commercial...................... 45,159
11,350 Lloyds TSB Group Plc.................. 162,817
750 National Bank of Greece, S.A.......... 54,927
3,750 San Paolo-IMI Spa..................... 65,537
4,000 Sanwa Bank, Ltd....................... 40,952
3,000 Sumitomo Bank, Ltd.................... 36,174
550 UBS AG................................ 171,222
-----------
576,788
-----------
Building & Construction - 1.58%
500 Compagnie De Saint Gobain............. 77,820
-----------
Computers - 4.59%
700 Cap Gemini SA......................... 121,181
900 NIDEC Corp............................ 105,414
-----------
226,595
-----------
Consumer Services - 4.06%
768 Vivendi............................... 200,485
-----------
Finance - 5.38%
300 Bellsystem 24, Inc.................... 85,949
500 Benesse Corp.......................... 35,391
1,500 ING Groep N.V......................... 84,085
400 Promise Co., Ltd...................... 18,201
100 Shohkoh Fund & Co., Ltd............... 41,963
-----------
265,589
-----------
Food & Beverages - 2.54%
1,500 Douglas Holding AG.................... 71,060
200 Selecta Group......................... 54,325
-----------
125,385
-----------
Hotels and Restaurants - 1.36%
5,440 Compass Group Plc..................... 67,307
-----------
Insurance - 7.52%
500 AXA Colonia Konzern AG................ 48,363
3,650 CNP Assurances *...................... 97,690
2,000 Fortis Bank Nederland *............... 72,874
8,300 Skandia Forksikrings.................. 152,596
-----------
371,523
-----------
Machinery - 4.28%
1,040 Mannesmann AG......................... 140,832
1,000 Sidel SA.............................. 70,455
-----------
211,287
-----------
Manufacturing - 4.12%
15,000 BTR Siebe Plc......................... 63,326
8,000 Hutchison Whampoa, Ltd................ 55,502
1,000 Siemens AG............................ 62,322
3,000 Smith (Howard) Limited................ 22,356
-----------
203,506
-----------
Medical Products - 11.48%
140 Glaxo Wellcome Plc.................... 4,470
52 Nestle SA............................. 98,171
102 Novartis AG........................... 178,977
10 Roche Holding AG...................... 126,665
20,000 WPP Group Plc......................... 158,446
-----------
566,729
-----------
Oil, Gas and Petroleum - 3.01%
340 Elf Aquitaine SA...................... 35,503
15,600 National Grid Group................... 112,830
-----------
148,333
-----------
Pharmaceutical - 5.07%
3,000 Rhone-Poulenc SA...................... 137,668
8,000 SmithKline Beecham Plc................ 112,772
-----------
250,440
-----------
Publishing - 8.31%
20,600 Mediaset Spa.......................... 194,725
70,000 Seat-Pagine Gialle Spa................ 91,944
1,000 Secom Co., Ltd........................ 77,607
4,000 Singapore Press Holdings.............. 45,974
-----------
410,250
-----------
See Notes to Financial Statements
- --------------------------------------------------------------------------------
17
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
INTERNATIONAL EQUITY FUND
Portfolio of Investments (continued) -- February 28, 1999 (unaudited)
Value
Shares (Note 2)
- ------ --------
Technology - 1.07%
700 Sony Corp............................. $ 52,968
-----------
Telecommunications - 16.67%
600 Alcatel............................... 64,630
8,000 British Telecom Plc................... 138,688
2,500 Deutsche Telekom AG................... 110,602
4,190 Energis Plc *......................... 100,456
1,240 Nokia Oyj *........................... 169,823
2 NTT Mobile Communications............. 81,230
3,000 Sonera Group Oyj...................... 51,605
600 Telecel Comunicacaoes Pessoais SA *... 106,277
-----------
823,311
-----------
Total Common Stocks................... 4,655,333
(Cost $4,818,470) -----------
Total Investments - 94.28%.......................... 4,655,333
(Cost $4,818,470) -----------
Net Other Assets and Liabilities - 5.72%............ 282,579
-----------
Net Assets - 100.00%................................ $ 4,937,912
===========
- ----------
* Non-income producing security
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18
- --------------------------------------------------------------------------------
<PAGE>
This page intentionally left blank.
<PAGE>
undiscovered
managers(TM)
STATEMENTS OF ASSETS AND LIABILITIES o February 28, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Behavioral Behavioral Behavioral REIT
Growth Fund Value Fund Long/Short Fund Fund
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost ................................... $ 24,573,734 $ 747,637 $ 2,971,910 $ 18,219,759
Net unrealized appreciation (depreciation) ............ 4,432,171 (54,524) (192,327) (1,203,886)
------------ ------------ ------------ ------------
Total investments at value .......................... 29,005,905 693,113 2,779,583 17,015,873
Cash .................................................... 1,854,187 36,738 1,502,214 1,496,055
Receivables:
Investments sold ...................................... 105,282 -- -- 299,432
Fund shares sold ...................................... 63,000 -- -- 12,750
Dividends and interest ................................ 7,363 299 841 65,682
Variation margin ...................................... -- -- 3,351,000 --
Due from Adviser, Net ................................. -- 26,527 28,818 --
Organization costs (Note 2) ............................. 24,486 -- -- 24,503
Insurance fees (Note 2) ................................. 4,570 -- -- 3,441
Other assets ............................................ 4,789 6,117 8,158 3,091
------------ ------------ ------------ ------------
Total Assets ........................................ 31,069,582 762,794 7,670,614 18,920,827
------------ ------------ ------------ ------------
LIABILITIES:
Payables:
Investments purchased ................................. 516,158 -- -- 1,100,826
Securities sold short, at value (Proceeds $2,618,902) . -- -- 2,671,380 --
Adviser fee (Note 3) .................................. 59,257 1,195 8,130 41,613
Accrued expenses and other payables ................... 85,058 26,925 30,453 24,730
------------ ------------ ------------ ------------
Total Liabilities ................................... 660,473 28,120 2,709,963 1,167,169
------------ ------------ ------------ ------------
NET ASSETS ................................................. $ 30,409,109 $ 734,674 $ 4,960,651 $ 17,753,658
============ ============ ============ ============
NET ASSETS consist of:
Paid-in capital ......................................... $ 27,585,975 $ 789,638 $ 5,290,142 $ 19,800,038
Undistributed (distribution in excess of) net investment
income/(loss) ......................................... (66,475) (384) 6,121 213,418
Accumulated net realized gain (loss) on investments sold
and foreign currency related transactions ............. (1,542,562) (56) (90,807) (1,055,912)
Net unrealized appreciation (depreciation) on investments
and foreign currency related transactions ............. 4,432,171 (54,524) (244,805) (1,203,886)
------------ ------------ ------------ ------------
TOTAL NET ASSETS ........................................... $ 30,409,109 $ 734,674 $ 4,960,651 $ 17,753,658
============ ============ ============ ============
SHARES OF BENEFICIAL INTEREST
Institutional Class:
Net Assets .............................................. $ 28,308,764 $ 734,674 $ 4,960,651 $ 17,753,658
Shares of beneficial interest outstanding ............... 1,768,355 60,108 437,125 1,718,671
------------ ------------ ------------ ------------
Net Asset Value, Offering and Redemption Price Per Share
(Net Assets/Shares Outstanding) ............................ $ 16.01 $ 12.22 $ 11.35 $ 10.33
============ ============ ============ ============
Investor Class:
Net Assets .............................................. $ 2,100,345 N/A N/A --
Shares of beneficial interest outstanding ............... 131,347 N/A N/A --
------------ ------------ ------------ ------------
Net Asset Value, Offering and Redemption Price Per Share
(Net Assets/Shares Outstanding) ............................ $ 15.99 N/A N/A --
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Special Small Small Cap Hidden All Cap Core International Small International
Cap Fund Value Fund Value Fund Value Fund Equity Fund Cap Equity fund Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 18,419,228 $ 20,879,956 $ 1,623,274 $ 505,626 $ 4,415,028 $ 5,246,247 $ 4,818,470
(2,003,873) (2,961,631) (211,719) 68,701 312,860 (107,556) (163,137)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
16,415,355 17,918,325 1,411,555 574,327 4,727,888 5,138,691 4,655,333
662,896 509,550 56,929 7,923 175,716 1,511,092 267,899
11,390 168,000 -- -- 167,554 -- --
4,346 -- 10,000 -- -- -- --
15,746 14,631 1,717 987 9,730 5 3,306
-- -- 25,675 34,682 26,300 41,058 38,323
24,469 24,469 24,486 24,486 24,486 -- --
4,439 4,873 366 103 923 -- --
2,705 2,479 18,960 14,097 1,036 17,051 16,384
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
17,141,346 18,642,327 1,549,688 656,605 5,133,633 6,707,897 4,981,245
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
217,103 -- -- -- 108,637 979,801 --
48,342 49,234 3,430 809 8,247 4,327 3,283
38,640 18,944 48,735 45,971 29,002 42,751 40,050
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
304,085 68,178 52,165 46,780 145,886 1,026,879 43,333
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 16,837,261 $ 18,574,149 $ 1,497,523 $ 609,825 $ 4,987,747 $ 5,681,018 $ 4,937,912
============ ============ ============ ============ ============ ============ ============
$ 19,247,520 $ 21,224,023 $ 1,703,048 $ 580,825 $ 4,704,906 $ 5,801,728 $ 5,100,000
(31,186) (20,391) (668) (830) 5,995 528 10,859
(375,200) 332,148 6,862 (38,871) (36,014) (10,710) (9,785)
(2,003,873) (2,961,631) (211,719) 68,701 312,860 (110,528) (163,162)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 16,837,261 $ 18,574,149 $ 1,497,523 $ 609,825 $ 4,987,747 $ 5,681,018 $ 4,937,912
============ ============ ============ ============ ============ ============ ============
$ 16,837,261 $ 18,529,373 $ 1,450,547 $ 557,193 $ 4,935,962 $ 5,681,018 $ 4,937,912
1,503,980 1,540,798 129,901 37,977 324,897 438,044 397,105
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 11.20 $ 12.03 $ 11.17 $ 14.67 $ 15.19 $ 12.97 $ 12.43
============ ============ ============ ============ ============ ============ ============
N/A $ 44,776 $ 46,976 $ 52,632 $ 51,785 N/A N/A
N/A 3,723 4,208 3,588 3,409 N/A N/A
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
N/A $ 12.03 $ 11.16 $ 14.67 $ 15.19 N/A N/A
============ ============ ============ ============ ============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
21
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
STATEMENTS OF OPERATIONS o For the period ended February 28, 1999 (unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Behavioral Behavioral Behavioral REIT
Growth Fund(1)(7) Value Fund(2) Long/Short Fund(3) Fund(4)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENTINCOME
Dividends (Note 2) .................................... $ 24,211 $ 755 $ 1,546 $ 524,007
Foreign taxes withheld on dividend income (Note 2) .... -- -- -- --
Interest (Note 2) ..................................... 31,649 454 15,065 15,996
Other income .......................................... -- -- -- --
----------- ----------- ----------- -----------
Total investment income ............................. 55,860 1,209 16,611 540,003
----------- ----------- ----------- -----------
EXPENSES
Investment advisory fees (Note 3) ..................... 88,597 1,195 8,130 70,508
Administration fees (Note 3) .......................... 18,942 283 1,311 16,647
Custodian fees (Note 3) ............................... 9,585 1,471 2,000 5,015
Professional fees ..................................... 18,234 8,672 17,579 15,205
Transfer Agent fees ................................... 28,509 4,057 4,268 15,395
Trustees' fees (Note 5) ............................... 4,585 48 250 3,203
Reports to shareholders ............................... 6,303 79 399 4,985
Amortization of organization costs (Note 2) ........... 3,164 -- -- 3,164
Registration fees ..................................... 18,829 13,772 14,693 2,358
Distribution fees - Investor Class (Note 3) ........... 1,159 -- -- --
Other fees ............................................ 4,094 27 119 2,908
----------- ----------- ----------- -----------
Total expenses before waiver/reimbursement .......... 202,001 29,604 48,749 139,388
Less: waiver/reimbursement (Note 3) ................. (79,621) (28,011) (38,259) (45,378)
Less: Shareholder servicing fees waiver (Note 3) .... (45) -- -- --
----------- ----------- ----------- -----------
Total expenses net of waiver/reimbursement .......... 122,335 1,593 10,490 94,010
----------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) ............................. (66,475) (384) 6,121 445,993
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY RELATED TRANSACTIONS (Note 2):
Net realized gain (loss) on investments sold .......... (1,369,152) (56) (90,807) (877,220)
Net change in unrealized appreciation (depreciation) on
investments and foreign currency related transactions 5,384,149 (54,524) (244,805) 112,821
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY RELATED TRANSACTIONS ............. 4,014,997 (54,580) (335,612) (764,399)
----------- ----------- ----------- -----------
NETINCREASE/(DECREASE)INNET ASSETS
RESULTINGFROMOPERATIONS ............................... $ 3,948,522 $ (54,964) $ (329,491) $ (318,406)
=========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
(1) The Fund's Institutional Class commenced investment operations on December
31, 1997.
(2) The Fund commenced investment operations on December 29, 1998.
(3) The Fund commenced investment operations on January 6, 1999.
(4) The Fund's Institutional Class commenced investment operations on January
1, 1998, and, although authorized to issue such shares, the Fund's
Investor Class had not commenced investment operations as of February 28,
1999.
(5) The Fund's Institutional Class commenced investment operations on December
30, 1997.
(6) The Fund commenced investment operations on January 5, 1999.
(7) The Fund's Investor Class commenced investment operations on July 31,
1998.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
22
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Special Small Small Cap Hidden All Cap Core International Small International
Cap Fund(5) Value Fund(5)(7) Value Fund(1)(7) Value Fund(1)(7) Equity Fund(1)(7) Cap Equity Fund(6) Equity Fund(6)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 88,184 $ 96,228 $ 9,990 $ 2,956 $ 26,854 $ 49 $ 4,607
-- -- -- -- -- (8) (677)
11,998 20,219 1,438 394 8,707 5,131 9,933
-- -- -- -- -- 1,376 2,006
--------- ----------- ----------- ----------- ----------- ----------- -----------
100,182 116,447 11,428 3,350 35,561 6,548 15,869
--------- ----------- ----------- ----------- ----------- ----------- -----------
88,110 90,651 6,377 1,557 12,438 4,327 3,282
19,663 21,584 1,678 526 4,202 941 864
2,570 3,700 2,265 2,460 3,105 5,854 4
16,956 18,118 7,531 6,870 8,542 21,363 14,419
14,649 28,264 14,141 23,870 24,643 4,176 2,385
3,741 4,109 307 91 787 309 7,047
5,887 5,426 564 252 1,112 494 2,340
3,164 3,164 3,164 3,164 3,164 -- --
1,788 13,921 13,203 13,167 14,355 14,878 14,683
-- 78 80 83 85 -- --
3,076 2,813 1,311 1,182 1,669 4 453
--------- ----------- ----------- ----------- ----------- ----------- -----------
159,604 191,828 50,621 53,242 74,102 52,346 45,477
(28,236) (70,885) (41,815) (51,076) (57,377) (46,326) (40,467)
-- (17) (80) (83) (85) -- --
--------- ----------- ----------- ----------- ----------- ----------- -----------
131,368 120,926 8,726 2,083 16,640 6,020 5,010
--------- ----------- ----------- ----------- ----------- ----------- -----------
(31,186) (4,479) 2,702 1,267 18,921 528 10,859
--------- ----------- ----------- ----------- ----------- ----------- -----------
19,084 332,974 14,837 (27,793) (32,995) (10,710) (9,785)
829,800 1,263,787 168,932 128,755 493,278 (110,528) (163,162)
--------- ----------- ----------- ----------- ----------- ----------- -----------
848,884 1,596,761 183,769 100,962 460,283 (121,238) (172,947)
--------- ----------- ----------- ----------- ----------- ----------- -----------
$ 817,698 $ 1,592,282 $ 186,471 $ 102,229 $ 479,204 $ (120,710) $ (162,088)
========= =========== =========== =========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
23
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Behavioral Behavioral Behavioral
Growth Fund(1)(7) Value Fund(2) Long/Short Fund(3)
---------------------------------- ----------------- ------------------
Six months ended Period ended Period ended
February 28, 1999 Period ended February 28, 1999 February 28, 1999
(Unaudited) August 31, 1998 (Unaudited) (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period ............................ $ 5,294,388 $ -- $ 100,000 $ 100,000
------------ ------------ ------------ ------------
Increase in net assets resulting from operations:
Net investment income (loss) .............................. (66,475) (8,228) (384) 6,121
Net realized gain (loss) on investments sold and
foreign currency related transactions ................... (1,369,152) (173,410) (56) (90,807)
Net change in unrealized appreciation (depreciation) on
investments and foreign currency related transactions ... 5,384,149 (951,978) (54,524) (244,805)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting from
operations .............................................. 3,948,522 (1,133,616) (54,964) (329,491)
------------ ------------ ------------ ------------
Distributions to shareholders from:
Institutional Class Shares:
Net investment income ................................... -- -- -- --
Net realized gains ...................................... -- -- -- --
Investor Class Shares:
Net investment income ................................... -- -- -- --
Net realized gains ...................................... -- -- -- --
------------ ------------ ------------ ------------
Total distributions to shareholders ....................... -- -- -- --
------------ ------------ ------------ ------------
Capital share transactions:
Institutional Class Shares:
Proceeds from Shares issued ............................. 20,465,947 6,766,150 689,638 5,190,142
Issued to shareholders in reinvestment of distributions . -- -- -- --
Cost of Shares repurchased .............................. (1,446,369) (388,146) -- --
------------ ------------ ------------ ------------
Increase in net assets derived from
Institutional Class Share transactions ................ 19,019,578 6,378,004 689,638 5,190,142
------------ ------------ ------------ ------------
Investor Class Shares:
Proceeds from Shares issued ............................. 2,201,505 50,000 N/A N/A
Issued to shareholders in reinvestment of distributions . -- -- N/A N/A
Cost of Shares repurchsed ............................... (54,884) -- N/A N/A
------------ ------------ ------------ ------------
Increase in net assets derived from
Investor Class Share transactions ..................... 2,146,621 50,000 N/A N/A
------------ ------------ ------------ ------------
Increase in net assets derived from capital share
transactions ............................................... 21,166,199 6,428,004 689,638 5,190,142
------------ ------------ ------------ ------------
Total increase in net assets ................................. 25,114,721 5,294,388 634,674 4,860,651
------------ ------------ ------------ ------------
NET ASSETS at end of period (including line A) ............... $ 30,409,109 $ 5,294,388 $ 734,674 $ 4,960,651
============ ============ ============ ============
(A) Undistributed net investment income ...................... $ (66,475) $ -- $ (384) $ 6,121
============ ============ ============ ============
OTHER INFORMATION:
Share transactions:
Institutional Class Shares:
Sold .................................................... 1,421,524 470,937 52,108 429,125
Issued to shareholders in reinvestment of distributions . -- -- -- --
Repurchased ............................................. (96,321) (27,785) -- --
------------ ------------ ------------ ------------
Total Institutional Class transactions ................ 1,325,203 443,152 52,108 429,125
------------ ------------ ------------ ------------
Investor Class Shares:
Sold .................................................... 131,347 3,392 N/A N/A
Issued to shareholders in reinvestment of distributions . -- -- N/A N/A
Repurchased ............................................. (3,392) -- N/A N/A
------------ ------------ ------------ ------------
Total Investor Class transactions ..................... 127,955 3,392 N/A N/A
------------ ------------ ------------ ------------
Net increase in capital shares ............................... 1,453,158 446,544 52,108 429,125
============ ============ ============ ============
</TABLE>
- ----------
(1) The Fund's Institutional Class commenced investment operations on December
31, 1997.
(2) The Fund commenced investment operations on December 29, 1998.
(3) The Fund commenced investment operations on January 6, 1999.
(4) The Fund's Institutional Class commenced investment operations on January
1, 1998, and, although authorized to issue such shares, the Fund's
Investor Class had not commenced investment operations as of February 28,
1999.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
24
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
REIT Special Small Small Cap Hidden
Fund(4) Cap Fund(5) Value Fund(5)(7) Value Fund(1)(7)
- ------------------------------- ------------------------------- ------------------------------- --------------------------------
Six months ended Six months ended Six months ended Six months ended
February 28, February 28, February 28, February 28,
1999 Period ended 1999 Period ended 1999 Period ended 1999 Period ended
(Unaudited) August 31, 1998 (Unaudited) August 31, 1998 (Unaudited) August 31, 1998 (Unaudited) August 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 9,122,042 $ -- $ 11,286,389 $ -- $ 13,879,749 $ 100,000 $ 964,979 $ --
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
445,993 168,577 (31,186) (27,446) (4,479) 4,458 2,702 2,819
(877,220) (189,265) 19,084 (394,284) 332,974 71,166 14,837 6,245
112,821 (1,316,707) 829,800 (2,833,673) 1,263,787 (4,225,418) 168,932 (380,651)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(318,406) (1,337,395) 817,698 (3,255,403) 1,592,282 (4,149,794) 186,471 (371,587)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(363,218) -- -- -- (23,448) -- (8,960) --
-- -- -- -- (71,810) -- (13,732) --
-- -- -- -- (30) -- (318) --
-- -- -- -- (181) -- (488) --
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(363,218) -- -- -- (95,469) -- (23,498) --
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
9,338,677 10,717,058 9,488,210 15,289,122 4,741,416 18,068,590 386,298 1,903,880
362,073 -- -- -- 94,600 -- 22,692 --
(387,510) (257,621) (4,755,036) (747,330) (1,649,454) (177,415) (40,199) (617,314)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
9,313,240 10,459,437 4,733,174 14,541,792 3,186,562 17,891,175 368,791 1,286,566
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-- N/A N/A N/A 10,814 38,368 50,000
-- N/A N/A N/A 211 -- 780 --
-- N/A N/A N/A -- -- -- --
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-- N/A N/A N/A 11,025 38,368 780 50,000
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
9,313,240 10,459,437 4,733,174 14,541,792 3,197,587 17,929,543 369,571 1,336,566
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
8,631,616 9,122,042 5,550,872 11,286,389 4,694,400 13,779,749 532,544 964,979
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 17,753,658 $ 9,122,042 $ 16,837,261 $ 11,286,389 $ 18,574,149 $ 13,879,749 $ 1,497,523 $ 964,979
============ ============ ============ ============ ============ ============ ============ ============
$ 213,418 $ 130,644 $ (31,186) $ -- $ (20,391) $ 7,565 $ (668) $ 5,908
============ ============ ============ ============ ============ ============ ============ ============
863,649 878,904 418,706 1,143,447 406,139 1,263,238 37,296 140,327
29,824 -- -- -- 6,094 -- 2,035 --
(32,438) (21,268) -- (58,173) (133,799) (874) (4,192) (45,565)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
861,035 857,636 418,706 1,085,274 278,434 1,262,364 35,139 94,762
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-- N/A N/A N/A 852 2,854 -- 4,136
-- N/A N/A N/A 18 -- 72 --
-- N/A N/A N/A -- -- -- --
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-- N/A N/A N/A 870 2,854 72 4,136
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
861,035 857,636 418,706 1,085,274 279,304 1,265,218 35,211 98,898
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
- ----------
(5) The Fund's Institutional Class commenced investment operations on December
30, 1997.
(6) The Fund commenced investment operations on January 5, 1999.
(7) The Fund's Investor Class commenced investment operations on July 31,
1998.
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
25
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
All Cap Core
Value Fund(1)(7) Equity Fund(1)(7)
--------------------------------- ---------------------------------
Six months ended Six months ended
February 28, 1999 Period ended February 28, 1999 Period ended
(Unaudited) August 31, 1998 (Unaudited) August 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period ............................... $ 329,619 $ -- $ 1,338,493 $ --
----------- ----------- ----------- -----------
Increase in net assets resulting from operations:
Net investment income (loss) ................................. 1,267 1,621 18,921 5,068
Net realized gain (loss) on investments sold and
foreign currency related transactions ...................... (27,793) (11,078) (32,995) (3,019)
Net change in unrealized appreciation (depreciation) on
investments and foreign currency related transactions ...... 128,755 (60,054) 493,278
(180,418)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations ................................................. 102,229 (69,511) 479,204 (178,369)
----------- ----------- ----------- -----------
Distributions to shareholders from:
Institutional Class Shares:
Net investment income ...................................... (5,968) -- (20,802) --
Net realized gains ......................................... -- -- -- --
Investor Class Shares:
Net investment income ...................................... (839) -- (281) --
Net realized gains ......................................... -- -- -- --
----------- ----------- ----------- -----------
Total distributions to shareholders .......................... (6,807) -- (21,083) --
----------- ----------- ----------- -----------
Capital share transactions:
Institutional Class Shares:
Proceeds from Shares issued ................................ 279,072 401,654 3,384,613 1,586,277
Issued to shareholders in reinvestment of distributions .... 5,968 -- 20,802 --
Cost of Shares repurchased ................................. (101,021) (52,524) (214,533) (119,415)
----------- ----------- ----------- -----------
Increase in net assets derived from
Institutional Class Share transactions ................... 184,019 349,130 3,190,882 1,466,862
----------- ----------- ----------- -----------
Investor Class Shares:
Proceeds from Shares issued ................................ -- 50,000 -- 50,000
Issued to shareholders in reinvestment of distributions .... 765 -- 251 --
Cost of Shares repurchased ................................. -- -- -- --
----------- ----------- ----------- -----------
Increase in net assets derived from Investor
Class Share transactions ................................. 765 50,000 251 50,000
----------- ----------- ----------- -----------
Increase in net assets derived from capital share
transactions .................................................. 184,784 399,130 3,191,133 1,516,862
----------- ----------- ----------- -----------
Total increase in net assets .................................... 280,206 329,619 3,649,254 1,338,493
----------- ----------- ----------- -----------
NET ASSETS at end of period (including line A) .................. $ 609,825 $ 329,619 $ 4,987,747 $ 1,338,493
=========== =========== =========== ===========
(A) Undistributed (distribution in excess of) net investment
income .................................................... $ (830) $ 4,710 $ 5,995 $ 8,157
=========== =========== =========== ===========
OTHER INFORMATION:
Share transactions:
Institutional Class Shares:
Sold ....................................................... 19,530 29,587 235,712 105,147
Issued to shareholders in reinvestment of distributions .... 443 -- 1,431 --
Repurchased ................................................ (7,069) (4,514) (13,830) (3,562)
----------- ----------- ----------- -----------
Total Institutional Class Share transactions ............. 12,904 25,073 223,313 101,585
----------- ----------- ----------- -----------
Investor Class Shares:
Sold ....................................................... -- 3,526 -- 3,390
Issued to shareholders in reinvestment of distributions .... 62 -- 19 --
Repurchased ................................................ -- -- -- --
----------- ----------- ----------- -----------
Total Investor Class Share transactions .................. 62 3,526 19 3,390
----------- ----------- ----------- -----------
Net increase in capital shares .................................. 12,966 28,599 223,332 104,975
=========== =========== =========== ===========
</TABLE>
- ----------
(1) The Fund's Institutional Class commenced investment operations on December
31, 1997.
(2) The Fund commenced investment operations on December 29, 1998.
(3) The Fund commenced investment operations on January 6, 1999.
(4) The Fund's Institutional Class commenced investment operations on January
1, 1998, and, although authorized to issue such shares, the Fund's
Investor Class had not commenced investment operations as of February 28,
1999.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
26
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
- -------------------------------------
International Small International
Cap Equity Fund(6) Equity Fund(6)
- -------------------------------------
Period ended Period ended
February 28, 1999 February 28, 1999
(Unaudited) (Unaudited)
- -------------------------------------
$ 100,000 $ 100,000
----------- -----------
528 10,859
(10,710) (9,785)
(110,528) (163,162)
----------- -----------
(120,710) (162,088)
----------- -----------
-- --
-- --
-- --
-- --
----------- -----------
-- --
----------- -----------
5,701,728 5,000,000
-- --
-- --
----------- -----------
5,701,728 5,000,000
----------- -----------
N/A N/A
N/A N/A
N/A N/A
----------- -----------
N/A N/A
----------- -----------
5,701,728 5,000,000
----------- -----------
5,581,018 4,837,912
----------- -----------
$ 5,681,018 $ 4,937,912
=========== ===========
$ 528 $ 10,859
=========== ===========
430,044 389,105
-- --
-- --
----------- -----------
430,044 389,105
----------- -----------
N/A N/A
N/A N/A
N/A N/A
----------- -----------
N/A N/A
----------- -----------
430,044 389,105
=========== ===========
- ----------
(5) The Fund's Institutional Class commenced investment operations on December
30, 1997.
(6) The Fund commenced investment operations on January 5, 1999.
(7) The Fund's Investor Class commenced investment operations on July 31,
1998.
- --------------------------------------------------------------------------------
27
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS - For a Share outstanding throughout the periods
- -----------------------------------------------------------------------------------------------------------------------------------
Behavioral Growth Fund
------------------------------------------------------------------
Institutional Class(1) Investor Class(7)
------------------------------------ -----------------------------------
Six months ended Six months ended
February 28, 1999 Period ended February 28, 1999 Period ended
(Unaudited) August 31, 1998 (Unaudited) August 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period ....................... $ 11.86 $ 12.50 $ 11.85 $ 14.74
Income from Investment Operations:
Net investment income (loss) (+) ........................ (0.04) (0.02) (0.02) 0.00(A)
Net realized and unrealized gain (loss)
on investments and foreign currencies ................. 4.19 (0.62) 4.16 (2.89)
---------- ---------- ---------- ----------
Total income (loss) from Investment Operations .......... 4.15 (0.64) 4.14 (2.89)
---------- ---------- ---------- ----------
Less Distributions:
Dividends from net investment income .................... 0.00 0.00 0.00 0.00
Distributions from capital gains ........................ 0.00 0.00 0.00 0.00
---------- ---------- ---------- ----------
Total distributions ..................................... 0.00 0.00 0.00 0.00
---------- ---------- ---------- ----------
Net increase (decrease) in net asset value from operations . 4.15 (0.64) 4.14 (2.89)
---------- ---------- ---------- ----------
Net Asset Value, end of period ............................. $ 16.01 $ 11.86 $ 15.99 $ 11.85
========== ========== ========== ==========
Total Return ............................................... 34.99%** (5.12)%** 34.94%** (19.61)%**
Ratios / Supplemental Data:
Net Assets, end of period (in 000's) ....................... $ 28,309 $ 5,254 $ 2,100 $ 40
Ratios to average net assets:
Net investment income (loss) including reimbursement .... (0.70)%* (0.35)%* (0.70)%* (0.35)%*
Operating expenses including reimbursement .............. 1.30%* 1.30%* 1.30%* 1.30%*
Portfolio Turnover Rate .................................... 26%** 67%** 26%** 67%**
+ The operating expenses of the Fund may reflect a reduction of the Adviser fee, an allocation of expenses to the
Investment Adviser, or both. Had such actions not been taken, the ratios and net investment income (loss)
per share would have been as follows:
Net investment income (loss) ............................ (1.56)%* (5.08)%* (1.91)%* (5.43)%*
Operating Expenses ...................................... 2.16%* 6.03%* 2.51%* 6.38%*
Net investment income (loss) per share .................. $ (0.08) $ (0.27) $ (0.05) $ (0.07)
</TABLE>
- ----------
* Annualized
** Not Annualized
(1) The Fund's Institutional Class commenced investment operations on December
31, 1997.
(2) The Fund commenced investment operations on December 29, 1998.
(3) The Fund commenced investment operations on January 6, 1999.
(4) The Fund's Institutional Class commenced investment operations on January
1, 1998, and, although authorized to issue such shares, the Fund's
Investor Class had not commenced investment operations as of February 28,
1999.
(5) The Fund's Institutional Class commenced investment operations on December
30, 1997.
(6) The Fund commenced investment operations on January 5, 1999.
(7) The Fund's Investor Class commenced investment operations on July 31,
1998.
(A) Represents less than $0.005 per share.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
28
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Behavioral Behavioral
Value Fund Long/Short Fund REIT Fund Special Small Cap Fund
- ---------------------- ---------------------- ------------------------------------ ----------------------------------
Institutional Class(6) Institutional Class(6) Institutional Class(4) Institutional Class(5)
- ---------------------- ---------------------- ------------------------------------ ----------------------------------
Period ended Period ended Six months ended Six months ended
February 28, 1999 February 28, 1999 February 28, 1999 Period ended February 28, 1999 Period ended
(Unaudited) (Unaudited) (Unaudited) August 31, 1998 (Unaudited) August 31, 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 12.50 $ 12.50 $ 10.64 $ 12.50 $ 10.40 $ 12.50
(0.01) 0.01 0.33 0.20 (0.02) (0.03)
(0.27) (1.16) (0.36) (2.06) 0.82 (2.07)
- ---------- ---------- ---------- ---------- ---------- ----------
(0.28) (1.15) (0.03) (1.86) 0.80 (2.10)
- ---------- ---------- ---------- ---------- ---------- ----------
0.00 0.00 (0.28) 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
- ---------- ---------- ---------- ---------- ---------- ----------
0.00 0.00 (0.28) 0.00 0.00 0.00
- ---------- ---------- ---------- ---------- ---------- ----------
(0.28) (1.15) (0.31) (1.86) 0.80 (2.10)
- ---------- ---------- ---------- ---------- ---------- ----------
$ 12.22 $ 11.35 $ 10.33 $ 10.64 $ 11.20 $ 10.40
========== ========== ========== ========== ========== ==========
(2.24)%** (9.20)%** (0.44)%** (14.88)%** 7.69%** (16.80)%**
$ 735 $ 4,961 $ 17,754 $ 9,122 $ 16,837 $ 11,286
(0.34)%* 1.16%* 6.70%* 4.85%* (0.40)%* (0.51)%*
1.40%* 2.00%* 1.40%* 1.40%* 1.67%* 1.70%*
5%** 9%** 30%** 52%** 9%** 9%**
(24.96)%* (6.13)%* 6.01%* 1.63%* (0.76)%* (3.13)%*
26.02%* 9.29 2.09%* 4.62%* 2.03%* 4.32%*
$ (0.47) $ (0.07) $ 0.29 $ 0.07 $ (0.04) $ (0.15)
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
29
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued) - For a Share outstanding throughout the periods
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund
---------------------------------------------------------------------------
Institutional Class(5) Investor Class(7)
------------------------------------ ------------------------------------
Six months ended Six months ended
February 28, 1999 Period ended February 28, 1999 Period ended
(Unaudited) August 31, 1998 (Unaudited) August 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period ........................$ 10.90 $ 12.50 $ 10.91 $ 13.45
Income from Investment Operations:
Net investment income (loss) (+) ......................... 0.00(A) 0.00(A) 0.00(A) 0.00(A)
Net realized and unrealized gain (loss)
on investments and foreign currencies .................. 1.19 (1.60) 1.18 (2.54)
---------- ---------- ---------- ----------
Total income (loss) from Investment Operations ........... 1.19 (1.60) 1.18 (2.54)
---------- ---------- ---------- ----------
Less Distributions:
Dividends from net investment income ..................... (0.01) 0.00 (0.01) 0.00
Distributions from capital gains ......................... (0.05) 0.00 (0.05) 0.00
---------- ---------- ---------- ----------
Total distributions ...................................... (0.06) 0.00 (0.06) 0.00
---------- ---------- ---------- ----------
Net increase (decrease) in net asset value from operations .. 1.13 (1.60) 1.12 (2.54)
---------- ---------- ---------- ----------
Net Asset Value, end of period ..............................$ 12.03 $ 10.90 $ 12.03 $ 10.91
========== ========== ========== ==========
Total Return ................................................ 10.96%** (12.80)%** 10.89%** (18.88)%**
Ratios / Supplemental Data:
Net Assets, end of period (in 000's) ........................$ 18,529 $ 13,849 $ 45 $ 31
Ratios to average net assets:
Net investment income (loss) including reimbursement ..... (0.05)%* 0.15%* (0.05)%* 0.15%*
Operating expenses including reimbursement ............... 1.40%* 1.40%* 1.40%* 1.40%*
Portfolio Turnover Rate ..................................... 8%** 10%** 8%** 10%**
+ The operating expenses of the Fund may reflect a reduction of the Adviser fee, an allocation of expenses to the Investment
Adviser, or both. Had such actions not been taken, the ratios and net investment income (loss) per share would have been as
follows:
Net investment income (loss) ............................. (0.87)%* (3.32)%* (1.22)%* (3.67)%*
Operating Expenses ....................................... 2.22%* 4.87%* 2.57%* 5.22%*
Net investment income (loss) per share ...................$ 0.22 $ (0.08) $ 0.11 $ (0.04)
</TABLE>
- ----------
* Annualized
** Not Annualized
(1) The Fund's Institutional Class commenced investment operations on December
31, 1997.
(2) The Fund commenced investment operations on December 29, 1998.
(3) The Fund commenced investment operations on January 6, 1999.
(4) The Fund's Institutional Class commenced investment operations on January
1, 1998, and, although authorized to issue such shares, the Fund's
Investor Class had not commenced investment operations as of February 28,
1999.
(5) The Fund's Institutional Class commenced investment operations on December
30, 1997.
(6) The Fund commenced investment operations on January 5, 1999.
(7) The Fund's Investor Class commenced investments operations on July 31,
1998.
(A) Represents less than $0.005 per share.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
30
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
- --------------------------------------------------------------------------------
Hidden Value Fund
------------------------------------------------------------------------
Institutional Class(1) Investor Class(7)
---------------------------------- ------------------------------------
Six months ended Six months ended
February 28, 1999 Period ended February 28, 1999 Period ended
(Unaudited) August 31, 1998 (Unaudited) August 31, 1998
- --------------------------------------------------------------------------------
$ 9.76 $ 12.50 $ 9.76 $ 12.09
0.02 0.03 0.02 0.01
1.59 (2.77) 1.58 (2.34)
--------- --------- --------- ---------
1.61 (2.74) 1.60 (2.33)
--------- --------- --------- ---------
(0.08) 0.00 (0.08) 0.00
(0.12) 0.00 (0.12) 0.00
--------- --------- --------- ---------
(0.20) 0.00 (0.20) 0.00
--------- --------- --------- ---------
1.41 (2.74) 1.40 (2.33)
--------- --------- --------- ---------
$ 11.17 $ 9.76 $ 11.16 $ 9.76
========= ========= ========= =========
16.45%** (21.92)%** 16.34%** (19.27)%**
$ 1,451 $ 925 $ 47 $ 40
0.40%* 0.58%* 0.40%* 0.58%*
1.30%* 1.30%* 1.30%* 1.30%*
25%** 74%** 25%** 74%**
(5.83)%* (15.16)%* (6.18)%* (15.51)%*
7.53%* 17.04%* 7.88%* 17.39%*
$ (1.41) $ (0.77) $ (1.53) $ (0.15)
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
31
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued) - For a Share outstanding throughout the periods
- ------------------------------------------------------------------------------------------------------------------------------------
All Cap Value Fund
---------------------------------------------------------------------------
Institutional Class(5) Investor Class(7)
------------------------------------ ------------------------------------
Six months ended Six months ended
February 28, 1999 Period ended February 28, 1999 Period ended
(Unaudited) August 31, 1998 (Unaudited) August 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period ......................... $ 11.53 $ 12.50 $ 11.52 $ 14.18
Income from Investment Operations:
Net investment income (loss) (+) .......................... 0.04 0.06 0.04 0.01
Net realized and unrealized gain (loss)
on investments and foreign currencies ................... 3.34 (1.03) 3.35 (2.67)
------- ------- ------- -------
Total income (loss) from Investment Operations ............ 3.38 (0.97) 3.39 (2.66)
------- ------- ------- -------
Less Distributions:
Dividends from net investment income ...................... (0.24) 0.00 (0.24) 0.00
Distributions from capital gains .......................... 0.00 0.00 0.00 0.00
------- ------- ------- -------
Total distributions ....................................... (0.24) 0.00 (0.24) 0.00
------- ------- ------- -------
Net increase (decrease) in net asset value from operations ... 3.14 (0.97) 3.15 (2.66)
------- ------- ------- -------
Net Asset Value, end of period ............................... $ 14.67 $ 11.53 $ 14.67 $ 11.52
======= ======= ======= =======
Total Return ................................................. 29.48%** (7.76)%** 29.59%** (18.76)%**
Ratios / Supplemental Data:
Net Assets, end of period (in 000's) ......................... $ 557 $ 289 $ 53 $ 41
Ratios to average net assets:
Net investment income (loss) including reimbursement ...... 0.60%* 0.95%* 0.60%* (0.95)%*
Operating expenses including reimbursement ................ 0.99%* 0.99%* 0.99%* 0.99%*
Portfolio Turnover Rate ...................................... 34%** 36%** 34%** 36%**
+ The operating expenses of the Fund may reflect a reduction of the Adviser fee, an allocation of expenses to the Investment
Adviser, or both. Had such actions not been taken, the ratios and net investment income (loss) per share would have been as
follows:
Net investment income (loss) ... ........................... (23.67)%* (41.18)%* (24.07)%* (41.53)%*
Operating Expenses ......................................... 25.26%* 43.12%* 25.66%* 43.47%*
Net investment income (loss) per share ..................... $ (4.34) $ (2.73) $ (1.75) $ (0.48)
</TABLE>
- ----------
* Annualized
** Not Annualized
(1) The Fund's Institutional Class commenced investment operations on December
31, 1997.
(2) The Fund commenced investment operations on December 29, 1998.
(3) The Fund commenced investment operations on January 6, 1999.
(4) The Fund's Institutional Class commenced investment operations on January
1, 1998, and, although authorized to issue such shares, the Fund's
Investor Class had not commenced investment operations as of February 28,
1999.
(5) The Fund's Institutional Class commenced investment operations on December
30, 1997.
(6) The Fund commenced investment operations on January 5, 1999.
(7) The Fund's Investor Class commenced investments operations on July 31,
1998.
(A) Represents less than $0.005 per share.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
32
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
International Small International
Core Equity Fund Cap Equity Fund Equity Fund
--------------------------------------------------------------------- ---------------------- ----------------------
Institutional Class(1) Investor Class(7) Institutional Class(6) Institutional Class(6)
---------------------------------- --------------------------------- ---------------------- ----------------------
Six months ended Six months ended Period ended Period ended
February 28, 1999 Period ended February 28, 1999 Period ended February 28, 1999 February 28, 1999
(Unaudited) August 31, 1998 (Unaudited) August 31, 1998 (Unaudited) (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 12.75 $ 12.50 $ 12.75 $ 14.75 $ 12.50 $ 12.50
0.08 0.05 0.08 0.01 0.00(A) 0.03
2.44 0.20 2.44 (2.01) 0.47 (0.10)
--------- --------- --------- --------- --------- ---------
2.52 0.25 2.52 (2.00) 0.47 (0.07)
--------- --------- --------- --------- --------- ---------
(0.08) 0.00 (0.08) 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- ---------
(0.08) 0.00 (0.08) 0.00 0.00 0.00
--------- --------- --------- --------- --------- ---------
2.44 0.25 2.44 (2.00) 0.47 (0.07)
--------- --------- --------- --------- --------- ---------
$ 15.19 $ 12.75 $ 15.19 $ 12.75 $ 12.97 $ 12.43
========= ========= ========= ========= ========= =========
19.82%** 2.00%** 19.82%** (13.56)%** 3.76%** (0.56)%**
$ 4,936 $ 1,295 $ 52 $ 43 $ 5,681 $ 4,938
1.12%* 1.18%* 1.12%* 1.18%* 0.14%* 3.14%*
0.99%* 0.99%* 0.99%* 0.99%* 1.60%* 1.45%*
8%** 46%** 8%** 46%** 37%** 0%**
(2.29)%* (16.23)%* (2.65)%* (16.58)%* (12.17)%* (8.57)%*
4.40%* 18.40%* 4.76%* 18.75%* 13.91%* 13.16%*
$ (0.16) $ (0.68) $ (0.19) $ (0.21) $ (0.10) $ (0.07)
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
33
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
NOTES TO FINANCIAL STATEMENTS
1. Organization
Undiscovered Managers Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Trust currently consists of eleven separately managed portfolios. The
accompanying financial statements and financial highlights are those of the
Funds, specifically Undiscovered Managers Behavioral Growth Fund ("Behavioral
Growth Fund"), Undiscovered Managers Behavioral Value Fund ("Behavioral Value
Fund"), Undiscovered Managers Behavioral Long/Short Fund ("Behavioral Long/Short
Fund"), Undiscovered Managers REIT Fund ("REIT Fund"), Undiscovered Managers
Special Small Cap Fund ("Special Small Cap Fund"), Undiscovered Managers Small
Cap Value Fund ("Small Cap Value Fund"), Undiscovered Managers Hidden Value Fund
("Hidden Value Fund"), Undiscovered Managers All Cap Value Fund ("All Cap Value
Fund"), Undiscovered Managers Core Equity Fund ("Core Equity Fund"), UM
International Small Cap Equity Fund ("International Small Cap Equity Fund") and
UM International Equity Fund ("International Equity Fund") each a "Fund", and
collectively, the "Funds". Each Fund is a diversified fund except for the
Special Small Cap Fund and the REIT Fund, which are non-diversified.
The Behavioral Growth, REIT, Small Cap Value, Hidden Value, All Cap Value and
Core Equity Funds are authorized to issue two classes of shares (Institutional
Class shares and Investor Class shares), while the Behavioral Value, Behavioral
Long/Short, Special Small Cap, International Small Cap Equity and International
Equity Funds are authorized to issue only Institutional Class shares. Each class
of shares represents interests in the assets of the Portfolio and has identical
voting, dividend, liquidation and other rights. Each class of shares bears its
own proportional share of fund level expenses and the Investor Class of shares
bears a service and distribution fee. The REIT Fund was authorized to issue
Investor Class Shares on December 15, 1998.
2. Significant Accounting Policies
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies consistently followed by each Fund in the
preparation of its financial statements. These policies are in conformity with
generally accepted accounting principles.
Portfolio Valuation: Domestic and foreign investments in securities which are
traded on a recognized stock exchange or on the NASDAQ National Market System
are normally valued at their last sale price on the exchange where primarily
traded or, if there is no reported sale during the day, or in the case of
over-the-counter securities not traded on a recognized stock exchange or on the
NASDAQ National Market System, at the last bid price. Short-term obligations
that mature in sixty days or less are valued at amortized cost, which
approximates market value. All other securities for which market quotations are
not readily available (including restricted securities, if any) and all other
assets are appraised at their fair value as determined in good faith under
guidelines established by the Board of Trustees, although the actual
calculations may be made by persons acting pursuant to the direction of the
Board.
Securities Sold Short: A short sale involves selling a security which the Fund
does not own. The proceeds received for short sales are recorded as liabilities
and the Fund records an unrealized gain or loss to the extent of the difference
between the proceeds received and the value of the open short position on the
day of determination. The Fund records a realized gain or loss when the short
position is closed out. By entering into a short sale, the Fund bears the market
risk of an unfavorable change in the price of the security sold short. Dividends
on short sales are recorded as an expense by the Fund on the ex-dividend date
and interest expense is recorded on the accrual basis.
Foreign Currency Translation: The books and records of each Fund are maintained
in United States (U.S.) dollars. Foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreci-
- --------------------------------------------------------------------------------
34
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
NOTES TO FINANCIAL STATEMENTS (continued)
ation/depreciation on investments and foreign currency transactions. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include foreign currency gains and losses occuring between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and dividends
recorded on the books of each Fund and the amounts actually received. The
portion of foreign currency gains and losses related to fluctuation in exchange
rates between the initial trade date and subsequent sale trade date is included
in realized gain/(loss) on investments.
Security Transactions and Investment Income: Security transactions are accounted
for on a trade date basis. Net realized gains or losses on sales of securities
are determined by the identified cost method. Interest income is recorded on the
accrual basis. Dividend income is recorded on the ex-dividend date.
Federal Income Taxes: Each Fund intends to qualify each year as a "regulated
investment company" under Sub-chapter M of the Internal Revenue Code and to
distribute substantially all of its net investment income. Accordingly, no
provisions for federal income taxes have been made in the accompanying financial
statements. The Funds intend to utilize provisions of the federal income tax
laws which allow them to carry a realized capital loss forward for eight years
following the year of the loss and offset such losses against any future
realized capital gains.
Classes: Class-specific expenses are borne by the relevant class. Income,
non-class specific expenses and realized and unrealized gains/(losses) are
allocated to the respective classes on the basis of relative net assets.
Expenses: The Trust accounts separately for the assets, liabilities, and
operations of each Fund. Expenses directly attributable to a Fund are charged to
the Fund, while expenses which are attributable to more than one Fund of the
Trust are allocated based upon the relative net assets of each Fund.
Organization Costs: The Funds have reimbursed Undiscovered Managers, LLC (the
"Adviser") for certain costs incurred in connection with the Funds'
organization. These organization costs are being amortized on a straight-line
basis over five years for the Behavioral Growth, REIT, Special Small Cap, Small
Cap Value, Hidden Value, All Cap Value and Core Equity Funds. Start-up costs for
the Behavioral Value, Behavioral Long/Short, International Small Cap Equity and
International Equity Funds will be expensed as incurred in accordance with SOP
98-5.
Repurchase Agreements: Each Fund may engage in repurchase agreement
transactions. Under a repurchase agreement, a Fund buys securities from a
seller, usually a bank or brokerage firm, with the understanding that the seller
will repurchase the securities at a higher price at a later date. If the seller
fails to repurchase the securities, the Fund has rights to sell the securities
to third parties. Repurchase agreements can be regarded as loans by the Fund to
the seller, collateralized by the securities that are the subject of the
agreement. Each repurchase agreement transaction is recorded at cost plus
accrued interest. The value of the collateral securities, including accrued
interest, is monitored daily to ensure that the value of the collateral
securities equals or exceeds the repurchase price, including accrued interest.
Repurchase agreements afford an opportunity for the Fund to earn a return on
available cash at relatively low credit risk, although the Fund may be subject
to various delays and risks of loss if the seller fails to meet its obligation
to repurchase.
3. Investment Advisory, Sub-Advisory, Administration and Other Fees
The Trust and the Adviser are parties to a management agreement on behalf of
each Fund under which the Adviser provides services for a fee, computed daily
and paid monthly, at the following annual percentage rates based on the average
daily net assets of each Fund: 0.95% for the Behavioral Growth Fund, 1.05% for
the Behavioral Value Fund, 1.55% for the Behavioral Long/Short Fund, 1.05% for
the REIT Fund, 0.65% to 1.65% (depending on the investment performance of the
Fund) for the Special Small Cap Fund, 1.05% for the Small Cap Value Fund, 0.95%
for the Hidden Value Fund, 0.74% for the All Cap Value Fund, 0.74% for the Core
Equity Fund, 1.15% for the International Small Cap Equity Fund and 0.95% for the
International Equity Fund; provided however, with respect to the Special Small
Cap Fund, prior to December 30, 1998, its annual advisory fee rate was 1.15%.
- --------------------------------------------------------------------------------
35
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
NOTES TO FINANCIAL STATEMENTS (continued)
The Adviser has voluntarily agreed, for an indefinite period, to reduce its fees
and pay the expenses of each Fund's Institutional and Investor Classes in excess
of the following annual percentage rates of the average daily net assets of such
Fund's Institutional and Investor Classes, respectively, subject to the
obligation of each class of a Fund to repay the Adviser such class's expenses in
future years, if any, when such class's expenses fall below the stated
percentage rate, but only to the extent that such repayment would not cause such
class's expenses in any such future year to exceed the stated percentage rate,
and provided that such class is not obligated to repay any such expenses more
than two years after the end of the fiscal year in which they were incurred:
1.30% and 1.65% for the Behavioral Growth Fund's Institutional Class and
Investor Class, respectively; 1.40% for the Behavioral Value Fund's
Institutional Class; 2.00% for the Behavioral Long/Short Fund's Institutional
Class; 1.40% and 1.75% for the REIT Fund's Institutional Class and Investor
Class, respectively; the sum of 0.55% plus the advisory fee rate for the Special
Small Cap Fund's Institutional Class for the year in question; 1.40% and 1.75%
for the Small Cap Value Fund's Institutional Class and Investor Class,
respectively; 1.30% and 1.65% for the Hidden Value Fund's Institutional Class
and Investor Class, respectively; 0.99% and 1.34% for the All Cap Value Fund's
Institutional Class and Investor Class, respectively, 0.99% and 1.34% for the
Core Equity Fund's Institutional Class and Investor Class, respectively; 1.60%
for the International Small Cap Equity Fund's Institutional Class and 1.45% for
the International Equity Fund's Institutional Class.
For the period ended February 28, 1999, the Adviser reduced its fees and bore
expenses pursuant to this voluntary agreement in the aggregate amounts of
$79,621, $28,011, $38,259, $45,378, $28,236, $70,885, $41,815, $51,076, $57,377,
$46,326, and $40,467 for the Behavioral Growth Fund, the Behavioral Value Fund,
the Behavioral Long/Short Fund, the REIT Fund, the Special Small Cap Fund, the
Small Cap Value Fund, the Hidden Value Fund, the All Cap Value Fund, the Core
Equity Fund, the International Small Cap Equity Fund and the International
Equity Fund, respectively. All of such amounts are subject to recoupment through
the end of the fiscal year ending August 31, 2001.
The Adviser has entered into various sub-advisory agreements pursuant to which
the Adviser shall pay each sub-adviser an annual fee at the following rates:
<TABLE>
<CAPTION>
Fee Rate as % of Fund's
Fund Sub-Adviser Average Daily Net Assets
- ---- ----------- ------------------------
<S> <C> <C>
Behavioral Growth Fund Fuller & Thaler Asset 0.60% of the first $200 million
Management, Inc. 0.55% of the next $100 million
0.50% in excess of $300 million
Behavioral Value Fund Fuller & Thaler Asset 0.70% of the first $200 million
Management, Inc. 0.65% of the next $100 million
0.60% in excess of $300 million
Behavioral Long/Short Fund Fuller & Thaler Asset 1.20% of the first $200 million
Management, Inc. 1.15% of the next $100 million
1.10% in excess of $300 million
REIT Fund Bay Isle Financial Corporation 0.70% of the first $200 million
0.65% of the next $100 million
0.60% in excess of $300 million
Special Small Cap Fund Kestrel Investment 0.30% - 1.30% of all assets*
Management Corporation
Small Cap Value Fund J.L. Kaplan Associates, LLC 0.70% of the first $200 million
0.65% of the next $100 million
0.60% in excess of $300 million
</TABLE>
* During the period from 12/29/97 through 12/29/98, there was a flat rate of
0.80%.
- --------------------------------------------------------------------------------
36
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
NOTES TO FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
Fee Rate as % of Fund's
Fund Sub-Adviser Average Daily Net Assets
- ---- ----------- ------------------------
<S> <C> <C>
Hidden Value Fund J.L. Kaplan Associates, LLC 0.60% of the first $200 million
0.55% of the next $100 million
0.50% in excess of $300 million
All Cap Value Fund E.R. Taylor Investments, Inc. 0.40% of the first $200 million
0.35% of the next $100 million
0.30% in excess of $300 million
Core Equity Fund Waite & Associates, L.L.C. 0.40% of the first $200 million
0.35% of the next $100 million
0.30% in excess of $300 million
International Small Cap Unibank Securities, Inc. 0.80% of the first $200 million
Equity Fund 0.75% of the next $100 million
0.70% in excess of $300 million
International Equity Fund Unibank Securities, Inc. 0.60% of the first $200 million
0.55% of the next $100 million
0.50% in excess of $300 million
</TABLE>
* The sub-advisory fee rate for the Special Small Cap Fund varies depending on
the investment performance of the Fund. Prior to December 30, 1998, however, the
annual fee rate for the Fund was 0.80%.
The Trust and the Adviser have entered into an Administrative Services
Agreement, pursuant to which the Adviser has agreed to provide each Fund all
administrative services. Under the Administrative Services Agreement the Adviser
is entitled to receive a fee computed and paid monthly at the annual rate of
0.25% of the average net asset value of the Trust.
The Trust has adopted a Service and Distribution Plan pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "12b-1 Plan"). Under the 12b-1
Plan, the Trust may pay fees as compensation for any or all of the following:
(i) engaging in activities or bearing expenses primarily intended to result in
the sale of Investor Class shares of the Trust, (ii) providing services relating
to the Investor Class shares of the Trust (which would be in addition to any
general services provided to a Fund as a whole) and (iii) providing additional
personal services to the Trust's Investor Class shareholders and/or for the
maintenance of Investor Class shareholder accounts. On an annual basis, the
aggregate amount of fees under the 12b-1 Plan with respect to each Fund
authorized to issue Investor Class shares will not exceed 0.35% of the Fund's
average daily net assets attributable to its Investor Class shares. The 12b-1
Plan replaced the Shareholder Servicing Plan relating to such shares previously
adopted by the Trust.
Prior to its implementation of the 12b-1 Plan, each Fund authorized to issue
Investor Class Shares, except the REIT Fund, had a Shareholder Servicing Plan
relating to such Shares. Pursuant to the Shareholder Servicing Plan, The Trust,
on behalf of the Investor Class shares of each Fund, paid to the Adviser, as the
shareholder servicing agent of the Investor Class shares of the Funds, or such
other entity as shall from time to time acted as the Shareholder Servicing Agent
of such Investor Class shares (the "Servicing Agent"), a fee (the "Shareholder
Servicing Fee") for services rendered and expenses borne by the Servicing Agent
in connection with the provision of certain services provided to Investor Class
shareholders, at an annual rate not to exceed 0.35% of a Fund's average daily
net assets attributable to such Fund's Investor Class shares. For the period
ended February 28, 1999, the Adviser voluntarily agreed to waive fees payable
under the Shareholder Servicing Plan of $45, $17, $80, $85 and $83 for the
Behavioral Growth Fund, the Small Cap Value Fund, the Hidden Value Fund, the All
Cap Value Fund and the Core Equity Fund, respectively, which constitutes all the
Shareholder Servicing Fees due to any Shareholder Servicing Agent during such
period.
- --------------------------------------------------------------------------------
37
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
NOTES TO FINANCIAL STATEMENTS (continued)
The Bank of New York is the custodian for all the Funds except for the
Behavioral Long/Short Fund, where Custodial Trust Company acts as custodian.
First Data Distributors, Inc., a wholly-owned subsidiary of Investors Services
Group and an indirect wholly-owned subsidiary of First Data Corporation, acts as
the distributor for the Funds.
4. Dividends from Net Investment Income and Distributions of Capital Gains
With respect to all Funds, dividends from net investment income are distributed
annually and net realized capital gains from investment transactions, if any,
are normally distributed to shareholders annually, but may, to the extent
permitted by law, be made more frequently as deemed advisable by the Trustees of
the Trust. Dividends and capital gain distributions are determined in accordance
with income tax requirements which may differ from generally accepted accounting
principles.
Distributions from net realized gains for book purposes may include short-term
capital gains, which are taxed as ordinary income.
5. Trustees' Compensation
Certain officers and trustees of the Funds are also officers and directors of
the Adviser. The Trust does not compensate its officers or its trustees who are
affiliated with the Adviser. Effective December 30, 1997, the Trust pays each
unaffiliated trustee an annual retainer of $10,000. Each unaffiliated Trustee
may elect not to receive such fees on a current basis but to receive in a
subsequent period an amount equal to the value that such fees would have if they
had been invested in one or more of the Funds on the normal payment date for
such fees.
6. Shares of Beneficial Interest
The Behavioral Growth, REIT, Small Cap Value, Hidden Value, All Cap Value and
Core Equity Funds each offer two classes of shares, the Institutional Class and
the Investor Class. The Behavioral Value, Behavioral Long/Short, Special Small
Cap, International Small Cap Equity and International Equity Funds offer one
class of shares, the Institutional Class. Each Fund is authorized to issue an
unlimited number of shares of beneficial interest in a class with no par value.
At February 28, 1999, Undiscovered Managers, LLC owned the following number of
shares in each Fund:
Fund Institutional Class Investor Class
- ---- ------------------- --------------
Behavioral Growth Fund 0 0
Behavioral Value Fund 8,000 N/A
Behavioral Long/Short 8,000 N/A
REIT Fund 0 0
Special Small Cap Fund 0 N/A
Small Cap Value Fund 8,043 2,868
Hidden Value Fund 0 4,208
All Cap Value Fund 4,553 3,588
Core Equity Fund 0 3,409
International Small Cap Equity 8,000 N/A
International Equity Fund 8,000 N/A
- --------------------------------------------------------------------------------
38
- --------------------------------------------------------------------------------
<PAGE>
undiscovered
managers(TM)
NOTES TO FINANCIAL STATEMENTS (continued)
7. Investment Transactions
Aggregate purchases and proceeds from sales of investment securities (other than
U.S. Government Obligations and short-term investments) for the period ended
February 28, 1999 were:
Aggregate Proceeds
Fund Purchases from Sales
- ---- --------- ----------
Behavioral Growth Fund $25,039,917 $4,572,019
Behavioral Value Fund 768,652 20,960
Behavioral Long/Short 3,214,123 172,469
REIT Fund 13,061,356 3,902,863
Special Small Cap Fund 5,890,710 1,405,220
Small Cap Value Fund 5,401,012 1,267,431
Hidden Value Fund 590,368 309,388
All Cap Value Fund 299,055 132,430
Core Equity Fund 3,375,039 226,389
International Small Cap Equity 5,903,883 656,451
International Equity Fund 4,818,470 0
The aggregate gross unrealized appreciation and depreciation and net unrealized
appreciation (depreciation) for all securities as computed on a federal income
tax basis, at February 28, 1999, for each Fund were as follows:
Fund Appreciation (Depreciation) Net
- ---- ------------ -------------- ---
Behavioral Growth Fund $5,207,788 $(775,617) $4,432,171
Behavioral Value Fund 34,946 (89,470) (54,524)
Behavioral Long/Short 385,610 (630,415) (244,805)
REIT Fund 278,123 (1,482,009) (1,203,886)
Special Small Cap Fund 1,000,014 (3,003,887) (2,003,873)
Small Cap Value Fund 1,052,608 (4,014,239) (2,961,631)
Hidden Value Fund 132,528 (344,247) (211,719)
All Cap Value Fund 78,052 (9,351) 68,701
Core Equity Fund 416,209 (103,349) 312,860
International Small Cap Equity 138,675 (249,203) (110,528)
International Equity 86,578 (249,740) (163,162)
8. Special Meeting of Shareholders (Unaudited)
A special meeting of Investor Class shareholders of the following funds was held
on January 29, 1999, to vote on the adoption of a 12b-1 Service and Distribution
Plan, which replaced the existing Shareholder Servicing Plan relating to such
shares. The results were as follows:
Fund Votes for Votes Against
- ---- --------- -------------
Behavioral Growth Fund 51,603 0
Small Cap Value Fund 2,868 0
Hidden Value Fund 4,208 0
Core Equity Fund 3,409 0
All Cap Value Fund 3,588 0
- --------------------------------------------------------------------------------
39
- --------------------------------------------------------------------------------
<PAGE>
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<PAGE>
HOW TO REACH
undiscovered
managers(TM)
----------------------------------------------------------------------
BY PHONE
CLIENT SERVICES,
GENERAL INFORMATION OR
TO OBTAIN A PROSPECTUS .................. (888) 242-3514 (TOLL-FREE)
A REGISTERED REPRESENTATIVE OF UNDISCOVERED MANAGERS CAN BE
REACHED FROM 7:30 AM - 7:00 PM CT
----------------------------------------------------------------------
BY FAX ............................................... (214) 999-7201
BY MAIL ................................. 700 NORTH PEARL, SUITE 1700
DALLAS, TX 75201
----------------------------------------------------------------------
BY E-MAIL [email protected]
----------------------------------------------------------------------
WWW.UNDISCOVEREDMANAGERS.COM
- --------------------------------------------------------------------------------
<PAGE>
[GRAPHIC] UNDISCOVERED MANAGERS
700 NORTH PEARL STREET
SUITE 1700
DALLAS TEXAS 75201
(888) 2424-3514
WWW.UNDISCOVEREDMANAGERS.COM
May 3, 1999
VIA EDGAR
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Attention: Office of Filings, Information & Consumer Services
RE: Undiscovered Managers Funds (the "Trust")
File Nos. 333-37711 and 811-8437
Dear Sir or Madam:
Pursuant to Rule 30b2-1 of the Investment Company Act of
1940, as amended, we are transmitting for filing, via Edgar one
(1) copy of the Semi-Annual Report to Shareholders on behalf of
the Trust for the period ended February 28, 1999.
Please acknowledge receipt of this transmission via CompuServe,
Mailbox Number 74313, 402.
Sincerely,
/s/Edward Espinosa
Edward Espinosa
Cc: Greg Davis
Sophia Dowl
Julie Tedesco
