FOUNDERS FUNDS, INC.
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 1997
The section of the Funds' Statement of Additional Information entitled
"Directors and Officers" is hereby amended on page 39 to delete the reference to
John K. Langum, who retired as a director effective September 1, 1997. Dr.
Langum has been designated Chairman Emeritus of the Company.
The section of the Funds' Statement of Additional Information entitled
"Directors and Officers" is hereby amended on page 40 to reflect that Jay A.
Precourt is Chairman of the Board of Directors and an Executive Committee
Member, effective September 1, 1997.
The second and third sentences of the first paragraph of the section of the
Funds' Statement of Additional Information entitled "Directors and Officers --
Director Compensation" on page 42 are hereby deleted and replaced with the
following:
The Company has no plan or other arrangement pursuant to which any of the
Company's independent directors receive pension or retirement benefits,
with the exception of an arrangement with former director Langum, who
receives an annual payment from Founders.
The section of the Funds' Statement of Additional Information entitled
"Additional Information -- Code of Ethics" is hereby amended on page 67 to read
as follows:
The Company and Founders have adopted a strict code of ethics that
limits directors, officers, investment personnel and other Founders
employees in investing in securities for their own accounts. With certain
exceptions, the code of ethics requires pre-clearance of personal
securities transactions and imposes restrictions and reporting
requirements upon such transactions. The Company and Founders carefully
monitor compliance with the code of ethics by their respective personnel.
Violations or apparent violations of the code of ethics by an
officer, director or employee of the Company are reported to the president
of the Company or to the Company's legal counsel, and thereafter to the
Company's board of directors. The Company's board of directors determines
whether a violation of the code of ethics has occurred and, if so, the
sanctions, if any, deemed appropriate.
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Violations or apparent violations of the code of ethics by an
officer, director or employee of Founders who is not also an officer,
director or employee of the Company are reported to the president of
Founders, Founders' Legal Department or to Founders' legal counsel.
Founders' president, in conjunction with the Legal Department, shall
determine whether a violation has occurred and, if so, will impose such
sanctions, if any, as he or she may deem appropriate. These determinations
are reviewed by the Company's Board of Directors.
Sanctions may include verbal or written warnings, a letter of
censure, suspension, termination of employment, disgorgement of profits
from improper transactions, or other sanctions. The code of ethics
requires maintenance of the highest standards of integrity and conduct. In
engaging in personal business activities, personnel of the Company and of
Founders must act in the best interests of the Company and its
shareholders. The Company's shareholders may obtain a copy of the code of
ethics without charge by calling Founders at 1-800-525-2440.
The date of this Supplement is September 1, 1997.
