The Undiscovered Managers Funds of Dallas is suspending the offering of C shares on all of its mutual funds and closing two of its smallest funds, according to a statement of additional information the fund group filed with the SEC March 15.

The group of nine funds, with $321 million under management, originally offered C shares for financial intermediaries who were making the transition from being paid per transaction to fee-based compensation arrangements, said Mark Hurley, president and CEO of Undiscovered Managers. The C shares were added at different times as each new fund was introduced. But, fewer intermediaries are now making that compensation shift, he said. The C class of shares had only attracted $1.8 million in assets in all of the funds as of March 21, Hurley said.

The group also disclosed that it had closed the Undiscovered Managers Behavioral Long/Short Fund on March 2 and the Undiscovered Managers Core Equity Fund on March 15. The long/short fund was a niche product that never attracted much interest, said Hurley. Also, advisers were opting to use private accounts, not the core equity fund which had only attracted $3 million since its introduction in December 1997, he said.

The Undiscovered Managers Funds introduced a mergers and acquisition fund late last year, has a second, large-cap fund in registration, and plans to introduce a hedge fund-of-funds later this year, Hurley said.

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