FOUNDERS FUNDS, INC.
SUPPLEMENT TO PROSPECTUS DATED MAY 1, 1997
(AS SUPPLEMENTED THROUGH JULY 10, 1997)
The second paragraph of the section of the Funds' prospectus entitled "General
Information - Founders' Services to the Funds" is hereby amended on page 43 to
read as follows:
Founders serves as investment adviser to each of the Funds. All of
Founders' voting stock is owned by Mr. Bjorn K. Borgen, its Chairman,
Chief Executive Officer, and Chief Investment Officer. On December 11,
1997, Founders and Mr. Borgen entered into an agreement with Mellon
Bank, N.A. ("Mellon") pursuant to which Founders will be merged into a
subsidiary of Mellon ("New Founders"). Fund management does not
anticipate changes in either Founders' investment philosophy or the
Funds' portfolio managers as a result of the merger.
When this merger takes effect, the Funds' investment advisory
agreements with Founders will automatically terminate. However,
completion of the merger is conditioned, among other things, on a new
investment advisory agreement between the Funds and New Founders
becoming effective. The new agreement will be substantially identical
to the existing agreements, including the fee provisions, and will be
submitted to the Funds' shareholders for approval at a special meeting
to be held in early 1998.
The affairs of the Funds, including the services provided by Founders
and, following the merger, New Founders, are subject to the
supervision and general oversight of the Funds' board of directors.
The date of this Supplement is December 17, 1997.
