SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c)
or Rule 14a-12
</TABLE>
Undiscovered Managers Funds
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[ ] Fee computed on a table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
UNDISCOVERED MANAGERS FUNDS
Undiscovered Managers Behavioral Growth Fund
Undiscovered Managers Small Cap Value Fund
Undiscovered Managers Hidden Value Fund
Undiscovered Managers Core Equity Fund
Undiscovered Managers All Cap Value Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
January 29, 1999
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of the
Investor Class shares of Undiscovered Managers Behavioral Growth Fund,
Undiscovered Managers Small Cap Value Fund, Undiscovered Managers Hidden Value
Fund, Undiscovered Managers Core Equity Fund and Undiscovered Managers All Cap
Value Fund (the "Funds"), each a series of Undiscovered Managers Funds (the
"Trust"), will be held at the offices of Undiscovered Managers, LLC, Plaza of
the Americas, 700 North Pearl Street, 16th Floor, Dallas, Texas 75201, on
January 29, 1999 at 10:00 a.m., Dallas time, for the following purposes:
1. To approve or disapprove a proposed Service and Distribution Plan
relating to the Investor Class shares of each Fund.
2. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
By order of the Trustees of the Trust,
MARY CHRIS SAYRE, Secretary
January 19, 1999
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
- --------------------------------------------------------------------------------
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED
PROXY PROMPTLY IN THE ENCLOSED POSTAGE-
PAID ENVELOPE WHETHER OR NOT YOU PLAN TO BE PRESENT
AT THE MEETING. YOU MAY STILL VOTE IN PERSON IF YOU
ATTEND THE MEETING.
<PAGE>
UNDISCOVERED MANAGERS FUNDS
Undiscovered Managers Behavioral Growth Fund
Undiscovered Managers Small Cap Value Fund
Undiscovered Managers Hidden Value Fund
Undiscovered Managers Core Equity Fund
Undiscovered Managers All Cap Value Fund
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of Undiscovered Managers Funds (the "Trust")
for use at the Special Meeting of Shareholders of the Investor Class shares of
Undiscovered Managers Behavioral Growth Fund, Undiscovered Managers Small Cap
Value Fund, Undiscovered Managers Hidden Value Fund, Undiscovered Managers Core
Equity Fund and Undiscovered Managers All Cap Value Fund (each a "Fund" and
collectively, the "Funds"), each a series of the Trust, to be held at the
offices of Undiscovered Managers, LLC ("Undiscovered Managers"), Plaza of the
Americas, 700 North Pearl Street, 16th Floor, Dallas, Texas 75201, on January
29, 1999 at 10:00 a.m., Dallas time, and at any adjournment or adjournments
thereof (the "Meeting"). This proxy statement and its enclosures are being
mailed to Investor Class shareholders of the Funds beginning on or about January
20, 1999. A copy of the Trust's Annual Report for the fiscal year ended August
31, 1998 may be obtained without charge by writing to Undiscovered Managers at
the above address or by calling 1-888-242-3514.
I. GENERAL
Each Fund's Investor Class shareholders of record on December 31, 1998, the
record date for determining shareholders entitled to vote at the Meeting (the
"Record Date"), are entitled to one vote for each whole Investor Class share of
beneficial interest (and a proportionate fractional vote for each fractional
Investor Class share) of the Fund held as of that date. The number of Investor
Class shares of the Funds issued and outstanding as of the Record Date was as
follows:
<TABLE>
<CAPTION>
Number of
Fund Shares Outstanding
---- ------------------
<S> <C>
Undiscovered Managers Behavioral Growth Fund 51,603
Undiscovered Managers Small Cap Value Fund 3,724
Undiscovered Managers Hidden Value Fund 4,208
Undiscovered Managers Core Equity Fund 3,409
Undiscovered Managers All Cap Value Fund 3,588
</TABLE>
- 1 -
<PAGE>
Timely, properly executed proxies will be voted as you instruct. If you
return your proxy card and no choice is indicated, your shares will be voted in
favor of the proposal set forth in the attached Notice of Special Meeting of
Shareholders. At any time before it has been voted, the enclosed proxy may be
revoked by the signer by (i) a written revocation received by the Secretary of
the Trust, (ii) properly executing a later-dated proxy or (iii) attending the
Meeting, requesting return of any previously delivered proxy and voting in
person.
The costs of solicitation of proxies will be borne by the Investor Class
shares of the Funds. Solicitation of proxies by personal interview, mail,
telephone and telegraph may be made by officers and Trustees of the Trust and
employees of the Funds' adviser, Undiscovered Managers, or First Data
Distributors, Inc., the Funds' principal underwriter. The address of First Data
Distributors, Inc., is 4400 Computer Drive, Westborough, Massachusetts 01581.
II. PROPOSED SERVICE AND DISTRIBUTION PLAN
At the Meeting, it is proposed that the Investor Class shareholders of each
Fund approve a Service and Distribution Plan of the Investor Class shares of the
Trust (the "Service and Distribution Plan") as it relates to that Fund. Proposal
1 in the Notice of Special Meeting of Shareholders (the "Proposal") relates to
the approval or disapproval of the Service and Distribution Plan.
The Service and Distribution Plan has been approved by the Trustees of the
Trust pursuant to Rule 12b-1 of the Investment Company Act of 1940, as amended
(the "1940 Act"), and, if approved by the Investor Class shareholders of a Fund,
would replace the Shareholder Servicing Plan of the Investor Class shares of the
Trust (the "Shareholder Servicing Plan") as it relates to that Fund. The Service
and Distribution Plan is similar to the Shareholder Servicing Plan in that both
plans permit the Trust to pay fees as compensation for shareholder services
relating to the Investor Class shares of the Trust (which shareholder services
are in addition to the general services provided to a Fund as a whole). However,
unlike the Shareholder Servicing Plan, the Service and Distribution Plan also
permits the Trust to pay fees as compensation for (i) activities and/or expenses
primarily intended to result in the sale of Investor Class shares of the Trust
and (ii) additional personal services to the Trust's Investor Class shareholders
and/or for the maintenance of Investor Class shareholder accounts. Both the
Service and Distribution Plan and the Shareholder Servicing Plan authorize a
Fund to pay on an annual basis up to 0.35% of the Fund's average daily net
assets attributable to its Investor Class shares as fees for services rendered
and expenses borne under such plans. At a meeting held on December 15, 1998, the
Trustees of the Trust, including all of the trustees who are not interested
persons of the Trust (as defined in the 1940 Act), and have no direct or
indirect financial interest in the operation of the Service and Distribution
Plan or any agreements related to it (the "Independent Trustees"), unanimously
approved the Service and Distribution Plan. The Trustees of the Trust recommend
that the Investor Class shareholders of each Fund approve the Service and
Distribution Plan. Approval
- 2 -
<PAGE>
of the Service and Distribution Plan by the Investor Class shareholders of a
Fund will result in the termination of the Shareholder Servicing Plan as it
relates to that Fund.
Current Shareholder Servicing Plan
The Shareholder Servicing Plan was originally adopted on July 9, 1998, by
the Trustees of the Trust. Under the Shareholder Servicing Plan, the Trust, on
behalf of the Investor Class shares of each Fund, pays to Undiscovered Managers
as the shareholder servicing agent of the Investor Class shares of the Funds, or
such other entity as shall from time to time act 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 to Investor
Class shareholders, at an annual rate not to exceed 0.35% of a Fund's average
daily net assets attributable to Investor Class shares. Such services are in
addition to any such general services provided to a Fund as a whole and may
include: (i) transfer agent and sub-transfer agent services for beneficial
owners of Investor Class shares, (ii) aggregating and processing purchase and
redemption orders for Investor Class shareholders, (iii) providing beneficial
owners of Investor Class shares who are not record owners with statements
showing their positions in the Fund, (iv) processing dividend payments for
Investor Class shares, (v) providing sub-accounting services for Investor Class
shares held beneficially, (vi) forwarding shareholder communications, such as
proxies, shareholder reports, dividend and tax notices, and updating
prospectuses to beneficial owners of Investor Class shares who are not record
owners and (vii) receiving, tabulating and transmitting proxies executed by
beneficial owners of Investor Class shares who are not record owners.
Under the Shareholder Servicing Plan, the Shareholder Servicing Fee rate is
to be approved from time to time by the Trustees of the Trust, subject to the
0.35% maximum fee rate. The Shareholder Servicing Fee is to be computed and paid
monthly or at such other intervals as the Trustees of the Trust will determine.
Under the Shareholder Servicing Plan, the Servicing Agent may pay all or any
portion of the Shareholder Servicing Fee to shareholder servicing agents or
other organizations (including, but not limited to, any affiliate of the
Servicing Agent) as shareholder servicing fees pursuant to agreements with such
organizations for providing all or any portion of the services under the
Shareholder Servicing Plan, and may retain all or any portion of the Shareholder
Servicing Fee as compensation for providing such shareholder services.
During the Funds' fiscal year ended August 31, 1998, none of the Funds paid
any amounts to Undiscovered Managers or any other entity under the Shareholder
Servicing Plan.
Proposed Service and Distribution Plan
The Trustees of the Trust have determined that it would be appropriate for
the Funds to adopt a Service and Distribution Plan for the Investor Class shares
of the Trust. In
- 3 -
<PAGE>
determining to recommend the Service and Distribution Plan for shareholder
approval, the Trustees considered, among other things, the different possible
arrangements for, as well as the cost associated with, providing distribution
services, shareholder services and account maintenance services. The Trustees of
the Trust believe that the Service and Distribution Plan will provide benefits
to each Fund. The Trustees of the Trust believe that the Service and
Distribution Plan is likely to result in greater sales and/or fewer redemptions
of the Trust's Investor Class shares, and thus higher asset levels in the Funds,
although it is impossible to know for certain the level of sales and redemptions
of the Trust's Investor Class shares that would occur in the absence of the
Service and Distribution Plan or under alternative distribution arrangements.
The Trustees of the Trust believe that higher asset levels could benefit the
Funds by reducing Fund expense ratios and/or by affording greater investment
flexibility to the Funds. With respect to each Fund, the Service and
Distribution Plan authorizes the Trust to pay on an annual basis up to 0.35% of
the Fund's average daily net assets attributable to its Investor Class shares as
fees for services rendered and expenses borne under the plan. Such percentage is
no greater than the maximum percentage currently authorized to be paid under the
Shareholder Servicing Plan.
Under the Service and Distribution Plan, the Trust would be authorized to
pay to First Data Distributors, Inc., or any successor principal underwriter of
the Trust (the "Distributor"), or to one or more other persons or entities
(which may but need not be affiliated with the Trust or any of its investment
advisers or other service providers), pursuant to agreements executed on behalf
of the Trust by one or more officers of the Trust or by the Distributor, fees
("Service and Distribution Fees") for services rendered and expenses borne in
connection with the provision of shareholder services, account maintenance
services and/or distribution services with respect to Investor Class shares of
the Trust.
Under the Service and Distribution Plan, the Service and Distribution Fees
may be paid as compensation for activities and/or expenses primarily intended to
result in the sale of Investor Class shares of the Trust, including, but not
limited to (i) compensation to, and expenses (including overhead and telephone
expenses) of, financial consultants or the distributor of the Trust or of
participating or introducing brokers who engage in distribution of Investor
Class shares, printing of prospectuses and reports for other than existing
shareholders of a Fund, advertising and preparation, printing and distribution
of sales literature and (ii) compensation to, and expenses (including telephone
and overhead expenses) of, financial consultants or the distributor of the Trust
or of participating or introducing brokers, banks and other financial
intermediaries who aid in the processing of purchase or redemption requests for
Investor Class shares or the processing of dividend payments with respect to
Investor Class shares, who provide information periodically to shareholders
showing their positions in a Fund's Investor Class shares, who forward
communications from the Trust to Investor shareholders, who render ongoing
advice concerning the suitability of particular investment opportunities offered
by the Trust in light of the shareholder's needs, who respond to inquiries from
Investor Class shareholders relating to such services, or who train personnel in
the provision of such services.
- 4 -
<PAGE>
The Service and Distribution Fees may also be paid as compensation for
shareholder services relating to the Investor Class shares of the Trust. These
services, which would be in addition to any such general services provided to a
Fund as a whole, may include: (i) transfer agent and sub-transfer agent services
for beneficial owners of Investor Class shares, (ii) aggregating and processing
purchase and redemption orders for Investor Class shareholders, (iii) providing
beneficial owners of Investor Class shares who are not record owners with
statements showing their positions in the Fund, (iv) processing dividend
payments for Investor Class shares, (v) providing sub-accounting services for
Investor Class shares held beneficially, (vi) forwarding shareholder
communications, such as proxies, shareholder reports, dividend and tax notices,
and updating prospectuses to beneficial owners of Investor Class shares who are
not record owners and (vii) receiving, tabulating and transmitting proxies
executed by beneficial owners of Investor Class shares who are not record
owners.
In addition, under the Service and Distribution Plan, the Service and
Distribution Fees may be paid as compensation for additional personal services
to the Trust's Investor Class shareholders and/or for the maintenance of
Investor Class shareholder accounts, provided that the Service and Distribution
Fees paid for these particular services will not exceed, on an annual basis,
0.25% of the average daily net assets attributable to the Investor Class shares
of any Fund.
If approved, the Service and Distribution Plan will continue in effect for
a period of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually by votes of the majority
of both (a) the Trustees of the Trust and (b) the Independent Trustees of the
Trust cast in person at a meeting called for the purpose of voting on
continuance of the Service and Distribution Plan.
Under the Service and Distribution Plan or any related agreement, any
person authorized to direct the disposition of monies paid or payable by the
Trust will be required to provide to the Trustees of the Trust, and the Trustees
will review, at least quarterly, a written report of the amounts so expended and
the purposes for which such expenditures were made.
The Service and Distribution Plan may be terminated at any time as to any
Fund by vote of a majority of the Independent Trustees, or by vote of a majority
of the outstanding Investor Class voting securities of that Fund (as defined in
the 1940 Act).
Under the Service and Distribution Plan, all agreements with any person
relating to implementation of the Service and Distribution Plan with respect to
any Fund will be in writing, and any agreement related to the Service and
Distribution Plan with respect to any Fund will provide (a) that such agreement
may be terminated at any time, without payment of any penalty, by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding Investor Class voting securities of the Fund (as defined in the 1940
Act), on not more than 60 days' written notice to any other party to the
agreement and (b) that such agreement shall terminate automatically in the event
of its assignment.
- 5 -
<PAGE>
Any change in the Service and Distribution Plan that would materially
increase the cost to the Investors Class shares of a Fund to which the Service
and Distribution Plan relates requires approval by the Investor Class
shareholders of that Fund. All material amendments to the Service and
Distribution Plan requires a vote of the Trustees of the Trust, including a
majority of the Independent Trustees, cast in person at a meeting called for
such purpose.
The foregoing discussion of the Service and Distribution Plan is qualified
in its entirety by the full text of the form of the Service and Distribution
Plan attached as Appendix A to this Proxy Statement.
Mark Hurley, the President and a Trustee of the Trust, and Mary Chris
Sayre, the Secretary of the Trust, may indirectly receive fees for services
rendered and expenses borne by Undiscovered Managers under the Service and
Distribution Plan through their affiliations with Undiscovered Managers.
Comparison of the Current and Proposed Arrangements
The major differences between the proposed Service and Distribution Plan
and the Shareholder Servicing Plan include:
o The Shareholder Servicing Plan authorizes the Trust, on behalf of the
Investor Class shares of each Fund, to pay fees only for services
rendered and expenses borne in connection with the provision of
shareholder services relating to a Fund's Investor Class shares (which
are in addition to any general services provided to the Fund as a
whole), but the Service and Distribution Plan authorizes the Trust, on
behalf of the Investor Class shares of each Fund, to pay fees for
services rendered and expenses borne in connection with the provision
of any or all of (i) activities or expenses primarily intended to
result in the sale of Investor Class shares, (ii) shareholder services
relating to a Fund's Investor Class shares (which are in addition to
any general services provided to the Fund as a whole) and (iii)
personal services to the Trust's Investor Class shareholders and/or
for the maintenance of Investor Class shareholder accounts;
o Under the Service and Distribution Plan, the Trustees of the Trust are
to review, at least quarterly, a written report of the amounts
expended under the plan and the purposes for which such expenditures
were made; and
o The Service and Distribution Plan may be terminated at any time as to
any Fund by vote of a majority of the outstanding Investor Class
voting securities of that Fund (as defined in the 1940 Act).
- 6 -
<PAGE>
Both the Service and Distribution Plan and the Shareholder Servicing Plan
authorize a Fund to pay on an annual basis up to 0.35% of the Fund's average
daily net assets attributable to its Investor Class shares as fees under such
plans.
III. ADDITIONAL INFORMATION
Information About the Trust
The Trust is a diversified, open-end management investment company
organized in 1997 as a business trust under the laws of Massachusetts. The Trust
is a series type company with eleven investment portfolios. The Funds are five
of those portfolios. The address of the Trust is Plaza of the Americas, 700
North Pearl Street, Dallas, Texas 75201.
Information About the Adviser, Sub-Advisers and Administrator
Undiscovered Managers is the investment adviser and administrator of each
of the Funds. Each Fund's investment portfolio is managed on a day-to-day basis
by the Fund's sub-adviser, under the general oversight of Undiscovered Managers
and the Board of Trustees of the Trust. The address of Undiscovered Managers is
Plaza of the Americas, 700 North Pearl Street, Dallas, Texas 75201. Fuller &
Thaler Asset Management, Inc., 411 Borel Avenue, Suite 402, San Mateo,
California 94402, is the sub-adviser to Undiscovered Managers Behavioral Growth
Fund. J.L. Kaplan Associates, LLC, 222 Berkeley Street, Suite 2010, Boston,
Massachusetts 02116, is the sub-adviser to both Undiscovered Managers Small Cap
Value Fund and Undiscovered Managers Hidden Value Fund. Waite & Associates,
L.L.C., 601 South Figueroa Street, Los Angeles, California 90017, is the
sub-adviser to Undiscovered Managers Core Equity Fund. E.R. Taylor Investments,
Inc., 46 South Main Street, Suite 4, Concord, New Hampshire 03301, is the
sub-adviser to Undiscovered Managers All Cap Value Fund.
Undiscovered Managers has contracted with First Data Investor Services
Group, Inc., to provide sub-administration services for the Funds. The address
of First Data Investor Services Group, Inc., is 4400 Computer Drive,
Westborough, Massachusetts 01581.
Certain Trustees and Officers of the Trust
Mark Hurley is a Trustee and the President of the Trust as well as the
President and Chief Executive Officer and a controlling member of Undiscovered
Managers. Mary Chris Sayre is the Secretary of the Trust as well as an employee
of Undiscovered Managers. Mary Chris Sayre also holds certain non-voting
interests in Undiscovered Managers.
- 7 -
<PAGE>
Shareholders as of the Record Date
As of the Record Date, the following persons owned of record or
beneficially the following numbers of shares of Investor Class shares of the
Funds, representing the indicated percentage of the outstanding shares of the
Investor Class shares of the Funds:
<TABLE>
<CAPTION>
Number of Percentage of
Fund Shareholder Shares Owned Investor Class Shares
- ---- ----------- ------------ ---------------------
<S> <C> <C> <C>
Undiscovered Managers Dain Rauscher Inc. FBO 24,131.274 46.7635%
Behavioral Growth Fund Washington Law School Foundation
Attn: Judi Christianson
1100 NE Campus Parkway
Seattle, WA 98105
Dain Rauscher Inc. FBO 9,410.289 18.2360%
Michael G. King
Elizabeth W. King
Long Term Account
JT Ten/WROS
14800 164th Place NE
Woodinville, WA 98072
Dain Rauscher Inc. FBO 7,717.042 14.9547%
J. Michael Blackwell
Premier Asset Mgmt Plus
P.O. Box 22176
Juneau, AK 99802
Dain Rauscher Inc. FBO 3,136.763 6.0787%
Michael G. King
Elizabeth W. King
JT Ten/WROS
K Account
14800 164th Place NE
Woodinville, WA 98072
Dain Rauscher Inc. FBO 3,136.763 6.0787%
Ward Beattie
Long Term Account
1526 East Interlaken Blvd.
Seattle, WA 98112
</TABLE>
- 8 -
<PAGE>
<TABLE>
<CAPTION>
Number of Percentage of
Fund Shareholder Shares Owned Investor Class Shares
- ---- ----------- ------------ ---------------------
<S> <C> <C> <C>
Undiscovered Managers Undiscovered Managers, LLC 2,867.751 77.0163%
Small Cap Value Fund 700 North Pearl Street
Dallas, Texas 75201
Marion William Blair 855.811 22.9837%
Analee Blair JTWROS
P.O. Box 170938
Irving, Texas 75017
Undiscovered Managers Undiscovered Managers, LLC 4,207.977 100%
Hidden Value Fund 700 North Pearl Street
Dallas, Texas 75201
Undiscovered Managers Undiscovered Managers, LLC 3,409.195 100%
Core Equity Fund 700 North Pearl Street
Dallas, Texas 75201
Undiscovered Managers Undiscovered Managers, LLC 3,588.349 100%
All Cap Value Fund 700 North Pearl Street
Dallas, Texas 75201
</TABLE>
Except for any amounts that could be attributed to Mark Hurley through his
ownership of a controlling interest in Undiscovered Managers, as of the Record
Date, the officers and Trustees of the Trust owned beneficially none of the
outstanding Investor Class shares of any of the Funds.
Trustee Action; Required Shareholder Vote
At a meeting held on December 15, 1998, the Trustees of the Trust voted
unanimously to approve the Service and Distribution Plan and to terminate the
Shareholder Servicing Plan with respect to a Fund, effective at such time as the
Service and Distribution Plan becomes effective with respect to such Fund. If
the Investor Class shareholders of a Fund approve the Service and Distribution
Plan at the Special Meeting of Shareholders, the Service and Distribution Plan
will become effective with respect to such Fund on or about such date.
The required vote for approval of the Service and Distribution Plan with
respect to a Fund is the lesser of (1) 67% of the Investor Class shares of the
Fund represented at the Meeting if more than 50% of the Investor Class shares of
the Fund are represented at the Meeting, or (2) more than 50% of the outstanding
Investor Class shares of the Fund. If shareholders of a Fund do not approve the
Service and Distribution Plan, the Shareholder Servicing Plan will remain in
effect with respect to such Fund.
The Trustees of the Trust unanimously recommend that shareholders vote to
approve the proposed Service and Distribution Plan.
- 9 -
<PAGE>
Other Matters
Forty percent (40%) of the Investor Class shares of each Fund outstanding
on the Record Date, present in person or represented by proxy, constitutes a
quorum with respect to such Fund for the transaction of business at the Meeting.
Votes cast by proxy or in person at the Meeting will be counted by persons
appointed by the Trust as tellers for the Meeting. The tellers will count the
total number of votes cast "for" approval of the Proposal for purposes of
determining whether sufficient affirmative votes have been cast. The tellers
will count all shares represented by proxies that reflect abstentions and
"broker non-votes" (i.e., shares held by brokers or nominees as to which
instructions have not been received from the beneficial owners or the persons
entitled to vote) for purposes of determining the presence of a quorum. Assuming
the presence or a quorum for a Fund, abstentions and broker non-votes have the
effect of a negative vote on the Proposal.
With respect to any Fund, in the event that a quorum is not present for
purposes of acting on the Proposal, or if sufficient votes in favor of the
Proposal are not received by January 29, 1999, the persons named as proxies may
vote on those matters for which a quorum is present and as to which sufficient
votes have been received and may propose one or more adjournments of the Meeting
with respect to such Fund to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of the shares
present in person or represented by proxy at the session of the Meeting to be
adjourned. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of the Proposal. They
will vote against any such adjournment those proxies required to be voted
against the Proposal and will not vote any proxies that direct them to abstain
from voting on such Proposal.
Although the Meeting is called to transact any other business that may
properly come before it, the only business that management intends to present or
knows that others will present is the Proposal mentioned in the Notice of
Special Meeting of Shareholders. However, you are being asked on the enclosed
proxy to authorize the persons named therein to vote in accordance with their
judgment with respect to any additional matters which properly come before the
Meeting, and on all matters incidental to the conduct of the Meeting.
Shareholder Proposals at Future Meetings
The Funds do not hold annual or other regular meetings of shareholders.
Shareholder proposals to be presented at any future meeting of shareholders of
the Funds must be received by the Trust at a reasonable time before the Trust's
solicitation of proxies for that meeting in order for such proposals to be
considered for inclusion in the proxy materials relating to that meeting.
January 19, 1999
- 10 -
<PAGE>
APPENDIX A
UNDISCOVERED MANAGERS FUNDS
Service and Distribution Plan (Investor Class Shares)
(Effective as of __________, 1999)
This Plan (the "Plan"), as amended from time to time, constitutes the
Service and Distribution Plan with respect to the Investor Class shares of
UNDISCOVERED MANAGERS FUNDS, a Massachusetts business trust (the "Trust").
Section 1. This Plan authorizes the Trust to pay to First Data
Distributors, Inc., or any successor principal underwriter of the Trust (the
"Distributor"), or to one or more other persons or entities (which may but need
not be affiliated with the Trust or any of its investment advisers or other
service providers), pursuant to agreements executed on behalf of the Trust by
one or more officers of the Trust or by the Distributor, fees ("Fees") for
services rendered and expenses borne in connection with the provision of
shareholder services, account maintenance services or distribution services with
respect to Investor Class shares of the Trust. On an annual basis, the aggregate
amount of Fees with respect to each fund (series) of the Trust (each, a "Fund")
shall not exceed 0.35% of the Fund's average daily net assets attributable to
its Investor Class shares, if any.
Section 2. The Fees may be paid as compensation for any or all of the
following:
(a) activities or expenses primarily intended to result in the sale of
Investor Class shares of the Trust, including, but not limited to (i)
compensation to, and expenses (including overhead and telephone expenses)
of, financial consultants or the distributor of the Trust or of
participating or introducing brokers who engage in distribution of Investor
Class shares, printing of prospectuses and reports for other than existing
shareholders of a Fund, advertising and preparation, printing and
distribution of sales literature and (ii) compensation to, and expenses
(including telephone and overhead expenses) of, financial consultants or
the distributor of the Trust or of participating or introducing brokers,
banks and other financial intermediaries who aid in the processing of
purchase or redemption requests for Investor Class shares or the processing
of dividend payments with respect to Investor Class shares, who provide
information periodically to shareholders showing their positions in a
Fund's Investor Class shares, who forward communications from the Trust to
Investor shareholders, who render ongoing advice concerning the suitability
of particular investment opportunities offered by the Trust in light of the
shareholder's needs, who respond to inquiries from Investor
<PAGE>
Class shareholders relating to such services, or who train personnel in the
provision of such services;
(b) services relating to the Investor Class shares of the Trust, which may
include (and are in addition to any such general services provided to a
Fund as a whole): (i) transfer agent and sub-transfer agent services for
beneficial owners of Investor Class shares, (ii) aggregating and processing
purchase and redemption orders for Investor Class shareholders, (iii)
providing beneficial owners of Investor Class shares who are not record
owners with statements showing their positions in the Fund, (iv) processing
dividend payments for Investor Class shares, (v) providing sub-accounting
services for Investor Class shares held beneficially, (vi) forwarding
shareholder communications, such as proxies, shareholder reports, dividend
and tax notices, and updating prospectuses to beneficial owners of Investor
Class shares who are not record owners and (vii) receiving, tabulating and
transmitting proxies executed by beneficial owners of Investor Class shares
who are not record owners; and
(c) additional personal services to the Trust's Investor Class shareholders
and/or for the maintenance of Investor Class shareholder accounts, provided
that the Fees paid pursuant to this sub-paragraph (c) shall not exceed, on
an annual basis, 0.25% of the average daily net assets attributable to the
Investor Class shares of any Fund.
Section 3. This Plan shall not take effect with respect to any Fund of the
Trust until it has been approved by a vote of at least a majority of the
outstanding Investor Class voting securities of that Fund, unless this Plan is
adopted prior to any public offering of the Investor Class voting securities of
that Fund or the sale of such securities to persons who are not affiliated
persons of that Fund, affiliated persons of such persons, promoters of that
Fund, or affiliated persons of such promoters. This Plan shall be deemed to have
been effectively approved with respect to any Fund if a majority of the
outstanding Investor Class voting securities of that Fund votes for the approval
of this Plan, notwithstanding that this Plan has not been approved by a majority
of the outstanding Investor Class voting securities of any other Fund or that
this Plan has not been approved by a majority of the outstanding voting
securities of that Fund or the Trust as a whole.
Section 4. This Plan shall not take effect until it has been approved,
together with any related agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be required by Section 12(b) of the
Investment Company Act of 1940, as amended (the "Act"), or the rules and
regulations thereunder), of both (a) the Trustees of the Trust, and (b) the
Independent Trustees of the Trust cast in person at a meeting called for the
purpose of voting on this Plan or such agreement.
Section 5. This Plan shall continue in effect for a period of more than one
year after it takes effect only so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
Section 4.
- 2 -
<PAGE>
Section 6. Any person authorized to direct the disposition of monies
paid or payable by the Trust pursuant to this Plan or any related agreement
shall provide to the Trustees of the Trust, and the Trustees shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
Section 7. This Plan may be terminated at any time as to any Fund by vote
of a majority of the Independent Trustees, or by vote of a majority of the
outstanding Investor Class voting securities of that Fund.
Section 8. All agreements with any person relating to implementation of
this Plan with respect to any Fund shall be in writing, and any agreement
related to this Plan with respect to any Fund shall provide:
A. That such agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Independent Trustees or by
vote of a majority of the outstanding Investor Class voting securities
of the Fund, on not more than 60 days' written notice to any other
party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
Section 9. This Plan may not be amended to increase materially the
aggregate amount of Fees permitted pursuant to Section 1 hereof without approval
in the manner provided in Section 3 hereof, and all material amendments to this
Plan shall be approved in the manner provided for approval of this Plan in
Section 4 hereof.
Section 10. As used in this Plan, (a) the term "Independent Trustees" shall
mean those Trustees of the Trust who are not interested persons of the Trust,
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it and (b) the terms "assignment," "interested
person" and "majority of the outstanding voting securities" shall have the
respective meanings specified in the Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission.
Dated: ______________, 1999
- 3 -
<PAGE>
INSTRUCTION FORM
THE PROXY TO WHICH THESE INSTRUCTIONS RELATE IS SOLICITED ON
BEHALF OF THE TRUSTEES OF UNDISCOVERED MANAGERS FUNDS
Please vote on the reverse side of this form and sign in the space provided.
Return your completed proxy in the enclosed envelope today.
You may receive additional proxies for other accounts. These are not duplicates;
you should sign and return each proxy card in order for your votes to be
counted. Please return them as soon as possible to avoid additional mailings.
NOTE: Please sign exactly as your name appears on this card. All joint owners
should sign. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, sign in the partnership name.
The undersigned hereby appoints Mark Hurley, June Stroh and Mary Chris Sayre,
and each of them, proxies, with power of substitution to each, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the Investor Class shares of Undiscovered Managers
Behavioral Growth Fund on January 29, 1999, at 10:00 a.m., Dallas time, and at
any adjournments thereof, all of the Investor Class shares of Undiscovered
Managers Behavioral Growth Fund which the undersigned would be entitled to vote
if personally present.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR the proposal.
<PAGE>
|X| PLEASE MARK VOTE LIKE THIS
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting. The Trustees recommend a vote FOR the
proposal below:
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
1. Proposal to approve Service and |_| |_| |_|
Distribution Plan relating to the
Investor Class shares of
Undiscovered Managers Behavioral
Growth Fund.
</TABLE>
Please be sure to sign and date this Proxy.
|-------------|
| Date |
| |
|------------------------------------------------------------------|
| |
| Shareholder sign here Co-owner sign here |
|------------------------------------------------------------------|
<PAGE>
INSTRUCTION FORM
THE PROXY TO WHICH THESE INSTRUCTIONS RELATE IS SOLICITED ON
BEHALF OF THE TRUSTEES OF UNDISCOVERED MANAGERS FUNDS
Please vote on the reverse side of this form and sign in the space provided.
Return your completed proxy in the enclosed envelope today.
You may receive additional proxies for other accounts. These are not duplicates;
you should sign and return each proxy card in order for your votes to be
counted. Please return them as soon as possible to avoid additional mailings.
NOTE: Please sign exactly as your name appears on this card. All joint owners
should sign. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, sign in the partnership name.
The undersigned hereby appoints Mark Hurley, June Stroh and Mary Chris Sayre,
and each of them, proxies, with power of substitution to each, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the Investor Class shares of Undiscovered Managers
Small Cap Value Fund on January 29, 1999, at 10:00 a.m., Dallas time, and at any
adjournments thereof, all of the Investor Class shares of Undiscovered Managers
Small Cap Value Fund which the undersigned would be entitled to vote if
personally present.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR the proposal.
<PAGE>
|X| PLEASE MARK VOTE LIKE THIS
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting. The Trustees recommend a vote FOR the
proposal below:
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
1. Proposal to approve Service and |_| |_| |_|
Distribution Plan relating to the
Investor Class shares of
Undiscovered Managers Small Cap
Value Fund.
</TABLE>
Please be sure to sign and date this Proxy.
|-------------|
| Date |
| |
|------------------------------------------------------------------|
| |
| Shareholder sign here Co-owner sign here |
|------------------------------------------------------------------|
<PAGE>
INSTRUCTION FORM
THE PROXY TO WHICH THESE INSTRUCTIONS RELATE IS SOLICITED ON
BEHALF OF THE TRUSTEES OF UNDISCOVERED MANAGERS FUNDS
Please vote on the reverse side of this form and sign in the space provided.
Return your completed proxy in the enclosed envelope today.
You may receive additional proxies for other accounts. These are not duplicates;
you should sign and return each proxy card in order for your votes to be
counted. Please return them as soon as possible to avoid additional mailings.
NOTE: Please sign exactly as your name appears on this card. All joint owners
should sign. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, sign in the partnership name.
The undersigned hereby appoints Mark Hurley, June Stroh and Mary Chris Sayre,
and each of them, proxies, with power of substitution to each, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the Investor Class shares of Undiscovered Managers
Hidden Value Fund on January 29, 1999, at 10:00 a.m., Dallas time, and at any
adjournments thereof, all of the Investor Class shares of Undiscovered Managers
Hidden Value Fund which the undersigned would be entitled to vote if personally
present.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR the proposal.
<PAGE>
|X| PLEASE MARK VOTE LIKE THIS
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting. The Trustees recommend a vote FOR the
proposal below:
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
1. Proposal to approve Service and |_| |_| |_|
Distribution Plan relating to the
Investor Class shares of
Undiscovered Managers Hidden
Value Fund.
</TABLE>
Please be sure to sign and date this Proxy.
|-------------|
| Date |
| |
|------------------------------------------------------------------|
| |
| Shareholder sign here Co-owner sign here |
|------------------------------------------------------------------|
<PAGE>
INSTRUCTION FORM
THE PROXY TO WHICH THESE INSTRUCTIONS RELATE IS SOLICITED ON
BEHALF OF THE TRUSTEES OF UNDISCOVERED MANAGERS FUNDS
Please vote on the reverse side of this form and sign in the space provided.
Return your completed proxy in the enclosed envelope today.
You may receive additional proxies for other accounts. These are not duplicates;
you should sign and return each proxy card in order for your votes to be
counted. Please return them as soon as possible to avoid additional mailings.
NOTE: Please sign exactly as your name appears on this card. All joint owners
should sign. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, sign in the partnership name.
The undersigned hereby appoints Mark Hurley, June Stroh and Mary Chris Sayre,
and each of them, proxies, with power of substitution to each, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the Investor Class shares of Undiscovered Managers
Core Equity Fund on January 29, 1999, at 10:00 a.m., Dallas time, and at any
adjournments thereof, all of the Investor Class shares of Undiscovered Managers
Core Equity Fund which the undersigned would be entitled to vote if personally
present.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR the proposal.
<PAGE>
|X| PLEASE MARK VOTE LIKE THIS
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting. The Trustees recommend a vote FOR the
proposal below:
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
1. Proposal to approve Service and |_| |_| |_|
Distribution Plan relating to the
Investor Class shares of
Undiscovered Managers Core Equity
Fund.
</TABLE>
Please be sure to sign and date this Proxy.
|-------------|
| Date |
| |
|------------------------------------------------------------------|
| |
| Shareholder sign here Co-owner sign here |
|------------------------------------------------------------------|
<PAGE>
INSTRUCTION FORM
THE PROXY TO WHICH THESE INSTRUCTIONS RELATE IS SOLICITED ON
BEHALF OF THE TRUSTEES OF UNDISCOVERED MANAGERS FUNDS
Please vote on the reverse side of this form and sign in the space provided.
Return your completed proxy in the enclosed envelope today.
You may receive additional proxies for other accounts. These are not duplicates;
you should sign and return each proxy card in order for your votes to be
counted. Please return them as soon as possible to avoid additional mailings.
NOTE: Please sign exactly as your name appears on this card. All joint owners
should sign. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, sign in the partnership name.
The undersigned hereby appoints Mark Hurley, June Stroh and Mary Chris Sayre,
and each of them, proxies, with power of substitution to each, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the Investor Class shares of Undiscovered Managers
All Cap Value Fund on January 29, 1999, at 10:00 a.m., Dallas time, and at any
adjournments thereof, all of the Investor Class shares of Undiscovered Managers
All Cap Value Fund which the undersigned would be entitled to vote if personally
present.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR the proposal.
<PAGE>
|X| PLEASE MARK VOTE LIKE THIS
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting. The Trustees recommend a vote FOR the
proposal below:
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
1. Proposal to approve Service and |_| |_| |_|
Distribution Plan relating to the
Investor Class shares of
Undiscovered Managers All Cap
Value Fund.
</TABLE>
Please be sure to sign and date this Proxy.
|-------------|
| Date |
| |
|------------------------------------------------------------------|
| |
| Shareholder sign here Co-owner sign here |
|------------------------------------------------------------------|
