<PAGE> 1
THE MONTGOMERY FUNDS
GROWTH FUND
MICRO CAP FUND
SMALL CAP FUND
EQUITY INCOME FUND
ASSET ALLOCATION FUND
GLOBAL OPPORTUNITIES FUND
GLOBAL COMMUNICATIONS FUND
INTERNATIONAL SMALL CAP FUND
EMERGING MARKETS FUND
SHORT GOVERNMENT BOND FUND
GOVERNMENT RESERVE FUND
CALIFORNIA TAX-FREE INTERMEDIATE BOND FUND
CALIFORNIA TAX-FREE MONEY FUND
ANNUAL REPORT
JUNE 30, 1995
<PAGE> 2
THE MONTGOMERY FUNDS
The Montgomery Funds represents a growing family of no-load mutual funds
providing a comprehensive range of equity, fixed-income and global investment
opportunities. We currently manage more than $8 billion on behalf of more than
300,000 individual investors, helping them meet their financial goals through a
combination of professional portfolio management and solid customer service.
GROWTH FUND
MICRO CAP FUND
SMALL CAP FUND
EQUITY INCOME FUND
ASSET ALLOCATION FUND
GLOBAL OPPORTUNITIES FUND
GLOBAL COMMUNICATIONS FUND
INTERNATIONAL GROWTH FUND
INTERNATIONAL SMALL CAP FUND
EMERGING MARKETS FUND
SHORT GOVERNMENT BOND FUND
GOVERNMENT RESERVE FUND
CALIFORNIA TAX-FREE INTERMEDIATE BOND FUND
CALIFORNIA TAX-FREE MONEY FUND
This report and the financial statements contained herein are provided for the
general information of the shareholders of The Montgomery Funds. This report is
not authorized for distribution to prospective investors in the funds unless
preceded or accompanied by an effective prospectus. Mutual fund shares are not
deposits or obligations of, or guaranteed by, any depository institution.
Shares are not insured by the FDIC or any other agency and are subject to
investment risk, including the possible loss of principal. Neither The
Montgomery Funds nor Montgomery Securities is a bank. For more information on
any Montgomery Fund, including charges and expenses, call 800-572-3863 for a
free prospectus. Read it carefully before you invest or send money. Montgomery
Securities, Distributor. 8/95
<PAGE> 3
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
JUNE 30, 1995 ANNUAL REPORT
CONTENTS
<TABLE>
<CAPTION>
PORTFOLIO PORTFOLIO FINANCIAL
FUND NAME HIGHLIGHTS INVESTMENTS HIGHLIGHTS
- ------------------------------ -------------- --------------- --------------
<S> <C> <C> <C> <C>
Growth........................ Page 1 12 84
Micro Cap..................... Page 2 15 85
Small Cap..................... Page 3 19 86
Equity Income................. Page 4 23 87
Asset Allocation.............. Page 5 26 88
Global Opportunities.......... Page 6 31 89
Global Communications......... Page 7 36 90
International Small Cap....... Page 8 41 91
Emerging Markets.............. Page 9 45 92
Short Government Bond......... Page 10 57 93
Government Reserve............ Page n/a 59 94
California Tax-Free
Intermediate Bond............. Page 11 62 95
California Tax-Free
Money......................... Page n/a 65 96
Page
----
Chairman's Letter to Shareholders................................ i
Statements of Assets and Liabilities as of June 30, 1995......... 70
Statements of Operations for the Year Ended June 30, 1995........ 74
Statement of Cash Flows for the Year Ended June 30, 1995......... 78
Statements of Changes in Net Assets for Years Ended June 30, 1994
and 1995....................................................... 80
Notes to Financial Statements.................................... 97
Independent Auditors' Report..................................... 124
Tax Information.................................................. 125
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
- ------------------ DEAR FELLOW SHAREHOLDER:
[PHOTO] There is good news for Montgomery
- ------------------ shareholders in this annual report, thanks
to our experienced team of portfolio
managers and generally positive markets
around the world.
Our primary challenge at The Montgomery
Funds is to create world class portfolio
management teams in each of our investment
disciplines. Ultimately, it is the quality
of the portfolio management process that is
the
</TABLE>
key to superior long-term performance, in good markets and especially in bad
ones. We want you to understand how we go about meeting this challenge because
it will help you make your mutual fund investment decisions with greater
confidence.
We know these decisions are far from easy. Mutual fund investing has become
increasingly complex with the proliferation of fund alternatives along with
bewildering and, at times, contradictory advice from financial pundits. In fact,
there are more mutual funds than there are securities on the New York Stock and
American Stock Exchanges combined.
All of us know people who do more research when buying a refrigerator than they
do when investing in a mutual fund. And yet, the long-term consequences of your
investment decisions mean they demand even more thoughtful consideration. It's
up to you -- and your financial advisor, if you work with one -- to decide what
your goals are, to assess your tolerance for risk, and to choose the asset
classes most appropriate to meet your needs. And it's up to you to be
disciplined in your approach to investing, particularly for long-term
investments such as equity or international funds.
Instead of chasing the latest investment fad or the most recent high-flying
fund, we suggest you determine the asset classes most appropriate to your
situation, and then choose a fund family that is committed to finding and
supporting superior portfolio managers. That's our job, and here's how we go
about it:
First, we look for fund managers who have delivered consistent, long-term
performance -- and that means not one good year but a string of good years. The
portfolio managers responsible for The Montgomery Funds bring years of proven
experience to the job.
Second, we look for fund managers with a real passion for portfolio
management -- people who love the business of managing money and selecting
securities, who are excited about the markets they follow. Montgomery's managers
are truly dedicated to what they do; they also tend to be independent thinkers,
willing to buck the "prevailing wisdom."
------------------ i -----------------
<PAGE> 5
When we find professionals who measure up to those stringent criteria, we offer
them an environment in which they can focus exclusively on the task at hand:
managing money. Our investment professionals are single-minded in their
dedication to investment management, and we've built the infrastructure that
allows them to pursue that without distraction.
We also make sure we have plenty of depth in each investment discipline. Each
Senior Portfolio Manager is backed by a team of experienced investment
professionals and analysts. This team approach leads to more comprehensive
market coverage and more creative ideas. Finally, we hold managers accountable
for the consistency of their disciplines and the quality of their decision
making.
These are challenging tasks, but absolutely necessary ones. We address them on
your behalf, so that when you invest in any Montgomery fund, you can do so with
a high degree of confidence in the people who are managing your money. You're
buying a lot more than a fund -- you're buying an entire firm.
Once you're in a fund, of course, our long-standing advice applies: Invest for
the long-term, and give your funds time to deliver results and move you further
towards your financial goals.
As always, we encourage you to let us know how we're doing at helping you meet
those goals or if you have ideas about how we might serve you more effectively.
Our customer service representatives can be reached at (800) 572-FUND. Thank you
for your support and confidence. We look forward to reporting to you again in
six months.
Sincerely,
[SIG]
R. Stephen Doyle
Chairman and Chief Executive Officer
------------------ ii ------------------
<PAGE> 6
PRUDENT STRATEGIES
FOR VOLATILE MARKETS
WHEN THE STOCK MARKET IS SETTING RECORDS,
EVEN THE MOST SOPHISTICATED INVESTORS ARE
TEMPTED TO BECOME MARKET TIMERS. THEY WANT
TO SELL AT "THE TOP" OF THE CYCLE AND BEGIN
INVESTING AGAIN AT "THE BOTTOM."
Unfortunately, the markets rarely send clear signals about tops and bottoms;
market timers run a real risk of missing upward movements and rarely avoid
downturns. We believe the key to long-term investment success is to stay in the
market -- and try to forget about the day-to-day fluctuations in the Dow Jones
Industrial Average. In other words, we believe there is no wrong time to invest
for long-term players.
But if you're looking for ways to make weathering market volatility a bit
easier, consider these two prudent -- and proven -- strategies:
- - Make sure you are well diversified, to cushion your investments
against volatility in any one security, market, or asset class.
- - Invest regularly, to smooth out the inevitable ups and downs of
the market.
ONE-STOP DIVERSIFICATION:
THE #1 ASSET ALLOCATION FUND
An easy way to ensure asset class diversification is with the Montgomery Asset
Allocation Fund, which seeks high total return through a strategic mix of stocks
for growth, bonds for income, and cash for liquidity. Its high degree of
diversification helps protect the Fund from the volatility of a 100% equity
portfolio.
MONTGOMERY
So far, this approach has resulted in ASSET ALLOCATION
category-leading performance: According to FUND
Lipper Analytical Services, Inc., the Fund
ranked #1 among 136 flexible portfolio funds 35.99%
for the year ending June 30, 1995 -- and #1
among 124 such funds since inception. One-year total return
for the year ended 6/30/95
29.92%
The performance data quoted represents historical Average annual total return
performance and is not indicative of future since inception (3/31/94)
performance. Return and principal value will vary through 6/30/95
and shares may be worth more or less when redeemed.
<PAGE> 7
While past performance is no guarantee of future results, you can be sure of
the experience and expertise of the Fund's management: Roger Honour (Montgomery
Growth Fund) handles the equity investments while Bill Stevens, who manages all
of Montgomery's fixed-income funds, invests the portions allocated to bonds and
cash.
ASSET ALLOCATION FUND MIX AS OF 7/31/95
Stocks 58%
Bonds 42%
INVEST REGULARLY; A GOOD STRATEGY FOR VOLATILE MARKETS
Once you've determined your long-term financial goals, consider the time-tested
strategy of regular investing: committing the same dollar amount on a monthly
or quarterly basis. Regular investing eliminates the temptation to try to "time
the market," and it allows you to automatically buy more shares when prices are
down and fewer when prices are up: dollar-cost averaging. (Such a plan does not
ensure a profit and does not protect against a loss in declining markets.) Over
time, you can reduce the average cost per share and better manage the risk of
market fluctuations.
Montgomery makes regular investing simple with our AUTOMATIC ACCOUNT BUILDER
program, which automatically taps your checking account for a monthly or
quarterly investment of $100 or more into any Montgomery fund.
IN SHORT, THERE ARE PRUDENT WAYS TO STAY INVESTED -- AND TO KEEP INVESTING --
DURING PERIODS OF MARKET VOLATILITY. PLEASE REVIEW YOUR PROSPECTUS FOR MORE
DETAILS ON THE ASSET ALLOCATION FUND, AUTOMATIC ACCOUNT BUILDER, AND ALL THE
INVESTMENT OPPORTUNITIES WE OFFER -- OR CALL YOUR MONTGOMERY REPRESENTATIVE
TODAY.
800-572-3863
http://www.xperts.montgomery.com/1
MONTGOMERY SECURITIES, DISTRIBUTOR, 8/95.
<PAGE> 8
-----------------------------------------------
MONTGOMERY GROWTH FUND
-----------------------------------------------
PORTFOLIO HIGHLIGHTS
JUNE 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Return Analysis
- --------------------------------------------------------------------------------
<S> <C> <C>
One Inception
Year Ended 9/30/93 through
6/30/95 6/30/95(1)
------------------ ------------------
Montgomery Growth Fund 26.53% 31.71%
S&P 500 Index 26.07% 13.40%
Lipper Growth Funds Average 22.25% 9.88%
- --------------------------------------------------------------------------------
</TABLE>
Montgomery Growth Fund's strong performance in 1994 enabled it to outperform
the S&P 500 Index as well as the Lipper Growth Funds Average for the twelve
months ended June 30, 1995. During the first six months of 1995, however, the
Fund underperformed the index, largely due to the level of cash in the Fund in a
rapidly rising market.
Looking forward, we are encouraged by the current valuations and growth
prospects of companies in which the Fund has invested. We are not banking
heavily on any particular macroeconomic forecast. Rather, we have carefully
placed our bets on the earnings potential of our individual stock positions. We
believe that our "all weather" investment process will add value throughout the
different seasons of the economic cycles and remain committed to our
disciplined, quantitative and qualitative approach to stock selection as the key
to superior long-term returns.
Hypothetical Illustration of $10,000 Invested at Inception
<TABLE>
<CAPTION>
Growth of Standard &
Growth of Value of Investment with Lipper Growth Poors 500
Initial Reinvested Distributions Fund Average- Daily Reinvest-
NAV Investment Distributions Reinvested Growth Fund(3) Growth Fund(2)
--- ---------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Sept. 1993 12.00 $10,000 $ 0 $10,000 $10,000.00 $10,000.00
Dec. 1993 14.12 11,767 67 11,834 10,234.31 10,231.68
March 1994 14.95 12,458 72 12,530 9,886.50 9,843.88
June 1994 15.27 12,725 73 12,798 9,641.97 9,885.12
Sept. 1994 16.52 13,767 79 13,846 10,156.03 10,368.41
Dec. 1994 16.93 14,108 201 14,309 10,030.83 10,366.78
March 1995 17.90 14,917 211 15,128 10,791.93 11,376.16
June 1995 19.16 15,967 226 16,193 11,815.11 12,462.10
</TABLE>
- --------------------------------------------------------------------------------
(1) Average Annual Total Return
(2) The S&P 500 Index is composed of 500 widely held common stocks listed on the
NYSE, AMEX and OTC Market.
(3) Lipper's Growth Funds Average universe consists of 514 funds.
Note: The performance shown represents past performance and is not a guarantee
of future results.
------------------- 1 ------------------
<PAGE> 9
---------------------------------------------------
MONTGOMERY MICRO CAP FUND
---------------------------------------------------
PORTFOLIO HIGHLIGHTS
JUNE 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Return Analysis
- --------------------------------------------------------------------------------
<S> <C> <C>
Inception
12/30/94 through
6/30/95(1)
------------------
Montgomery Micro Cap Fund 14.58%
Russell 2000 Index 14.42%
Lipper Small Company Growth Funds Average 15.35%
- --------------------------------------------------------------------------------
</TABLE>
We are excited about the long-term prospects for investing in the micro cap
area. Smaller companies are often undiscovered, underesearched, and
underappreciated by investors because of their size. This represents tremendous
opportunity for investors who are willing to contact companies directly and
conduct independent fundamental research. The U.S. Growth Equity team's mission
is to continue to uncover the "hidden gems" in the micro cap universe.
The first half of 1995 represented a strong start for the Montgomery Micro
Cap Fund. We were able to exceed the returns on the Russell 2000 Index, a
significant achievement given our substantial levels of cash flow in the period.
We attribute this success to our investment discipline of only investing in
companies that we feel represent high quality growth at reasonable prices.
We thank you for your support and patience during this start-up phase of the
Montgomery Micro Cap Fund.
Hypothetical Illustration of $10,000 Invested at Inception
<TABLE>
<CAPTION>
Lipper Small Company Growth
Montgomery Micro Cap Fund Russell 2000 Index(2) Funds Average(3)
------------------------- --------------------- ---------------------------
<S> <C> <C> <C>
Dec. 30, 1994 10,000 10,000 10,000
Mar. 1995 10,558 10,461 10,559
June 1995 11,458 11,442 11,535
</TABLE>
- --------------------------------------------------------------------------------
(1) Aggregate Total Return
(2) The Russell 2000 Index is a capitalization weighted total return index which
is comprised of 2,000 of the smallest capitalized U.S. domiciled companies
whose common stock is traded in the U.S. on the NYSE, AMEX and NASDAQ.
(3) Lipper's Small Company Growth Funds Average universe consists of 267 funds.
Note: The performance shown represents past performance and is not a guarantee
of future results.
------------------ 2 ------------------
<PAGE> 10
---------------------------------------------------
MONTGOMERY SMALL CAP FUND
---------------------------------------------------
PORTFOLIO HIGHLIGHTS
JUNE 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Return Analysis
- --------------------------------------------------------------------------------
<S> <C> <C>
One Inception
Year Ended 7/13/90 through
6/30/95 6/30/95(1)
------------------ ------------------
Montgomery Small Cap Fund 20.12% 19.87%
Russell 2000 Index 20.07% 12.86%
Lipper Small Company
Growth Funds Average 24.79% 13.75%
- --------------------------------------------------------------------------------
</TABLE>
For the twelve months ended June 30, 1995, the Fund kept pace with the
Russell 2000 Index, while trailing the Lipper Small Company Growth Funds
Average. Our investment style, which requires all portfolio candidates to pass
strict valuation criteria and possess sustainable earnings growth out two to
three years, biased the Fund away from some of the technology stocks that have
been carried to dizzying valuations since the fourth quarter of 1994.
Currently, the Fund's holdings are selling at approximately 16 times
one-year forecasted earnings. The Fund is positioned for strong growth, and we
believe the strength of earnings in the Fund's companies will be recognized by
the market and individual investors.
Hypothetical Illustration of $10,000 Invested at Inception
<TABLE>
<CAPTION>
Lipper Small Company Growth
Montgomery Small Cap Fund Russell 2000 Index(2) Funds Average(3)
------------------------- --------------------- ---------------------------
<S> <C> <C> <C>
July 13, 1990 10,000 9,562 9,640
7,853 7,546 7,722
Dec. 1990 8,820 7,926 8,425
12,310 10,283 10,562
June 1991 12,489 10,123 10,393
15,371 10,949 11,512
Dec. 1991 17,529 11,575 12,646
17,541 12,465 13,054
June 1992 15,947 11,596 11,971
16,231 11,926 12,370
Dec. 1992 19,210 13,707 14,381
19,396 14,291 14,745
June 1993 20,805 14,602 15,138
23,432 15,879 16,426
Dec. 1993 23,881 16,295 16,844
22,800 15,862 16,365
June 1994 20,475 15,245 15,441
22,718 16,303 18,755
Dec. 1994 21,503 15,999 16,712
22,811 16,736 17,645
June 1995 24,594 19,148 20,143
</TABLE>
- --------------------------------------------------------------------------------
(1) Average Annual Total Return
(2) The Russell 2000 Index is a capitalization weighted total return index which
is comprised of 2,000 of the smallest capitalized U.S. domiciled companies
whose common stock is traded in the U.S. on NYSE, AMEX and NASDAQ.
(3) Lipper's Small Company Growth Funds Average universe consists of 267 funds.
Note: The performance shown represents past performance and is not a guarantee
of future results.
------------------ 3 ------------------
<PAGE> 11
----------------------------------------------------------
MONTGOMERY EQUITY INCOME FUND
----------------------------------------------------------
PORTFOLIO HIGHLIGHTS
JUNE 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Return Analysis
- --------------------------------------------------------------------------------
<S> <C> <C>
Inception
9/30/94 through
6/30/95(1)
------------------
Montgomery Equity Income Fund 14.26%
S&P 500 Index 20.19%
Lipper Equity Income Funds Average 11.74%
- --------------------------------------------------------------------------------
</TABLE>
Performance for the nine months since the Fund's inception was well ahead of
the Lipper Equity Income Funds Average; however, the Fund lagged the S&P 500
Index, largely due to the most recent quarter. Our investment approach
emphasizes high quality companies with relatively stable earnings, and therefore
showed solid relative performance during the fourth quarter of 1994 and early
1995. However, as investor preference rotated toward the more financially
leveraged and cyclical firms late in the first quarter, our performance lagged.
Looking forward, we believe that the consistent use of relative yield
valuation, coupled with diligent fundamental analysis, should add value for our
shareholders, while seeking to maintain greater stability of principal during
the unavoidable periods of market decline.
Hypothetical Illustration of $10,000 Invested at Inception
<TABLE>
<CAPTION>
Lipper Equity Income
Montgomery Equity Income Fund Standard & Poor's 500 Index(2) Funds Average (3)
----------------------------- ------------------------------ --------------------
<S> <C> <C> <C>
Sept. 30, 1994 10,000 10,000 10,000
Dec. 1994 9,907 9,998 9,747
Mar. 1995 10,824 10,970 10,468
June 1995 11,426 12,019 11,174
</TABLE>
- --------------------------------------------------------------------------------
(1) Aggregate Total Return
(2) The S&P 500 Index is composed of 500 widely held common stocks listed on the
NYSE, AMEX and OTC Market.
(3) Lipper's Equity Income Funds Average universe consists of 109 funds.
Note: The performance shown represents past performance and is not a guarantee
of future results.
------------------ 4 ------------------
<PAGE> 12
----------------------------------------------------------------
MONTGOMERY ASSET ALLOCATION FUND
----------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
JUNE 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Return Analysis
- --------------------------------------------------------------------------------
<S> <C> <C>
One Inception
Year Ended 3/31/94 through
6/30/95 6/30/95(1)
------------------ ------------------
Montgomery Asset Allocation Fund 35.99% 29.92%
S&P 500 Index 26.07% 20.76%
Lehman Brothers Aggregate
High Grade Bond Index 12.55% 9.01%
Lipper Flexible Portfolio Funds
Average 16.27% 11.89%
- --------------------------------------------------------------------------------
</TABLE>
The Montgomery Asset Allocation Fund uses a three pronged attack for
achieving the best possible returns. First, the allocation decision is made
based on a proprietary quantitative model. In the synchronous bond and stock
market rallies, the goal was to avoid significant cash positions. Early in the
year we reduced our cash allocation from 10% to 5%, and moved to a fully
invested allocation in July.
Second, the active management of the bond portion of the portfolio is
designed to generate consistently better performance than the high grade bond
market, and provide an "anchor to windward" for the portfolio. The fixed-income
allocation declined slightly over the first half of 1995 from 50% to 47%.
Thirdly, and most importantly, the active management of the equity
allocation seeks out the best long-term growth opportunities that offer solid
fundamental value. The equity allocation increased over the first half from 40%
to 46% and in July moved to 58%.
We will continue to review our allocation positions monthly in order to take
advantage of the continual shifting of economic, market and political
environments.
Hypothetical Illustration of $10,000 Invested at Inception
<TABLE>
<CAPTION>
Montgomery Asset Standard & Poor's Lehman Aggregate High Lipper Flexible Portfolio
Allocation Fund 500 Index(2) Grade Bond Index(3) Funds Average(4)
---------------- ----------------- --------------------- -------------------------
<S> <C> <C> <C> <C>
Mar. 31, 1994 10,000 10,000 10,000 10,000
June 1994 10,200 10,041 9,897 9,887
Sept. 1994 11,142 10,531 9,958 10,168
Dec. 1994 11,976 10,529 9,995 10,072
Mar. 1995 12,877 11,552 10,500 10,703
June 1995 13,871 12,660 11,139 11,511
</TABLE>
- -------------------------------------------------------------------------------
(1) Average Annual Total Return
(2) The S&P 500 Index is composed of 500 widely held common stocks listed on the
NYSE, AMEX and OTC counter.
(3) The Lehman Brothers Aggregate High Grade Bond Index includes fixed rate debt
issues rated investment grade or higher by Moody's, S&P or Fitch.
(4) Lipper's Flexible Portfolio Funds Average universe consists of 136 funds.
Note: The performance shown represents past performance and is not a guarantee
of future results.
------------------ 5 ------------------
<PAGE> 13
------------------------------------------------------------------------
MONTGOMERY GLOBAL OPPORTUNITIES FUND
------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
JUNE 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Return Analysis
- --------------------------------------------------------------------------------
<S> <C> <C>
One Inception
Year Ended 9/30/93 through
6/30/95 6/30/95(1)
------------------ ------------------
Montgomery Global Opportunities
Fund 6.43% 8.09%
Morgan Stanley Capital
International World Index 10.67% 9.14%
Lipper Global Funds Average 7.55% 7.75%
- --------------------------------------------------------------------------------
</TABLE>
The past twelve months were characterized by volatility in global markets,
primarily caused by changing interest rates and currency valuations. In
addition, large swings in emerging markets added to the volatility. While the
second half of 1994 and the beginning of 1995 were difficult for global
investors, the five-month period ended June 30, 1995 produced a strong rebound.
Montgomery Global Opportunities Fund performed relatively well during this
rocky ride. While we have underperformed the Morgan Stanley Capital
International World Index due to an underweighted position in the U.S., we have
outperformed our peer group since inception. More recently, the Montgomery
Global Opportunities Fund was among the top-ranked Global Funds in the Lipper
Universe during the second quarter of 1995. Our emphasis on technology and
telecommunication stocks contributed to our recent strong performance.
As we move into the second half of 1995, we remain cautiously optimistic on
global markets. We continue to position the portfolio in those stocks with
positive earnings momentum and which offer the highest total return (growth and
yield) for the best price.
Hypothetical Illustration of $10,000 Invested at Inception
<TABLE>
<CAPTION>
Morgan Stanley Capital
Montgomery Global Opportunities Fund International World Index(2) Lipper Global Funds Average(3)
------------------------------------ --------------------------- -----------------------------
<S> <C> <C> <C>
Sept. 1993 10,000 10,000 10,000
Dec. 1993 11,850 10,161 10,935
Mar. 1994 11,508 10,223 10,694
June 1994 10,767 10,530 10,582
Sept. 1994 11,608 10,756 11,141
Dec. 1994 10,836 10,676 10,663
Mar. 1995 10,343 11,175 10,693
June 1995 11,459 11,654 11,408
</TABLE>
- --------------------------------------------------------------------------------
(1) Average Annual Total Return
(2) The Morgan Stanley Capital International World Index measures performance of
twenty global stock markets.
(3) Lipper's Global Funds Average universe consists of 108 funds.
Note: The performance shown represents past performance and is not a guarantee
of future results.
------------------ 6 ------------------
<PAGE> 14
----------------------------------------------------------------------------
MONTGOMERY GLOBAL COMMUNICATIONS FUND
----------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
JUNE 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Return Analysis
- --------------------------------------------------------------------------------
<S> <C> <C>
One Inception
Year Ended 6/1/93 through
6/30/95 6/30/95(1)
------------------ ------------------
Montgomery Global Communications
Fund 8.83% 12.93%
Morgan Stanley Capital
International World Index 10.67% 9.56%
Lipper Global Funds Average 7.55% 9.69%
- --------------------------------------------------------------------------------
</TABLE>
During the twelve-month period ended June 30, 1995, interest-rate and
currency fluctuations caused volatility in global markets. Events within
emerging markets, such as the "meltdown" in Mexico, also contributed to the
volatility across the world's equity markets.
Within the Montgomery Global Communications Fund, however, we were able to
capitalize on this volatility and produce returns superior to our peer group.
The Fund has also significantly outperformed the Morgan Stanley Capital
International World Index and its peer group since inception, producing a 12.93%
average annual return. In the short term, our exciting second-quarter 1995
performance resulted from the global growth in the telecommunications equipment
sector as well as from our exposure to technology and wireless communications
stocks.
We remain bullish on the worldwide demand for communications services and
equipment, a large and diverse sector. We believe this group will continue to
provide better growth prospects than global markets in general. As of June 30,
1995, the Fund was invested in approximately seventy companies and thirty
countries.
Hypothetical Illustration of $10,000 Invested at Inception
<TABLE>
<CAPTION>
Montgomery Global Morgan Stanley Capital Lipper Global
Communication Fund International World Index(2) Funds Average(3)
------------------ ---------------------------- ---------------
<S> <C> <C> <C>
June 1, 1993 10,000 10,000 10,000
June 1993 10,375 9,914 9,880
Sept. 1993 12,017 10,379 10,685
Dec. 1993 13,483 10,548 11,684
Mar. 1994 12,558 10,611 11,426
June 1994 11,833 10,929 11,307
Sept. 1994 12,950 11,163 11,904
Dec. 1994 11,675 11,081 11,384
Mar. 1995 11,241 11,598 11,425
June 1995 12,878 12,095 12,146
</TABLE>
- --------------------------------------------------------------------------------
(1) Average Annual Total Return
(2) The Morgan Stanley Capital International World Index measures performance of
twenty global stock markets.
(3) Lipper's Global Funds Average universe consists of 108 funds.
Note: The performance shown represents past performance and is not a guarantee
of future results.
------------------ 7 ------------------
<PAGE> 15
----------------------------------------------------------------------------
MONTGOMERY INTERNATIONAL SMALL CAP FUND
----------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
JUNE 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Return Analysis
- --------------------------------------------------------------------------------
<S> <C> <C>
One Inception
Year Ended 9/30/93 through
6/30/95 6/30/95(1)
------------------ ------------------
Montgomery International Small Cap
Fund (2.23)% (1.19)%
MSCI EAFE Index 1.65 % 6.44 %
Lipper International Small Company
Funds Average (3.76)% 4.23 %
- --------------------------------------------------------------------------------
</TABLE>
During the past twelve months, international equities, particularly small
capitalization stocks, were volatile, reversing course several times. The fourth
quarter of 1994 and the first quarter of 1995 proved especially difficult as
interest rate uncertainties and currency fluctuations impacted investor
sentiment.
While the Montgomery International Small Cap Fund was impacted by the
difficult late 1994/early 1995 period, the Fund rebounded sharply during the
second quarter of 1995. Many of our favorite holdings were rewarded recently, as
investors recognized their strong fundamentals and earnings growth. We have also
taken advantage of market weaknesses to purchase new attractive investment
opportunities. Such opportunities include, on a country level, Japanese stocks.
On an industry level, we have identified select financial services companies,
late cycle capital equipment/engineering, retail trade, and shipping companies.
We continue to emphasize bottom-up stock selection with a broad
international scope, focusing our research on those small and medium size
companies offering the strongest earnings and dividend growth for the most
attractive prices. We believe that over time this investment strategy will
continue to add value.
Hypothetical Illustration of $10,000 Invested at Inception
<TABLE>
<CAPTION>
Lipper International
Montgomery International Small Cap Fund MSCI EAFE Index(2) Small Company Funds Average(3)
--------------------------------------- ----------------- -----------------------------
<S> <C> <C> <C>
Sept. 1993 10,000 10,000 10,000
Dec. 1993 11,342 10,088 11,074
Mar. 1994 11,158 10,438 11,352
June 1994 10,017 10,971 11,174
Sept. 1994 10,517 10,982 11,362
Dec. 1994 9,835 10,869 10,638
Mar. 1995 9,301 11,072 10,153
June 1995 9,793 11,154 10,755
</TABLE>
- --------------------------------------------------------------------------------
(1) Average Annual Total Return
(2) The Morgan Stanley Capital International EAFE Index is composed of Europe,
Australia and a Far East Index of eighteen developed market countries.
(3) Lipper's International Small Company Funds Average universe consists of 11
funds.
Note: The performance shown represents past performance and is not a guarantee
of future results.
------------------ 8 ------------------
<PAGE> 16
------------------------------------------------------------------
MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
JUNE 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Return Analysis
- --------------------------------------------------------------------------------
<S> <C> <C>
One Inception
Year Ended 3/1/92 through
6/30/95 6/30/95(1)
------------------ ------------------
Montgomery Emerging Markets Fund 1.40 % 11.03%
IFC Global Composite Index (2.98)% 7.78%
Lipper Emerging Markets Funds
Average (3.86)% 11.06%
- --------------------------------------------------------------------------------
</TABLE>
The past twelve months represented a period of volatility in emerging
markets. The third quarter of 1994's strong performance resulted from positive
corporate reports. These results, however, were more than reversed in the
subsequent two quarters by rising U.S. interest rates and the "meltdown" in
Mexico. The second quarter of 1995 yielded the strong returns more indicative of
long term expectations in emerging markets, as sentiment shifted positive and
currency relationships stabilized.
Montgomery Emerging Markets Fund investors were rewarded for keeping their
assets in the Fund for the full twelve months. The Fund not only posted a
positive return, it outperformed the benchmark index and peer group by wide
margins. Our decision to underweight Mexico prior to the crisis, as well as
strategic investments in Asia, contributed to our strong relative performance.
Our outlook for the emerging markets remains positive. As global liquidity
improves with the prospects of falling interest rates and slower economic growth
in the developed markets, we expect that the emerging markets will garner more
investor attention.
Hypothetical Illustration of $10,000 Invested at Inception
<TABLE>
<CAPTION>
Montgomery Emerging Markets Fund IFC Global Composite Index(2) Lipper Emerging Markets Funds Average(3)
-------------------------------- ----------------------------- ----------------------------------------
<S> <C> <C> <C>
Mar. 1, 1992 10,000
10,010 10,056 9,965
June 1992 9,960 9,158 10,143
9,570 8,372 9,587
Dec. 1992 10,031 8,809 9,728
10,482 9,313 10,574
June 1993 11,083 9,691 11,297
12,324 10,543 12,651
Dec. 1993 15,916 14,481 16,527
14,445 13,135 15,290
June 1994 13,975 13,234 14,513
16,212 16,049 16,811
Dec. 1994 14,687 14,145 14,593
13,105 12,307 13,026
June 1995 14,170 12,839 14,196
</TABLE>
- --------------------------------------------------------------------------------
(1) Average Annual Total Return
(2) The IFC Global Composite Index is comprised of over 1,200 individual stocks
from 25 developing countries in Asia, Latin America, Middle East, Africa and
Europe.
(3) Lipper's Emerging Markets Funds Average universe consists of 31 funds.
Note: The performance shown represents past performance and is not a guarantee
of future results.
------------------ 9 ------------------
<PAGE> 17
-----------------------------------------------------------------------------
MONTGOMERY SHORT GOVERNMENT BOND FUND
-----------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
JUNE 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Return Analysis
- --------------------------------------------------------------------------------
<S> <C> <C>
One Inception
Year Ended 12/18/92 through
6/30/95 6/30/95(1)
------------------ ------------------
Montgomery Short Government Bond
Fund 8.28% 6.48%
Lehman Brothers 1-3 Year
Government Index 7.67% 4.98%
Lipper Short U.S. Government
Funds Average 7.33% 4.43%
- --------------------------------------------------------------------------------
</TABLE>
We believe 1995 is shaping up to be as good for the U.S. bond market as 1994
was bad. The yield on two-year U.S. Treasury Notes has declined by almost 2%,
and was one of the best performing securities, risk adjusted, in the world. The
total return on 30-year U.S. Treasuries rivaled the strong performance of the
stock markets. As one of the more conservatively positioned short government
funds, the Montgomery Short Government Bond Fund has to work hard to keep up in
a powerful bull market.
Looking forward, we are impressed with the Federal Reserve's resolve to keep
inflation in check. We would look at any rise in interest rates in the second
half of this year that results from renewed economic growth as a buying
opportunity.
Hypothetical Illustration of $10,000 Invested at Inception
<TABLE>
<CAPTION>
Montgomery Short Lehman Brothers 1-3 Year Lipper Short U.S. Government
Government Bond Fund Government Index(2) Funds Average(3)
-------------------- ------------------------ ----------------------------
<S> <C> <C> <C>
Dec. 18, 1992 10,000 10,000 10,000
Dec. 1992 10,043 10,000 10,000
Mar. 1993 10,350 10,217 10,271
June 1993 10,565 10,332 10,415
Sept. 1993 10,750 10,474 10,563
Dec. 1993 10,856 10,541 10,585
Mar. 1994 10,831 10,489 10,453
June 1994 10,829 10,489 10,338
Sept. 1994 10,938 10,594 10,409
Dec. 1994 10,979 10,594 10,387
Mar. 1995 11,351 10,945 10,749
June 1995 11,725 11,291 11,149
</TABLE>
- --------------------------------------------------------------------------------
(1) Average Annual Total Return
(2) The Lehman Brothers 1-3 Year Government Index is composed of all U.S.
Government issues with maturities of 1-3 years.
(3) Lipper's Short U.S. Government Funds Average universe consists of 131 funds.
Note: The performance shown represents past performance and is not a guarantee
of future results.
------------------ 10 ------------------
<PAGE> 18
-----------------------------------------------------------
MONTGOMERY CALIFORNIA TAX-FREE
INTERMEDIATE BOND FUND
-----------------------------------------------------------
PORTFOLIO HIGHLIGHTS
JUNE 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Return Analysis
- --------------------------------------------------------------------------------
<S> <C> <C>
One Inception
Year Ended 7/1/93 through
6/30/95 6/30/95(1)
------------------ ------------------
Montgomery California Tax-Free
Intermediate Bond Fund 6.03% 3.85%
Merrill Lynch California Municipal
Bond Index (0-7 years) 6.79% 2.64%
Lipper California Municipal Debt
Funds Average 5.30% 3.47%
- --------------------------------------------------------------------------------
</TABLE>
Intermediate term tax exempt yields trended lower in the first half of 1995,
but the decline was not as abrupt as in other fixed income sectors. Municipal
bond prices lagged on the upside as the emergence of prospective Federal tax
reform and Orange County's bankruptcy stifled demand. The influence of these
technical factors is expected to dissipate with relative valuation returning
more closely to normal.
As of June 30, 1995, portfolio management embarked on a program to modestly
extend maturities in order to increase the dividend distribution rate. Strategic
decision-making will continue to emphasize quantitative analysis methods in an
effort to optimize risk-adjusted returns. Proprietary credit analysis also
remains a priority; this approach was successful in completely insulating the
portfolio from the decline in credit of Orange County.
Investment returns have been very competitive. For the year ended June 30,
1995, the Fund ranked first of nine within its Lipper category with a total
return of 6.03%.
Hypothetical Illustration of $10,000 Invested at Inception
<TABLE>
<CAPTION>
Montgomery California Tax-Free Merrill Lynch California Lipper California
Intermediate Bond Fund Municipal Bond Index (0-7 years) Municipal Debt Funds Average(2)
------------------------------ ------------------------------- ------------------------------
<S> <C> <C> <C>
July 1993 10,000 9,938 9,995
Sept. 1993 10,121 9,949 10,359
Dec. 1993 10,233 10,158 10,459
Mar. 1994 10,086 10,015 9,843
June 1994 10,171 9,885 9,873
Sept. 1994 10,271 10,008 9,920
Dec. 1994 10,238 9,998 9,675
Mar. 1995 10,583 10,277 10,424
June 1995 10,784 10,535 10,707
</TABLE>
- --------------------------------------------------------------------------------
(1) Average Annual Total Return
(2) Lipper's California Municipal Debt Funds Average universe consists of 9
funds.
Note: The performance shown represents past performance and is not a guarantee
of future results.
------------------ 11 ------------------
<PAGE> 19
-----------------------------------------------
MONTGOMERY GROWTH FUND
-----------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------------ ------------
<S> <C> <C>
COMMON STOCKS--75.8%
CAPITAL GOODS--4.4%
600,000 Measurex Corporation..................................... $ 18,225,000
225,000 Trinity Industries Inc. ................................. 7,481,250
235,000 Tyco International Ltd. ................................. 12,690,000
------------
38,396,250
------------
COMPUTER HARDWARE--2.6%
965,000 AST Research Inc.+....................................... 14,897,187
338,600 EMC Corporation+......................................... 8,211,050
------------
23,108,237
------------
COMPUTER SOFTWARE--11.0%
454,000 Applied Voice Technology Inc.+........................... 6,356,000
350,000 Bay Networks Inc.+....................................... 14,437,500
250,000 HBO & Company............................................ 13,656,250
575,000 Picturetel Corporation+.................................. 27,743,750
48,500 Sybase Inc.+............................................. 1,409,531
1,150,000 Symantec Corporation+.................................... 33,134,375
------------
96,737,406
------------
CONSUMER--LEISURE TIME PRODUCTS--1.3%
627,500 Toy Biz, Inc.+........................................... 11,373,438
------------
ELECTRICAL EQUIPMENT--1.0%
200,000 AMP Inc. ................................................ 8,450,000
------------
ENERGY RELATED--4.7%
175,000 Amoco Corporation........................................ 11,659,375
300,000 BJ Services Company+..................................... 6,825,000
275,000 Enron Corporation........................................ 9,659,375
100,000 PanHandle Eastern Corporation............................ 2,437,500
175,000 Schlumberger Ltd. ....................................... 10,871,875
------------
41,453,125
------------
FINANCIAL SERVICES--6.2%
190,000 BankAmerica Corporation.................................. 9,998,750
160,000 Citicorp................................................. 9,260,000
391,200 Golden West Financial Corporation........................ 18,435,300
574,000 Norwest Corporation...................................... 16,502,500
------------
54,196,550
------------
HEALTH CARE--MISCELLANEOUS--1.1%
433,500 Pyxis Corporation+....................................... 9,780,844
------------
HEALTH CARE SERVICES--5.7%
390,000 Healthsource Inc.+....................................... 13,650,000
650,000 Living Centers America Inc.+............................. 17,631,250
255,000 Oxford Health Plans+..................................... 11,985,000
400,000 Sun Healthcare Group Inc.+............................... 6,300,000
------------
49,566,250
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 12 ------------------
<PAGE> 20
-----------------------------------------------
MONTGOMERY GROWTH FUND
-----------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------------ ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
HOME BUILDER--1.1%
600,000 Clayton Homes Inc. ...................................... $ 9,825,000
------------
INDUSTRIAL PRODUCTS--2.6%
410,000 Owens-Corning Fiberglass Corporation+.................... 15,118,750
240,000 Wabash National Corporation.............................. 7,470,000
------------
22,588,750
------------
LODGING--1.0%
120,000 Hilton Hotels Corporation................................ 8,430,000
------------
MEDIA/ENTERTAINMENT--1.0%
325,000 Electronic Arts Inc.+.................................... 8,835,937
------------
PAPER AND FOREST PRODUCTS--7.6%
350,000 Chesapeake Corporation................................... 10,893,750
655,000 International Paper Company.............................. 56,166,250
------------
67,060,000
------------
REAL ESTATE INVESTMENT TRUST--1.0%
385,000 Starwood Lodging Trust+.................................. 9,047,500
------------
RETAIL--4.3%
122,500 General Nutrition Companies, Inc.+....................... 4,272,188
475,000 Nordstrom Inc. .......................................... 19,623,437
503,500 Tommy Hilfiger Corporation+.............................. 14,098,000
------------
37,993,625
------------
SEMICONDUCTORS--1.1%
290,000 Analog Devices Inc.+ .................................... 9,860,000
------------
TECHNOLOGY--MISCELLANEOUS--5.1%
200,000 Computer Sciences Corporation+........................... 11,375,000
1,147,200 Octel Communications Corporation+........................ 33,627,300
------------
45,002,300
------------
TELECOMMUNICATIONS--EQUIPMENT--11.9%
525,000 Aspect Telecommunications Corporation+................... 23,625,000
1,900,000 Ericsson (L.M.) Telephone Company, Class B, ADR.......... 38,118,750
1,025,000 General Instrument Corporation, New+..................... 39,334,375
34,000 U.S. Robotics Corporation+............................... 3,701,750
------------
104,779,875
------------
TELECOMMUNICATIONS--UTILITY--1.1%
362,000 WorldCom Inc.+........................................... 9,751,375
------------
TOTAL COMMON STOCKS
(Cost $565,854,260).................................... 666,236,462
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 13 ------------------
<PAGE> 21
-----------------------------------------------
MONTGOMERY GROWTH FUND
-----------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
------------ ------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY DISCOUNT NOTES--15.5%
FEDERAL HOME LOAN BANK (FHLB)--8.5%
$75,000,000 6.086%** due 07/03/95.................................... $ 74,975,000
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)--1.3%
11,000,000 6.000%** due 07/07/95.................................... 10,989,165
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)--5.7%
50,000,000 5.998%** due 07/05/95.................................... 49,967,167
------------
TOTAL U.S. GOVERNMENT AGENCY DISCOUNT NOTES
(Cost $135,931,332).................................... 135,931,332
------------
TOTAL INVESTMENTS (Cost $701,785,592*)............................ 91.3% 802,167,794
OTHER ASSETS AND LIABILITIES (Net)................................ 8.7 76,607,916
----- ------------
NET ASSETS........................................................ 100.0% $878,775,710
===== ============
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes was $702,997,413.
** Rate represents annualized yield at date of purchase.
+ Non-income producing security.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
ABBREVIATION:
ADR American Depositary Receipt
The accompanying notes are an integral part of these financial statements.
------------------ 14 ------------------
<PAGE> 22
---------------------------------------------------
MONTGOMERY MICRO CAP FUND
---------------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
COMMON STOCKS--66.1%
BASIC MATERIALS--1.2%
100,000 IMCO Recycling, Inc. .................................... $ 1,875,000
------------
BUILDING MATERIALS--0.8%
77,000 Triangle Pacific Corporation+............................ 1,270,500
------------
CAPITAL EQUIPMENT--0.8%
44,000 SDL Inc.+................................................ 1,309,000
------------
CAPITAL GOODS--4.1%
110,000 Esterline Technologies Corporation+...................... 2,488,750
95,000 Measurex Corporation..................................... 2,885,625
11,000 Scientific Technologies Inc. ............................ 405,625
60,000 Woodhead Industries, Inc. ............................... 828,750
------------
6,608,750
------------
COMPUTER SOFTWARE--9.5%
170,000 Apertus Technologies Inc.+............................... 1,476,875
65,700 Applied Voice Technology Inc.+........................... 919,800
15,000 Arcsys Inc. ............................................. 515,625
40,000 CBT Group PLC, ADR+...................................... 1,720,000
50,000 Computervision Corporation............................... 331,250
151,500 Comshare, Inc.+.......................................... 3,200,437
20,000 Datalogix International Inc. ............................ 482,500
36,000 Edmark Corporation....................................... 1,453,500
15,000 HNC Software Inc.+....................................... 315,000
15,000 Maxis, Inc. ............................................. 397,500
60,000 Symantec Corporation+.................................... 1,728,750
40,000 The Learning Company+.................................... 1,430,000
70,000 Veritas Software Corporation+............................ 1,540,000
------------
15,511,237
------------
COMPUTER SYSTEMS--2.1%
125,000 Henry (Jack) & Associates................................ 1,867,187
41,500 Kronos, Inc.+............................................ 1,551,062
------------
3,418,249
------------
CONSUMER--LEISURE TIME PRODUCTS--4.1%
85,000 Anchor Gaming+........................................... 1,891,250
125,000 Stratosphere Corporation................................. 953,125
63,300 Toy Biz, Inc.+........................................... 1,147,313
216,000 VariFlex, Inc.+.......................................... 2,632,500
------------
6,624,188
------------
CONSUMER NON-DURABLES--3.2%
95,000 Geerlings & Wade, Inc. .................................. 1,591,250
90,500 Ha-Lo Industries Inc. ................................... 961,562
80,000 Oshkosh B'Gosh, Inc. .................................... 1,310,000
50,000 Polk Audio, Inc.+ ....................................... 593,750
40,100 Safety First Inc.+....................................... 796,987
------------
5,253,549
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 15 ------------------
<PAGE> 23
---------------------------------------------------
MONTGOMERY MICRO CAP FUND
---------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
ELECTRICAL EQUIPMENT--2.7%
89,000 Cherry Corporation+...................................... $ 1,201,500
112,500 Giga-Tronics Inc. ....................................... 815,625
85,000 II-VI Inc.+.............................................. 2,353,438
------------
4,370,563
------------
ENERGY RELATED--1.2%
274,000 Unit Corporation+........................................ 993,250
125,000 Varco International Inc.+................................ 1,031,250
------------
2,024,500
------------
ENGINEERING--CONSTRUCTION--0.4%
120,000 Failure Group, Inc. ..................................... 660,000
------------
ENVIRONMENTAL SERVICES--POLLUTION CONTROL--0.5%
140,000 Smith Environmental Technology Corporation+.............. 770,000
------------
FINANCIAL SERVICES--2.5%
68,500 Aames Financial Corporation.............................. 1,228,719
59,300 Centura Banks, Inc. ..................................... 1,652,987
79,700 Pioneer Financial Services Inc. ......................... 1,175,575
------------
4,057,281
------------
FOOD PROCESSING--1.3%
94,900 International Multifoods Corporation..................... 2,135,250
------------
HEALTH CARE SERVICES--2.9%
70,000 HCIA Inc.+............................................... 2,161,250
60,000 OccuSystems, Inc.+....................................... 1,008,750
69,500 Pyxis Corporation+....................................... 1,568,094
------------
4,738,094
------------
INDUSTRIAL PRODUCTS--5.3%
85,000 Automotive Industries Holdings Inc.+..................... 2,295,000
80,000 Bliss & Laughlin Industries Inc. ........................ 470,000
230,000 Holopak Technologies Inc. ............................... 2,041,250
100,000 Materials Science Corporation+........................... 2,037,500
150,000 Shelter Components Corporation........................... 1,762,500
------------
8,606,250
------------
INFORMATION--BUSINESS SERVICES--2.1%
117,500 On Assignment Inc.+...................................... 2,188,438
53,500 Right Management Consulting.............................. 1,237,188
------------
3,425,626
------------
INSURANCE--1.7%
89,600 AVEMCO Corporation....................................... 1,556,800
45,000 Security-Connecticut Corporation......................... 1,158,750
------------
2,715,550
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 16 ------------------
<PAGE> 24
---------------------------------------------------
MONTGOMERY MICRO CAP FUND
---------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
MACHINERY--CONSTRUCTION--1.2%
50,000 Gehl Company+............................................ $ 418,750
55,000 Manitowoc Company........................................ 1,588,125
------------
2,006,875
------------
MEDICAL PRODUCTS--TECHNOLOGY--0.7%
46,500 Spacelabs Medical Inc. .................................. 1,179,938
------------
PAPER AND FOREST PRODUCTS--1.2%
250,000 Repap Enterprises Inc. .................................. 1,945,313
------------
REAL ESTATE INVESTMENT TRUST--1.4%
98,000 Starwood Lodging Trust+.................................. 2,303,000
------------
RESTAURANTS--1.1%
65,000 Sonic Corporation+....................................... 1,771,250
------------
RETAIL--1.0%
415,000 Filene's Basement Corporation............................ 1,400,625
10,000 Global Direct Mail Corporation........................... 197,500
------------
1,598,125
------------
SEMICONDUCTORS--3.0%
155,000 Actel Corporation+....................................... 2,015,000
26,500 Integrated Silicon Solution, Inc.+....................... 1,381,313
12,500 International Rectifier Corporation+..................... 406,250
30,000 Oak Technology, Inc.+.................................... 1,098,750
------------
4,901,313
------------
TECHNOLOGY--MISCELLANEOUS--5.9%
45,000 Avid Technology Inc.+.................................... 1,681,875
102,500 Data Research Associates Inc.+........................... 1,294,062
30,000 Data Translation Inc.+................................... 843,750
101,800 Octel Communications Corporation+........................ 2,984,013
25,000 Sanmina Corporation+..................................... 959,375
65,000 Tekelec+................................................. 1,551,875
60,600 Tripos Inc. ............................................. 371,175
------------
9,686,125
------------
TELECOMMUNICATIONS--EQUIPMENT--2.1%
75,000 Aspect Telecommunications Corporation+................... 3,375,000
------------
TRUCKING AND LEASING--2.1%
37,000 Landstar System Inc.+.................................... 952,750
150,000 Swift Transportation Company Inc. ....................... 2,550,000
------------
3,502,750
------------
TOTAL COMMON STOCK
(Cost $92,930,557)....................................... 107,643,276
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 17 ------------------
<PAGE> 25
---------------------------------------------------
MONTGOMERY MICRO CAP FUND
---------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY DISCOUNT NOTES--18.4%
FEDERAL HOME LOAN BANK (FHLB)--12.3%
$20,000,000 6.000%** due 07/03/95.................................... $ 19,993,333
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)--6.1%
10,000,000 5.910%** due 07/07/95.................................... 9,990,150
------------
TOTAL U.S. GOVERNMENT AGENCY DISCOUNT NOTES
(Cost $29,983,483)....................................... 29,983,483
------------
TOTAL INVESTMENTS (Cost $122,914,040*)............................... 84.5% 137,626,759
OTHER ASSETS AND LIABILITIES (Net)................................... 15.5 25,322,737
----- ------------
NET ASSETS........................................................... 100.0% $162,949,496
===== ============
</TABLE>
- ------------
<TABLE>
<C> <S>
* Aggregate cost for Federal tax purposes was $123,086,540.
** Rate represents annualized yield at date of purchase.
+ Non-income producing security.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 18 ------------------
<PAGE> 26
---------------------------------------------------
MONTGOMERY SMALL CAP FUND
---------------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
COMMON STOCKS--92.5%
BIOTECHNOLOGY--1.3%
176,000 Centocor Inc.,+ .......................................... $ 2,530,000
------------
CAPITAL GOODS--4.5%
2,300 ASM Lithography Holding N.V.+............................. 82,656
17,600 California Microwave Inc.+................................ 444,400
61,000 Del Webb Corporation...................................... 1,418,250
92,000 Elsag Bailey Process Auto N.V.+........................... 2,530,000
45,000 Glenayre Technologies Inc.+............................... 2,306,250
94,100 Oakwood Homes Corporation................................. 2,411,313
------------
9,192,869
------------
COMPUTER HARDWARE--6.8%
108,000 Dynatech Corporation+..................................... 2,052,000
61,400 Gasonics International Corporation+....................... 1,765,250
81,000 International Rectifer Corporation........................ 2,632,500
44,000 Novellus Systems Inc.+.................................... 2,981,000
88,000 Pairgain Technologies Inc.+............................... 1,683,000
52,000 Zilog Inc.+............................................... 2,593,500
------------
13,707,250
------------
COMPUTER SOFTWARE--1.9%
40,000 Avid Technology Inc.+..................................... 1,495,000
100,000 Network Peripheral, Inc.+................................. 2,200,000
24,000 Starsight Telecast, Inc.+................................. 126,000
------------
3,821,000
------------
CONSUMER--LEISURE TIME PRODUCTS--8.7%
100,000 ACS Enterprises Inc.+..................................... 1,781,250
66,900 Anthony Industries Inc. .................................. 1,229,287
288,000 Benson Eyecare Corporation+............................... 2,916,000
52,000 Carmikle Cinemas, Inc., Class A+.......................... 1,261,000
58,300 Comcast U.K., Cable Partners Ltd. ........................ 947,375
32,000 Exide Corporation......................................... 1,376,000
40,000 Regal Cinemas Inc.+....................................... 1,285,000
68,000 Renaissance Communications Corporation+................... 2,278,000
200,004 ShoLodge, Inc.+........................................... 2,950,059
56,000 Young Broadcasting, Inc., Class A+........................ 1,533,000
------------
17,556,971
------------
DRUGS--DRUG DELIVERY--7.8%
88,000 Amerisource Health Corporation, Class A................... 2,024,000
188,000 Circa Pharmaceuticals Inc.+ .............................. 5,992,500
112,000 Diagnostek, Inc.+......................................... 1,792,000
277,700 Roberts Pharmaceuticals Corporation+...................... 6,039,975
------------
15,848,475
------------
ENERGY RELATED--5.4%
82,400 BJ Services Company+...................................... 1,874,600
78,200 Camco International Inc. ................................. 1,827,925
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 19 ------------------
<PAGE> 27
---------------------------------------------------
MONTGOMERY SMALL CAP FUND
---------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
ENERGY RELATED--(CONTINUED)
240,000 High Plains Corporation+.................................. $ 1,350,000
160,000 Petroleum Geo-Services, ADR+.............................. 4,630,000
71,700 Seagull Energy Corporation+............................... 1,183,050
------------
10,865,575
------------
FINANCIAL SERVICES--7.7%
52,000 CMAC Investment Corporation............................... 2,255,500
112,000 Commercial Federal Corporation+........................... 3,059,000
104,000 Countrywide Credit Industries, Inc. ...................... 2,184,000
62,900 Equitable of Iowa Companies............................... 2,067,838
89,400 Life Re Corporation....................................... 1,665,075
35,400 ONBANCorp Inc. ........................................... 1,002,262
40,000 The PMI Group Inc. ....................................... 1,735,000
48,000 Vesta Insurance Group Inc. ............................... 1,650,000
------------
15,618,675
------------
FOOD--0.9%
132,000 WLR Foods, Inc. .......................................... 1,872,750
------------
HEALTH CARE SERVICES--6.5%
65,200 Apria Healthcare Group, Inc.+............................. 1,825,600
100,000 Community Health Systems, Inc.+........................... 3,387,500
79,800 Multicare Companies, Inc.+................................ 1,391,512
88,000 Omnicare, Inc. ........................................... 2,387,000
240,000 OrNda Healthcorp+......................................... 4,125,000
------------
13,116,612
------------
INDUSTRIAL PRODUCTS--7.3%
95,900 Belden, Inc. ............................................. 2,589,300
88,000 C-COR Electronics+........................................ 2,442,000
134,800 Greenfield Industries Inc. ............................... 3,875,500
128,000 OEA Systems Inc. ......................................... 3,792,000
84,000 Titan Wheel International, Inc. .......................... 2,163,000
------------
14,861,800
------------
INFORMATION--BUSINESS SERVICES--4.2%
283,500 National Data Corporation................................. 6,555,938
82,000 VeriFone, Inc.+........................................... 1,993,625
------------
8,549,563
------------
MEDICAL PRODUCTS--TECHNOLOGY--4.1%
48,000 Arrow International....................................... 2,010,000
250,000 Corvita Corporation+...................................... 1,250,000
98,200 I-Stat Corporation+....................................... 3,584,300
41,100 Isolyser Company Inc.+.................................... 1,464,187
------------
8,308,487
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 20 ------------------
<PAGE> 28
---------------------------------------------------
MONTGOMERY SMALL CAP FUND
---------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
RETAIL--4.0%
128,000 APS Holding Corporation, Class A+......................... $ 3,360,000
61,000 Global Direct Mail Corporation+........................... 1,204,750
128,000 Tommy Hilfiger Corporation+............................... 3,584,000
------------
8,148,750
------------
TELECOMMUNICATIONS--20.4%
305,500 ALC Communications Corporation+........................... 13,785,687
80,000 Arch Communications Group+................................ 1,765,000
120,000 IntelCom Group, Inc.+..................................... 1,072,500
285,400 LCI International Worldwide Telecommunication+............ 8,740,375
63,900 MobileMedia Corporation+.................................. 1,317,938
144,000 Mobile Telecommunications Technology Corporation+......... 3,933,000
400,000 WorldCom, Inc.+........................................... 10,775,000
------------
41,389,500
------------
TRANSPORTATION--1.0%
61,700 Valujet Airlines Inc.+.................................... 2,028,388
------------
TOTAL COMMON STOCKS
(Cost $140,154,454)..................................... 187,416,665
------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
CONVERTIBLE BONDS--2.9%
$1,000,000 All American Communications, Subordinated Notes,
6.500% due 10/01/03..................................... 940,000
4,434,872 IntelCom Group, Subordinated Notes, Payment-in-Kind,
7.000% due 10/30/98..................................... 3,148,759
2,500,000 United Gaming Inc, Subordinated Debenture,
7.500% due 09/15/03**................................... 1,693,750
------------
TOTAL CORPORATE BONDS
(Cost $7,934,872)....................................... 5,782,509
------------
TOTAL SECURITIES
(Cost $148,089,326)..................................... 193,199,174
------------
REPURCHASE AGREEMENTS--3.6%
3,614,500 Agreement with Chemical Bank Tri-Party, 6.250% dated
06/30/95, to be repurchased at $3,616,383, on 07/03/95,
collateralized by $236,513 U.S. Treasury Note, 7.875%
due 11/15/04; and $3,430,347 Federal National Mortgage
Association,
6.594% due 11/15/23..................................... 3,614,500
3,614,500 Agreement with Paine Webber Mortgage Tri-Party, 6.250%
dated 06/30/95, to be repurchased at $3,616,383 on
07/03/95, collateralized by $3,667,338 Federal Home Loan
Mortgage Corporation #1630, 6.625% due 10/15/22......... 3,614,500
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $7,229,000)....................................... 7,229,000
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 21 ------------------
<PAGE> 29
---------------------------------------------------
MONTGOMERY SMALL CAP FUND
---------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
(NOTE 1)
------------
<S> <C> <C>
TOTAL INVESTMENTS (Cost $155,318,326*).......................... 99.0% $200,428,174
OTHER ASSETS AND LIABILITIES (Net).............................. 1.0 1,970,667
----- ------------
NET ASSETS...................................................... 100.0% $202,398,841
===== ============
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes was $155,420,740.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
+ Non-income producing security.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
ABBREVIATION:
ADR American Depositary Receipt
The accompanying notes are an integral part of these financial statements.
------------------ 22 ------------------
<PAGE> 30
----------------------------------------------------------
MONTGOMERY EQUITY INCOME FUND
----------------------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
--------- ----------
<S> <C> <C>
COMMON STOCKS--93.7%
CAPITAL GOODS--2.7%
2,000 Minnesota Mining & Manufacturing Company..................... $ 114,500
2,000 National Services Industries Inc. ........................... 57,750
----------
172,250
----------
CHEMICALS--3.9%
1,800 Betz Laboratories Inc. ...................................... 81,450
1,300 Dow Chemical Company......................................... 93,438
2,200 Witco Corporation............................................ 70,950
----------
245,838
----------
CONSUMER NON-DURABLES--9.9%
3,300 American Brands Inc. ........................................ 131,175
1,000 Clorox Company............................................... 65,250
3,500 Philip Morris Companies, Inc. ............................... 260,312
5,900 UST Inc. .................................................... 175,525
----------
632,262
----------
DRUGS--DRUG DELIVERY--1.9%
3,300 Baxter International Inc. ................................... 120,037
----------
ENERGY RELATED--14.2%
2,500 Amoco Corporation............................................ 166,562
500 Atlantic Richfield Company................................... 54,875
3,000 Chevron Corporation.......................................... 139,875
6,800 Dresser Industries Inc. ..................................... 151,300
3,100 Exxon Corporation............................................ 218,937
2,700 Texaco Inc. ................................................. 177,188
----------
908,737
----------
FINANCIAL SERVICES--8.8%
3,800 Banc One Corporation......................................... 122,550
1,500 First of America Bankcorp.................................... 55,688
2,200 KeyCorp, New................................................. 69,025
700 Morgan (J.P.) & Company Inc. ................................ 49,087
4,900 U.S. Bancorp................................................. 117,906
4,100 Wachovia Corporation......................................... 146,575
----------
560,831
----------
FOOD--2.6%
1,000 Anheuser-Busch Companies Inc. ............................... 56,875
800 Darden Restaurants Inc.+..................................... 8,700
1,300 General Mills Inc. .......................................... 66,788
700 Heinz (H.J.) Company......................................... 31,063
----------
163,426
----------
INFORMATION--BUSINESS SERVICES--1.3%
1,100 McGraw Hill Companies Inc. .................................. 83,463
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 23 ------------------
<PAGE> 31
----------------------------------------------------------
MONTGOMERY EQUITY INCOME FUND
----------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
--------- ----------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
INSURANCE--8.9%
3,400 American General Corporation................................. $ 114,750
1,300 Lincoln National Corporation, Ltd. .......................... 56,875
1,900 Marsh & McLennan Companies................................... 154,138
1,000 Ohio Casualty Corporation.................................... 31,750
2,000 SAFECO Corporation........................................... 114,625
2,000 St. Paul Companies, Inc. .................................... 98,500
----------
570,638
----------
MACHINERY--CONSTRUCTION--0.9%
1,400 Keystone International Inc. ................................. 27,475
800 Stanley Works................................................ 30,300
----------
57,775
----------
OFFICE EQUIPMENT--0.9%
1,500 Pitney Bowes Inc. ........................................... 57,562
----------
PAPER AND FOREST PRODUCTS--3.7%
2,400 Kimberly-Clark Corporation................................... 143,700
1,600 Union Camp Corporation....................................... 92,600
----------
236,300
----------
PHARMACEUTICALS--10.0%
2,500 American Home Products Corporation........................... 193,437
3,100 Bristol-Myers Squibb Company................................. 211,188
900 Lilly (Eli) & Company........................................ 70,650
1,700 Merck & Company, Inc. ....................................... 83,300
900 Warner-Lambert Company....................................... 77,737
----------
636,312
----------
RETAIL--2.0%
700 May Department Stores Company................................ 29,137
2,100 Penney (J.C.) Company, Inc. ................................. 100,800
----------
129,937
----------
TELECOMMUNICATIONS--8.4%
2,400 BellSouth Corporation........................................ 152,400
6,100 GTE Corporation.............................................. 208,163
2,800 NYNEX Corporation............................................ 112,700
1,800 Southern New England Telecommunications Corporation.......... 63,450
----------
536,713
----------
UTILITIES--13.6%
4,700 Baltimore Gas & Electric Company............................. 117,500
2,000 Florida Progress Corporation................................. 62,500
2,900 IPALCO Enterprises Inc. ..................................... 92,437
2,100 National Fuel Gas Company.................................... 60,113
3,600 NICOR Inc. .................................................. 96,750
5,800 Pacific Corporation.......................................... 108,750
5,400 SCANA Corporation............................................ 120,825
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 24 ------------------
<PAGE> 32
----------------------------------------------------------
MONTGOMERY EQUITY INCOME FUND
----------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
--------- ----------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
UTILITIES--(CONTINUED)
1,900 Union Electric Company....................................... $ 70,775
2,600 Western Resources Inc. ...................................... 80,275
2,000 Wisconsin Energy Corporation................................. 56,000
----------
865,925
----------
TOTAL COMMON STOCK
(Cost $5,659,911).......................................... 5,978,006
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
REPURCHASE AGREEMENTS--6.6%
$212,500 Agreement with Chemical Bank Tri-Party, 6.250% dated
06/30/95, to be repurchased at $212,611 on 07/03/95,
collateralized by: $13,905 U.S. Treasury Note, 7.875% due
11/15/04 and $201,673 Federal National Mortgage
Association, 6.594% due 11/15/23........................... 212,500
212,500 Agreement with Paine Webber Tri-Party, 6.250% dated 06/30/95,
to be repurchased at $212,611 on 07/03/95, collateralized
by
$215,607 Federal Home Loan Mortgage Corporation #1630,
6.625% due 10/15/22........................................ 212,500
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $425,000)............................................ 425,000
----------
TOTAL INVESTMENTS (Cost $6,084,911*).............................. 100.3% 6,403,006
OTHER ASSETS AND LIABILITIES (Net)................................ (0.3) (20,388)
----- ----------
NET ASSETS........................................................ 100.0% $6,382,618
===== ==========
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes was $6,085,943.
+ Non-income producing security.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
The accompanying notes are an integral part of these financial statements.
------------------ 25 ------------------
<PAGE> 33
----------------------------------------------------------------
MONTGOMERY ASSET ALLOCATION FUND
----------------------------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- -----------
<S> <C> <C>
COMMON STOCKS--45.3%
BUILDING MATERIALS--2.2%
22,000 Oakwood Homes Corporation................................. $ 563,750
20,000 Owens-Corning Fiberglass Corporation+..................... 737,500
-----------
1,301,250
-----------
BUSINESS SERVICES--0.3%
10,000 Sitel Corporation+........................................ 176,875
-----------
CAPITAL GOODS--1.4%
10,000 ASM Lithography Holdings N.V.+............................ 359,375
8,900 Tyco International Ltd. .................................. 480,600
-----------
839,975
-----------
COMPUTER HARDWARE--1.1%
25,000 AST Research Inc.+........................................ 385,937
11,400 EMC Corporation+.......................................... 276,450
-----------
662,387
-----------
COMPUTER NETWORKING--1.0%
15,000 Bay Networks Inc.+........................................ 618,750
-----------
COMPUTER SERVICES--0.6%
6,300 Computer Sciences Corporation+............................ 358,312
-----------
COMPUTER SOFTWARE--4.1%
13,500 Applied Voice Technology Inc.+............................ 189,000
24,500 Baan Company, N.V. ....................................... 756,437
2,000 HBO & Company............................................. 109,250
7,500 Policy Management Systems Corporation+.................... 345,000
16,500 Sybase Inc.+.............................................. 479,531
20,000 Symantec Corporation+..................................... 576,250
-----------
2,455,468
-----------
COMPUTER SYSTEMS--0.5%
7,800 Kronos, Inc.+............................................. 291,525
-----------
CONSUMER--LEISURE TIME PRODUCTS--1.0%
32,100 Toy Biz, Inc.+............................................ 581,813
-----------
ENERGY RELATED--3.8%
5,500 Amoco Corporation......................................... 366,438
49,000 BJ Services Company+...................................... 1,114,750
16,000 Enron Corporation......................................... 562,000
4,000 Schlumberger Ltd. ........................................ 248,500
-----------
2,291,688
-----------
FINANCIAL SERVICES--3.4%
5,700 BankAmerica Corporation................................... 299,963
10,000 Citicorp.................................................. 578,750
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 26 ------------------
<PAGE> 34
----------------------------------------------------------------
MONTGOMERY ASSET ALLOCATION FUND
----------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- -----------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
FINANCIAL SERVICES--(CONTINUED)
15,000 Golden West Financial Corporation......................... $ 706,875
16,000 Norwest Corporation....................................... 460,000
-----------
2,045,588
-----------
HEALTH CARE SERVICES--3.0%
11,300 Healthsource Inc.+........................................ 395,500
16,900 Living Centers of America Inc.+........................... 458,412
16,400 Oxford Health Plans Inc.+................................. 770,800
10,000 Sun Healthcare Group Inc.+................................ 157,500
-----------
1,782,212
-----------
HOME BUILDER--0.8%
28,000 Clayton Homes Inc. ....................................... 458,500
-----------
INDUSTRIAL PRODUCTS--0.5%
10,000 Wabash National Corporation............................... 311,250
-----------
INSURANCE--0.8%
19,800 Security-Connecticut Corporation.......................... 509,850
-----------
PAPER AND FOREST PRODUCTS--2.8%
20,000 International Paper Company............................... 1,715,000
-----------
REAL ESTATE INVESTMENT TRUST--0.6%
15,900 Starwood Lodging Trust+................................... 373,650
-----------
RETAIL--2.5%
5,000 General Nutrition Companies, Inc.+........................ 174,375
25,000 Global Direct Mail Corporation............................ 493,750
20,400 Nordstrom, Inc. .......................................... 842,775
-----------
1,510,900
-----------
SEMICONDUCTORS--1.7%
23,700 Actel Corporation+........................................ 308,100
10,500 Analog Devises Inc.+...................................... 357,000
9,000 Oak Technology, Inc.+..................................... 329,625
-----------
994,725
-----------
TECHNOLOGY--MISCELLANEOUS--4.8%
50,000 Ampex Corporation, Class A+............................... 112,500
2,500 Discreet Logic, Inc.+..................................... 81,562
46,300 Octel Communications Corporation+......................... 1,357,169
12,000 PictureTel Corporation+................................... 579,000
20,200 Videoserver, Inc. ........................................ 785,275
-----------
2,915,506
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 27 ------------------
<PAGE> 35
----------------------------------------------------------------
MONTGOMERY ASSET ALLOCATION FUND
----------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- -----------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
TELECOMMUNICATIONS--3.9%
13,500 Aspect Telecommunications Corporation+.................... $ 607,500
56,000 Ericsson Telephone, Class B, ADR.......................... 1,123,500
6,000 Nokia Corporation, Class A, ADR........................... 357,750
10,500 Worldcom, Inc.+........................................... 282,844
-----------
2,371,594
-----------
TELECOMMUNICATIONS--EQUIPMENT--3.4%
50,000 General Instruments Corporation, New+..................... 1,918,750
1,000 U.S. Robotics Corporation+................................ 108,875
-----------
2,027,625
-----------
TRANSPORTATION--1.1%
40,000 Swift Transportation Company Inc.+........................ 680,000
-----------
TOTAL COMMON STOCKS
(Cost $24,469,552)........................................ 27,274,443
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS--27.5%
U.S. TREASURY BONDS--10.4%
$1,000,000 U.S. Treasury Bonds, 7.250% due 05/15/04.................. 1,067,812
1,000,000 U.S. Treasury Bonds, 10.750% due 08/15/05**............... 1,327,969
1,000,000 U.S. Treasury Bonds, 8.875% due 08/15/17.................. 1,245,156
1,000,000 U.S. Treasury Bonds, 8.875% due 02/15/19**................ 1,250,312
1,500,000 U.S. Treasury Bonds, 6.250% due 08/15/23.................. 1,416,797
-----------
6,308,046
-----------
U.S. TREASURY NOTES--17.1%
1,000,000 U.S. Treasury Notes, 6.500% due 04/30/97.................. 1,011,719
1,000,000 U.S. Treasury Notes, 6.125% due 05/15/98.................. 1,006,875
1,000,000 U.S. Treasury Notes, 5.000% due 01/31/99.................. 970,313
3,000,000 U.S. Treasury Notes, 7.500% due 10/31/99**................ 3,169,688
2,000,000 U.S. Treasury Notes, 7.750% due 01/31/00.................. 2,137,813
1,000,000 U.S. Treasury Notes, 5.750% due 08/15/03.................. 969,688
1,000,000 U.S. Treasury Notes, 6.500% due 05/15/05**................ 1,021,250
-----------
10,287,346
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $16,077,085)........................................ 16,595,392
-----------
U.S. GOVERNMENT AGENCY SECURITIES--22.5%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)--3.8%
FHLMC:
50,435 Pool #200024, 10.000% due 01/01/01........................ 52,397
63,041 Pool #200043, 9.000% due 07/01/01......................... 65,277
FHLMC, REMIC:
577,984 1366C (PAC) 5.500% due 05/15/01........................... 575,636
1,173,459 1350C (XPAC) 5.650% due 02/15/11.......................... 1,168,508
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 28 ------------------
<PAGE> 36
----------------------------------------------------------------
MONTGOMERY ASSET ALLOCATION FUND
----------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES--(CONTINUED)
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC)--(CONTINUED)
$ 224,007 11C (XTAC) 9.500% due 04/15/19............................ $ 231,288
209,504 1569 A (PAC), (PO) due 08/15/23........................... 205,796
-----------
2,298,902
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)--18.7%
FNMA:
2,000,000 7.000% due TBA............................................ 1,967,188
678,537 3.000% due 03/25/20....................................... 664,966
1,000,000 9.500% TBA................................................ 1,051,094
FNMA, Balloon:
354,307 Pool #305560, 9.500% due 01/01/25......................... 372,410
645,692 Pool #304018, 9.500% due 02/01/25......................... 678,683
FNMA, REMIC:
603,163 1400A (XPAC) 6.250% due 10/15/96.......................... 588,837
107,274 1991-79B (PO) due 07/25/98................................ 87,998
1,000,000 1993-59C (PAC) 5.000% due 11/25/02........................ 979,219
114,498 1552A (PAC) 5.000% due 06/15/03........................... 114,516
1,000,000 1993-220PB (PAC) 4.350% due 06/25/03**.................... 979,375
500,000 1663PM (PAC) 7.000% due 08/15/04.......................... 507,422
500,000 1574PB (PAC) 4.700% due 11/15/07.......................... 494,297
200,000 1993-167B (PAC) 4.750% due 02/25/09....................... 197,344
1,000,000 1993-224PC (PAC) 4.750% due 07/25/11...................... 977,031
980,000 1993-50PE (PAC) 5.000% due 11/25/11....................... 960,400
35,933 1989-5B (PAC) 8.500% due 03/25/14**....................... 35,815
577,557 1151G (Inverse) 9.525% due 05/20/14....................... 587,394
-----------
11,243,989
-----------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(Cost $13,458,893)...................................... 13,542,891
-----------
CORPORATE BONDS--4.0%
200,000 AT&T Corporation, MTN,
9.040% due 11/01/95..................................... 201,962
500,000 BankAmerica Corporation, Notes,
5.875% due 11/15/95..................................... 499,445
1,250,000 Ford Motor Company, Notes,
7.875% due 10/15/96..................................... 1,275,049
425,000 Merrill Lynch and Company, MTN,
6.520% due 05/13/96..................................... 426,889
-----------
TOTAL CORPORATE BONDS
(Cost $2,405,659)....................................... 2,403,345
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 29 ------------------
<PAGE> 37
----------------------------------------------------------------
MONTGOMERY ASSET ALLOCATION FUND
----------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS--0.1% (Cost $44,345)
$ 44,346 Drexel Burnham Lambert Mortgage, Series C3, (SEQ)
9.500% due 05/20/14..................................... $ 44,824
-----------
TOTAL INVESTMENTS (Cost $56,455,534*)................................ 99.4% 59,860,895
OTHER ASSETS AND LIABILITIES (Net)................................... 0.6 372,934
----- -----------
NET ASSETS........................................................... 100.0% $60,233,829
===== ===========
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes.
** Security pledged as collateral for dollar roll transactions.
+ Non-income producing security.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
<TABLE>
<S> <C>
ABBREVIATIONS:
ADR American Depositary Receipt.
Inverse Bonds with coupon rates that rise when index rates fall and fall when index
rates rise.
MTN Medium-Term Note.
PAC Planned Amortization Class: Bonds which are protected in part from variations
in prepayments, generally resulting in greater stability.
PO Principal Only: Bonds which receive no interest and that are very sensitive to
changes in prepayment rates. Can be very volatile.
REMIC Real Estate Mortgage Investment Conduit.
SEQ Sequential: Bonds which are repaid in sequential order. Their actual principal
paydowns are dependent on how quickly the underlying mortgages prepay.
TAC Targeted Amortization Class: Bonds which are protected from prepayments.
However, these bonds are usually less stable than PAC's.
TBA To be Announced Security.
XPAC Broken Planned Amortization Class: PAC bonds which have lost their protection
against prepayment risk, resulting in a security similar to a sequential.
XTAC Broken Targeted Amortization Class: TAC bonds which have lost their protection
against prepayment risk, resulting in a security similar to a sequential.
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 30 ------------------
<PAGE> 38
------------------------------------------------------------------------
MONTGOMERY GLOBAL OPPORTUNITIES FUND
------------------------------------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
--------- -----------
<S> <C> <C>
COMMON STOCKS--100.1%
ARGENTINA--0.3%
10,250 Angel Estrada............................................... $ 40,498
-----------
AUSTRALIA--3.4%
39,499 National Australia Bank Ltd., ORD........................... 312,182
49,800 Publishing and Broadcasting Ltd. ........................... 148,307
-----------
460,489
-----------
AUSTRIA--2.4%
950 BWT Benchiser Wassertechnik AG.............................. 115,092
2,160 Voest Alpine Eisenbahnsys................................... 217,331
-----------
332,423
-----------
BELGIUM--0.9%
540 Kredietbank NPV............................................. 128,327
-----------
CANADA--2.4%
10,470 Brascan, Class A............................................ 163,897
13,300 Western International Communication, Class B................ 169,464
-----------
333,361
-----------
CHINA--2.0%
15,200 Huaneng Power International, ADS+........................... 279,300
-----------
COLUMBIA--1.0%
18,300 Banco de Columbia, GDR***................................... 139,995
-----------
DENMARK--3.2%
1,000 Den Danske Bank............................................. 62,772
11,200 Tele Danmark A.S., ADR...................................... 313,600
1,350 Unidanmark A.S., Class A+................................... 66,244
-----------
442,616
-----------
FINLAND--5.0%
3,100 Metra AB, Class B, ORD...................................... 136,818
9,240 Nokia AB Corporation, Series A.............................. 546,266
-----------
683,084
-----------
FRANCE--0.8%
2,290 Valeo....................................................... 111,355
-----------
GERMANY--3.9%
339 Axel Springer Verlag, Class A............................... 191,214
260 Commerzbank AG.............................................. 62,196
156 Deutsche Fpandbrief & Hypobk................................ 79,306
2300 Dresdner Bank AG............................................ 66,529
210 Kampa Haus AG............................................... 128,322
-----------
527,567
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 31 ------------------
<PAGE> 39
------------------------------------------------------------------------
MONTGOMERY GLOBAL OPPORTUNITIES FUND
------------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
--------- -----------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
GREAT BRITAIN--4.1%
642,100 Aegis Group, ORD+........................................... $ 285,908
14,900 Pearson, ORD................................................ 140,984
16,100 Reuters, ORD................................................ 134,032
-----------
560,924
-----------
HONG KONG--4.8%
10,800 HSBC Holdings............................................... 138,528
54,000 Hutchison Whampoa, Ltd. .................................... 261,004
34,400 Sun Hung Kai Properties..................................... 254,517
-----------
654,049
-----------
INDONESIA--2.4%
8,600 Indonesian Satellite Inc., ADR.............................. 328,950
-----------
IRELAND--1.2%
191,431 Anglo Irish Bank Corporation................................ 163,153
-----------
ITALY--3.7%
39,800 S.T.E.T. ................................................... 110,066
57,900 S.T.E.T. Di Risp............................................ 128,627
62,800 Telecom Italia Risp......................................... 132,796
49,400 Telecom Italia SPA.......................................... 133,897
-----------
505,386
-----------
JAPAN--12.3%
3,000 Aiwa Corporation............................................ 72,562
28 DDI Corporation............................................. 224,648
3,000 Izumi Company, Ltd. ........................................ 70,438
5,000 Kyocera Corporation......................................... 411,775
17,000 Matsushita Electric Industrial.............................. 264,763
3,000 National House Industrial Company........................... 55,572
5,000 Nihon Dempa Kogyo........................................... 144,534
14 Nippon Telegraph and Telephone Corporation.................. 117,279
2,200 Nissen Company.............................................. 66,191
6,000 Tokyo Electron Ltd. ........................................ 205,298
1,000 Towa Pharmaceutical......................................... 54,864
-----------
1,687,924
-----------
NETHERLANDS--6.1%
6,215 ABN Amro Holdings........................................... 239,856
11,400 IHC Caland N.V. ............................................ 323,717
5,770 Koninklijke PTT Nederland................................... 207,415
2,600 Vendex International N.V.+ ................................. 68,796
-----------
839,784
-----------
NEW ZEALAND--1.0%
35,800 Telecom Corporation of New Zealand.......................... 134,031
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 32 ------------------
<PAGE> 40
------------------------------------------------------------------------
MONTGOMERY GLOBAL OPPORTUNITIES FUND
------------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
--------- -----------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
NORWAY--6.6%
119,100 Christiana Bank Kreditkasse+................................ $ 276,303
48,400 Den Norske Bank+............................................ 131,129
6,070 Kvaerner, Class A........................................... 277,700
12,600 Unitor Ships Services....................................... 219,744
-----------
904,876
-----------
SPAIN--4.0%
2,600 Empresa Nacional de Electicidad (Endesa).................... 128,363
28,360 Iberdrola S.A. ............................................. 213,534
6,270 Repsol, ADR................................................. 198,289
-----------
540,186
-----------
SWEDEN--7.5%
4,500 Astra AB, Class A........................................... 138,874
4,000 Autoliv..................................................... 213,895
10,680 Ericsson (L.M.) Telephone Company, Class B.................. 212,878
7,900 Pharmacia AB, Class B....................................... 171,583
6,700 Pharmacia AB, ADR........................................... 146,562
16,300 Sparbanken/Swedbank**....................................... 136,681
-----------
1,020,473
-----------
SWITZERLAND--1.5%
150 Danzas Holdings............................................. 128,962
65 Publicitas Holding SA-R..................................... 70,560
-----------
199,522
-----------
UNITED STATES--19.6%
2,158 American International Group, Inc. ......................... 246,012
2,825 Andrew Corporation+......................................... 163,497
5,400 Cisco Systems Inc.+......................................... 273,037
8,400 Claire's Stores Inc. ....................................... 152,250
5,950 Cummins Engine Inc. ........................................ 259,569
2,700 Dean Witter Discover & Company.............................. 126,900
2,280 Dow Chemical Company........................................ 163,875
3,900 DSC Communications Corporation+............................. 181,594
3,470 Federal National Mortgage Association....................... 327,481
2,795 Morgan (J.P.) & Company, Inc. .............................. 195,999
850 Nike Inc., Class B.......................................... 71,400
12,000 Sola International Inc.+.................................... 298,500
15,400 Sunbeam Corporation ........................................ 213,674
-----------
2,673,788
-----------
TOTAL COMMON STOCKS
(Cost $12,565,654)........................................ 13,692,061
-----------
PREFERRED STOCK--1.4% (Cost $203,803)
GERMANY--1.4%
990 Herlitz AG.................................................. 193,296
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 33 ------------------
<PAGE> 41
------------------------------------------------------------------------
MONTGOMERY GLOBAL OPPORTUNITIES FUND
------------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
(NOTE 1)
-----------
<S> <C> <C>
TOTAL INVESTMENTS (Cost $12,769,457*).............................. 101.5% 13,885,357
OTHER ASSETS AND LIABILITIES (Net)................................. (1.5) (208,286)
----- -----------
NET ASSETS......................................................... 100.0% $13,677,071
===== ===========
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes was $12,774,861.
** Illiquid or Special Situation Security. (See Note 7 to Financial
Statements).
*** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
+ Non-income producing security.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
<TABLE>
<S> <C>
ABBREVIATIONS:
ADR American Depositary Receipt
ADS American Depositary Share
GDR Global Depositary Receipt
ORD Ordinary
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 34 ------------------
<PAGE> 42
------------------------------------------------------------------------
MONTGOMERY GLOBAL OPPORTUNITIES FUND
------------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
% OF NET VALUE
INDUSTRY DIVERSIFICATION (UNAUDITED) ASSETS (NOTE 1)
- ------------------------------------ -------- -----------
<S> <C> <C>
COMMON STOCKS:
Banks...................................................... 16.1% $ 2,199,200
Telecommunications/Equipment............................... 9.7 1,328,883
Telephone/Networks......................................... 8.5 1,160,432
Electronics................................................ 8.0 1,098,932
Broadcasting/Advertising................................... 5.9 808,271
Engineering/Construction................................... 4.8 656,140
Electric Utilities......................................... 4.5 621,197
Health Care/Pharmacy....................................... 3.7 511,883
Diversified Financial Services............................. 3.3 454,381
Machinery and Tools........................................ 2.9 396,387
Newspapers/Publishing...................................... 2.7 372,696
Retail Trade............................................... 2.6 357,675
Telephone/Long Distance.................................... 2.4 328,950
Automotive/Automotive Parts................................ 2.4 325,250
Cosmetics and Personal Care................................ 2.2 298,500
Heavy Construction......................................... 2.0 277,700
Telecommunications/Networking.............................. 2.0 273,037
Conglomerates.............................................. 1.9 261,004
Real Estate................................................ 1.9 254,517
Insurance.................................................. 1.8 246,012
Shipping................................................... 1.6 219,744
Household Products......................................... 1.6 213,674
Oil........................................................ 1.5 198,289
Housing.................................................... 1.4 183,894
Metals and Mining.......................................... 1.2 163,897
Chemicals.................................................. 1.2 163,875
Airfreight Couriers........................................ 0.9 128,962
Telephone/Regional--Local.................................. 0.9 117,279
Footwear................................................... 0.5 71,400
----- -----------
TOTAL COMMON STOCKS............................................ 100.1 13,692,061
PREFERRED STOCK................................................ 1.4 193,296
----- -----------
TOTAL INVESTMENTS.............................................. 101.5 13,885,357
OTHER ASSETS AND LIABILITIES (Net)............................. (1.5) (208,286)
----- -----------
NET ASSETS..................................................... 100.0% $13,677,071
===== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 35 ------------------
<PAGE> 43
----------------------------------------------------------------------------
MONTGOMERY GLOBAL COMMUNICATIONS FUND
----------------------------------------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
COMMON STOCKS--100.6%
ARGENTINA--2.8%
371,485 Angel Estrada........................................... $ 1,467,733
37,650 Argentine Cellular Communications Ltd.**................ 941,485
1,387,600 Telefonica de Argentina S.A. ........................... 3,469,867
------------
5,879,085
------------
AUSTRALIA--2.7%
3,403,700 Australis Media Ltd.+ .................................. 1,766,002
867,000 John Fairfax Holdings................................... 1,589,849
798,100 Publishing and Broadcasting Ltd. ....................... 2,376,777
------------
5,732,628
------------
CANADA--0.8%
67,300 Rogers Communication, Inc., Class B+.................... 1,592,522
------------
CHILE--1.3%
200,800 Telex Chile, ADS........................................ 2,710,800
------------
CZECH REPUBLIC--0.4%
8,100 SPT Telecom............................................. 822,534
------------
DENMARK--3.3%
248,200 Tele Danmark A.S., ADR.................................. 6,949,600
------------
FINLAND--5.1%
181,900 Nokia AB Corporation, Series A.......................... 10,753,863
------------
GERMANY--1.7%
6,150 Axel Springer Verlag, Class A........................... 3,468,923
------------
GREAT BRITAIN--9.2%
5,670,000 Aegis Group, ORD+....................................... 2,524,681
49,800 Bell Cablemedia PLC, ADR+............................... 964,875
4,651 Ionica+**............................................... 1,590,194
323,000 Pearson, ORD............................................ 3,056,222
561,600 Reuters, ORD............................................ 4,675,296
183,000 Videotron Holdings PLC, ADR+............................ 2,584,875
1,069,792 Vodafone Group, ORD..................................... 3,972,387
------------
19,368,530
------------
HONG KONG--3.2%
2,278,000 First Pacific Company................................... 2,016,633
602,000 Hutchinson Whampoa, Ltd. ............................... 2,909,716
521,000 Television Broadcasting, Ltd. .......................... 1,831,425
------------
6,757,774
------------
INDONESIA--3.4%
131,800 Indonesian Satellite Inc., ADR.......................... 5,041,350
1,277,000 PT Kabel Metal (F)...................................... 2,150,314
------------
7,191,664
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 36 ------------------
<PAGE> 44
----------------------------------------------------------------------------
MONTGOMERY GLOBAL COMMUNICATIONS FUND
----------------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
ISRAEL--3.0%
95,936 ECI Telecommunications, Ltd. ........................... $ 1,319,120
218,000 Gilat Satellite Networks, Ltd.+......................... 5,014,000
------------
6,333,120
------------
ITALY--4.1%
680,700 S.T.E.T. ............................................... 1,882,455
1,223,000 S.T.E.T. Di Risp........................................ 2,716,947
962,600 Telecom Italia Risp..................................... 2,035,506
758,400 Telecom Italia SPA...................................... 2,055,617
------------
8,690,525
------------
JAPAN--10.8%
432 DDI Corporation......................................... 3,465,990
69,000 Kyocera Corporation..................................... 5,682,497
57,000 Nihon Dempa Kogyo....................................... 1,647,690
454 Nippon Telegraph and Telephone Corporation.............. 3,803,197
101,000 Omron Corporation....................................... 1,930,506
41,000 Rohm Corporation........................................ 2,118,813
114,000 Tokyo Electron Ltd. .................................... 3,900,655
------------
22,549,348
------------
KOREA--3.2%
22,800 Korea Mobile Telecom, GDS+.............................. 815,100
3,420 Korean Mobile Telecom, ORD.............................. 3,197,503
12,150 Samsung Electronics Ltd., GDR+ ***...................... 656,100
988 Samsung Electronics Ltd., GDS+.......................... 53,352
38,300 Samsung Electronics Ltd., GDS........................... 2,068,200
------------
6,790,255
------------
MALAYSIA--5.5%
1,651,666 Leader Universal Holdings............................... 5,893,968
847,000 O'Connor's Engineering.................................. 2,536,136
1,128,000 Sistem Televisyen Malaysia.............................. 3,007,383
------------
11,437,487
------------
MEXICO--0.3%
31,300 Grupo Iusacell, Series D, ADR+.......................... 328,650
27,900 Grupo Iusacell, Series L, ADR+.......................... 334,800
105,000 Grupo Mexicano de Video, ADS **+........................ 38,850
------------
702,300
------------
NETHERLANDS--1.7%
101,990 Royal PTT Nederland..................................... 3,666,243
------------
NEW ZEALAND--1.0%
551,200 Telecom Corporation of New Zealand...................... 2,063,627
------------
NORWAY--1.0%
77,300 Nera AS................................................. 2,194,598
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 37 ------------------
<PAGE> 45
----------------------------------------------------------------------------
MONTGOMERY GLOBAL COMMUNICATIONS FUND
----------------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
PERU--3.3%
2,790,333 Compania Peruana De Telefonos, Class B.................. $ 4,766,584
1,681,530 Tele 2000............................................... 2,161,913
------------
6,928,497
------------
PHILIPINES--1.0%
3,500 Philipines Long Distance Telephone...................... 250,098
25,900 Philipines Long Distance Telephone, ADR................. 1,858,325
------------
2,108,423
------------
PORTUGAL--0.4%
43,500 Portugal Telecom+....................................... 832,536
------------
RUSSIA--3.9%
450,987 Global Telesystems Group, Inc.+**....................... 6,088,324
200,000 Russian Telecommunications Development Corporation+**... 2,000,000
------------
8,088,324
------------
SPAIN--1.4%
222,500 Telefonica Nacional de Espana, ORD...................... 2,865,635
------------
SWEDEN--4.0%
416,800 Ericsson (L.M.) Telephone Company, Class B.............. 8,307,811
------------
SWITZERLAND--0.2%
330 Publicitas Holding SA-R................................. 358,228
------------
THAILAND--1.2%
64,500 Advanced Information Services (F)....................... 956,330
39,400 Shinawatra Computer (F)................................. 976,820
33,600 United Communications Industry (F)...................... 490,014
------------
2,423,164
------------
UNITED STATES--20.7%
67,700 Alltel Corporation...................................... 1,717,887
37,600 AT & T.................................................. 1,997,500
111,050 Andrew Corporation+..................................... 6,427,019
127,342 Cisco Systems Inc.+..................................... 6,438,730
147,100 DSC Communications Corporation+......................... 6,849,344
23,300 LIN Broadcasting Corporation+........................... 2,950,362
90,000 Montgomery Emerging Communications Fund++............... 900,000
75,400 Motorola, Inc. ......................................... 5,061,225
99,000 Sprint Corporation...................................... 3,328,875
145,000 Stanford Telecommunications+............................ 2,175,000
100,792 USA Mobile Communications+.............................. 1,763,860
138,904 Worldcom, Inc.+......................................... 3,741,728
------------
43,351,530
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 38 ------------------
<PAGE> 46
----------------------------------------------------------------------------
MONTGOMERY GLOBAL COMMUNICATIONS FUND
----------------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
VENEZUELA--0.0%#
33,075 Electricidad de Caracas................................. $ 24,961
------------
TOTAL COMMON STOCKS
(Cost $181,338,085)................................... 210,944,535
------------
TOTAL INVESTMENTS (Cost $181,338,085*).......................... 100.6% 210,944,535
OTHER ASSETS AND LIABILITIES (Net).............................. (0.6) (1,300,329)
----- ------------
NET ASSETS...................................................... 100.0% $209,644,206
===== ============
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes.
** Illiquid Security or Special Situation Security (See Note 7 to Financial
Statements).
*** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
# Amount represents less than 0.1%.
+ Non-income producing security.
++ See Note 2 to Financial Statements.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
<TABLE>
<S> <C>
ABBREVIATIONS:
ADR American Depositary Receipt
ADS American Depositary Share
(F) Foreign or alien shares.
GDR Global Depositary Receipt
GDS Global Depositary Share
ORD Ordinary
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 39 ------------------
<PAGE> 47
----------------------------------------------------------------------------
MONTGOMERY GLOBAL COMMUNICATIONS FUND
----------------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
% OF NET VALUE
INDUSTRY DIVERSIFICATION (UNAUDITED) ASSETS (NOTE 1)
- ------------------------------------ -------- ------------
<S> <C> <C>
COMMON STOCKS:
Telecommunications/Equipment.............................. 29.4% $ 61,563,582
Telephone/Networks........................................ 21.7 45,498,864
Telecommunications/Wireless............................... 9.2 19,359,646
Electronics............................................... 8.6 18,114,000
Telephone/Long Distance................................... 7.9 16,540,640
Broadcasting/Advertising.................................. 7.0 14,773,790
Newspapers/Publishing..................................... 4.6 9,582,727
Telecommunications/Networking............................. 3.1 6,438,730
Telephone/Regional-Local.................................. 2.9 5,965,110
Cable Television.......................................... 2.5 5,315,752
Conglomerates............................................. 1.4 2,909,716
Semiconductors............................................ 1.0 2,118,813
Computers/Office Equipment................................ 0.5 976,820
Mutual Funds.............................................. 0.4 900,000
Telecommunications/Other.................................. 0.4 822,534
Leisure Times............................................. 0.0# 38,850
Electric Utilities........................................ 0.0# 24,961
----- ------------
TOTAL COMMON STOCKS........................................... 100.6 210,944,535
----- ------------
TOTAL INVESTMENTS............................................. 100.6 210,944,535
OTHER ASSETS AND LIABILITIES (Net)............................ (0.6) (1,300,329)
----- ------------
NET ASSETS.................................................... 100.0% $209,644,206
===== ============
</TABLE>
- ------------
# Amount represents less than 0.1%.
The accompanying notes are an integral part of these financial statements.
------------------ 40 ------------------
<PAGE> 48
------------------------------------------------------------------------------
MONTGOMERY INTERNATIONAL SMALL CAP FUND
------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- -----------
<S> <C> <C>
COMMON STOCKS--97.8%
ARGENTINA--0.2%
13,865 Angel Estrada.............................................. $ 54,780
------------
AUSTRIA--8.7%
8,600 Boehler Ud deholm.......................................... 595,113
16,660 Burgenland Holdings AG..................................... 571,298
3,860 BWT Benchiser Wassertechnik AG............................. 467,639
8,283 Voest Alpine Eisenbahnsys.................................. 833,402
------------
2,467,452
------------
BELGIUM--2.4%
5,280 Glaverbel ORD.............................................. 695,128
------------
CHINA--2.3%
35,100 Huaneng Power International, ADS+.......................... 644,963
------------
DENMARK--1.9%
19,600 Tele Danmark A.S., ADR..................................... 548,800
------------
FINLAND--4.1%
14,000 Metra AB, Class B, ORD..................................... 617,888
16,300 Rauma Corporation+......................................... 294,247
15,000 Rauma Corporation, ADR+.................................... 270,000
------------
1,182,135
------------
FRANCE--4.0%
3,880 Essilor International...................................... 705,418
8,800 Valeo...................................................... 427,914
------------
1,133,332
------------
GERMANY--4.1%
1,040 Axel Springer Verlag, Class A.............................. 586,615
955 Kampa Haus AG.............................................. 583,559
------------
1,170,174
------------
GREAT BRITAIN--7.3%
2,040,600 Aegis Group, ORD+.......................................... 908,618
52,900 Frogmore Estates PLC....................................... 398,749
591,800 M.A.I.D.+.................................................. 781,121
------------
2,088,488
------------
HONG KONG--5.0%
1,293,000 International Bank of Asia................................. 693,472
1,098,000 JCG Holdings............................................... 723,694
------------
1,417,166
------------
INDONESIA--2.0%
522,000 Bank Tiara, Asia (F)....................................... 574,270
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 41 ------------------
<PAGE> 49
------------------------------------------------------------------------------
MONTGOMERY INTERNATIONAL SMALL CAP FUND
------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- -----------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
IRELAND--4.4%
876,659 Anglo Irish Bank Corporation............................... $ 747,159
222,598 Anglo Irish Bank Corporation (UK).......................... 189,716
44,276 Irish Continental Group.................................... 327,465
------------
1,264,340
------------
JAPAN--25.6%
18,000 Aiwa....................................................... 435,372
20,000 Arcland Sakamoto........................................... 325,644
19,000 Fuji Machine............................................... 580,615
37,000 Fuso Lexel Inc. ........................................... 307,769
6,000 Izumi Company Ltd. ........................................ 140,877
24,000 National House Industrial Company.......................... 444,576
129,000 New Japan Securities....................................... 560,109
15,000 Nichiha Corporation........................................ 309,716
21,000 Nihon Dempa Kogyo.......................................... 607,044
19,300 Nissen Company............................................. 580,675
4,000 Nissin Company............................................. 229,367
17,000 Royal Ltd. ................................................ 601,734
10,000 Sankyo Frontier............................................ 285,529
24,000 Santen Pharmaceutical Company.............................. 639,962
54,000 Tohoku Misawa Homes........................................ 599,540
12,000 Towa Pharmaceutical........................................ 658,368
------------
7,306,897
------------
MALAYSIA--4.0%
167,000 Hock Hua Bank.............................................. 630,189
194,000 Sistem Televisyen Malaysia................................. 517,227
------------
1,147,416
------------
NETHERLANDS--4.5%
31,430 IHC Caland N.V. ........................................... 892,494
14,200 Vendex International N.V+.................................. 375,734
------------
1,268,228
------------
NORWAY--10.0%
289,500 Christiana Bank Kreditkasse................................ 671,617
127,000 Havtor A+.................................................. 403,829
18,000 Kvaerner, Class A.......................................... 823,491
53,000 Unitor Ships Services...................................... 924,319
------------
2,823,256
------------
SWEDEN--6.3%
21,500 Althin Medical "AB"**...................................... 360,570
15,000 Autoliv.................................................... 802,106
76,400 Sparbanken/Swedbank**...................................... 640,640
------------
1,803,316
------------
SWITZERLAND--1.0%
340 Danzas Holding+............................................ 292,314
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 42 ------------------
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MONTGOMERY INTERNATIONAL SMALL CAP FUND
------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- -----------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
VENEZUELA--0.0%#
3,753 Electricidad de Caracas.................................... $ 2,832
------------
TOTAL COMMON STOCKS
(Cost $27,296,495)......................................... 27,885,287
------------
PREFERRED STOCK--2.2% (Cost $673,043)
GERMANY--2.2%
3,266 Herlitz AG................................................. 637,683
------------
TOTAL SECURITIES
(Cost $27,969,538)......................................... 28,522,970
------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
REPURCHASE AGREEMENTS--5.0%
$709,000 Agreement with Chemical Bank Tri-Party, 6.250% dated
06/30/95 to be repurchased at $709,369, on 07/03/95,
collateralized by: $46,393 Treasury Note, 7.875% due
11/15/04 and $672,878 Federal Home Loan Mortgage
Corporation, 6.594% due 11/15/23......................... 709,000
709,000 Agreement with Paine Webber Tri-Party, 6.250% dated
06/30/95 to be repurchased at $709,369 on 07/03/95,
collateralized by $719,364 Federal Home Loan Mortgage
Corporation #1630, 6.625% due 10/15/22................... 709,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $1,418,000)........................................ 1,418,000
------------
TOTAL INVESTMENTS (Cost $29,387,538*)................................. 105.0% 29,940,970
OTHER ASSETS AND LIABILITIES (Net).................................... (5.0) (1,425,377)
----- ------------
NET ASSETS............................................................ 100.0% $28,515,593
===== ============
</TABLE>
- ------------
<TABLE>
<S> <C>
* Aggregate cost for Federal tax purposes was $29,391,540.
** Illiquid or Special Situation Security (See Note 7 to Financial Statements).
# Amount represents less than 0.1%.
+ Non-income producing security.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
ABBREVIATIONS:
ADR American Depositary Receipt
ADS American Depositary Shares
(F) Foreign or alien shares.
ORD Ordinary
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 43 ------------------
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MONTGOMERY INTERNATIONAL SMALL CAP FUND
------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
% OF NET VALUE
INDUSTRY DIVERSIFICATION (UNAUDITED) ASSETS (NOTE 1)
------------------------------------ -------- -----------
<S> <C> <C>
COMMON STOCKS:
Banks...................................................... 14.5% $ 4,147,063
Engineering/Construction................................... 7.7 2,193,535
Retail Trade............................................... 7.1 2,024,664
Machinery and Tools........................................ 6.2 1,762,750
Housing.................................................... 5.9 1,686,503
Shipping................................................... 5.8 1,655,613
Broadcasting/Advertising................................... 5.0 1,425,845
Automotive/Automotive Parts................................ 4.3 1,230,020
Electric Utilities......................................... 4.3 1,219,093
Electronics................................................ 3.7 1,042,416
Diversified Financial Services............................. 3.3 953,061
Building Materials......................................... 3.3 949,678
Health Care/Pharmaceuticals................................ 3.1 885,069
Heavy Construction......................................... 3.0 823,491
Software Systems........................................... 2.7 781,121
Real Estate................................................ 2.5 706,518
Cosmetics and Personal Care................................ 2.5 705,418
Glass...................................................... 2.4 695,128
Newspapers/Publishing...................................... 2.2 641,395
Steel...................................................... 2.1 595,113
Securities Broker.......................................... 2.0 560,109
Telephone/Networks......................................... 1.9 548,800
Medical and Biotechnology.................................. 1.3 360,570
Airfreight Couriers........................................ 1.0 292,314
----- -----------
TOTAL COMMON STOCKS.......................................... 97.8 27,885,287
PREFERRED STOCK.............................................. 2.2 637,683
REPURCHASE AGREEMENTS........................................ 5.0 1,418,000
----- -----------
TOTAL INVESTMENTS............................................ 105.0 29,940,970
OTHER ASSETS AND LIABILITIES (Net)........................... (5.0) (1,425,377)
----- -----------
NET ASSETS................................................... 100.0% $28,515,593
===== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 44 ------------------
<PAGE> 52
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MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
-------------- ------------
<S> <C> <C>
COMMON STOCKS--82.2%
ARGENTINA--4.9%
1,486,830 Astra Cia Argentina de Petroleo....................... $ 2,230,803
80,600 Banco Frances, ADR.................................... 1,450,800
1,365,393 Central Costanera..................................... 4,302,063
10,715 C.I.A.D.E.A. S.A...................................... 51,981
5,182,057 Cresud................................................ 7,982,363
104 Galicia Y Buenos Aires................................ 413
3,524,616 Inversiones Y Representaciones+....................... 8,355,429
28,818 Inversiones Y Representaciones, GDR+.................. 670,019
15,405 Inversiones Y Representaciones, GDS+.................. 361,055
4,184,266 Perez Companc......................................... 17,578,312
76,200 Telefonica de Argentina, ADR.......................... 1,885,950
1,481,900 Telefonica de Argentina, S.A. ........................ 3,720,499
------------
48,589,687
------------
BANGLADESH--0.2%
45,640 Apex Tannery.......................................... 1,120,627
49,339 Bangladesh Oxygen..................................... 202,425
104,000 Eastern Housing Ltd.+................................. 382,233
------------
1,705,285
------------
BRAZIL--1.5%
959,700 Aracruz Celulose S.A., ADR............................ 11,276,475
97,321 Telebras, ADR......................................... 3,205,510
------------
14,481,985
------------
CHILE--3.8%
153,800 AFP Provida, ADR...................................... 4,133,375
477,800 Chilgener, ADS........................................ 15,110,425
169,390 Empresa Nacional Electricidad de Chile, ADR........... 4,488,835
86,396 Sociedad Quimica Minera de Chile...................... 4,082,211
93,412 The Chile Fund........................................ 5,020,895
267,250 Vina Concha Y Tora S.A., ADR.......................... 5,177,969
------------
38,013,710
------------
CHINA -- 2.4%
4,901,750 Guangdong Investment Holdings Ltd. ................... 2,676,458
8,519,000 Guangzhou Investment Company, Ltd. ................... 1,519,323
173,400 Huaneng Power International, ADS+..................... 3,186,225
1,365,880 Johnson Electric Holdings Ltd., ORD................... 2,753,719
3,582,000 M.C. Packaging of Hong Kong........................... 1,238,317
1,991,360 Shanghai Dazhong Taxi, Class B........................ 1,449,710
2,213,000 Shanghai Diesel Engine, Class B+...................... 1,372,060
2,473,900 Shangri-La Asia....................................... 2,941,389
6,623,000 Sinocan Holdings, ORD................................. 1,883,042
12,551,000 Siu Fung Ceramic Holdings............................. 1,800,461
9,245,000 Tian An China Investments Company..................... 1,433,741
5,404,880 Yue Yuen Industrial Holdings.......................... 1,313,186
------------
23,567,631
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 45 ------------------
<PAGE> 53
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MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
-------------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
COLOMBIA--0.8%
158,765 Banco de Bogota....................................... $ 936,826
136,000 Banco de Colombia, GDR***............................. 1,040,400
19,900 Cadanalco, ADR***..................................... 424,119
96,754 Carulla............................................... 1,207,710
82,226 Cia Nacional de Chocolate............................. 816,428
37,300 Cementos Paz del Rio S.A., Sponsored ADR.............. 631,769
1,606,338 Construcel............................................ 637,978
241,086 Noel.................................................. 1,367,864
54,000 Suramericana, ORD..................................... 1,201,021
------------
8,264,115
------------
CZECH REPUBLIC--1.0%
19,518 IF Rychleho Vynosu.................................... 928,709
35,714 Komercni Banka IF..................................... 599,609
6,238 PIF................................................... 102,800
106,583 Sepap SA.............................................. 5,401,305
33,744 Sporitelni Privatizacni............................... 496,043
24,800 SPT Telecom........................................... 2,518,375
------------
10,046,841
------------
GHANA--0.1%
38,245 Ashanti Goldfields***................................. 889,196
10,100 Ashanti Goldfields, Reg. ADR.......................... 234,825
------------
1,124,021
------------
GREECE--1.2%
110,840 Aegek................................................. 2,464,864
27,820 Aluminium Company of Greece........................... 1,162,466
26,500 Ergo Bank............................................. 1,219,867
106,080 Hellenic Bottling Company............................. 3,151,639
93,170 Nikas S.A. ........................................... 1,247,295
186,080 The Greek Progress Fund............................... 1,820,744
151,250 Themeliodomi S.A. .................................... 1,456,397
------------
12,523,272
------------
HONG KONG--0.4%
599,000 Cheung Kong Holdings.................................. 2,964,887
114,300 HSBC Holdings......................................... 1,466,085
------------
4,430,972
------------
HUNGARY--0.2%
97,200 Egis Gyogyszergyar**.................................. 2,110,723
------------
INDIA--4.0%
301,850 Arvind Mills Ltd.**................................... 1,413,119
664,787 Arvind Mills Ltd., GDS................................ 3,490,132
145,500 Bajaj Auto**.......................................... 3,382,643
151,500 Bharat Petroleum**.................................... 1,413,678
220,000 BITV**................................................ 1,261,147
</TABLE>
The accompanying notes are an integral part of these financial statements.
-------------------- 46 --------------------
<PAGE> 54
------------------------------------------------------------------
MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
-------------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
INDIA--(CONTINUED)
870,800 Carrier Aircon Ltd.**................................. $ 4,381,732
7,500 East India Hotels**................................... 101,513
1,600 Finolex Cables**...................................... 15,287
86,250 Grasim Industries Ltd.**.............................. 1,659,076
86,425 Grasim Industries Ltd., GDR........................... 2,074,200
8,500 Grasim Industries Ltd., GDS........................... 204,000
343,300 Great Eastern Shipping**.............................. 508,390
50,100 Great Eastern Shipping, GDR........................... 357,213
4,577 Great Eastern Shipping, GDS........................... 32,634
277,080 Great Eastern Shipping, New+**........................ 410,325
106,800 Gujarat Ambuja Cement**............................... 809,503
74,580 Housing Development and Finance Corporation**......... 5,665,072
184,000 Inovative Marine Products+**.......................... 87,897
346,300 ITI Ltd.**............................................ 297,774
222,800 Kotak Mahindra**...................................... 1,284,293
149,700 Lok Holdings**........................................ 553,032
102,350 Reliance Industries Ltd.**............................ 860,522
116,073 Reliance Industries Ltd., GDS......................... 2,118,333
2,100,000 Rolta India Ltd.**.................................... 1,789,013
64,900 The Indian Hotels Company, Ltd.**..................... 1,045,841
170,400 The Indian Hotels Company, Ltd., GDS.................. 2,748,552
15,300 The Indian Hotels Company, Ltd., Series S............. 246,789
311,700 Titan Watch**......................................... 1,310,331
1,350 Upcom Cables+**....................................... 2,558
------------
39,524,599
------------
INDONESIA--5.8%
504,800 Asia Pacific Resource................................. 4,606,300
2,116,500 Astra International (F)............................... 3,754,009
1,218,500 Bank Bali (F)**....................................... 3,091,390
2,023,100 Bank International Indonesia (F)...................... 6,245,538
1,286,500 Dankos Laboratories (F)+**............................ 4,101,549
2,541,660 Duta Anggada Realty (F)............................... 2,054,328
1,056,000 Hanjaya Mandala Sampoerna (F)......................... 8,298,159
45,100 Indonesian Satellite, ADR............................. 1,725,075
191,500 Indonesian Satellite (F).............................. 726,616
1,726,000 Indorama (F).......................................... 5,192,726
2,626,000 International Indorayon Utama**....................... 5,424,158
82,600 Kalbe Farme (F)....................................... 378,322
804,000 Pabrik Kertas Tjiwi Kimia (F)**....................... 1,615,582
4,119,000 Pakuwon Jati (F)...................................... 3,051,796
1,092,500 Semen Gresik (F)**.................................... 7,334,026
------------
57,599,574
------------
ISRAEL--1.2%
1,597 African Israel+....................................... 1,909,779
133,729 ECI Telecommunications, Ltd. ......................... 1,838,774
622,134 Kitan................................................. 1,534,079
43,706 Koor Industries....................................... 3,723,008
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 47 ------------------
<PAGE> 55
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MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
-------------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
ISRAEL--(CONTINUED)
4,152 Teva Pharmaceuticals.................................. $ 1,552,484
34,403 Teva Pharmaceuticals, ADR............................. 1,290,113
------------
11,848,237
------------
JORDAN--0.2%
97,200 Arab International Hotels............................. 843,332
87,184 Dar Al Dawa........................................... 1,016,101
------------
1,859,433
------------
KOREA--4.0%
49,160 Hamil Iron and Steel Company.......................... 3,382,526
35,330 Hankook Tire Manufacturing............................ 3,005,671
134,930 KEPCO................................................. 5,185,156
148,337 Korea Long Term Credit Bank........................... 4,245,187
65,690 Pohang Iron & Steel Company........................... 6,572,379
114,436 Samsung Construction.................................. 3,093,885
59,300 Samsung Construction, New............................. 1,384,253
7,698 Samsung Construction, New, GDR........................ 55,812
20,000 Samsung Construction, GDS............................. 145,000
10,089 Samsung Electronics Ltd. ............................. 1,714,073
263,300 Shinhan Bank.......................................... 5,698,739
45,996 Shinhan Bank, New..................................... 950,845
143,996 Shinil Engineering Company............................ 2,316,850
23,370 Shinil Engineering Company, New....................... 323,620
67,601 SsangYong Investments & Securities.................... 1,150,085
44,718 Tong Yang Securities.................................. 601,546
------------
39,825,627
------------
MALAYSIA--17.4%
3,618,000 Arab Malaysian Corporation**.......................... 12,910,828
418,000 Arab Malaysian Finance (F)**.......................... 1,688,802
1,960,000 Arab Malaysian Merchant Bank**........................ 23,314,192
4,932,000 DCB Holdings Corporation**............................ 14,464,233
1,241,000 Genting Berhad**...................................... 12,267,473
1,515,500 Hong Leong Credit**................................... 7,645,878
3,590,000 IJM Corporation Berhad**.............................. 14,283,429
6,673,000 IOI Corporation Berhad**.............................. 8,758,655
383,000 IOI Industrial Oxygen................................. 498,791
105,000 IOI Properties........................................ 366,079
1,449,000 Kian Joo Can Factory**................................ 5,675,943
3,732,333 Leader Universal Holdings**........................... 13,318,826
2,793,000 Resorts World Berhad**................................ 16,382,239
3,370,000 Sime Darby**.......................................... 9,399,508
1,943,000 Tanjong PLC**......................................... 6,694,504
981,000 Telekom Malaysia**.................................... 7,444,011
2,952,700 United Engineers**.................................... 18,772,293
------------
173,885,684
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 48 ------------------
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------------------------------------------------------------------
MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
-------------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
MEXICO--2.8%
48,000 Grupo Mexicano de Video, ADS+......................... $ 17,760
510,000 Grupo Mexico, Class B**............................... 2,448,000
3,635,194 Industrias Penoles CPO................................ 10,911,398
244,000 Kimberly Clark de Mexico, Class A..................... 2,791,360
389,900 Telefonos de Mexico de CV S.A., Series A, ADR......... 11,550,788
------------
27,719,306
------------
PAKISTAN--1.0%
382,682 Adamjee Insurance Company**........................... 1,395,883
167,700 Bank of Punjab**...................................... 128,567
237,968 Dandot Cement**....................................... 228,527
751,000 DG Khan**............................................. 1,060,597
171,840 Engro Chemical**...................................... 865,329
35,400 Hub Power Company, GDR***............................. 522,150
235,800 ICI Pakistan**........................................ 620,346
518,760 ICI Pakistan, New**................................... 1,364,761
305,006 KASB**................................................ 351,979
82,225 Kohinoor Industries**................................. 24,553
811,782 Nishat Textile**...................................... 753,373
223,437 Pakistan International Airlines**..................... 72,125
379,705 Pakistan Electron**................................... 612,843
182,977 Pakistan State Oil**.................................. 2,214,932
------------
10,215,965
------------
PERU--1.2%
2,073,972 Banco De Credito...................................... 3,636,094
879,834 Ferreyros............................................. 1,234,022
890,599 Southern Peru Copper Corporation...................... 4,043,628
1,842,905 Telefonica del Peru................................... 2,999,018
------------
11,912,762
------------
PHILIPPINES--4.9%
27,409,560 Aboitiz Equity Ventures............................... 5,580,646
2,693,891 Ayala Corporation, Class B............................ 3,006,104
4,315,448 Ayala Land Inc., Class B.............................. 4,984,562
5,085,416 Bacnotan Cement+...................................... 6,172,588
133,320 Ben Pres Holdings***.................................. 1,116,555
403,980 Ben Pres Holdings, GDR***............................. 3,383,333
452,300 International Container Terminal Corporation.......... 314,343
3,939,827 Keppel Philippine Shipyards,Inc., Class B............. 1,754,719
14,533,325 Kepphil Shipyard, Inc................................. 1,507,961
1,616,900 La Tondena............................................ 1,930,910
1,063,695,882 Manila Mining, Class B................................ 4,164,823
6,120,350 Metro Pacific Inc.+................................... 754,859
6,570,875 Petron Corporation.................................... 4,309,403
46,650 Philippine Long Distance Telephone.................... 3,333,448
83,695 Philippine Long Distance Telephone, ADR............... 6,005,116
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 49 ------------------
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MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
-------------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
PHILIPPINES--(CONTINUED)
86,600 Philipino Telephone................................... $ 67,813
192,369 San Miguel Corporation, Class B....................... 798,401
------------
49,185,584
------------
POLAND--0.0%#
8,509 Wielkopolski Bank Kredilowy**......................... 20,718
------------
PORTUGAL--1.2%
40,125 Capital Portugal...................................... 3,916,507
100,496 Cimentos de Portugal.................................. 1,634,863
142,150 Electricas Empresa Fabril de Maquinas................. 1,690,643
106,400 Portucal Industries Empresa+.......................... 760,000
113,300 Sonae Investmentos.................................... 2,711,301
51,850 Soporcel.............................................. 1,343,209
------------
12,056,523
------------
RUSSIA--0.4%
46,389 Global Telesystems Group Inc.**....................... 626,251
7 LukOil, RDC........................................... 1,181,250
130,700 The Templeton Russia Fund**........................... 1,901,685
------------
3,709,186
------------
SINGAPORE--4.1%
14,005,572 CDL Hotels International, Ltd. ....................... 6,832,825
754,880 City Development...................................... 4,618,407
955,250 Development Bank of Singapore (F)..................... 10,868,318
686,000 Far East Levingston Shipbuilding...................... 3,288,873
331,000 Singapore International Airlines (F).................. 3,055,385
230,400 Singapore Press Holdings (F).......................... 3,445,696
893,444 United Overseas Bank (F).............................. 8,438,970
------------
40,548,474
------------
SOUTH AFRICA--4.6%
152,750 Anglo American Corporation............................ 8,275,490
361,900 Barlow Ltd. .......................................... 3,707,329
109,700 Liberty Life.......................................... 3,016,844
797,900 Nampak Ltd. .......................................... 3,576,698
6,800 Nampak Ltd., EDR...................................... 77,350
91,100 Nedcor Units.......................................... 4,532,225
449,000 Sasol Ltd. ........................................... 4,303,239
7,066,932 South Africa Iron and Steel Industrial Corporation.... 8,026,519
173,660 South African Breweries............................... 4,954,892
155,130 Standard Bank......................................... 5,588,733
------------
46,059,319
------------
SRI LANKA--0.5%
416,395 Aitken Spence & Company............................... 1,588,000
926,320 CT Land............................................... 211,594
246,133 Habarana Lodge, Ltd. ................................. 173,557
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 50 ------------------
<PAGE> 58
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MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
-------------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
SRI LANKA--(CONTINUED)
306,992 John Keels Holdings................................... $ 1,158,575
47,297 John Keels Holdings, GDR***........................... 348,815
238,980 Lanka Orik Leasing Company............................ 1,015,825
225,700 National Development Bank............................. 1,075,936
------------
5,572,302
------------
TAIWAN--5.3%
2,416,644 ASE**................................................. 7,017,512
13 Asia Cement, GDS...................................... 273
1,334,200 Cathay Life Insurance**............................... 7,025,368
3,412,000 China Steel Corporation**............................. 3,078,039
197,352 China Steel Corporation, ADS***....................... 4,045,716
56,100 China Steel Corporation, GDS.......................... 1,150,050
1,615,320 Formosa Plastics**.................................... 2,964,465
2,716,975 Nan Ya Plastics**..................................... 5,217,669
2,256,500 Phoenixtec Power**.................................... 4,979,886
62,327 President Enterprises Corporation, GDS................ 1,036,186
71,803 R.O.C. Taiwan Fund.................................... 789,833
2,037,600 Taiwan Semiconductor Company**........................ 9,900,836
207,000 United Microelectronics Corporation**................. 1,061,929
321,211 Yageo Corporation, GDR***............................. 4,778,012
------------
53,045,774
------------
THAILAND--5.2%
102,800 Ban Pu Coal Company Ltd. ............................. 2,432,052
28,400 Ban Pu Coal Company Ltd. (F).......................... 671,890
558,000 Bangkok Bank Public Company Ltd. (F).................. 6,148,511
160,850 Bangkok Insurance Public Company, Ltd. (F)............ 3,062,568
2,145,500 Electricity Generating Public Company, Ltd............ 6,475,177
222,000 Land & House Public Company Ltd. (F).................. 4,676,524
230,100 Phatra Thanakit Company Ltd. (F)...................... 1,920,219
266,600 Regional Container Lines.............................. 4,266,032
117,900 Siam Cement Public Company Ltd. (F)................... 7,527,259
897,750 Thai Farmers Bank Public Company, Ltd. (F)............ 8,582,905
310,600 United Communication Industry (F)..................... 4,529,715
1,391,500 Wongpaitoon Footwear Public Company, Ltd. (F)......... 2,142,070
------------
52,434,922
------------
TURKEY--1.4%
2,940,300 Akbank................................................ 748,126
1,475,685 Climentas***.......................................... 951,194
4,602,600 EFES**................................................ 239,421
1,904,000 Ege Biracilik Vem..................................... 2,239,240
3,752,260 Kartonsan............................................. 1,463,903
1,957,100 Koc Holding........................................... 1,925,452
3,979,512 Tat Konserve.......................................... 3,105,126
3,623,500 Tofas Turk Otomobil Fabrepasi......................... 3,196,121
------------
13,868,583
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 51 ------------------
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MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
-------------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
VENEZUELA--0.5%
4,449,606 Sivensa............................................... $ 1,069,799
1,339,600 Sivensa, ADR.......................................... 2,056,286
72 Venezolana de Cementos................................ 73
239,051 Venprecar, GDS........................................ 1,479,128
------------
4,605,286
------------
VIETNAM--0.0%#
38,000........ The Vietnam Frontier Fund............................. 190,000
------------
TOTAL COMMON STOCKS
(Cost $783,341,721)................................... 820,546,100
------------
PREFERRED STOCKS--8.3%
BRAZIL--6.9%
53,236,000 Agroceres............................................. 925,340
320,000 Aracruz Celulose...................................... 747,420
93,291,600 Brazil Distribuidora.................................. 3,222,893
5,821,675 Cimento Itau.......................................... 1,707,609
58,221,000 Compania Vale do Rio Doce............................. 8,791,656
1,437,000 Confab**.............................................. 1,061,553
4,001,700 Copene................................................ 3,160,452
7,597,400 Coteminas............................................. 2,393,532
42,890,000 Electrobras B......................................... 11,415,589
62,804,920 Ferreira Guimaraes.................................... 75,052
12,506,000 Gradiente Electronica................................. 1,630,331
88,757,143 Industrias Romi, SA. ................................. 2,314,146
50,500 Kepler Weber SA. ..................................... 482,232
96,162,000 Lojas Renner SA. ..................................... 1,629,687
6,920,000 Marcopolo S.A., "B" Shares, NPV**..................... 1,165,086
24,025,000 Shulz................................................. 939,598
90,985,300 Petroleo Brasileiro................................... 7,709,781
3,431,655,800 Randon................................................ 3,951,717
1,727,001 Sadia Concordia....................................... 1,613,494
145,555,194 Telebras.............................................. 4,791,225
8,622,793,200 Usiminas.............................................. 9,742,211
------------
69,470,604
------------
GREECE--0.0%#
5,030 Aluminium Company of Greece (Non-Voting Shares)....... 185,571
------------
KOREA--1.2%
88,600 Mando Machinery Corporation........................... 3,247,580
70,365 Samsung Electronics Ltd............................... 6,544,294
109,950 SsangYong Investments & Securities.................... 1,218,041
96,480 Tong Yang Securities.................................. 801,614
------------
11,811,529
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 52 ------------------
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------------------------------------------------------------------
MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
-------------- ------------
<S> <C> <C>
PREFERRED STOCKS--(CONTINUED)
PHILIPPINES--0.2%
23,500 Philippine Long Distance Telephone.................... $ 1,512,813
------------
TOTAL PREFERRED STOCKS
(Cost $92,836,137).................................... 82,980,517
------------
WARRANTS--0.1%
MALAYSIA--0.1%
589,500 DCB Holding Corporation, Warrants,
Expire 12/28/99+...................................... 677,030
161,000 Kian Joo Can Factory, Warrants,
Expire 09/01/99+...................................... 241,698
------------
918,728
------------
TOTAL WARRANTS
(Cost $168,622)....................................... 918,728
------------
RIGHTS--0.0%#
PAKISTAN--0.0%#
83 Indorama Synthetics, Rights,
Expire 07/03/95+...................................... 50
121,767 Nishat Mills, Rights, Expire 09/30/95+**.............. 34,393
------------
TOTAL RIGHTS
(Cost $0)............................................. 34,443
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
---------------
<S> <C> <C>
CONVERTIBLE BONDS--4.8%
$ 7,550,000 Bangkok Bank, 3.250% due 03/03/04.................... 7,701,000
5,178,000 Ban Pu Coal, 3.500% due 08/25/04..................... 6,330,105
1,985,000 Essar Gujarat, 5.500% due 08/05/98................... 2,133,875
1,320,000 Gujarat Cement, 3.500% due 06/30/99.................. 1,762,200
635,950 I.C.I.C.I., 2.500% due 04/03/00**.................... 1,944,306
800,000 International Container Terminal, 6.000% due
02/19/00............................................. 920,000
1,840,000 Nan Ya Plastics, 1.750% due 07/19/01................. 1,768,700
6,500,000 U-Ming Marine, 1.500% due 02/07/01................... 6,589,375
13,135,000 United Engineers, 2.000% due 03/01/04................ 14,842,550
2,285,000 United Microelectronics, 1.250% due 06/08/04***...... 3,895,925
------------
TOTAL CONVERTIBLE BONDS
(Cost $47,514,328)................................... 47,888,036
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 53 ------------------
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------------------------------------------------------------------
MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------------- -----------
<S> <C> <C>
CORPORATE BONDS--0.8%
MYR 578,000 AMMB Loan Stock @ 7.500%............................. $ 315,316
SAFR 3,845,000 Barlow Ltd. @ 7.000% due 09/20/04.................... 4,503,456
SAFR 2,955,000 Liberty Life @ 6.500% due 09/30/04................... 3,472,125
------------
TOTAL CORPORATE BONDS
(Cost $8,007,781).................................... 8,290,897
------------
TOTAL SECURITIES
(Cost $931,868,589).................................. 960,658,721
------------
REPURCHASE AGREEMENTS--3.0%
14,795,000 Agreement with Chemical Bank Tri-Party, 6.250% dated
06/30/95 to be repurchased at $14,802,706, on
07/03/95 collateralized by: $968,104 U.S. Treasury
Note, 7.875% due 11/15/04 and $14,041,219
Federal Home Loan Mortgage Corporation, 6.594% due
11/15/23............................................. 14,795,000
14,795,000 Agreement with Paine Webber Tri-Party, 6.250% dated
06/30/95 to be repurchased at $14,802,706 on
07/03/95, collateralized by $15,011,276 Federal Home
Loan Mortgage Corporation #1630, 6.625% due
10/15/22............................................. 14,795,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $29,590,000)................................... 29,590,000
------------
TOTAL INVESTMENTS (Cost $961,458,589*)............................ 99.2% 990,248,721
OTHER ASSETS AND LIABILITIES (Net)................................ 0.8 7,834,674
----- ------------
NET ASSETS........................................................ 100.0% $998,083,395
===== ============
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes was $966,121,237.
** Illiquid or Special Situation Security (See Note 7 to Financial Statements).
*** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
+ Non-income producing security.
# Amount represents less than 0.1%.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
<TABLE>
<S> <C>
ABBREVIATIONS:
ADR American Depositary Receipt
ADS American Depositary Share
EDR European Depositary Receipt
(F) Foreign or alien shares.
GDR Global Depositary Receipt
GDS Global Depositary Share
MYR Malaysian Ringgit
ORD Ordinary
RDC Russian Depositary Receipt
SAFR South African Financial Rand
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 54 ------------------
<PAGE> 62
------------------------------------------------------------------
MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
% OF NET VALUE
INDUSTRY DIVERSIFICATION (UNAUDITED) ASSETS (NOTE 1)
------------------------------------ -------- ------------
<S> <C> <C>
COMMON STOCKS
Banks....................................................... 13.7% $135,809,349
Telecommunications.......................................... 6.6 65,495,796
Real Estate................................................. 5.5 55,051,401
Heavy Construction.......................................... 4.9 49,222,664
Electric Utilities.......................................... 3.9 39,270,031
Conglomerates............................................... 3.9 38,675,067
Leisure Time................................................ 3.5 35,361,977
Pulp and Paper.............................................. 3.5 34,682,292
Building Materials and Home Builders........................ 3.3 33,049,474
Steel....................................................... 3.1 30,860,442
Oil......................................................... 2.9 28,928,378
Metals and Mining........................................... 2.8 28,157,575
Food and Beverages.......................................... 2.6 26,065,370
Electronics................................................. 2.1 21,299,013
Diversified Financial Services.............................. 2.0 20,217,551
Insurance................................................... 1.9 19,392,146
Mutual Funds................................................ 1.6 15,766,825
Apparel and Textiles........................................ 1.4 13,528,607
Automotives/Automotive Parts................................ 1.4 13,390,424
Chemicals................................................... 1.2 12,352,742
Containers and Packaging.................................... 1.2 11,839,115
Semiconductors.............................................. 1.1 10,962,765
Health Care/Pharmaceuticals................................. 1.1 10,449,291
Shipping.................................................... 0.9 9,151,617
Tobacco..................................................... 0.8 8,298,159
Lodging..................................................... 0.8 8,100,973
Holding Companies........................................... 0.8 8,041,057
Broadcasting/Advertising.................................... 0.6 5,761,034
Securities Brokerage........................................ 0.5 4,631,752
Home Appliances............................................. 0.4 4,381,732
Footwear.................................................... 0.3 3,455,257
Newspapers/Publishing....................................... 0.3 3,445,696
Coal........................................................ 0.3 3,257,484
Airlines.................................................... 0.3 3,127,510
Software Systems............................................ 0.2 1,789,013
Retail Trade................................................ 0.2 1,631,828
Trucking.................................................... 0.2 1,449,710
Machinery and Machine Tools................................. 0.2 1,372,060
Household Products.......................................... 0.1 1,310,331
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 55 ------------------
<PAGE> 63
------------------------------------------------------------------
MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
% OF NET VALUE
INDUSTRY DIVERSIFICATION--(CONTINUED) (UNAUDITED) ASSETS (NOTE 1)
------------------------------------------------- -------- ------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
Electrical Equipment........................................ 0.1% $ 925,903
Agricultural Commodities.................................... 0.0# 586,689
----- ------------
TOTAL COMMON STOCKS........................................... 82.2 820,546,100
PREFERRED STOCKS.............................................. 8.3 82,980,517
WARRANTS...................................................... 0.1 918,728
RIGHTS........................................................ 0.0# 34,443
CONVERTIBLE BONDS............................................. 4.8 47,888,036
CORPORATE BONDS............................................... 0.8 8,290,897
REPURCHASE AGREEMENTS......................................... 3.0 29,590,000
----- ------------
TOTAL INVESTMENTS............................................. 99.2 990,248,721
OTHER ASSETS AND LIABILITIES (Net)............................ 0.8 7,834,674
----- ------------
NET ASSETS.................................................... 100.0% $998,083,395
===== ============
</TABLE>
- ---------------
# Amount represents less than 0.1%.
The accompanying notes are an integral part of these financial statements.
------------------ 56 ------------------
<PAGE> 64
-----------------------------------------------------------------------------
MONTGOMERY SHORT GOVERNMENT BOND FUND
-----------------------------------------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- ------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES--73.3%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)--24.1%
FHLMC:
$ 264,643 9.000% Pass Thru Pools due 10/01/16-10/01/18.............. $ 273,824
175,280 Pool #308601 9.500% due 10/01/18.......................... 182,483
85,899 FHLMC, Balloon,
Pool #893147 9.000% due 11/01/95.......................... 86,020
FHLMC, REMIC:
290,000 1611E (PAC) 5.500% due 12/15/18........................... 278,536
800,000 1575PE (PAC) 6.000% due 03/15/07.......................... 787,750
1,036,155 1328B (FRN) 6.675% due 07/15/97........................... 1,037,774
139,348 1098F (XPAC) 8.000% due 03/15/05.......................... 140,001
500,000 199B (XPAC) 8.500% due 03/15/01........................... 502,031
171,722 170E (XPAC) 8.500% due 05/15/19........................... 172,178
274,458 72F (XPAC) 9.000% due 04/15/20**.......................... 278,189
270,031 35B (XPAC) 9.600% due 05/15/13............................ 270,579
FHLMC, Tiered Payment:
11,764 Pool #730288 8.500% due 07/01/06.......................... 12,029
57,665 Pool #735008 9.500% due 02/01/05.......................... 59,205
39,770 Pool #730223 9.500% due 01/01/06.......................... 40,832
------------
4,121,431
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)--47.1%
FNMA, Balloon,
980,000 Pass Thru Pools 9.500% due 01/01/25-03/01/25.............. 1,030,072
FNMA, REMIC:
569,595 94-42A (PAC) 4.750% due 01/25/05.......................... 563,988
1,000,000 93-97B (PAC) 5.000% due 08/25/13.......................... 989,531
1,615,000 93-101PD (PAC) 5.500% due 05/25/05........................ 1,577,906
144,534 92-22C (XPAC) 5.750% due 01/25/00......................... 143,676
650,000 93-99D (PAC) 6.700% due 03/25/04**........................ 643,602
217,287 91-108JD (SEQ) 7.000% due 05/25/96........................ 217,321
48,414 1070E (SEQ) 7.500% due 04/15/96........................... 48,542
102,339 G-6G (XPAC) 8.500% due 04/25/01........................... 102,131
536,373 91-125J (SEQ) 8.500% due 09/25/01......................... 538,385
384,521 91-30E (XPAC) 8.500% due 03/25/09......................... 385,122
431,193 89-5B (PAC) 8.500% due 03/25/14........................... 429,778
1,000,000 91-74L (XPAC) 8.500% due 08/25/21......................... 1,054,375
75,303 88-29B (XTAC) 9.500% due 12/25/18......................... 78,386
231,231 89-21G (SEQ) 10.450% due 04/25/19......................... 247,490
------------
8,050,305
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA)--2.1%
GNMA I:
193,790 9.000% Pass Thru Pools due 04/15/16-12/15/19**............ 203,782
119,869 9.500% Pass Thru Pools due 09/15/16-04/15/20**............ 127,211
27,657 GNMA II,
10.500% Pass thru Pools due 01/20/19...................... 30,137
------------
361,130
------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(Cost $12,418,017)........................................ 12,532,866
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 57 ------------------
<PAGE> 65
-----------------------------------------------------------------------------
MONTGOMERY SHORT GOVERNMENT BOND FUND
-----------------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- ------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS--34.8%
$2,000,000 U.S. Treasury Note, 4.750% due 10/31/98................... $ 1,929,375
4,000,000 U.S. Treasury Note, 6.125% due 05/31/97................... 4,021,250
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $5,928,170)......................................... 5,950,625
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS--7.6%
Collateralized Mortgage Securities Corporation:
12,009 Series 1990-7B, (SEQ) 9.500% due 03/20/19**............... 12,104
119,325 Series 1991-9H, (PAC) 8.250% due 06/20/96................. 120,034
Drexel Burnham Lambert Mortgage:
399,110 Series C3, (SEQ) 9.500% due 05/20/14...................... 403,413
204,388 Series J2, (SEQ) 8.000% due 07/01/17...................... 203,430
547,502 Smith Barney Shearson Mortgage, Series 2Z, (Accrual)
9.900% due 09/01/17**................................... 556,912
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $1,283,691)......................................... 1,295,893
-----------
TOTAL INVESTMENTS (Cost $19,629,878*).............................. 115.7% 19,779,384
OTHER ASSETS AND LIABILITIES (Net)................................. (15.7) (2,685,981)
----- ------------
NET ASSETS......................................................... 100.0% $17,093,403
===== ===========
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes.
** Security pledged as collateral for reverse repurchase agreement.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
<TABLE>
<S> <C>
ABBREVIATIONS:
Accrual Bonds which receive negative amortization (coupon interest is added to
principal) according to the stated coupon rate for a period of time.
FRN Bonds with coupon rates that adjust periodically at a spread to an index.
PAC Planned Amortization Class: bonds which are protected in part from variations
in prepayments, generally resulting in greater stability.
REMIC Real Estate Mortgage Investment Conduit.
SEQ Sequential: bonds which are repaid in sequential order. Their actual principal
paydowns are dependent on how quickly the underlying mortgages prepay and
overall have similar risks to mortgage backed pass-thrus.
TAC Targeted Amortization Class: bonds which are protected from prepayments.
However, these bonds are usually less stable than PAC's.
XPAC Broken Planned Amortization Class: PAC bonds which have lost their protection
against prepayment risk, resulting in a security similar to a sequential.
XTAC Broken Targeted Amortization Class: TAC bonds which have lost their protection
against prepayment risk, resulting in a security similar to a sequential.
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 58 ------------------
<PAGE> 66
----------------------------------------------------------------------
MONTGOMERY GOVERNMENT RESERVE FUND
----------------------------------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES--34.5%
FEDERAL FARM CREDIT BANK (FFCB)--4.1%
FFCB:
$ 5,000,000 5.300% due 07/05/95...................................... $ 4,999,074
400,000 5.375% due 08/01/95...................................... 399,693
1,150,000 5.790% due 10/02/95...................................... 1,146,311
1,000,000 6.330% due 11/01/95...................................... 997,342
1,000,000 9.600% due 11/06/95...................................... 1,011,447
1,300,000 5.830% due 12/21/95...................................... 1,296,378
680,000 6.760% due 02/28/96...................................... 680,352
------------
10,530,597
------------
FEDERAL HOME LOAN BANK (FHLB)--6.5%
FHLB:
5,000,000 5.400% due 07/06/95...................................... 4,999,866
500,000 4.000% due 07/14/95...................................... 499,594
1,000,000 5.700% due 09/22/95...................................... 998,503
800,000 5.000% due 10/25/95...................................... 795,857
1,000,000 5.063% due 12/18/95...................................... 995,170
2,000,000 7.070% due 12/22/95...................................... 2,004,701
3,000,000 6.800% due 01/02/96...................................... 2,998,936
2,000,000 7.415% due 01/10/96...................................... 2,002,830
1,150,000 6.787% due 02/15/96...................................... 1,151,221
500,000 5.800% due 04/29/96...................................... 499,210
------------
16,945,888
------------
STUDENT LOAN MARKETING ASSOCIATION (SLMA)--19.9%
SLMA:
2,000,000 6.943% due 02/21/96...................................... 2,005,277
10,000,000 5.690% due 05/14/96+..................................... 10,004,560
5,250,000 6.080% due 07/01/96++.................................... 5,249,232
5,150,000 5.660% due 07/19/96+..................................... 5,149,150
8,000,000 5.960% due 08/22/96+..................................... 8,023,513
5,000,000 5.660% due 09/23/96+..................................... 4,998,972
2,500,000 5.910% due 11/01/96+..................................... 2,506,297
6,000,000 5.720% due 12/20/96+..................................... 5,999,165
5,000,000 6.130% due 06/30/97+..................................... 4,989,572
2,500,000 5.860% due 10/30/97+..................................... 2,500,687
------------
51,426,425
------------
TENNESSEE VALLEY AUTHORITY (TVA)--4.0%
Medium Term Notes:
8,525,000 3.810% due 10/04/95...................................... 8,456,912
2,000,000 4.320% due 01/11/96...................................... 1,974,648
------------
10,431,560
------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES.................. 89,334,470
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 59 ------------------
<PAGE> 67
----------------------------------------------------------------------
MONTGOMERY GOVERNMENT RESERVE FUND
----------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY DISCOUNT NOTES--15.7%
FEDERAL FARM CREDIT BANK (FFCB)--1.6%
FFCB:
$ 3,000,000 5.900%** due 08/11/95.................................... $ 2,996,924
1,000,000 6.100%** due 04/24/96.................................... 999,541
------------
3,996,465
------------
FEDERAL HOME LOAN BANK (FHLB)--14.1%
FHLB:
10,000,000 6.086%** due 07/03/95.................................... 9,996,717
5,000,000 6.270%** due 07/24/95.................................... 4,980,586
2,505,000 6.290%** due 08/28/95.................................... 2,480,657
3,450,000 4.207%** due 09/01/95.................................... 3,439,258
5,000,000 6.195%** due 09/06/95.................................... 4,944,526
100,000 4.264%** due 09/11/95.................................... 99,674
1,000,000 6.000%** due 10/06/95.................................... 1,000,000
1,390,000 6.319%** due 10/16/95.................................... 1,365,043
2,000,000 4.783%** due 11/06/95.................................... 1,989,450
1,000,000 5.000%** due 02/05/96.................................... 993,299
5,250,000 5.250%** due 02/16/96.................................... 5,222,917
------------
36,512,127
------------
TOTAL U.S. GOVERNMENT AGENCY DISCOUNT NOTES.............. 40,508,592
------------
U.S. TREASURY OBLIGATIONS--2.6%
U.S. TREASURY BILLS--1.8%
U.S. Treasury Bills:
4,000,000 5.664%** due 04/04/96.................................... 3,822,387
1,000,000 6.337%** due 05/02/96.................................... 949,424
------------
4,771,811
------------
U.S. TREASURY NOTES--0.8%
U.S. Treasury Notes,
2,000,000 9.375% due 04/15/96...................................... 2,049,287
------------
TOTAL U.S. TREASURY OBLIGATIONS.......................... 6,821,098
------------
U.S. SOVEREIGN BOND--0.6%
1,665,424 AID-Israel, Series B, 5.875% due 01/01/99+............... 1,665,424
------------
TOTAL SECURITIES (Cost $138,329,584)..................... 138,329,584
------------
REPURCHASE AGREEMENTS--46.2%
20,000,000 Agreement with Bear Stearns Mortgage Tri-Party, 6.080%
dated 06/26/95, to be repurchased at $20,023,644, on
07/03/95, collateralized by $20,467,362 market value of
U.S. Government securities, having various maturities
and various interest rates............................. 20,000,000
15,000,000 Agreement with Bear Stearns Mortgage Tri-Party, 6.170%
dated 06/29/95, to be repurchased at $15,017,996, on
07/06/95, collateralized by $15,350,521 market value of
U.S. Government securities, having various maturities
and various interest rates............................. 15,000,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 60 ------------------
<PAGE> 68
----------------------------------------------------------------------
MONTGOMERY GOVERNMENT RESERVE FUND
----------------------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<S> <C> <C>
REPURCHASE AGREEMENTS--(CONTINUED)
$12,263,500 Agreement with Chemical Bank Tri-Party, 6.250% dated
06/30/95, to be repurchased at $12,269,887, on
07/03/95, collateralized by: $802,457 U.S. Treasury
Note, 7.875% due 11/15/04; $11,638,695 Federal National
Mortgage Association, 6.594% due 11/15/23.............. $ 12,263,500
10,000,000 Agreement with Morgan Stanley Mortgage Tri-Party, 6.070%
dated 06/27/95, to be repurchased at $10,013,489, on
07/05/95, collateralized by: $27,271 U.S. Treasury
Note, 5.125% due 03/31/98; $10,183,419 market value of
U.S. Government securities having various maturities
and various interest rates............................. 10,000,000
10,000,000 Agreement with Morgan Stanley Mortgage Tri-Party, 6.080%
dated 06/28/95, to be repurchased at $10,011,822, on
07/05/95, collateralized by: $27,271 U.S. Treasury
Note, 5.125% due 03/31/98; $10,183,419 market value of
U.S. Government securities having various maturities
and various interest rates............................. 10,000,000
7,263,500 Agreement with Paine Webber Mortgage Tri-Party, 6.250%
dated 06/30/95, to be repurchased at $7,267,283, on
07/03/95, collateralized by $7,369,679 Federal Home
Loan Mortgage Corporation #1630, 6.625% due 10/15/22... 7,263,500
15,000,000 Agreement with Sanwa Bank Mortgage Tri-Party, 6.080%
dated 06/28/95, to be repurchased at $15,017,733, on
07/05/95, collateralized by $15,314,449 market value of
U.S. Government securities, having various maturities
and various interest rates............................. 15,000,000
10,000,000 Agreement with Sanwa Bank Mortgage Tri -Party, 6.070%
dated 06/27/95, to be repurchased at $10,013,489, on
07/05/95, collateralized by $10,224,072 market value of
U.S. Government securities, having various maturities
and various interest rates............................. 10,000,000
20,000,000 Agreement with Sanwa Bank Mortgage Tri-Party, 6.170%
dated 06/29/95, to be repurchased at $20,023,994, on
07/06/95, collateralized by $20,415,263 market value of
U.S. Government securities, having various maturities
and various interest rates............................. 20,000,000
------------
TOTAL REPURCHASE AGREEMENTS.............................. 119,527,000
------------
TOTAL INVESTMENTS (at amortized cost*)............................ 99.6% 257,856,584
OTHER ASSETS AND LIABILITIES (Net)................................ 0.4 1,099,440
----- ------------
NET ASSETS........................................................ 100.0% $258,956,024
===== ============
</TABLE>
- ------------
* Aggregate cost for Federal tax purposes.
** Rate represents annualized yield at date of purchase.
+ Floating rate note, rate resets weekly.
++ Floating rate note, rate resets annually.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
The accompanying notes are an integral part of these financial statements.
------------------ 61 ------------------
<PAGE> 69
-----------------------------------------------------------
MONTGOMERY CALIFORNIA TAX-FREE
INTERMEDIATE BOND FUND
-----------------------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
-------- ----------
<S> <C> <C>
MUNICIPAL BONDS AND NOTES--99.1%
CALIFORNIA--99.1%
$ 55,000 Alameda, California, School District,
6.900% due 07/01/97.......................................... $ 57,976
200,000 Bakersfield, California, Hospital, (BAKMED),
7.375% due 01/01/14.......................................... 222,002
80,000 Burbank, California, Public Service Department, Series A,
Pre-refunded 06/01/97,
6.625% due 06/01/05.......................................... 85,184
California State:
60,000 6.300% due 05/01/97........................................ 62,221
200,000 11.000% due 03/01/98....................................... 232,440
250,000 (FGIC Insured),
7.000% due 04/01/06........................................ 280,973
California State, (CAS):
25,000 8.000% due 05/01/96........................................ 25,850
40,000 6.400% due 08/01/96........................................ 41,043
50,000 9.400% due 10/01/96........................................ 53,293
40,000 6.800% due 03/01/99........................................ 42,937
California State, Health Facilities, Financing Authority,
(CASMED):
90,000 Centinela Hospital,
6.500% due 08/01/96........................................ 91,882
125,000 (Kaiser),
8.800% due 10/01/98........................................ 128,836
California State, Public Works:
100,000 High-Tech,
7.750% due 08/01/06........................................ 115,597
75,000 Series A,
7.000% due 03/01/96........................................ 76,415
75,000 California State, University Revenue, (AMBAC Insured),
6.250% due 11/01/00........................................ 80,461
California State, Veterans Bond:
25,000 Series AG,
8.100% due 10/01/98........................................ 27,788
70,000 Series AL,
9.600% due 04/01/01........................................ 86,073
100,000 Series AT,
9.500% due 02/01/10........................................ 134,640
200,000 Series AQ,
8.900% due 10/01/99........................................ 232,852
100,000 Carpinteria, California, (CPNUTL), (FGIC Insured),
7.500% due 07/01/00........................................ 112,354
150,000 Contra Costa, California, Transportation Authority, Series A,
6.100% due 03/01/98........................................ 157,193
75,000 East Bay, California, Utility District, Series M,
7.500% due 03/01/00........................................ 84,039
50,000 Estero, California, Series S-1,
7.000% due 07/01/00........................................ 54,585
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 62 ------------------
<PAGE> 70
-----------------------------------------------------------
MONTGOMERY CALIFORNIA TAX-FREE
INTERMEDIATE BOND FUND
-----------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
-------- ----------
<S> <C> <C>
MUNICIPAL BONDS AND NOTES--(CONTINUED)
CALIFORNIA--(CONTINUED)
$ 90,000 Fremont, California, School District, (CGIC Insured),
7.700% due 09/01/96........................................ $ 93,960
100,000 Los Angeles, California, Series A, Pre-refunded 07/01/95,
6.400% due 09/01/98........................................ 105,879
250,000 Los Angeles, California, Water & Power,
9.000% due 12/15/97........................................ 277,743
25,000 Los Angeles County, California, Adult & Juvenile Detention,
6.700% due 06/01/96........................................ 25,666
Los Angeles County, California, Public Works:
100,000 Financing Authority Revenue,
4.000% due 03/01/98........................................ 98,923
50,000 Revenue Anticipation Notes,
4.500% due 03/01/01........................................ 48,583
170,000 Los Angeles County, California, Waste Water, Series D, (MBIA
Insured),
6.000% due 12/01/98........................................ 179,202
20,000 Mt. Diablo, California, School District, (FGIC Insured),
6.800% due 08/01/97........................................ 21,085
50,000 Northern California, Transmission, (MBIA Insured),
6.400% due 08/15/96........................................ 51,410
75,000 Paramount, California, Redevelopment Agency,
5.100% due 08/01/98........................................ 76,000
70,000 Pasadena, California, Water Authority,
7.900% due 07/01/95........................................ 70,000
Piedmont, California, School District:
Series A:
75,000 8.300% due 08/01/01........................................ 88,837
45,000 7.100% due 08/01/02........................................ 50,864
40,000 Series C,
7.200% due 08/01/01........................................ 45,035
50,000 Riverside County, California, (Kaiser),
8.700% due 12/01/98........................................ 51,888
200,000 Sacramento, California, City Financing Authority, (AMBAC
Insured),
4.650% due 11/01/02........................................ 194,536
100,000 San Bernardino County, California, (SBDCTF), (MBIA Insured),
Pre-refunded 07/01/96,
7.500% due 07/01/06........................................ 105,593
50,000 San Francisco, California, City & County Police Facilities,
8.000% due 06/15/99........................................ 56,279
100,000 San Francisco, California, City & County, Series A,
6.100% due 12/15/98........................................ 105,823
500,000 Santa Rosa, California, High School District, (FGIC Insured),
7.000% due 05/01/01........................................ 555,100
200,000 University of California, Research Facilities Revenue, Series
B,
5.700% due 09/01/06........................................ 196,422
50,000 University of Southern California, (CASEDU),
6.450% due 10/01/96........................................ 51,596
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 63 ------------------
<PAGE> 71
-----------------------------------------------------------
MONTGOMERY CALIFORNIA TAX-FREE
INTERMEDIATE BOND FUND
-----------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
-------- ----------
<S> <C> <C>
MUNICIPAL BONDS AND NOTES--(CONTINUED)
CALIFORNIA--(CONTINUED)
$ 65,000 Watsonville, California, Water Revenue, (MBIA Insured),
6.100% due 05/15/99........................................ $ 68,719
----------
TOTAL MUNICIPAL BONDS AND NOTES
(Cost $5,066,946)............................................ 5,105,777
----------
SHORT-TERM MUNICIPAL BOND AND NOTE -- 0.8% (Cost $40,000)
40,000 California State, Health Facilities Financing Authority,
(CASMED), St. Joseph's Health System, Series B,
4.100% due 07/01/13+.................................. 40,000
----------
TOTAL INVESTMENTS (Cost $5,106,946*)................................... 99.9% 5,145,777
OTHER ASSETS AND LIABILITIES (Net)..................................... 0.1 7,393
------ ----------
NET ASSETS.............................................................100.0% $5,153,170
====== ==========
</TABLE>
- ------------
<TABLE>
<S> <C>
* Aggregate cost for Federal tax purposes.
+ Floating rate note, rate resets daily.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
ABBREVIATIONS:
AMBAC American Municipal Bond Assurance Corporation
CGIC Capital Guaranty Insurance Corporation
FGIC Federal Guaranty Insurance Corporation
MBIA Municipal Bond Investors Assurance
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 64 ------------------
<PAGE> 72
-----------------------------------------------------------
MONTGOMERY CALIFORNIA TAX-FREE
MONEY FUND
-----------------------------------------------------------
PORTFOLIO INVESTMENTS
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<S> <C> <C>
MUNICIPAL BONDS AND NOTES--107.5%
CALIFORNIA--107.5%
$1,300,000 ABAG Finance Authority for Non-Profit Corporations,
Certificates of Participation, (Lucile Salter Packard
Project), (AMBAC Insured),
3.950% due 08/01/23++.................................... $ 1,300,000
1,000,000 Burbank, California, Redevelopment Agency Revenue, Issue A,
3.850% due 11/01/10++.................................... 1,000,000
California Education Facilities Authority Revenue:
California Institute of Technology:
1,900,000 3.600% due 01/01/24++.................................... 1,900,000
250,000 Pre-refunded 01/01/96,
8.625% due 01/01/16...................................... 259,349
1,400,000 (Stanford University Project), Series G, Pre-refunded
12/01/95,
8.500% due 12/01/07...................................... 1,455,116
500,000 California School Cash Reserves Authority, Program Revenue,
Series A,
4.500% due 07/05/95...................................... 499,913
3,700,000 California State, Department of Water Resources, Water
Systems Revenue, Series -V2,
3.750% due 12/01/25+..................................... 3,700,000
California State, Health Facilities Finance Authority
Revenue, (CASMED):
250,000 Methodist Hospital, Sacramento,
8.400% due 11/01/95...................................... 252,869
200,000 Series A, (MBIA Insured),
8.400% due 09/01/95...................................... 201,418
Series B, St. Joseph Health System:
1,500,000 4.100% due 07/01/09+..................................... 1,500,000
625,000 4.100% due 07/01/13+..................................... 625,000
1,300,000 Series C, Catholic Healthcare, (MBIA Insured),
3.900% due 07/01/20+..................................... 1,300,000
1,700,000 California State, Pollution Control Finance Authority,
Commercial Paper,
3.850% due 07/11/95...................................... 1,700,000
California State, Pollution Control Finance Authority:
Resource Recovery Revenue:
1,000,000 (Burney Forest Products Project), Series A,
4.300% due 09/01/20+..................................... 1,000,000
570,000 (Stanislaus Project),
4.350% due 12/01/17+..................................... 570,000
(Shell Oil Company Project), PCR:
200,000 Series A,
4.050% due 10/01/08+..................................... 200,000
1,200,000 Series B,
4.050% due 10/01/11+..................................... 1,200,000
(Southern California Edison Project):
1,200,000 Series A,
4.500% due 02/28/08+..................................... 1,200,000
1,500,000 Series B,
4.500% due 02/28/08+..................................... 1,500,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 65 ------------------
<PAGE> 73
-----------------------------------------------------------
MONTGOMERY CALIFORNIA TAX-FREE
MONEY FUND
-----------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<S> <C> <C>
MUNICIPAL BONDS AND NOTES--(CONTINUED)
CALIFORNIA--(CONTINUED)
$1,215,000 California State, Public Works Board, Lease Revenue,
(University of California), Series A,
6.300% due 09/01/95...................................... $ 1,219,478
California Statewide Communities Development Authority
Revenue:
Certificates of Participation:
100,000 3.400% due 07/01/95...................................... 100,000
1,100,000 (St. Joseph Health System),
4.100% due 07/01/24++.................................... 1,100,000
1,500,000 Solid Waste Facilities, (Chevron U.S.A. Inc. Project),
4.300% due 12/15/24++.................................... 1,500,000
Tax and Revenue Anticipation Notes, Series A:
45,000 4.500% due 07/17/95...................................... 45,002
1,000,000 4.750% due 07/05/96...................................... 1,006,700
1,800,000 Contra Costa, California, Transportation Authority, Sales
Tax Revenue, Series A, (FGIC Insured),
3.900% due 03/01/09++.................................... 1,800,000
2,500,000 Del Mar Race Track Authority, Commercial Paper,
3.300% due 07/27/95...................................... 2,500,000
1,000,000 East Bay, California, MUD, Commercial Paper,
3.050% due 07/06/95...................................... 1,000,000
1,300,000 East Bay, California, MUD, Waste Water, Commercial Paper,
3.300% due 08/04/95...................................... 1,300,000
250,000 East Bay, California, Regional Park District, Promissory
Notes, Pre-refunded 03/01/96,
7.600% due 03/01/08...................................... 260,390
200,000 Escondido, California, Certificates of Participation,
(Escondido City Hall Project), Pre-refunded 09/01/95,
7.900% due 09/01/10...................................... 205,006
1,400,000 Imperial, California, Irrigation District, Certificates of
Participation, (Electric Systems Project),
5.500% due 05/01/96...................................... 1,417,527
50,000 Inglewood, California, Redevelopment Agency Tax Allocation,
(La Cienega Redevelopment Project), Series B,
Pre-refunded 11/01/95, (AMBAC Insured),
8.800% due 11/01/15...................................... 51,601
2,500,000 Kern, California, Community College District, Certificates
of Participation,
4.250% due 01/01/25++.................................... 2,500,000
300,000 Lancaster, California, Redevelopment Agency, Multi-family
Housing Revenue, (Westwood Park Apartments), Series K,
3.600% due 12/01/07++.................................... 300,000
65,000 Los Angeles, California, Certificates of Participation,
Equipment Acquisition Program, (AMBAC Insured),
4.300% due 09/01/95...................................... 65,016
1,000,000 Los Angeles, California, Certificates of Participation, LOC
Edlagys,
Series A,
4.500% due 07/06/95...................................... 999,989
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 66 ------------------
<PAGE> 74
-----------------------------------------------------------
MONTGOMERY CALIFORNIA TAX-FREE
MONEY FUND
-----------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<S> <C> <C>
MUNICIPAL BONDS AND NOTES--(CONTINUED)
CALIFORNIA--(CONTINUED)
Los Angeles, California, Community Redevelopment Agency
Revenue:
$ 500,000 Series A, (Bunker Hill Project), Pre-refunded 12/01/95,
8.500% due 12/01/00...................................... $ 519,684
Central Business District:
200,000 Series E, Pre-refunded 07/01/95,
8.850% due 07/01/10...................................... 204,000
170,000 Series F, Pre-refunded 07/01/95, (BIG Insured),
8.600% due 07/01/98...................................... 173,400
1,000,000 Customer Receipt, Series BT-23, (MBIA Insured),
4.050% due 12/01/03++.................................... 1,000,000
2,000,000 Los Angeles, California, Department of Water and Power,
Commercial Paper,
3.200% due 08/02/95...................................... 2,000,000
Los Angeles, California, Metropolitan Rapid Transit
Authority, Commercial Paper:
1,000,000 3.850% due 07/10/95...................................... 1,000,000
1,500,000 3.700% due 07/18/95...................................... 1,500,000
3,000,000 Los Angeles, California, Multi-family Housing Revenue,
Series K,
3.750% due 07/01/10++.................................... 3,000,000
Los Angeles, California, Wastewater Systems, Commercial
Paper:
1,000,000 3.850% due 07/17/95...................................... 1,000,000
1,000,000 3.000% due 08/07/95...................................... 1,000,000
1,610,000 Los Angeles County, California, Certificates of
Participation, (Los Angeles County Public Properties
Project), Pre-refunded 10/01/95,
9.250% due 10/01/99...................................... 1,662,803
1,000,000 Metropolitan Water District, Southern California,
Commercial Paper,
3.400% due 07/25/95...................................... 1,000,000
1,000,000 Modesto, California, High School District, GO, (MBIA
Insured),
7.000% due 08/01/95...................................... 1,001,852
455,000 Modesto, California, Irrigation District, Certificates of
Participation, (Geysters Geothermal Power Project),
Pre-refunded 10/01/95,
8.875% due 10/01/17...................................... 469,139
500,000 Northern California, Public Power Agency Revenue,
(Geothermal Project No. 3), Series A, Pre-refunded
07/01/95,
9.500% due 07/01/00...................................... 510,000
1,250,000 Orange County, California, Community Facilities District
Revenue, (Rancho Santa Margarita Project), Series A,
Pre-refunded 07/01/96,
8.125% due 07/01/16++.................................... 1,325,290
Palm Springs, California, Community Redevelopment Agency,
Certificates of Participation:
1,900,000 District No. 2,
4.550% due 12/01/14++.................................... 1,900,000
800,000 District No. 5,
4.550% due 12/01/14++.................................... 800,000
1,200,000 District No. 9,
4.550% due 12/01/14++.................................... 1,200,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 67 ------------------
<PAGE> 75
-----------------------------------------------------------
MONTGOMERY CALIFORNIA TAX-FREE
MONEY FUND
-----------------------------------------------------------
PORTFOLIO INVESTMENTS--(CONTINUED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<S> <C> <C>
MUNICIPAL BONDS AND NOTES--(CONTINUED)
CALIFORNIA--(CONTINUED)
$1,000,000 Richmond, California, J.T. Powers Finance Authority, Port
Terminal Lease Revenue,
4.300% due 09/01/04+..................................... $ 1,000,000
150,000 San Bernardino (County of), California, School District
Revenue, Sisters of Charity, Series A,
5.800% due 07/01/95...................................... 150,000
1,000,000 San Diego (County of), California, Tax and Revenue
Anticipation Note, Series A,
4.750% due 07/03/96...................................... 1,008,130
3,585,000 San Francisco, California, Bay Area, Rapid Transit
District, Sales Tax Revenue, Pre-refunded 07/01/95,
9.000% due 07/01/11...................................... 3,692,550
500,000 San Jose,California, Redevelopment Agency, Tax Allocation,
(Merged Area Redevelopment Project), (MBIA Insured),
3.400% due 08/01/95...................................... 499,646
2,300,000 Southern California, Public Power Authority Revenue,
(Southern Transmission Project):
4.850% due 07/01/19++.................................... 2,300,000
1,000,000 Yuba (County of), California, Tax and Revenue Anticipation
Note,
5.000% due 10/26/95...................................... 1,000,854
------------
TOTAL MUNICIPAL BONDS AND NOTES............................ 69,651,722
------------
TOTAL INVESTMENTS (at amortized cost*)............................... 107.5% 69,651,722
OTHER ASSETS AND LIABILITIES (Net)................................... (7.5) (4,871,825)
------ -----------
NET ASSETS........................................................... 100.0% $64,779,897
====== ===========
</TABLE>
- ------------
<TABLE>
<S> <C>
* Aggregate cost for federal tax purposes.
+ Floating rate note, rate resets daily.
++ Floating rate note, rate resets weekly.
Descriptions of securities have not been audited by Deloitte & Touche LLP.
ABBREVIATIONS:
AMBAC American Municipal Bond Assurance Corporation
BIG Bond Investors Guaranty
FGIC Federal Guaranty Insurance Corporation
GO General Obligation Bond
LOC Letter of Credit
MBIA Municipal Bond Investors Guaranty
PCR Pollution Control Revenue
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 68 ------------------
<PAGE> 76
[THIS PAGE INTENTIONALLY LEFT BLANK]
------------------ 69 ------------------
<PAGE> 77
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1995
<TABLE>
<CAPTION>
GROWTH
FUND
------------
<S> <C>
ASSETS:
Investments in securities, at value (Note 1)
Securities.................................................................... $802,167,794
Repurchase agreements......................................................... --
------------
Total investments.............................................................. 802,167,794
Cash........................................................................... 89,684,049
Foreign currency, at value (Cost $206,432)..................................... --
Forward foreign exchange contracts:
Forward foreign exchange contracts to buy, at value (Contract cost $288,862)
(Note 3)...................................................................... --
Forward foreign exchange contracts to sell (Note 3)........................... --
Receivables:
Dividends..................................................................... 153,625
Interest...................................................................... --
Expenses absorbed by Manager.................................................. --
Shares of beneficial interest sold............................................ 1,827,374
Investment securities sold.................................................... 4,304,626
Other Assets:
Organization costs (Note 1)................................................... 35,578
Prepaid expenses and other assets............................................. --
------------
Total Assets................................................................... 898,173,046
------------
LIABILITIES:
Forward foreign exchange contracts:
Forward foreign exchange contracts to buy (Note 3)............................ --
Forward foreign exchange contracts to sell, at value (Contract cost $96,116)
(Note 3)...................................................................... --
Reverse repurchase agreements (Note 3)......................................... --
Payables:
Deferred fee income on dollar roll transactions............................... --
Deferred gain on dollar roll transactions..................................... --
Shares of beneficial interest redeemed........................................ 1,535,962
Investment securities purchased............................................... 16,749,595
Management fees............................................................... 258,806
Administration fees........................................................... 57,999
Custodian fees................................................................ 16,348
Dividends..................................................................... --
Trustees' fees and expenses................................................... 1,567
Due to custodian.............................................................. --
Transfer agency and servicing fees............................................ 239,427
Accrued liabilities and expenses.............................................. 537,632
------------
Total Liabilities.............................................................. 19,397,336
------------
NET ASSETS..................................................................... $878,775,710
============
Investments at Identified Cost................................................. $701,785,592
============
NET ASSETS CONSIST OF:
Undistributed net investment income............................................ $ 3,692,196
Accumulated net realized gain/(loss) on securities sold, forward foreign
exchange contracts,
futures contracts, foreign currency transactions and securities sold short.... 22,332,169
Net unrealized appreciation of securities, forward foreign exchange contracts,
foreign currency transactions and net other assets............................ 100,382,202
Shares of beneficial interest.................................................. 458,549
Additional paid-in capital..................................................... 751,910,594
------------
NET ASSETS..................................................................... $878,775,710
============
Net Asset Value, offering and redemption price per share outstanding........... $19.16
=====
Number of Fund shares outstanding.............................................. 45,854,910
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 70 ------------------
<PAGE> 78
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
<TABLE>
<CAPTION>
EQUITY ASSET GLOBAL
MICRO CAP SMALL CAP INCOME ALLOCATION OPPORTUNITIES
FUND FUND FUND FUND FUND
------------ ------------ ---------- ----------- -------------
<S> <C> <C> <C> <C>
$137,626,759 $193,199,174 $5,978,006 $59,860,895 $13,885,357
-- 7,229,000 425,000 -- --
------------ ------------ ------------ ---------- -----------
137,626,759 200,428,174 6,403,006 59,860,895 13,885,357
32,227,532 201,407 749 7,268,120 --
-- -- -- -- 208,388
-- -- -- -- 287,372
-- -- -- -- 96,116
37,432 33,646 24,854 2,140 29,889
-- 125,326 74 409,971 --
-- -- 2,347 -- --
1,225,648 37,885 40,394 498,707 95,754
2,919,245 3,370,482 -- 1,051,875 124,930
23,974 6,528 25,360 44,411 36,059
-- -- -- 257 --
------------ ------------ ------------ ---------- -----------
174,060,590 204,203,448 6,496,784 69,136,376 14,763,865
------------ ------------ ------------ ---------- -----------
-- -- -- -- 288,862
-- -- -- -- 96,681
-- -- -- -- --
-- -- -- 1,247 --
-- -- -- 15,078 --
56,197 79,130 1,000 128,327 26,921
10,738,303 1,339,419 -- 8,651,598 497,745
115,000 166,452 -- 17,998 4,254
8,173 11,652 363 3,147 788
5,525 105,419 1,999 3,761 8,603
-- -- 51,653 -- --
1,031 1,568 1,567 1,568 1,567
-- -- -- -- 129,432
27,000 33,522 1,512 16,573 4,191
159,865 67,445 56,072 63,250 27,750
------------ ------------ ------------ ---------- -----------
11,111,094 1,804,607 114,166 8,902,547 1,086,794
------------ ------------ ------------ ---------- -----------
$162,949,496 $202,398,841 $6,382,618 $60,233,829 $13,677,071
============ ============ ============ ========== ===========
$122,914,040 $155,318,326 $6,084,911 $56,455,534 $12,769,457
============ ============ ============ ========== ===========
$ 704,275 $ -- $ 980 $ 509,593 $ 42,661
312,720 6,471,686 39,974 1,097,296 (1,429,734)
14,712,719 45,109,848 318,095 3,405,361 1,115,129
118,503 118,279 4,769 36,886 10,321
147,101,279 150,699,028 6,018,800 55,184,693 13,938,694
------------ ------------ ------------ ---------- -----------
$162,949,496 $202,398,841 $6,382,618 $60,233,829 $13,677,071
============ ============ ============ ========== ===========
$13.75 $17.11 $13.38 $16.33 $13.25
===== ===== ===== ===== =====
11,850,322 11,827,906 476,925 3,688,632 1,032,075
============ ============ ============ ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 71 ------------------
<PAGE> 79
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1995
<TABLE>
<CAPTION>
GLOBAL
COMMUNICATIONS
FUND
--------------
<S> <C>
ASSETS:
Investments in securities, at value (Note 1)
Investment securities...................................................... $210,944,535
Repurchase agreements...................................................... --
------------
Total investments........................................................... 210,944,535
Cash........................................................................ --
Foreign currency, at value (Cost $1,343,632 and $6,002,299, respectively)... --
Forward foreign exchange contracts:
Forward foreign exchange contracts to buy, at value (Contract cost
$4,474,870,
$1,832,829 and $2,906,750, respectively) (Note 3).......................... 4,472,211
Forward foreign exchange contracts to sell (Note 3)........................ 2,658,913
Receivables:
Dividends.................................................................. 227,782
Interest................................................................... --
Expenses absorbed by Manager............................................... --
Shares of beneficial interest sold......................................... 135,411
Investment securities sold................................................. 7,577,512
Other Assets:
Organization costs (Note 1)................................................ 46,518
Prepaid expenses and other assets.......................................... --
------------
Total Assets................................................................ 226,062,882
------------
LIABILITIES:
Forward foreign exchange contracts:
Forward foreign exchange contracts to buy (Note 3)......................... 4,474,870
Forward foreign exchange contracts to sell, at value (Contract cost
$2,658,913,
$570,112 and $4,126,114, respectively) (Note 3)............................ 2,666,625
Reverse repurchase agreements (Note 3)...................................... --
Payables:
Deferred fee income on dollar roll transactions............................ --
Deferred gain on dollar roll transactions.................................. --
Shares of beneficial interest redeemed..................................... 212,201
Investment securities purchased............................................ 4,472,162
Management fees............................................................ 188,024
Administration fees........................................................ 11,963
Custodian fees............................................................. 49,302
Dividends.................................................................. --
Trustees' fees and expenses................................................ 1,567
Due to custodian........................................................... 4,137,792
Transfer agency and servicing fees......................................... 72,742
Accrued liabilities and expenses........................................... 131,428
------------
Total Liabilities........................................................... 16,418,676
------------
NET ASSETS.................................................................. $209,644,206
============
Investments at Identified Cost.............................................. $181,338,085
============
NET ASSETS CONSIST OF:
Undistributed net investment income/(accumulated net investment loss)....... $ (366,907)
Accumulated net realized gain/(loss) on securities sold, forward foreign
exchange contracts, futures contracts, foreign currency transactions and
securities sold short...................................................... (21,559,367)
Net unrealized appreciation of securities, forward foreign exchange
contracts, foreign currency transactions and net other assets.............. 29,680,625
Shares of beneficial interest............................................... 135,986
Additional paid-in capital.................................................. 201,753,869
------------
NET ASSETS.................................................................. $209,644,206
============
Net Asset Value, offering and redemption price per share outstanding........ $15.42
======
Number of Fund shares outstanding........................................... 13,598,577
============
</TABLE>
- ------------
** Amount represents distributions in excess of net investment income.
The accompanying notes are an integral part of these financial statements.
------------------ 72 ------------------
<PAGE> 80
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA
INTERNATIONAL EMERGING SHORT GOVERNMENT TAX-FREE CALIFORNIA
SMALL CAP MARKETS GOVERNMENT BOND RESERVE INTERMEDIATE TAX-FREE MONEY
FUND FUND FUND FUND BOND FUND FUND
------------- -------------- --------------- ------------ ---------- --------------
<S> <C> <C> <C> <C> <C>
$28,522,970 $ 960,658,721 $19,779,384 $138,329,584 $5,145,777 $ 69,651,722
1,418,000 29,590,000 -- 119,527,000 -- --
----------- ------------ ----------- ------------ ---------- -----------
29,940,970 990,248,721 19,779,384 257,856,584 5,145,777 69,651,722
-- 919,034 883,674 2,427 -- 984,409
1,344,255 5,934,404 -- -- -- --
1,823,486 2,900,391 -- -- -- --
570,112 4,126,114 -- -- -- --
63,578 2,407,984 -- -- -- --
246 780,601 138,651 1,346,751 93,247 698,008
-- -- 3,709 -- 2,825 --
125,954 2,709,862 327,068 53,242 12,000 4,984
988,498 8,602,431 62,963 -- 115,022 --
36,568 35,977 42,351 37,784 25,428 3,235
-- -- -- -- 136 --
----------- ------------ ----------- ------------ ---------- -----------
34,893,667 1,018,665,519 21,237,800 259,296,788 5,394,435 71,342,358
----------- ------------ ----------- ------------ ---------- -----------
1,832,829 2,906,750 -- -- -- --
570,890 4,132,238 -- -- -- --
-- -- 4,041,183 -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
10,327 1,834,719 56,552 122,932 -- 2,500
3,875,762 10,148,271 -- -- 199,679 6,445,033
18,581 218,188 -- 91,854 -- 10,594
1,689 51,467 679 10,433 220 2,704
10,211 441,997 892 5,631 3,908 5,000
-- -- 5,929 8,770 56 189
1,567 1,587 1,566 1,567 1,567 1,567
13,023 -- -- -- 11,323 --
9,243 241,385 2,953 15,973 2,167 3,523
33,952 605,522 34,643 83,604 22,345 91,351
----------- ------------ ----------- ------------ ---------- -----------
6,378,074 20,582,124 4,144,397 340,764 241,265 6,562,461
----------- ------------ ----------- ------------ ---------- -----------
$28,515,593 $ 998,083,395 $17,093,403 $258,956,024 $5,153,170 $ 64,779,897
=========== ============ =========== ============ ========== ===========
$29,387,538 $ 961,458,589 $19,629,878 $257,856,584 $5,106,946 $ 69,651,722
=========== ============ =========== ============ ========== ===========
$ (18,308) $ (3,656,524) $ (87,194) $ 457 $ 317 $ (395)**
(6,391,327) (22,196,011) (510,134) (37,718) (142,824 ) (1,324)
547,147 28,711,273 149,506 -- 38,831 --
24,266 757,959 17,182 2,589,976 4,280 647,816
34,353,815 994,466,698 17,524,043 256,403,309 5,252,566 64,133,800
----------- ------------ ----------- ------------ ---------- -----------
$28,515,593 $ 998,083,395 $17,093,403 $258,956,024 $5,153,170 $ 64,779,897
=========== ============ =========== ============ ========== ===========
$11.75 $13.17 $9.95 $1.00 $12.04 $1.00
===== ===== ==== ==== ===== ====
2,426,630 75,795,850 1,718,239 258,997,590 428,036 64,781,616
=========== ============ =========== ============ ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 73 ------------------
<PAGE> 81
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995*
<TABLE>
<CAPTION>
GROWTH
FUND
------------
<S> <C>
NET INVESTMENT INCOME:
INVESTMENT INCOME:
Interest................................................................. $ 9,589,136
Dividends (Net of foreign withholding taxes of $61,048, $3,513, $26,526
and $366,068 for the Montgomery Growth Fund, Montgomery Small Cap Fund,
Montgomery Global Opportunities Fund and Montgomery Global Communications,
respectively)............................................................ 4,348,210
------------
Total income........................................................... 13,937,346
------------
EXPENSES:
Management fee (Note 2).................................................. 5,566,892
Custodian fee............................................................ 27,952
Transfer agency and servicing fees....................................... 1,387,939
Administration fee (Note 2).............................................. 390,017
Legal and audit fees..................................................... 117,899
Trustees' fees........................................................... 8,840
Registration fees........................................................ 295,212
Printing fees............................................................ 380,450
Amortization of organization expenses (Note 1)........................... 11,233
Other.................................................................... 251,485
Interest expense......................................................... 6,008
Fees deferred and/or expenses absorbed by Manager (Note 2)............... --
------------
Total Expenses......................................................... 8,443,927
------------
NET INVESTMENT INCOME/(LOSS)............................................. 5,493,419
------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) from:
Security transactions (Net of foreign capital gains tax of $60,323 for
the Montgomery Global Communications Fund)........................... 25,117,201
Forward foreign exchange contracts..................................... --
Futures contracts...................................................... --
Foreign currency transactions.......................................... --
Securities sold short.................................................. --
------------
Net realized gain/(loss) on investments during the year.................. 25,117,201
------------
Net change in unrealized appreciation/(depreciation) of:
Securities............................................................. 99,934,770
Forward foreign exchange contracts..................................... --
Futures contracts...................................................... --
Securities sold short.................................................. --
Foreign currency transactions and other assets......................... --
------------
Net unrealized appreciation of investments during the year............... 99,934,770
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.......................... 125,051,971
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $130,545,390
============
</TABLE>
- ------------
* The Montgomery Micro Cap Fund and Montgomery Equity Income Fund commenced
operations on December 30, 1994 and September 30, 1994, respectively.
The accompanying notes are an integral part of these financial statements.
------------------ 74 ------------------
<PAGE> 82
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
<TABLE>
<CAPTION>
EQUITY ASSET GLOBAL GLOBAL
MICRO CAP SMALL CAP INCOME ALLOCATION OPPORTUNITIES COMMUNICATIONS
FUND FUND FUND FUND FUND FUND
----------- ----------- ---------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C>
$1,491,426 $1,158,958 $ 15,713 $ 739,444 $ 88,057 $ 322,239
92,099 523,995 89,194 29,278 301,757 3,691,786
1,583,525 1,682,953 104,907 768,722 389,814 4,014,025
----------- ----------- ----------- -------- --------- -----------
703,124 2,095,945 12,589 150,882 226,283 2,952,058
8,090 143,636 4,376 8,021 37,244 349,778
112,597 197,956 6,634 46,376 32,743 639,339
35,111 146,716 1,498 11,356 9,294 155,189
34,991 68,996 9,141 28,485 22,792 82,184
4,841 9,090 5,378 8,404 8,840 8,840
61,000 38,189 6,271 49,799 22,589 22,821
54,365 44,670 17,214 8,874 6,445 165,929
2,507 15,869 3,504 11,627 11,233 15,503
21,065 109,969 993 11,575 19,482 216,761
344 2,088 -- 1,034 688 23,966
(158,785) -- (49,653) (124,429 (144,683) (387,886)
----------- ----------- ----------- --------- --------- -----------
879,250 2,873,124 17,945 212,004 252,950 4,244,482
----------- ----------- ----------- --------- --------- -----------
704,275 (1,190,171) 86,962 556,718 136,864 (230,457)
----------- ----------- ----------- --------- --------- -----------
312,720 6,527,411 39,974 971,297 (1,429,734) (19,134,826)
-- -- -- -- (51,807) (368,515)
-- -- -- 184,800 -- --
-- -- -- -- 13,265 (147,649)
-- -- -- -- -- --
----------- ----------- ----------- --------- --------- -----------
312,720 6,527,411 39,974 1,156,097 (1,468,276) (19,650,990)
----------- ----------- ----------- --------- --------- -----------
14,712,719 32,375,979 318,095 3,376,173 2,073,626 36,305,375
-- -- -- -- (2,055) (10,285)
-- -- -- 2,484 -- --
-- -- -- -- -- --
-- -- -- -- (2,161) 87,238
----------- ----------- ----------- --------- --------- -----------
14,712,719 32,375,979 318,095 3,378,657 2,069,410 36,382,328
----------- ----------- ----------- --------- --------- -----------
15,025,439 38,903,390 358,069 4,534,754 601,134 16,731,338
----------- ----------- ----------- --------- --------- -----------
$15,729,714 $37,713,219 $445,031 $5,091,472 $ 737,998 $ 16,500,881
=========== =========== =========== ========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 75 ------------------
<PAGE> 83
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL CAP
FUND
-------------
<S> <C>
NET INVESTMENT INCOME:
INVESTMENT INCOME:
Interest (Net of foreign withholding taxes of $2,001 for the Montgomery
Emerging Markets Fund)................................................. $ 234,251
Dividends (Net of foreign withholding taxes of $60,146 and $2,079,753
for the Montgomery International Small Cap Fund and Montgomery
Emerging Markets Fund, respectively)................................... 665,560
-----------
Total income........................................................... 899,811
-----------
EXPENSES:
Management fee (Note 2).................................................. 473,200
Custodian fee............................................................ 67,817
Transfer agency and servicing fees....................................... 95,508
Administration fee (Note 2).............................................. 22,118
Legal and audit fees..................................................... 29,417
Trustees' fees........................................................... 8,840
Registration fees........................................................ 18,527
Printing fees............................................................ 20,880
Amortization of organization expenses (Note 1)........................... 11,343
Other.................................................................... 37,465
Interest expense......................................................... --
Fees deferred and/or expenses absorbed by Manager (Note 2)............... (184,013)
----------
Total Expenses......................................................... 601,102
----------
NET INVESTMENT INCOME.................................................... 298,709
----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) from:
Security transactions (Net of foreign capital gains tax of $11,073 and
$2,016,519
for the Montgomery International Small Cap Fund and Montgomery
Emerging
Markets Fund)........................................................ (6,405,585)
Forward foreign exchange contracts..................................... (197,537)
Futures contracts...................................................... --
Foreign currency transactions.......................................... 89,553
Securities sold short.................................................. --
----------
Net realized loss on investments during the year......................... (6,513,569)
----------
Net change in unrealized appreciation/(depreciation) of:
Securities............................................................. 5,668,696
Forward foreign exchange contracts..................................... 2,641
Futures contracts...................................................... --
Securities sold short.................................................. --
Foreign currency transactions and other assets......................... 44,304
----------
Net unrealized appreciation/(depreciation) of investments during the
year................................................................... 5,715,641
----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS................... (797,928)
----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.......... $ (499,219)
==========
</TABLE>
- ------------
* The Montgomery California Tax-Free Money Fund commenced operations on
September 30, 1994.
The accompanying notes are an integral part of these financial statements.
------------------ 76 ------------------
<PAGE> 84
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE
EMERGING SHORT GOVERNMENT INTERMEDIATE CALIFORNIA
MARKETS GOVERNMENT BOND RESERVE BOND TAX-FREE MONEY
FUND FUND FUND FUND FUND
------------ --------------- ----------- ------------------- --------------
<S> <C> <C> <C> <C>
$ 4,586,558 $ 1,544,579 $13,902,811 $ 375,149 $1,451,165
13,006,401 -- -- -- --
------------ ----------- ----------- ---------- ----------
17,592,959 1,544,579 13,902,811 375,149 1,451,165
------------ ----------- ----------- ---------- ----------
9,290,178 99,249 1,440,964 43,889 149,574
2,186,525 6,680 7,812 5,092 6,231
1,893,915 22,068 113,579 14,237 16,924
544,911 9,925 124,139 4,389 18,697
179,892 35,178 60,707 23,724 43,747
7,860 8,839 8,840 8,840 6,136
194,361 43,516 43,076 3,865 17,149
480,228 2,169 25,905 -- 41,353
21,593 16,940 17,174 8,476 3,929
825,505 18,618 135,817 11,521 18,264
-- 180,279 63,359 -- --
-- (170,343) (474,297) (74,640) (198,927)
------------ ----------- ----------- ---------- ----------
15,624,968 273,118 1,567,075 49,393 123,077
------------ ----------- ----------- ---------- ----------
1,967,991 1,271,461 12,335,736 325,756 1,328,088
------------ ----------- ----------- ---------- ----------
2,980,549 (36,035) (12,875) (87,106) (1,324)
(2,793,224) -- -- -- --
-- (34,942) -- -- --
(1,202,268) -- -- -- --
-- (26,875) -- -- --
------------ ----------- ----------- ---------- ----------
(1,014,943) (97,852) (12,875) (87,106) (1,324)
------------ ----------- ----------- ---------- ----------
(10,005,758) 266,346 -- 197,541 --
(46,831) -- -- -- --
-- 16,656 -- -- --
-- 12,500 -- -- --
199,348 -- -- -- --
------------ ----------- ----------- ---------- ----------
(9,853,241) 295,502 -- 197,541 --
------------ ----------- ----------- ---------- ----------
(10,868,184) 197,650 (12,875) 110,435 (1,324)
------------ ----------- ----------- ---------- ----------
$ (8,900,193) $ 1,469,111 $12,322,861 $ 436,191 $1,326,764
============ =========== =========== ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 77 ----------------
<PAGE> 85
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
SHORT GOVERNMENT BOND FUND
STATEMENT OF CASH FLOWS
JUNE 30, 1995
<TABLE>
<S> <C> <C>
Cash flows from operating activities:
Interest received....................................... $ 1,609,114
Operating expenses paid................................. (110,535)
Proceeds from sales of long-term securities and
purchased options..................................... 60,658,744
Net proceeds from futures transactions.................. (13,845)
Proceeds from short sale transactions................... (26,875)
Purchases of long-term securities and purchased
options............................................... (58,732,088)
------------
CASH PROVIDED BY OPERATING ACTIVITIES..................... $ 3,384,515
Cash flows from financing activities:
Proceeds received from subscriptions.................... 14,635,908
Payments on shares redeemed............................. (20,839,734)
Cash provided from reverse repurchase agreement......... 4,020,000
Dollar roll deferred fee income......................... 24,531
Cash dividends paid*.................................... (121,641)
Reverse repurchase agreement and dollar roll interest
expense............................................... (159,096)
------------
CASH USED BY FINANCING ACTIVITIES......................... (2,440,032)
-----------
Increase in cash.......................................... 944,483
(Due to custodian) at beginning of year................... (60,809)
-----------
Cash at end of year....................................... $ 883,674
===========
RECONCILIATION OF NET INCREASE IN NET ASSETS FROM
OPERATIONS TO CASH PROVIDED BY OPERATING ACTIVITIES:
Net increase in net assets resulting from operations...... $ 1,469,111
Decrease in investments................................. $ 1,679,763
Decrease in interest and dividends receivable........... 17,629
Decrease in variation margin for futures transactions... 4,441
Increase in short sales................................. (2,113,750)
Increase in other assets................................ (20,671)
Decrease in receivables for investments sold............ 2,315,335
Decrease in payable for investments purchased........... (150,597)
Increase in accrued expenses............................ 2,975
Increase in interest expense............................ 180,279
------------
Total adjustments....................................... 1,915,404
-----------
CASH PROVIDED BY OPERATING ACTIVITIES..................... $ 3,384,515
===========
</TABLE>
- ------------
* Non cash activities include reinvestment of dividends of $1,164,807.
The accompanying notes are an integral part of these financial statements.
------------------ 78 ------------------
<PAGE> 86
[THIS PAGE INTENTIONALLY LEFT BLANK]
------------------ 79 -----------------
<PAGE> 87
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 1995*
<TABLE>
<CAPTION>
GROWTH
FUND
------------
<S> <C>
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income/(loss).................................................. $ 5,493,419
Net realized gain/(loss) on securities, forward foreign exchange contracts,
futures contracts, securities sold short and foreign currency transactions
during the year.............................................................. 25,117,201
Net unrealized appreciation of securities, forward foreign exchange contracts,
futures contracts, securities sold short, foreign currency transactions and
net other assets during the year............................................. 99,934,770
------------
Net increase/(decrease) in net assets resulting from operations............... 130,545,390
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income................................................... (2,115,772)
In excess of net investment income........................................... --
From net realized gains on investments....................................... (2,056,942)
In excess of net realized gains on investments............................... --
From capital................................................................. --
BENEFICIAL INTEREST TRANSACTIONS:
Net increase/(decrease) from beneficial interest transactions (Note 4)........ 603,300,386
------------
Net increase/(decrease) in net assets......................................... 729,673,062
NET ASSETS:
Beginning of year............................................................. 149,102,648
------------
End of year................................................................... $878,775,710
============
Accumulated undistributed net investment income............................... $ 3,692,196
============
</TABLE>
- ------------
* The Montgomery Micro Cap Fund and Montgomery Equity Income Fund commenced
operations on December 30, 1994 and September 30, 1994, respectively.
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 1994*
<TABLE>
<CAPTION>
GROWTH
FUND
------------
<S> <C>
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income/(loss).................................................. $ 316,890
Net realized gain/(loss) on securities, forward foreign exchange contracts,
futures contracts and currency transactions during the year.................. (710,018)
Net unrealized appreciation/(depreciation) of securities, forward foreign
exchange contracts, futures contracts, investments sold short, foreign
currency transactions and net other assets during the year................... 447,432
------------
Net increase/(decrease) in net assets resulting from operations............... 54,304
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income................................................... (2,341)
In excess of net investment income........................................... --
From net realized gains on investments....................................... --
In excess of net realized gains on investments............................... (18,072)
BENEFICIAL INTEREST TRANSACTIONS:
Net increase from beneficial interest transactions (Note 4)................... 149,068,757
------------
Net increase in net assets.................................................... 149,102,648
NET ASSETS:
Beginning of year............................................................. --
------------
End of year................................................................... $149,102,648
============
Accumulated undistributed net investment income/(accumulated net investment
loss)........................................................................ $ 314,549
============
</TABLE>
- ------------
* Montgomery Growth Fund, Montgomery Asset Allocation Fund and Montgomery Global
Opportunities Fund commenced operations on September 30, 1993, March 31, 1994,
September 30, 1993, respectively.
The accompanying notes are an integral part of these financial statements.
------------------ 80 -----------------
<PAGE> 88
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
<TABLE>
<CAPTION>
EQUITY ASSET GLOBAL GLOBAL
MICRO CAP SMALL CAP INCOME ALLOCATION OPPORTUNITIES COMMUNICATIONS
FUND FUND FUND FUND FUND FUND
------------ ------------ ---------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C>
$ 704,275 $ (1,190,171) $ 86,962 $ 556,718 $ 136,864 $ (230,457)
312,720 6,527,411 39,974 1,156,097 (1,468,276) (19,650,990)
14,712,719 32,375,979 318,095 3,378,657 2,069,410 36,382,328
----------- ------------ ---------- ----------- ----------- ------------
15,729,714 37,713,219 445,031 5,091,472 737,998 16,500,881
-- -- (86,042) (59,071) -- --
-- -- -- -- -- --
-- (12,839,859) -- (35,860) (519,575) --
-- -- -- -- -- (523,480)
-- -- -- -- -- --
147,219,782 (31,537,136) 6,023,629 53,689,330 954,427 (41,218,767)
------------ ------------ ---------- ----------- ----------- ------------
162,949,496 (6,663,776) 6,382,618 56,685,871 1,172,850 (25,241,366)
-- 209,062,617 -- 1,547,958 12,504,221 234,885,572
------------ ------------ ---------- ----------- ----------- ------------
$162,949,496 $202,398,841 $6,382,618 $60,233,829 $13,677,071 $209,644,206
============ ============ ========== =========== =========== ============
$ 704,275 -- $ 980 $ 509,593 $ 42,661 $ (366,907)
============ ============ ========== =========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
ASSET GLOBAL GLOBAL
SMALL CAP ALLOCATION OPPORTUNITIES COMMUNICATIONS
FUND FUND FUND FUND
------------ ----------- ------------- --------------
<S> <C> <C> <C>
$ (1,602,125) $ 7,084 $ 1,217 $ (830,343)
28,926,896 (18,252) 462,660 (2,380,538)
(29,407,567) 26,704 (954,281) (6,797,485)
------------ ----------- ----------- -----------
(2,082,796) 15,536 (490,404) (10,008,366)
-- -- -- --
-- -- -- --
(20,239,441) -- -- --
-- -- -- --
11,416,582 1,532,422 12,994,625 240,223,672
------------ ----------- ----------- ------------
(10,905,655) 1,547,958 12,504,221 230,215,306
219,968,272 -- -- 4,670,266
------------ ----------- ----------- ------------
$209,062,617 $ 1,547,958 $12,504,221 $234,885,572
============ =========== =========== ============
$ -- $ 7,084 $ 1,217 $ (828,131)
============ ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 81 ------------------
<PAGE> 89
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 1995*
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL CAP
FUND
-------------
<S> <C>
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income/(loss)................................................... $ 298,709
Net realized gain/(loss) on securities, forward foreign exchange contracts,
futures contracts, securities sold short and foreign currency transactions
during the year............................................................... (6,513,569)
Net unrealized appreciation/(depreciation) of securities, forward foreign
exchange contracts, futures contracts, securities sold short, foreign currency
transactions and net other assets during the year............................. 5,715,641
------------
Net increase/(decrease) in net assets resulting from operations................ (499,219)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................................................... (4,674)
In excess of net investment income............................................ --
From net realized gains on investments........................................ --
In excess of net realized gains on investments................................ --
From capital.................................................................. --
BENEFICIAL INTEREST TRANSACTIONS:
Net increase/(decrease) from beneficial interest transactions (Note 4)......... (5,535,750)
------------
Net increase/(decrease) in net assets.......................................... (6,039,643)
NET ASSETS:
Beginning of year.............................................................. 34,555,236
------------
End of year.................................................................... $28,515,593
============
Accumulated undistributed net investment income/(accumulated net investment
loss)......................................................................... $ (18,308)
============
</TABLE>
- ------------
* The Montgomery California Tax-Free Money Fund commenced operations on
September 30, 1994.
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 1994*
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL CAP
FUND
-------------
<S> <C>
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income/(loss)................................................... $ 10,554
Net realized gain/(loss) on securities, forward foreign exchange contracts,
futures contracts and currency transactions during the year................... (200,674)
Net unrealized appreciation/(depreciation) of securities, forward foreign
exchange contracts, futures contracts, investments sold short, foreign
currency transactions and net other assets during the year.................... (5,168,494)
------------
Net increase/(decrease) in net assets resulting from operations................ (5,358,614)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................................................... --
In excess of net investment income............................................ --
From net realized gains on investments........................................ --
In excess of net realized gains on investments................................ --
BENEFICIAL INTEREST TRANSACTIONS:
Net increase from beneficial interest transactions (Note 4).................... 39,913,850
------------
Net increase/(decrease) in net assets.......................................... 34,555,236
NET ASSETS:
Beginning of year.............................................................. --
------------
End of year.................................................................... $34,555,236
============
Accumulated undistributed net investment income/(accumulated net investment
loss)......................................................................... $ 10,554
============
</TABLE>
- ------------
* Montgomery International Small Cap Fund and Montgomery California Tax-Free
Intermediate Bond Fund commenced operations on September 30, 1993 and July 1,
1993, respectively.
The accompanying notes are an integral part of these financial statements.
------------------ 82 ------------------
<PAGE> 90
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
<TABLE>
<CAPTION>
EMERGING SHORT GOVERNMENT CALIFORNIA TAX-FREE CALIFORNIA
MARKETS GOVERNMENT BOND RESERVE INTERMEDIATE BOND TAX-FREE MONEY
FUND FUND FUND FUND FUND
------------ ---------------- ------------ -------------------- ---------------
<S> <C> <C> <C> <C>
$ 1,967,991 $ 1,271,461 $ 12,335,736 $ 325,756 $ 1,328,088
(1,014,943) (97,852) (12,875) (87,106) (1,324)
(9,853,241) 295,502 -- 197,541 --
------------ ------------ ------------ ------------ -----------
(8,900,193) 1,469,111 12,322,861 436,191 1,326,764
-- (1,253,298) (12,336,143) (325,716) (1,328,088)
-- -- -- -- (395)
(26,061,048) -- -- (1,870) --
(22,548,326) -- -- -- --
-- (20,117) -- -- --
400,632,672 (5,039,019) 47,840,494 (6,511,663) 64,781,616
------------ ------------ ------------ ------------ -----------
343,123,105 (4,843,323) 47,827,212 (6,403,058) 64,779,897
654,960,290 21,936,726 211,128,812 11,556,228 --
------------ ------------ ------------ ------------ -----------
$998,083,395 $ 17,093,403 $258,956,024 $ 5,153,170 $64,779,897
============ ============ ============ ============ ===========
$ (3,656,524) $ (87,194) $ 457 $ 317 $ (395)
============ ============ =========== ============ ===========
</TABLE>
<TABLE>
<CAPTION>
EMERGING SHORT GOVERNMENT CALIFORNIA TAX-FREE
MARKETS GOVERNMENT BOND RESERVE INTERMEDIATE BOND
FUND FUND FUND FUND
------------ ---------------- ------------ --------------------
<S> <C> <C> <C>
$ (708,743) $ 1,392,467 $ 4,729,181 $ 341,452
30,275,622 (489,708) (12,390) (53,848)
23,520,571 (331,530) -- (158,710)
------------ ------------ ------------ ------------
53,087,450 571,229 4,716,791 128,894
-- (1,272,883) (4,728,317) (341,248)
(556,286) (158,675) -- --
(7,975,866) -- -- --
-- (185,814) -- --
403,788,257 728,957 86,345,080 11,768,582
------------ ------------ ------------ ------------
448,343,555 (317,186) 86,333,554 11,556,228
206,616,735 22,253,912 124,795,258 --
------------ ------------ ------------ ------------
$654,960,290 $ 21,936,726 $211,128,812 $ 11,556,228
============ ============ ============ ============
$ (3,386,032) $ (99,215) $ 864 $ 204
=========== ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
------------------ 83 ------------------
<PAGE> 91
-----------------------------------------------
MONTGOMERY GROWTH FUND
-----------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
06/30/95 06/30/94*
-------- ---------
<S> <C> <C>
Net asset value--beginning of year.......................... $ 15.27 $ 12.00
------- --------
Net investment income....................................... 0.12 0.04
Net realized and unrealized gain on investments............. 3.91 3.31++
------- --------
Net increase in net assets resulting from
investment operations..................................... 4.03 3.35
------- --------
Distributions:
Dividends from net investment income...................... (0.07) (0.01)
Distributions from net realized capital gains............. (0.07) --
Distributions in excess of net realized capital gains..... -- (0.07)
------- --------
Total distributions......................................... (0.14) (0.08)
------- --------
Net asset value--end of year................................ $ 19.16 $ 15.27
======= ========
Total return**.............................................. 26.53% 27.98%
======= ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's).......................... $878,776 $149,103
Ratio of net investment income to average net assets........ 0.98% 1.09%+
Ratio of operating expenses to average net assets........... 1.50% 1.49%+
Portfolio turnover rate..................................... 128.36% 110.65%
Net investment income before deferral of fees
by Manager................................................ -- $ 0.03
Operating expense ratio before deferral of fees
by Manager................................................ -- 1.79%+
</TABLE>
- ------------
* The Fund commenced operations on September 30, 1993.
** Total return represents aggregate total return for the periods indicated.
+ Annualized.
++ The amount shown in this caption for each share outstanding throughout the
period may not accord with the change in the aggregate gains and losses in
the portfolio securities because of the timing of purchases and withdrawal of
shares in relation to the fluctuating market values of the portfolio.
The accompanying notes are an integral part of these financial statements.
------------------ 84 ------------------
<PAGE> 92
---------------------------------------------------
MONTGOMERY MICRO CAP FUND
---------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
06/30/95*#
----------
<S> <C>
Net asset value--beginning of period...................................... $ 12.00
--------
Net investment income..................................................... 0.09
Net realized and unrealized gain on investments........................... 1.66
--------
Net increase in net assets resulting from investment operations........... 1.75
--------
Net asset value--end of period............................................ $ 13.75
========
Total return**............................................................ 14.58%
========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)...................................... $162,949
Ratio of net investment income to average net assets...................... 1.40%+
Ratio of operating expenses to average net assets......................... 1.75%+
Portfolio turnover rate................................................... 36.81%
Net investment income before deferral of fees by Manager.................. $ 0.07
Operating expense ratio before deferral of fees by Manager................ 2.07%+
</TABLE>
- ------------
* The Fund commenced operations on December 30, 1994.
** Total return represents aggregate total return for the period indicated.
+ Annualized.
# Per shares numbers have been calculated using the average shares method,
which more appropriately represent the per share data for the period since
the use of the undistributed income method did not accord with the results of
operations.
The accompanying notes are an integral part of these financial statements.
------------------ 85 ------------------
<PAGE> 93
---------------------------------------------------
MONTGOMERY SMALL CAP FUND
---------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
PERIOD
YEAR ENDED JUNE 30, ENDED
----------------------------------------------------- JUNE 30,
1995 1994 1993 1992 1991 1991*
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value--beginning
of year.................. $ 15.15 $ 16.83 $ 12.90 $ 13.24 $ 10.05 $ 10.62
-------- -------- -------- -------- ------- -------
Net investment loss........ (0.10) (0.12) (0.11) (0.06) (0.06) (0.07)
Net realized and unrealized
gain/(loss) on
investments.............. 3.04 (0.47) 4.04 3.25 3.27 2.71
-------- -------- -------- -------- ------- -------
Net increase/(decrease) in
net assets resulting from
investment operations.... 2.94 (0.59) 3.93 3.19 3.21 2.64
-------- -------- -------- -------- ------- -------
Distributions:
Dividends from net
realized capital
gains.................. (0.98) (1.09) -- (2.75) (0.02) (0.02)
Distributions from
capital................ -- -- -- (0.78) -- --
-------- -------- -------- -------- ------- -------
Total distributions........ (0.98) (1.09) -- (3.53) (0.02) (0.02)
-------- -------- -------- -------- ------- -------
Net asset value--end of
year..................... $ 17.11 $ 15.15 $ 16.83 $ 12.90 $ 13.24 $ 13.24
======== ======== ======== ======== ======= =======
Total return**............. 20.12% (1.59)% 30.47% 27.69% 31.97% 24.89%
======== ======== ======== ======== ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year
(in 000's)............... $202,399 $209,063 $219,968 $176,588 $27,181 $27,181
Ratio of net investment
loss to average net
assets................... (0.57)% (0.68)% (0.69)% (0.44)% (0.47)% (0.45)%+
Ratio of operating expenses
to average net assets.... 1.37% 1.35% 1.40% 1.50% 1.50% 1.45%+
Portfolio turnover rate.... 85.07% 95.22% 130.37% 80.67% 194.63% 188.16%
</TABLE>
- ------------
* The Fund's shares became available for investment by the public on July 13,
1990.
** Total return represents aggregate total return for the periods indicated.
+ Annualized.
The accompanying notes are an integral part of these financial statements.
------------------ 86 ------------------
<PAGE> 94
----------------------------------------------------------
MONTGOMERY EQUITY INCOME FUND
----------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
06/30/95*
---------
<S> <C>
Net asset value--beginning of period........................................ $ 12.00
------
Net investment income....................................................... 0.31
Net realized and unrealized gain on investments............................. 1.38
------
Net increase in net assets resulting from investment operations............. 1.69
------
Dividends from net investment income........................................ (0.31)
------
Net asset value--end of period.............................................. $ 13.38
======
Total return**.............................................................. 14.26%
======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........................................ $ 6,383
Ratio of net investment income to average net assets........................ 4.06%+
Ratio of operating expenses to average net assets........................... 0.84%+
Portfolio turnover rate..................................................... 29.46%
Net investment income before deferral of fees by Manager.................... $ 0.13
Operating expense ratio before deferral of fees by Manager.................. 3.16%+
</TABLE>
- ------------
* The Fund commenced operations on September 30, 1994.
** Total return represents aggregate total return for the period indicated.
+ Annualized.
The accompanying notes are an integral part of these financial statements.
------------------ 87 ------------------
<PAGE> 95
----------------------------------------------------------------
MONTGOMERY ASSET ALLOCATION FUND
----------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
06/30/95 06/30/94*
-------- --------
<S> <C> <C>
Net asset value--beginning of year........................... $ 12.24 $ 12.00
------- -------
Net investment income........................................ 0.25 0.06
Net realized and unrealized gain on investments.............. 4.11 0.18
------- -------
Net increase in net assets resulting from
investment operations...................................... 4.36 0.24
------- -------
Distributions:
Dividends from net investment income....................... (0.17) --
Distributions from net realized capital gains.............. (0.10) --
------- -------
Total distributions.......................................... (0.27) --
------- -------
Net asset value--end of year................................. $ 16.33 $ 12.24
======= =======
Total return**............................................... 35.99% 2.00%
======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)........................... $60,234 $ 1,548
Ratio of net investment income to average net assets......... 3.43% 2.54%+
Ratio of operating expenses to average net assets#........... 1.31% 1.43%+
Portfolio turnover rate...................................... 95.75% 190.94%
Net investment income/(loss) before deferral of fees and
absorption of expenses by Manager.......................... $ 0.19 $ (0.11)
Operating expense ratio before deferral of fees and
absorption of expenses, excluding interest expense, by
Manager.................................................... 2.07% 8.86%+
</TABLE>
- ------------
* The Fund commenced operations on March 31, 1994.
** Total return represents aggregate total return for the periods indicated.
+ Annualized.
# Annualized expense ratios excluding interest expense for the year ended June
30, 1995 and for the period ended June 30, 1994 were 1.30% and 1.30%,
respectively.
The accompanying notes are an integral part of these financial statements.
------------------ 88 ------------------
<PAGE> 96
------------------------------------------------------------------------
MONTGOMERY GLOBAL OPPORTUNITIES FUND
------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
06/30/95 06/30/94*
-------- --------
<S> <C> <C>
Net asset value--beginning of year........................... $ 12.92 $ 12.00
------- -------
Net investment income........................................ 0.13 0.01
Net realized and unrealized gain on investments.............. 0.70 0.91
------- -------
Net increase in net assets resulting from investment
operations................................................. 0.83 0.92
------- -------
Distributions from net realized capital gains................ (0.50) --
------- -------
Net asset value--end of year................................. $ 13.25 $ 12.92
======= =======
Total return**............................................... 6.43% 7.67%
======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)........................... $13,677 $12,504
Ratio of net investment income to average net assets......... 1.03% 0.02%+
Ratio of operating expenses to average net assets#........... 1.91% 1.99%+
Portfolio turnover rate...................................... 118.75% 67.22%
Net investment loss before deferral of fees by Manager....... $ (0.01) $ (0.05)
Operating expense ratio before deferral of fees, excluding
interest expense, by Manager............................... 2.99% 1.11%+
</TABLE>
- ------------
* The Fund commenced operations on September 30, 1993.
** Total return represents aggregate total return for the periods indicated.
+ Annualized.
# Annualized expense ratios excluding interest expense and taxes for the
periods ended June 30, 1994 and 1995 were each 1.90%.
The accompanying notes are an integral part of these financial statements.
------------------ 89 ------------------
<PAGE> 97
----------------------------------------------------------------------------
MONTGOMERY GLOBAL COMMUNICATIONS FUND
----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30, PERIOD
--------------------- ENDED
1995 1994 06/30/93*
-------- -------- ---------
<S> <C> <C> <C>
Net asset value--beginning of year................ $ 14.20 $ 12.45 $ 12.00
-------- -------- -------
Net investment loss............................... (0.03) (0.05) 0.00#
Net realized and unrealized gain on investments... 1.28 1.80++ 0.45
-------- -------- -------
Net increase in net assets resulting from
investment operations........................... 1.25 1.75 0.45
-------- -------- -------
Distributions in excess of net realized capital
gains........................................... (0.03) -- --
-------- -------- -------
Net asset value--end of year...................... $ 15.42 $ 14.20 $ 12.45
======== ======== =======
Total return**.................................... 8.83% 14.06% 3.75%
======== ======== =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)................ $209,644 $234,886 $ 4,670
Ratio of net investment loss to average
net assets...................................... (0.10)% (0.46)% (0.05)%+
Ratio of operating expenses to average
net assets##.................................... 1.91% 1.94% 1.90%+
Portfolio turnover rate........................... 50.17% 29.20% 0.00%
Net investment loss before deferral of fees and/or
absorption of expenses by Manager............... $ (0.07) $ (0.06) $ (0.04)
Operating expense ratio before deferral of fees
and/or absorption of expenses, excluding
interest expense, by Manager.................... 2.08% 1.99% 8.96%+
</TABLE>
- ------------
* The Fund commenced operations on June 1, 1993.
** Total return represents aggregate total return for the periods indicated.
+ Annualized.
++ The amount shown in this caption for each share outstanding throughout the
period may not accord with the change in the aggregate gains and losses in
the portfolio securities because of the timing of purchases and withdrawal of
shares in relation to the fluctuating market values of the portfolio.
# Amount represents less than $0.01 per share.
## Annualized expense ratios excluding interest expense for the year ended June
30, 1995 and for the period ended June 30, 1994 were 1.90% and 1.90%,
respectively.
The accompanying notes are an integral part of these financial statements.
------------------ 90 ------------------
<PAGE> 98
------------------------------------------------------------------------------
MONTGOMERY INTERNATIONAL SMALL CAP FUND
------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
06/30/95 06/30/94*
-------- --------
<S> <C> <C>
Net asset value--beginning of year........................... $ 12.02 $ 12.00
------- -------
Net investment income........................................ 0.12 0.00#
Net realized and unrealized gain/(loss) on investments....... (0.39) 0.02
------- -------
Net increase/(decrease) in net assets resulting from
investment operations...................................... (0.27) 0.02
------- -------
Dividends from net investment income......................... (0.00)# --
------- -------
Net asset value--end of year................................. $ 11.75 $ 12.02
======= =======
Total return**............................................... (2.23)% 0.17%
======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)........................... $28,516 $34,555
Ratio of net investment income to average net assets......... 0.95% 0.04%+
Ratio of operating expenses to average net assets............ 1.91% 1.99%+##
Portfolio turnover rate...................................... 156.13% 123.50%
Net investment income/(loss) before deferral of fees by
Manager.................................................... $ 0.05 $ (0.02)
Operating expense ratio before deferral of fees, excluding
interest expense, by Manager............................... 2.50% 2.32%+
</TABLE>
- ------------
* The Fund commenced operations on September 30, 1993.
** Total return represents aggregate total return for the periods indicated.
+ Annualized.
# Amount represents less than $0.01 per share.
## Annualized expense ratio excluding interest expense for the period ended June
30, 1994 was 1.90%.
The accompanying notes are an integral part of these financial statements.
------------------ 91 ------------------
<PAGE> 99
------------------------------------------------------------------
MONTGOMERY EMERGING MARKETS FUND
------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, PERIOD
-------------------------------- ENDED
1995++ 1994 1993 06/30/92*
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net asset value--beginning of year....... $ 13.68 $ 11.07 $ 9.96 $ 10.00
-------- -------- -------- -------
Net investment/(loss) income............. 0.03 (0.03) 0.07 0.03
Net realized and unrealized gain/(loss)
on investments......................... 0.25## 2.92 1.05 (0.07)
-------- -------- -------- -------
Net increase/(decrease) in net
assets resulting from investment
operations............................. 0.28 2.89 1.12 (0.04)
-------- -------- -------- -------
Distributions:
Dividends from net investment income... -- -- (0.01) --
Distributions from net realized capital
gains................................ (0.42) (0.28) (0.00)# --
Distributions in excess of net realized
capital gains........................ (0.37) -- -- --
-------- -------- -------- -------
Total distributions...................... (0.79) (0.28) (0.01) --
-------- -------- -------- -------
Net asset value--end of year............. $ 13.17 $ 13.68 $ 11.07 $ 9.96
======== ======== ======== =======
Total return**........................... 1.40% 26.10% 11.27% (0.40)%
======== ======== ======== =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)....... $998,083 $654,960 $206,617 $54,625
Ratio of net investment income/(loss) to
average net assets..................... 0.23% (0.14)% 0.66% 1.70%+
Ratio of operating expenses to average
net assets............................. 1.80% 1.85% 1.90% 1.90%+
Portfolio turnover....................... 92.09% 63.79% 21.40% 0.19%
Net investment income before deferral of
fees by Manager........................ -- -- $ 0.06 $ 0.01
Operating expense ratio before deferral
of fees by Manager..................... -- -- 1.93% 2.80%+
</TABLE>
- ------------
* The Fund commenced operations on March 1, 1992.
** Total return represents aggregate total return for the periods indicated.
+ Annualized.
++ Per shares numbers have been calculated using the average shares method,
which more appropriately represent the per share data for the period since
the use of the undistributed income method did not accord with the results of
operations.
# Amount represents less than $0.01 per share.
## The amount shown in this caption for each share outstanding throughout the
period may not accord with the change in the aggregate gains and losses in
the portfolio securities because of the timing of purchases and withdrawal of
shares in relation to the fluctuating market values of the portfolio.
The accompanying notes are an integral part of these financial statements.
------------------ 92 ------------------
<PAGE> 100
-----------------------------------------------------------------------------
MONTGOMERY SHORT GOVERNMENT BOND FUND
-----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------
1995 1994 1993*
------- ------- -------
<S> <C> <C> <C>
Net asset value--beginning of year...................... $ 9.80 $ 10.23 $ 10.00
------- ------- -------
Net investment income................................... 0.62 0.61 0.33
Net realized and unrealized gain/(loss)
on investments........................................ 0.16 (0.34) 0.23
------- ------- -------
Net increase in net assets resulting from
investment operations................................. 0.78 0.27 0.56
------- ------- -------
Distributions:
Dividends from net investment income.................. (0.62) (0.56) (0.33)
Distributions in excess of net investment income...... -- (0.07) --
Distributions in excess of net realized
capital gains....................................... -- (0.07) --
Distributions from capital............................ (0.01) -- 0.00#
------- ------- -------
Total distributions..................................... (0.63) (0.70) (0.33)
------- ------- -------
Net asset value--end of year............................ $ 9.95 $ 9.80 $ 10.23
------- ------- -------
Total return**.......................................... 8.28% 2.49% 5.66%
======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)...................... $17,093 $21,937 $22,254
Ratio of net investment income to average
net assets............................................ 6.41% 5.93% 6.02%+
Ratio of operating expenses to average net assets##..... 1.38% 0.71% 0.22%+
Portfolio turnover...................................... 284.23% 603.07% 213.22%
Net investment income before deferral of fees and
absorption of expenses by Manager..................... $ 0.54 $ 0.51 $ 0.27
Ratio of operating expense to average net assets before
deferral of fees and absorption of expenses, excluding
interest expense, by Manager.......................... 1.33% 1.29% 2.07%+
</TABLE>
- ------------
* The Fund commenced operations on December 18, 1992.
** Total return represents aggregate total return for the periods indicated.
+ Annualized.
# Amount represents less than $0.01 per share.
## Annualized expense ratios excluding interest expense for the years ended June
30, 1995 and 1994 were 0.47% and 0.25%, respectively.
The accompanying notes are an integral part of these financial statements.
------------------ 93 ------------------
<PAGE> 101
----------------------------------------------------------------------
MONTGOMERY GOVERNMENT RESERVE FUND
----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
PERIOD
--------------------- ENDED
1995 1994 06/30/93*
-------- -------- ----------
<S> <C> <C> <C>
Net asset value--beginning of year.................. $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Net investment income............................... 0.049 0.029 0.024
Net realized and unrealized gain on investments#.... 0.000 0.000 0.000
-------- -------- --------
Net increase in net assets resulting from investment
operations........................................ 0.049 0.029 0.024
-------- -------- --------
Dividends from net investment income................ (0.049) (0.029) (0.024)
-------- -------- --------
Net asset value--end of year........................ $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total return**...................................... 4.97% 2.96% 2.41%
======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's).................. $258,956 $211,129 $124,795
Ratio of net investment income to average net
assets............................................ 4.92% 2.99% 2.96%+
Ratio of operating expenses to average net assets... 0.63%## 0.60% 0.38%+
Net investment income before deferral of fees by
Manager........................................... $ 0.047 $ 0.028 $ 0.013
Ratio of operating expense to average net assets
before absorption of expenses, excluding interest
expense, by Manager............................... 0.79% 0.71% 0.77%+
</TABLE>
- ------------
* The Fund commenced operations on September 14, 1992.
** Total return represents aggregate total return for the periods indicated.
+ Annualized.
# Amount represents less than $0.01 per share.
## Annualized operating expense ratio excluding interest expense for the year
ended June 30, 1995 was 0.60%.
The accompanying notes are an integral part of these financial statements.
------------------ 94 ------------------
<PAGE> 102
-----------------------------------------------------------
MONTGOMERY CALIFORNIA TAX-FREE
INTERMEDIATE BOND FUND
-----------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR ENDED JUNE
30,
------------------
1995 1994*
------ -------
<S> <C> <C>
Net asset value--beginning of year.................................. $11.79 $ 12.00
------ -------
Net investment income............................................... 0.44 0.41
Net realized and unrealized gain/(loss) on investments.............. 0.25 (0.21)
------ -------
Net increase in net assets resulting from investment operations..... 0.69 0.20
------ -------
Distributions:
Dividends from net investment income.............................. (0.44) (0.41)
Distributions from net realized capital gains..................... (0.00)# --
------ -------
Total distributions................................................. (0.44) (0.41)
------ -------
Net asset value--end of year........................................ $12.04 $ 11.79
====== =======
Total return**...................................................... 6.03% 1.65%
====== =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's).................................. $5,153 $11,556
Ratio of net investment income to average net assets................ 3.71% 3.44%
Ratio of operating expenses to average net assets................... 0.56% 0.23%
Portfolio turnover.................................................. 37.93% 77.03%
Net investment income before deferral of fees and absorption of
expenses by Manager............................................... $ 0.34 $ 0.25
Operating expense ratio before deferral of fees and absorption of
expenses by Manager............................................... 1.41% 1.63%
</TABLE>
- ------------
* The Fund commenced operations on July 1, 1993.
** Total return represents aggregate total return for the periods indicated.
# Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial statements.
------------------ 95 ------------------
<PAGE> 103
-----------------------------------------------------------
MONTGOMERY CALIFORNIA TAX-FREE
MONEY FUND
-----------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
06/30/95*
---------
<S> <C>
Net asset value--beginning of period........................................ $ 1.00
-------
Net investment income....................................................... 0.027
Net realized and unrealized gain on investments............................. 0.000
-------
Net increase in net assets resulting from investment operations............. 0.027
-------
Distributions:
Dividends from net investment income...................................... (0.027)
-------
Dividends in excess of net investment income.............................. (0.000)#
-------
(0.027)
-------
Net asset value--end of period.............................................. $ 1.00
=======
Total return**.............................................................. 2.68%
=======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........................................ $64,780
Ratio of net investment income to average net assets........................ 3.55%+
Ratio of operating expenses to average net assets........................... 0.33%+
Net investment income before deferral of fees and absorption of expenses by
Manager................................................................... $ 0.023
Operating expense ratio before deferral of fees and absorption of expenses
by Manager................................................................ 0.86%+
</TABLE>
- ------------
* The Fund commenced operations on September 30, 1994.
** Total return represents aggregate total return for the period indicated.
+ Annualized.
# Amount represents less than $0.001 per share.
The accompanying notes are an integral part of these financial statements.
------------------ 96 ------------------
<PAGE> 104
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The Montgomery Funds and The Montgomery Funds II (individually, the "Trust"
and, collectively, the "Trusts") are registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as diversified, open-end management
investment companies. As of June 30, 1995, the Trusts had fourteen publicly
offered series: Montgomery Growth Fund, Montgomery Micro Cap Fund, Montgomery
Small Cap Fund, Montgomery Equity Income Fund, Montgomery Asset Allocation Fund
(formerly Montgomery Strategic U.S. Fund), Montgomery Global Opportunities Fund,
Montgomery Global Communications Fund, Montgomery International Small Cap Fund,
Montgomery Emerging Markets Fund, Montgomery Short Government Bond Fund
(formerly Montgomery Short Duration Government Fund), Montgomery Government
Reserve Fund, Montgomery California Tax-Free Intermediate Bond Fund (formerly
Montgomery California Tax-Free Short/Intermediate Fund), Montgomery California
Tax-Free Money Fund and Montgomery Institutional Series: Emerging Markets
Portfolio (individually, the "Fund" and, collectively, the "Funds").
The Montgomery Funds were organized as a Massachusetts business trust on
May 10, 1990 and commenced operations with the Montgomery Small Cap Fund. The
Montgomery Funds II were organized as a Delaware business trust on September 8,
1993 and commenced operations with the Montgomery Institutional Series: Emerging
Markets Portfolio. Prior to the public offerings of shares of each Fund, a
limited number of shares were sold to Montgomery Asset Management, L.P. and/or
affiliated persons of Montgomery Asset Management in private placement
offerings. Otherwise, no Fund had any significant operations prior to the date
on which it commenced operations (i.e., commenced selling shares to the public).
Information presented in these financial statements pertains to all the
above Funds except for Montgomery Institutional Series: Emerging Markets
Portfolio which is presented under separate cover.
The following is a summary of significant accounting policies.
A. PORTFOLIO VALUATION--For the Montgomery Growth Fund, the Montgomery
Micro Cap Fund, Montgomery Small Cap Fund, Montgomery Equity Income Fund,
Montgomery Asset Allocation Fund, Montgomery Short Government Bond Fund and
Montgomery California Tax-Free Intermediate Bond Fund portfolio securities are
valued using current market valuations: either the last reported sales price,
or, in the case of securities for which there is no reported last sale and in
the case of fixed income securities, the mean of the closing bid and asked
prices.
For the Montgomery International Small Cap Fund and the Montgomery Emerging
Markets Fund, portfolio securities which are traded primarily on foreign
securities
------------------ 97 ------------------
<PAGE> 105
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
exchanges or for which market quotations are readily available are generally
valued at the last reported sales price on the respective exchanges or markets,
except that when an occurrence subsequent to the time that a value was so
established is likely to have changed said value, the fair value of those
securities will be determined by consideration of other factors by or under the
direction of the Board of Trustees or its delegates. Securities traded on the
over-the-counter market are valued at the mean between the last available bid
and ask price prior to the time of valuation.
For the Montgomery Global Opportunities Fund and the Montgomery Global
Communications Fund, portfolio securities are valued using current market
valuations: either the last reported sales price, or, in the case of securities
for which there is no reported last sale and in the case of fixed income
securities, the mean of the last available bid and asked prices. The value of
portfolio securities which are traded primarily on foreign securities exchanges
are generally valued at the immediate preceding closing values of such
securities on the respective exchanges or markets, except that when an
occurrence subsequent to the time that a value was so established is likely to
have changed said value, the fair value of those securities will be determined
by consideration of other factors by or under the direction of the Board of
Trustees or its delegates.
Securities, including American Depositary Receipts and European Depositary
Receipts, which are traded on securities exchanges are valued at the last sale
price on the exchange on which such securities are traded, as of the close of
business on the day the securities are being valued or, lacking any reported
sales and in the case of fixed income securities, at the mean between the last
available bid and asked price. In cases where securities are traded on more than
one exchange, the securities are valued on the exchange determined by the
Manager to be the primary market. Securities traded in the over-the-counter
market are valued at the mean between the last available bid and asked price
prior to the time of valuation. Securities and assets for which market
quotations are not readily available (including restricted securities which are
subject to limitations as to their sale) are valued at fair value as determined
in good faith by or under the supervision of the Trust in accordance with
methods which are authorized by the Trust's Board of Trustees.
For the Montgomery Government Reserve Fund and the Montgomery California
Tax-Free Money Fund, portfolio securities are valued at amortized cost, which
means they are valued at acquisition cost (as adjusted for amortization of
premium or discount) rather than at current market value. Amortized cost
involves valuing a portfolio security instrument at its cost, initially, and
thereafter, assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. Calculations are made to compare the value of each
Fund's investments valued at amortized cost with market values. Market
valuations are obtained by using actual quotations provided by market makers,
estimates of market value, or values obtained from yield data relating to
classes of money market instruments.
------------------ 98 ------------------
<PAGE> 106
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
For each of the Funds, securities for which market quotations are not
readily available are valued at fair market value as determined in good faith by
or under the supervision of the Trusts' officers in accordance with methods
which are authorized by the Trusts' Board of Trustees. Short-term securities
with maturities of 60 days or less (excluding the Montgomery Government Reserve
Fund and the Montgomery California Tax-Free Money Fund which value all
securities at amortized cost) are carried at amortized cost, which approximates
market value.
B. FORWARD FOREIGN CURRENCY CONTRACTS--Certain Funds may engage in forward
foreign currency contracts. Forward foreign currency contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
recorded by the Fund as an unrealized gain or loss.
When the contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it was opened
and the value at the time it was closed. Forward foreign currency contracts have
been used solely to establish a rate of exchange for settlement of transactions.
Although forward foreign currency contracts limit the risk of loss due to a
decline in the value of the hedged currency, they also limit any potential gain
that might result should the value of the currency increase. In addition, the
Fund could be exposed to risks if the counterparties to the contracts are unable
to meet the terms of their contracts.
C. FOREIGN CURRENCY--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 and
income and expenses are translated on the respective dates of such transactions.
Unrealized gains and losses which result from changes in foreign currency
exchange rates on investments have been included in the unrealized
appreciation/(depreciation) of securities. Net realized foreign currency gains
and losses resulting from movement in exchange rates include foreign currency
gains and losses 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 the Fund and the
amount actually received and the portion of foreign currency gains and losses
related to fluctuations in exchange rates between the initial purchase trade
date and subsequent sale trade date.
D. REPURCHASE AGREEMENTS--Each Fund may engage in repurchase agreement
transactions individually or jointly through a joint repurchase account with
other series of the Trusts pursuant to a joint repurchase agreement. Under the
terms of a typical repurchase agreement, a Fund writes a financial contract with
a counterparty and takes possession of a government debt obligation as
collateral. The Fund also agrees with the counterparty to allow the counterparty
to repurchase the financial contract at a specified date and price, thereby
determining the yield during the Fund's holding period. This arrangement results
in a fixed rate of return that is not subject to market fluctuations
------------------ 99 ------------------
<PAGE> 107
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
during the Fund's holding period. The value of the collateral is at least equal
at all times to the total amount of the repurchase obligations, including
interest. In the event of counterparty default, the Fund has the right to use
the collateral to offset losses incurred. There could be potential loss to the
Fund in the event the Fund is delayed or prevented from exercising its rights to
dispose of the collateral securities, including the risk of a possible decline
in the value of the underlying securities during the period while the Fund seeks
to assert its rights. The Fund's investment manager, acting under the
supervision of the Board of Trustees, reviews the value of the collateral and
the creditworthiness of those banks and dealers with which the Fund enters into
repurchase agreements to evaluate potential risks. The Funds may also
participate on an individual or joint basis in tri-party repurchase agreements
which involves a counterparty and a custodian bank.
E. DOLLAR ROLL TRANSACTIONS--The Asset Allocation Fund and The Short
Government Bond Fund may enter into dollar roll transactions with financial
institutions to take advantage of opportunities in the mortgage market. A dollar
roll transaction involves a sale by the Fund of securities with a simultaneous
agreement to repurchase substantially similar securities at an agreed upon price
at a future date. The securities repurchased will bear the same interest as
those sold, but generally will be collateralized by different pools of mortgages
with different prepayment histories. During the period between the sale and
repurchase, the Fund will not be entitled to receive interest and principal
payments on the securities sold. The Fund will invest the proceeds of the sale
in additional instruments, the income from which, together with any additional
fee income received for the dollar roll, may or may not generate income for the
Fund exceeding the yield on the securities sold. Dollar roll transactions
involve the risk that the market value of the securities sold by the Fund may
decline below the repurchase price of those securities.
F. SHORT SALES/FORWARD COMMITMENTS--Certain Funds may seek to hedge
investments through forward commitments to sell high grade liquid debt
securities. In some cases, the Fund may enter into forward commitments to sell
securities the Fund does not yet own (but has the right to acquire). Such
forward commitments effectively constitute a form of short sale and have been
limited to date to the Montgomery Short Government Bond Fund and to securities
issued by the Federal Home Loan Mortgage Corporation ("FHLMC") in connection
with certain FHLMC conversion programs. To complete such a transaction, the Fund
must obtain a security that is convertible into the security it has made a
commitment to deliver. Forward commitments involve transaction costs and entail
risk to the extent interest rates move in a direction different from that
anticipated. There is a risk that the market price will increase for the
security it must purchase. Whenever the Fund engages in this type of
transaction, it maintains other high quality liquid debt securities equal in
value to the forward commitment in a segregated account with its custodian.
------------------ 100 ------------------
<PAGE> 108
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
G. REVERSE REPURCHASE AGREEMENTS--The Growth Fund, The Micro Cap Fund, The
Small Cap Fund, The Equity Income Fund, The Asset Allocation Fund, The Global
Opportunities Fund, The Government Reserve Fund, The California Tax-Free
Intermediate Bond Fund and The California Tax-Free Money Fund may enter into
reverse repurchase agreement transactions with member banks on the Federal
Reserve Bank of New York's list of reporting dealers for leverage purposes. A
reverse repurchase agreement involves a sale by the Fund of securities that it
holds with an agreement by the Fund to repurchase the same securities at an
agreed upon price and date. A reverse repurchase agreement involves the risk
that the market value of the securities sold by the Fund may decline below the
repurchase price of the securities. In the event the buyer of securities under a
reverse repurchase agreement files for bankruptcy or becomes insolvent, a Fund's
use of the proceeds of the agreement may be restricted pending a determination
by the party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities. Each Fund will establish a segregated
account with its custodian in which the Fund will maintain cash, U.S. government
securities or other liquid high grade debt obligations equal in value to its
obligations with respect to reverse repurchase agreements.
H. REVERSE DOLLAR ROLL TRANSACTIONS--The Montgomery Asset Allocation Fund
and Montgomery Short Government Bond Fund may enter into reverse dollar roll
transactions. When a Fund engages in a reverse dollar roll, it purchases a
security from a financial institution and concurrently agrees to resell a
similar security to that institution at a later date at an agreed-upon price.
Under the 1940 Act, reverse dollar roll transactions are considered to be loans
by a Fund and must be fully collateralized. If the seller defaults on its
obligation to repurchase the underlying security, a Fund may experience delay or
difficulty in exercising its rights to realize upon the security, may incur a
loss if the value of the security declines and may incur disposition costs in
liquidating the security.
I. FUTURES CONTRACTS--Upon entering into a futures contract, a Fund (the
Montgomery Government Reserve Fund and Montgomery California Tax-Free Money Fund
do not enter into futures contracts) is required to deposit with the custodian
on behalf of the broker an amount of cash or cash equivalents equal to a certain
percentage of the contract amount. This is known as the "initial margin."
Subsequent payments ("variation margin") are made or received by a Fund each
day, depending on the daily fluctuation of the value of the contract.
There are several risks in connection with the use of futures contracts as
a hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
------------------ 101 ------------------
<PAGE> 109
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
J. DIVIDENDS AND DISTRIBUTIONS--Dividends, if any, from net investment
income of the Montgomery Growth Fund, the Montgomery Micro Cap Fund, the
Montgomery Small Cap Fund, the Montgomery Asset Allocation Fund, the Montgomery
Global Opportunities Fund, the Montgomery Global Communications Fund, the
Montgomery International Small Cap Fund and the Montgomery Emerging Markets Fund
are declared and paid at least annually. Dividends from net investment income of
the Montgomery Short Government Bond Fund, the Montgomery Government Reserve
Fund, the Montgomery California Tax-Free Intermediate Bond Fund and the
Montgomery California Tax-Free Money Fund are declared daily and paid monthly.
Dividends from net investment income of the Montgomery Equity Income Fund are
declared and paid quarterly.
Distributions of any short-term capital gains earned by a Fund are
distributed no less frequently than annually. Additional distributions of net
investment income and capital gains for each Fund may be made in order to avoid
the application of a 4% non-deductible excise tax on certain undistributed
amounts of ordinary income and capital gains. Income distributions and capital
gain distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatments of income and gains on
various investment securities held by the Fund, timing differences and differing
characterization of distributions made by the Fund.
Permanent differences incurred during the year ended June 30, 1995
resulting from differences in book and tax accounting have been reclassified at
year end to undistributed net investment income and paid-in capital as follows:
<TABLE>
<CAPTION>
INCREASE/(DECREASE) INCREASE/(DECREASE)
UNDISTRIBUTED NET ACCUMULATED
DECREASE INVESTMENT NET REALIZED
PAID-IN-CAPITAL INCOME GAIN/(LOSS)
--------------- ------------------- -------------------
<S> <C> <C> <C>
Small Cap Fund............ $(1,189,465) $ 1,190,171 $ (706)
Equity Income Fund........ (60) 60 --
Asset Allocation Fund..... (173) 4,862 (4,689)
Global Opportunities
Fund.................... (37) (95,420) 95,457
Global Communication
Fund.................... (1,687,322) 691,681 995,641
International
Small Cap Fund.......... (19) (322,897) 322,916
Emerging Markets Fund..... -- (2,238,483) 2,238,483
Short Government Bond
Fund.................... -- (6,142) 6,142
California Tax-Free
Intermediate Bond
Fund.................... (73) 73 --
</TABLE>
Paid-in capital was reduced by $20,117 for the Montgomery Short Government
Bond Fund due to a tax return of capital.
------------------ 102 ------------------
<PAGE> 110
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
K. SECURITIES TRANSACTIONS AND INVESTMENT INCOME-- Securities transactions
are recorded on a trade-date basis. Realized gain and loss from securities
transactions are recorded on the specific identified cost basis. Dividend income
is recognized on the ex-dividend date. Dividend income on foreign securities is
recognized as soon as the Fund is informed of the ex-dividend date. Interest
income, including, where applicable, amortization of discount on short-term
investments, is recognized on the accrual basis. Securities purchased on a
when-issued or delayed delivery basis may be settled a month or more after the
trade date; interest income is not accrued until settlement date. The Funds
instruct their custodian to segregate assets in a separate account with a
current value at least equal to the amount of its when issued purchase
commitments.
The Montgomery Small Cap Fund has invested in pay-in-kind ("PIK") bonds.
PIK bonds pay interest through the issuance of additional bonds. PIK bonds are
recorded at fair market value on the date of payment and carry a risk in that
unlike bonds which pay interest in cash throughout the period to maturity, the
Fund will realize no cash until the cash payment date unless a portion of such
securities are sold and, if the issuer defaults, the Fund may obtain no return
at all on its investment.
L. FEDERAL INCOME TAXES--Each Fund has qualified and it is the intention of
each Fund to continue to qualify and elect treatment as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), by complying with the provisions available to certain investment
companies, as defined in applicable sections of the Code, and to make
distributions of taxable income to shareholders sufficient to relieve each Fund
from all or substantially all federal income taxes.
------------------ 103 ------------------
<PAGE> 111
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
M. ORGANIZATION COSTS--Expenses incurred in connection with the
organization of each Fund, including the fees and expenses of registering and
qualifying its shares for distribution under federal and state securities
regulations, are being amortized on a straight-line basis over a period of five
years from the following dates:
<TABLE>
<S> <C>
Growth Fund.................................... September 30, 1993
Micro Cap Fund................................. December 30, 1994
Small Cap Fund................................. December 1, 1990
Equity Income Fund............................. September 30, 1994
Asset Allocation Fund.......................... March 31, 1994
Global Opportunities Fund...................... September 30, 1993
Global Communications Fund..................... August 1, 1993
International Small Cap Fund................... September 30, 1993
Emerging Markets Fund.......................... March 1, 1992
Short Government Bond Fund..................... December 18, 1992
Government Reserve Fund........................ September 14, 1992
California Tax-Free Intermediate Bond Fund..... July 1, 1993
California Tax-Free Money Fund................. September 30, 1994
</TABLE>
N. CASH--Cash, as used in the Statement of Cash Flows, is the amount
reported in the Statements of Assets and Liabilities for the Montgomery Short
Government Bond Fund. The Fund issues and redeems its shares, invests in
securities and distributes dividends from net investment income and net realized
gains (which are either paid in cash or reinvested at the discretion of
shareholders). These activities are reported in the Statement of Changes in Net
Assets. Information on cash payments is presented in the Statement of Cash
Flows. Accounting practices that do not affect reporting activities on a cash
basis include unrealized gain or loss on investment securities and accretion
income recognized on investment securities. Amounts reported as Due to Custodian
on the Statements of Assets and Liabilities reflect cash and foreign currency
overdrafts.
O. EXPENSES--Most expenses of the Trust can be directly attributed to a
Fund. Expenses which cannot be directly attributed are apportioned between the
Funds in the Trust.
2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH
AFFILIATES AND OTHER CONTRACTUAL COMMITMENTS:
a. Montgomery Asset Management, L.P. is the Funds' Manager (the "Manager").
The Manager, a California limited partnership, is an investment adviser
registered with the Securities and Exchange Commission under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"). The general partner of
the Manager is Montgomery Asset Management, Inc. The sole limited partner of the
Manager is Montgomery Securities, the Funds' principal underwriter and
distributor. Under the Advisers Act, both Montgomery Asset Management, Inc. and
Montgomery Securities may be deemed
------------------ 104 ------------------
<PAGE> 112
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
controlling persons of the Manager. Although the operations and management of
the Manager are independent from those of Montgomery Securities, it is expected
that the Manager may draw upon the research and administrative resources of
Montgomery Securities at its discretion in a manner consistent with applicable
regulations.
Pursuant to investment management agreements ("Investment Management
Agreements"), the Manager provides each Fund with advice on buying and selling
securities, manages the investments of each Fund including the placement of
orders for portfolio transactions, furnishes each Fund with office space and
certain administrative services, and provides the personnel needed by the Trusts
with respect to the Manager's responsibilities under such agreement. The Manager
has agreed to reduce some or all of its management fee or absorb fund expenses
if necessary to keep each Fund's annual operating expenses, exclusive of
interest and taxes, at or below the maximum allowed by applicable state expense
limitations or the following percentages of each Fund's average net assets,
whichever is lower: 1.50% for the Montgomery Growth Fund; 1.75% for the
Montgomery Micro Cap Fund; 1.40% for the Montgomery Small Cap Fund; 0.85% for
the Montgomery Equity Income Fund; 1.30% for the Montgomery Asset Allocation
Fund; 1.90% for the Montgomery Global Opportunities Fund, Montgomery Global
Communications Fund, Montgomery International Small Cap Fund and Montgomery
Emerging Markets Fund; 0.60% for the Montgomery Government Reserve Fund and
Montgomery California Tax-Free Money Fund; and 0.70% for the Montgomery Short
Government Bond Fund and Montgomery California Tax-Free Intermediate Bond Fund.
Any reductions or absorptions made to the Funds by the Manager are subject to
recovery within the following two years (three years for the Montgomery Asset
Allocation Fund) provided the Fund is able to affect such reimbursement and
remain in compliance with applicable expense limitations. The Manager may
terminate these reductions or absorptions at any time.
Montgomery Asset Management, L.P. serves as the Funds' administrator (the
"Administrator"). The Administrator performs services with regard to various
aspects of each Fund's administrative operations.
------------------ 105 ------------------
<PAGE> 113
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
As compensation, each Fund has accrued a monthly management and
administration fee (accrued daily) based upon the average daily net assets of
each Fund at the following effective annual rates:
<TABLE>
<CAPTION>
MANAGEMENT ADMINISTRATION
NAME OF FUND FEE FEE
----------------------------------------- ---------- --------------
<S> <C> <C>
Growth Fund.............................. 0.99% 0.07%
Micro Cap Fund........................... 1.40% 0.07%
Small Cap Fund........................... 1.00% 0.07%
Equity Income Fund....................... 0.59% 0.07%
Asset Allocation Fund.................... 0.93% 0.07%
Global Opportunities Fund................ 1.70% 0.07%
Global Communications Fund............... 1.33% 0.07%
International Small Cap Fund............. 1.50% 0.07%
Emerging Markets Fund.................... 1.07% 0.07%
Short Government Bond Fund............... 0.50% 0.05%
Government Reserve Fund.................. 0.57% 0.05%
California Tax-Free Intermediate Bond
Fund................................... 0.50% 0.05%
California Tax-Free Money Fund........... 0.30% 0.05%
</TABLE>
The Manager has recouped previously deferred fees and/or absorbed expenses
during the year ended June 30, 1995. These amounts have been included with
current year management fees in the Statement of Operations and are part of the
effective rates shown above. The amounts recouped during the year ended June 30,
1995 were $88,428, $21,106, $60,321, $182,351, $78,233 and $450,190 for the
Montgomery Growth Fund, Montgomery Asset Allocation Fund, Montgomery Global
Opportunities Fund, Montgomery Global Communications Fund, Montgomery
International Small Cap Fund and Montgomery Government Reserve Fund,
respectively.
For the year ended June 30, 1995, the Manager has deferred fees and/or
absorbed expenses as follows:
<TABLE>
<CAPTION>
FEES EXPENSES
DEFERRED ABSORBED
-------- --------
<S> <C> <C>
Micro Cap Fund................................. $158,785 --
Equity Income Fund............................. 12,589 $37,064
Asset Allocation Fund.......................... 124,429 --
Global Opportunities Fund...................... 144,683 --
Global Communications Fund..................... 387,886 --
International Small Cap Fund................... 184,013 --
Short Government Bond Fund..................... 99,249 71,094
Government Reserve Fund........................ 474,297 --
California Tax-Free Intermediate Bond Fund..... 43,889 30,751
California Tax-Free Money Fund................. 149,574 49,353
</TABLE>
------------------ 106 ------------------
<PAGE> 114
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
As of June 30, 1995, the deferred management fees and absorbed expenses
subject to recoupment are $158,785, $49,653, $124,429, $144,683, $387,886,
$184,013, $414,057, $474,297, $213,281 and $198,927 for the Montgomery Micro Cap
Fund, Montgomery Equity Income Fund, Montgomery Asset Allocation Fund,
Montgomery Global Opportunities Fund, Montgomery Global Communications Fund,
Montgomery International Small Cap Fund, Montgomery Short Government Bond Fund,
Montgomery Government Reserve Fund, Montgomery California Tax-Free Intermediate
Bond Fund and Montgomery California Tax-Free Money Fund, respectively.
b. Certain officers and Trustees of the Trust are, with respect to the
Trust's Manager and/or principal underwriter, "affiliated persons" as defined in
the 1940 Act. Each Trustee of the Montgomery Funds who is not an "affiliated
person" will receive an annual retainer and quarterly meeting fee totaling
$30,000 per annum, as well as reimbursement for expenses.
c. For the year ended June 30, 1995, the Funds' securities transactions
generated commissions of $11,840,329 of which $74,850 was paid to Montgomery
Securities.
d. The Funds have no sales load and do not pay distribution (Rule 12b-1)
fees to their distributor. Therefore, Montgomery Securities has received no
direct compensation for serving as the Funds' principal underwriter and
distributor.
e. At June 30, 1995, Montgomery Global Communications Fund owned 90,000
shares of Montgomery Emerging Communications Fund which has the same investment
manager as the Trust. For the year ended June 30, 1995, the Montgomery Global
Communications Fund received no dividend income from the Montgomery Emerging
Communications Fund.
f. Certain Funds are parties to agreements with Charles Schwab & Co. Inc.
("Schwab") related to the Funds' participation in Schwab's mutual fund
OneSourceTM program. The Funds that participate in the OneSourceTM program make
payments to Schwab for certain services provided to shareholders who own shares
of the Funds through that program. The Manager may make additional payments to
Schwab in connection with the Funds' participation in the OneSourceTM program.
Certain Funds also are parties to agreements for participation in similar
programs sponsored by organizations such as Fidelity Investments. The following
Funds participate in one or more of these programs: Montgomery Growth Fund;
Montgomery Micro Cap Fund; Montgomery Small Cap Fund; Montgomery Equity Income
Fund; Montgomery Asset Allocation Fund; Montgomery Global Opportunities Fund;
Montgomery Global Communications Fund; Montgomery International Small Cap Fund;
Montgomery Emerging Markets Fund; Montgomery Short Government Bond Fund;
Montgomery California Tax-Free Intermediate Bond Fund.
------------------ 107 ------------------
<PAGE> 115
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. SECURITIES TRANSACTIONS:
a. The aggregate amount of purchases and sales of long-term securities,
excluding long-term U.S. Government securities, during the year ended June 30,
1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------- ------------
<S> <C> <C>
Growth Fund........................... $ 954,518,876 $516,380,988
Micro Cap Fund........................ 111,632,644 19,014,808
Small Cap Fund........................ 167,164,389 200,284,808
Equity Income Fund.................... 6,377,689 757,751
Asset Allocation Fund................. 32,703,124 7,733,416
Global Opportunities Fund............. 15,134,975 13,816,527
Global Communications Fund............ 116,727,319 156,236,306
International Small Cap Fund.......... 41,842,174 41,939,902
Emerging Markets Fund................. 1,087,351,418 708,193,938
Short Government Bond Fund............ 2,288,493 2,923,339
California Tax-Free Intermediate Bond
Fund................................ 3,141,952 8,229,498
</TABLE>
The aggregate amount of purchases and sales of long-term U.S. Government
securities, during the year ended June 30, 1995, were:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------- ------------
<S> <C> <C>
Asset Allocation Fund................. $ 33,901,975 $ 6,157,094
Short Government Bond Fund............ 56,443,596 57,493,820
</TABLE>
b. At June 30, 1995, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities in which there was an excess of
tax cost over value was as follows:
<TABLE>
<CAPTION>
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION
------------ ------------
<S> <C> <C>
Growth Fund.............................. $112,519,514 $ 13,349,133
Micro Cap Fund........................... 16,750,093 2,209,874
Small Cap Fund........................... 51,998,198 6,990,764
Equity Income Fund....................... 329,479 12,416
Asset Allocation Fund.................... 3,906,031 500,670
Global Opportunities Fund................ 1,507,019 396,523
Global Communications Fund............... 42,322,577 12,716,127
International Small Cap Fund............. 1,759,029 1,209,599
Emerging Markets Fund.................... 84,726,304 60,598,820
Short Government Bond Fund............... 158,055 8,549
California Tax-Free Intermediate Bond
Fund................................... 56,470 17,639
</TABLE>
------------------ 108 ------------------
<PAGE> 116
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
c. Information regarding transactions under dollar roll transactions is as
follows:
<TABLE>
<CAPTION>
AVERAGE
MAXIMUM AVERAGE AVERAGE DEBT
AMOUNT AMOUNT SHARES PER SHARE
OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING
DURING DURING DURING DURING
NAME OF FUND YEAR YEAR YEAR YEAR
- ------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Asset Allocation Fund.......... $2,027,188 $ 406,395 1,137,412 $0.36
Short Government Bond Fund..... 3,180,938 691,120 2,019,684 0.34
</TABLE>
The average amount outstanding during the period was calculated by totaling
borrowings at the end of each day and dividing the sum by the number of days in
the year ended June 30, 1995.
Interest income earned for the year ended June 30, 1995 by the Montgomery
Asset Allocation Fund and the Montgomery Short Government Bond Fund under dollar
roll transactions aggregated $6,878 and $1,875, respectively.
Interest expense incurred for the year ended June 30, 1995 by the
Montgomery Asset Allocation Fund and the Montgomery Short Government Bond Fund
for dollar roll transactions aggregated $85 and $19,843, respectively.
Information regarding borrowings under reverse repurchase agreements is as
follows:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ----------
<S> <C> <C>
Reverse Repurchase Agreements outstanding at June
30, 1995:
SHORT GOVERNMENT BOND FUND
$4,000,000 Reverse Repurchase Agreement with Barclays Bank,
dated 06/30/95 bearing 6.300% to be repurchased at
$4,022,110 on 07/03/95, collateralized by
$18,937,000 U.S. Treasury Note, 6.125% due
05/31/97.......................................... $4,041,183
</TABLE>
<TABLE>
<CAPTION>
AVERAGE
MAXIMUM AVERAGE AVERAGE DEBT
AMOUNT AMOUNT SHARES PER SHARE
OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING
DURING DURING DURING DURING
NAME OF FUND YEAR YEAR YEAR YEAR
- --------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Asset Allocation Fund...... $ 997,500 $ 19,130 1,137,412 $ 0.02
Short Government Bond
Fund..................... 6,015,000 3,133,370 2,019,684 1.55
Government Reserve Fund.... 9,117,502 1,243,287 247,594,517 0.01
</TABLE>
The average interest rate approximated 5.34%, 4.50% and 5.00% for the
Montgomery Asset Allocation Fund, the Montgomery Short Government Bond Fund and
the Montgomery Government Reserve Fund, respectively, during the year. The
average
------------------ 109 ------------------
<PAGE> 117
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
amount outstanding during the year was calculated by adding the borrowings at
the end of each day and dividing the sum by the number of days in the year ended
June 30, 1995.
Interest expense for the year ended June 30, 1995 on borrowings by the
Montgomery Asset Allocation Fund, the Montgomery Short Government Bond Fund and
the Montgomery Government Reserve Fund under reverse repurchase agreements
aggregated $949, $160,436 and $63,359, respectively.
d. The Montgomery Global Opportunities Fund, the Montgomery Global
Communications Fund, the Montgomery International Small Cap Fund and the
Montgomery Emerging Markets Fund regularly trade in forward foreign exchange
contracts with off balance sheet risk in the normal course of its investing
activities in order to manage exposure to market risks.
------------------ 110 ------------------
<PAGE> 118
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The schedule of forward foreign exchange contracts at June 30, 1995 was as
follows:
<TABLE>
<CAPTION>
CONTRACT
VALUE VALUE
DATE (NOTE 1)
-------- ----------
<S> <C> <C>
GLOBAL OPPORTUNITIES FUND:
Forward Foreign Exchange Contracts to Buy:
16,025,139 Japanese Yen................................ 07/03/95 $ 189,076
2,497,221 Japanese Yen................................. 07/05/95 29,464
24,276 Swiss Francs.................................... 07/03/95 21,083
54,973 Swiss Francs.................................... 07/06/95 47,749
----------
TOTAL FORWARD FOREIGN EXCHANGE
CONTRACTS TO BUY:
(Contract cost $288,862)........................... $ 287,372
==========
Forward Foreign Exchange Contracts to Sell:
(Contract cost $96,116)
149,796 Netherlands Guilder.......................... 07/05/95 $ 96,681
==========
GLOBAL COMMUNICATIONS FUND:
Forward Foreign Exchange Contracts to Buy:
137,088 Australian Dollars............................. 07/03/95 $ 97,434
83,244,580 Japanese Yen................................ 07/03/95 982,179
13,570,015 Norwegian Krona............................. 07/03/95 2,201,495
91,036 Swiss Francs.................................... 07/03/95 79,061
51,862 Australian Dollars.............................. 07/05/95 36,859
311,516 Swiss Francs................................... 07/06/95 270,580
20,798,978 Czechoslovakian Crown....................... 07/07/95 804,603
----------
TOTAL FORWARD FOREIGN EXCHANGE
CONTRACTS TO BUY:
(Contract cost $4,474,870)......................... $4,472,211
==========
Forward Foreign Exchange Contracts to Sell:
1,081,829 Netherlands Guilder.......................... 07/03/95 $ 698,180
1,091,192 New Zealand Dollars.......................... 07/03/95 729,491
1,919,608 Netherlands Guilder.......................... 07/05/95 1,238,954
----------
TOTAL FORWARD FOREIGN EXCHANGE
CONTRACTS TO SELL:
(Contract cost $2,658,913)......................... $2,666,625
==========
</TABLE>
------------------ 111 ------------------
<PAGE> 119
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
CONTRACT
VALUE VALUE
DATE (NOTE 1)
-------- ----------
<S> <C> <C>
INTERNATIONAL SMALL CAP FUND:
Forward Foreign Exchange Contracts to Buy:
84,344,090 Japanese Yen................................ 07/03/95 $ 995,152
69,233 Great Britain Pound............................. 07/05/95 110,095
27,466,903 Japanese Yen................................ 07/05/95 324,074
126,517 Great Britain Pound............................ 07/06/95 201,187
937,048 French Franc................................... 07/31/95 192,978
----------
TOTAL FORWARD FOREIGN EXCHANGE
CONTRACTS TO BUY:
(Contract cost $1,832,829)......................... $1,823,486
==========
Forward Foreign Exchange Contracts to Sell:
35,179 Great Britain Pound............................. 07/05/95 $ 55,941
706,079 Norwegian Krone................................ 07/05/95 114,549
174,649 Great Britain Pound............................ 07/07/95 277,724
1,194,503 Austrian Shilling............................ 07/10/95 122,676
----------
TOTAL FORWARD FOREIGN EXCHANGE
CONTRACTS TO SELL:
(Contract cost $570,112)........................... $ 570,890
==========
EMERGING MARKETS FUND:
Forward Foreign Exchange Contracts to Buy:
880,234 Austrian Shillings............................. 07/03/95 $ 880,455
52,220 Brazilian Real.................................. 07/03/95 56,730
4,500,930 Czechoslovakian Crown........................ 07/03/95 174,117
10,100,850 Indian Rupee................................ 07/03/95 321,683
1,628,250,750 Turkish Lira............................. 07/03/95 36,826
684,999 Philippine Peso................................ 07/05/95 26,821
54,065,812 Portuguese Escudo........................... 07/06/95 369,485
9,757,545 Czechoslovakian Crown........................ 07/07/95 377,468
2,703,808 Czechoslovakian Crown........................ 07/11/95 104,596
1,232,500,000 Indian Rupee............................. 07/11/95 552,210
----------
TOTAL FORWARD FOREIGN EXCHANGE
CONTRACTS TO BUY:
(Contract cost $2,906,750)......................... $2,900,391
==========
</TABLE>
------------------ 112 ------------------
<PAGE> 120
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
CONTRACT
VALUE VALUE
DATE (NOTE 1)
-------- ----------
<S> <C> <C>
EMERGING MARKETS FUND (CONT'D):
Forward Foreign Exchange Contracts to Sell:
70,391 Brazilian Ringett............................... 07/03/95 $ 76,470
1,388,249 Hong Kong Dollars............................ 07/03/95 179,412
475,862 Malaysian Ringett.............................. 07/03/95 195,187
947,240 Mexican Peso................................... 07/03/95 151,558
23,547,782 Philippine Peso............................. 07/03/95 921,966
34,885,645 Greek Drakma................................ 07/05/95 155,100
426,465 Hong Kong Dollars.............................. 07/05/95 55,115
1,369,256 Malaysian Ringett............................ 07/05/95 561,634
1,122,723 Singapore Dollars............................ 07/05/95 803,495
3,473,868,491 Turkish Lira............................. 07/05/95 78,568
1,411,560 Malaysian Ringett............................ 07/06/95 579,004
523,525 Singapore Dollars.............................. 07/07/95 374,729
----------
TOTAL FORWARD FOREIGN EXCHANGE
CONTRACTS TO SELL:
(Contract cost $4,126,114)......................... $4,132,238
==========
</TABLE>
e. Under an unsecured Revolving Credit Agreement with Credit Lyonnais San
Francisco Branch and Credit Lyonnais Cayman Islands Branch, each of the Funds of
The Montgomery Funds and The Montgomery Funds II may, for one year starting
October 1, 1994, borrow (consistent with applicable law and its investment
policies) amounts over $1,000,000 but not more than 10% of its net asset value,
provided that the aggregate principal amount of outstanding loans under the
agreement to all Funds does not exceed $25,000,000. For the year ended June 30,
1995 the Funds, except for Montgomery Global Communications Fund, did not borrow
under the Revolving Credit Agreement.
Information regarding borrowings by the Montgomery Global Communications
Fund for the year ended June 30, 1995 was as follows:
<TABLE>
<CAPTION>
AVERAGE
MAXIMUM AVERAGE AVERAGE DEBT
AMOUNT AMOUNT SHARES PER SHARE
OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING
DURING DURING DURING DURING
YEAR YEAR YEAR YEAR
- ----------- ----------- ----------- -----------
<S> <C> <C> <C>
$7,800,000 $ 286,301 15,236,812 $0.02
</TABLE>
The interest expense for the year ended June 30, 1995 for the Montgomery
Global Communications Fund was $23,966. The average interest rate approximated
8.125% during the year.
------------------ 113 ------------------
<PAGE> 121
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. TRANSACTIONS IN SHARES WITH A BENEFICIAL INTEREST:
The Trusts have authorized an unlimited number of shares of beneficial
interest which have a par value of $0.01. Because the Montgomery Government
Reserve Fund and the Montgomery California Tax-Free Money Fund are money market
funds and money market funds sell shares, issue shares for reinvestment of
dividends and redeem shares only at a constant net asset value of $1.00 per
share, the number of shares represented by such sales, reinvestments and
redemptions are the same as the dollar amounts shown for such transactions.
Transactions in shares of beneficial interest for the years and periods
indicated below were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JUNE 30, 1995 JUNE 30, 1994*
--------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
GROWTH FUND:
Shares Sold............... 55,250,712 $ 934,030,969 11,723,679 $178,855,050
Issued as Reinvestment of
Dividends............... 231,401 3,882,010 1,420 19,777
Shares Redeemed........... (19,392,480) (334,612,593) (1,959,822) (29,806,070)
----------- ------------- ---------- ------------
Net Increase.............. 36,089,633 $ 603,300,386 9,765,277 $149,068,757
=========== ============= ========== ============
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1995*
---------------------------
SHARES AMOUNT
----------- -------------
<S> <C> <C>
MICRO CAP FUND:
Shares Sold............... 12,671,633 $ 157,656,419
Shares Redeemed........... (821,311) (10,436,637)
----------- -------------
Net Increase.............. 11,850,322 $ 147,219,782
=========== =============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994
--------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
SMALL CAP FUND:
Shares Sold............... 1,496,300 $ 23,945,432 3,178,467 $ 55,182,621
Issued as Reinvestment of
Dividends............... 773,942 11,895,470 1,162,931 19,184,555
Shares Redeemed........... (4,243,870) (67,378,038) (3,606,592) (62,950,594)
---------- ------------- --------- ------------
Net Increase/(Decrease)... (1,973,628) $ (31,537,136) 734,806 $ 11,416,582
========== ============= ========= ============
</TABLE>
------------------ 114 ------------------
<PAGE> 122
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1995*
--------------------------
SHARES AMOUNT
---------- -------------
<S> <C> <C>
EQUITY INCOME FUND:
Shares Sold............... 753,880 $ 9,630,958
Issued as Reinvestment of
Dividends............... 2,677 33,435
Shares Redeemed........... (279,632) (3,640,764)
-------- -------------
Net Increase.............. 476,925 $ 6,023,629
======== =============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JUNE 30, 1995 JUNE 30, 1994*
-------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ------- -------------
<S> <C> <C> <C> <C>
ASSET ALLOCATION FUND:
Shares Sold............... 4,354,998 $ 65,485,176 136,581 $ 1,658,074
Issued as Reinvestment of
Dividends............... 6,393 90,647 -- --
Shares Redeemed........... (799,234) (11,886,493) (10,106) (125,652)
--------- ------------- ------- -------------
Net Increase.............. 3,562,157 $ 53,689,330 126,475 $ 1,532,422
========= ============= ======= =============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JUNE 30, 1995 JUNE 30, 1994*
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
GLOBAL OPPORTUNITIES FUND:
Shares Sold............... 642,384 $ 8,407,571 1,644,078 $ 22,635,158
Issued as Reinvestment of
Dividends............... 37,775 497,870 -- --
Shares Redeemed........... (615,561) (7,951,014) (676,601) (9,640,533)
---------- ------------- --------- -------------
Net Increase.............. 64,598 $ 954,427 967,477 $ 12,994,625
========== ============= ========= =============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
GLOBAL COMMUNICATIONS
FUND:
Shares Sold............... 4,810,419 $ 70,362,748 23,894,085 $ 362,967,547
Issued as Reinvestment of
Dividends............... 32,523 487,504 -- --
Shares Redeemed........... (7,788,313) (112,069,019) (7,725,310) (122,743,875)
---------- ------------- ---------- -------------
Net Increase/(Decrease)... (2,945,371) $ (41,218,767) 16,168,775 $ 240,223,672
========== ============= ========== =============
</TABLE>
------------------ 115 ------------------
<PAGE> 123
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JUNE 30, 1995 JUNE 30, 1994*
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
INTERNATIONAL SMALL CAP
FUND:
Shares Sold............. 2,251,600 $ 26,655,775 6,446,273 $ 88,627,307
Issued as Reinvestment
of Dividends.......... 360 4,392 -- --
Shares Redeemed......... (2,700,718) (32,195,917) (3,570,885) (48,713,457)
---------- ------------- ---------- -------------
Net
Increase/(Decrease)... (448,758) $ (5,535,750) 2,875,388 $ 39,913,850
========== ============= ========== =============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
EMERGING MARKETS FUND:
Shares Sold............. 54,598,981 $ 765,638,358 49,285,430 $ 695,021,730
Issued as Reinvestment
of Dividends.......... 3,026,103 44,907,086 589,239 7,931,137
Shares Redeemed......... (29,715,496) (409,912,772) (20,657,690) (299,164,610)
----------- ------------- ----------- -------------
Net Increase............ 27,909,588 $ 400,632,672 29,216,979 $ 403,788,257
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
SHORT GOVERNMENT BOND
FUND:
Shares Sold............. 1,495,452 $ 14,635,908 4,384,083 $ 44,329,442
Issued as Reinvestment
of Dividends.......... 119,259 1,164,807 151,961 1,533,125
Shares Redeemed......... (2,134,721) (20,839,734) (4,472,407) (45,133,610)
---------- ------------- ---------- -------------
Net
Increase/(Decrease)... (520,010) $ (5,039,019) 63,637 $ 728,957
========== ============= ========== =============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994
----------------- -----------------
SHARES AND AMOUNT SHARES AND AMOUNT
----------------- -----------------
<S> <C> <C>
GOVERNMENT RESERVE FUND:
Shares Sold.............. $ 1,548,087,417 $ 1,105,001,748
Issued as Reinvestment of
Dividends.............. 11,696,059 4,453,198
Shares Redeemed.......... (1,511,942,982) $(1,023,109,866)
-------------- ---------------
Net Increase............. $ 47,840,494 $ 86,345,080
============== ===============
</TABLE>
------------------ 116 ------------------
<PAGE> 124
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JUNE 30, 1995 JUNE 30, 1994*
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CALIFORNIA TAX-FREE
INTERMEDIATE
BOND FUND:
Shares Sold............. 303,088 $ 3,581,420 2,441,709 $ 29,291,862
Issued as
Reinvestment of
Dividends............. 26,720 315,799 27,685 330,789
Shares Redeemed......... (881,940) (10,408,882) (1,489,226) (17,854,069)
-------- ------------- ---------- -------------
Net
Increase/(Decrease)... (552,132) $ (6,511,663) 980,168 $ 11,768,582
======== ============= ========== =============
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1995*
-----------------
SHARES AND AMOUNT
-----------------
<S> <C>
CALIFORNIA TAX-FREE MONEY FUND:
Shares Sold....................... $ 286,800,141
Issued as Reinvestment of
Dividends....................... 1,284,285
Shares Redeemed................... (223,302,810)
-------------
Net Increase...................... $ 64,781,616
=============
</TABLE>
- ------------
* The Montgomery Growth Fund, Montgomery Micro Cap Fund, Montgomery Equity
Income Fund, Montgomery Asset Allocation Fund, Montgomery Global Opportunities
Fund, Montgomery International Small Cap Fund, Montgomery California Tax-Free
Intermediate Bond Fund and the Montgomery California Tax-Free Money Fund
commenced operations on September 30, 1993, December 30, 1994, September 30,
1994, March 31, 1994, September 30, 1993, September 30, 1993, July 1, 1993 and
September 30, 1994, respectively.
5. FOREIGN SECURITIES:
Certain Funds may purchase securities on foreign security exchanges.
Securities of foreign companies and foreign governments involve special risks
and considerations not typically associated with investing in U.S. companies and
the U.S. government. These risks include re-valuation of currencies, less
reliable information about issuers, different securities transactions clearance
and settlement practices, and future adverse political and economic
developments. These risks are heightened for investments in emerging market
countries. Moreover, securities of many foreign companies and foreign
governments and their markets may be less liquid and their prices more volatile
than those of securities of comparable U.S. companies and the U.S. government.
The Montgomery Emerging Markets Fund invests at least 65% of its total assets in
the equity securities of companies in emerging market countries.
------------------ 117 ------------------
<PAGE> 125
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. PORTFOLIO CONCENTRATION:
The Montgomery Global Communications Fund concentrates its investments in
the global communications industry. Because of this concentration, the value of
this Fund's shares may vary in response to factors affecting the global
communications industry, and therefore may be more volatile than that of
investment companies that do not similarly concentrate their investments. The
global communications industry may be subject to greater changes in governmental
policies and governmental regulation than many other industries, and regulatory
approval requirements may materially affect the products and services of this
industry.
The Montgomery California Tax-Free Intermediate Bond Fund and the
Montgomery California Tax-Free Money Fund concentrate in California municipal
securities. Certain California constitutional amendments, legislative measures,
executive orders, administrative regulations, court decisions and voter
initiatives could result in certain adverse consequences, including impairing
the ability of certain issuers of California municipal securities to pay
principal and interest on their obligations.
7. ILLIQUID AND SPECIAL SITUATION SECURITIES:
Each Fund may not invest more than 15% of its net assets in illiquid
securities. The securities shown in the table below have been determined by the
Manager to be illiquid because they are restricted or because there is an
exceptionally low trading volume in the primary trading market for the security
at June 30, 1995. These securities are valued at market price.
GLOBAL OPPORTUNITIES FUND:
<TABLE>
<CAPTION>
6/30/95 MARKET
ACQUISITION MARKET VALUE PER % OF TOTAL
SECURITY DATE SHARES VALUE SHARE COST NET ASSETS
- -------------------- ----------- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sparbanken/
Swedbank.......... 06/02/95 16,300 $ 136,681 $ 8.39 $ 128,968 1.00%
=========== ====
</TABLE>
------------------ 118 ------------------
<PAGE> 126
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
GLOBAL COMMUNICATIONS FUND:
<TABLE>
<CAPTION>
6/30/95 MARKET
ACQUISITION MARKET VALUE PER % OF TOTAL
SECURITY DATE SHARES VALUE SHARE COST NET ASSETS
- -------------------- ----------- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Argentine Cellular
Communications
Ltd............... 02/25/94 37,650 $ 941,485 $ 25.01 $ 389,153 0.45%
Global Telesystems
Group, Inc........ 04/22/94 450,987 6,088,324 13.50 3,881,177 2.90
Grupo Mexicano de
Video, ADS........ 09/03/93 105,000 38,850 0.37 1,865,000 0.02
Ionica.............. 02/23/95 4,651 1,590,194 341.90 1,592,894 0.76
Russian
Telecommunications
Development
Corporation....... 12/22/93 200,000 2,000,000 10.00 2,000,000 0.95
----------- ----
$10,658,853 5.08%
=========== ====
</TABLE>
INTERNATIONAL SMALL CAP FUND:
<TABLE>
<CAPTION>
6/30/95 MARKET
ACQUISITION MARKET VALUE PER % OF TOTAL
SECURITY DATE SHARES VALUE SHARE COST NET ASSETS
- -------------------- ----------- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Althin Medical
"AB".............. 04/19/95 21,500 $ 360,570 $ 16.77 $ 359,016 1.26%
Sparbanken/
Swedbank.......... 06/02/95 76,400 640,640 8.39 604,488 2.25
----------- ----
$ 1,001,210 3.51%
=========== ====
</TABLE>
EMERGING MARKETS FUND:
<TABLE>
<CAPTION>
6/30/95 MARKET
ACQUISITION MARKET VALUE PER % OF TOTAL
SECURITY DATE SHARES VALUE SHARE COST NET ASSETS
- -------------------- ----------- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Adamjee Insurance
Company........... 05/26/92 382,682 $ 1,395,883 $ 3.65 $1,630,636 0.14%
Arvind Mills, Ltd... 12/07/93 301,850 1,413,119 4.68 1,819,974 0.14
ASE................. 11/17/94 2,416,644 7,017,512 2.90 6,397,674 0.70
Bajaj Auto.......... 02/23/95 145,500 3,382,643 23.25 3,225,984 0.34
Bank of Punjab...... 05/12/94 167,700 128,567 0.77 392,170 0.01
Bharat Petroleum.... 05/31/95 151,500 1,413,678 9.33 1,460,764 0.14
BITV................ 04/06/94 220,000 1,261,147 5.73 1,261,183 0.12
Carrier Aircon
Ltd............... 12/02/93 870,800 4,381,732 5.03 2,426,295 0.44
Cathay Life
Insurance......... 06/07/94 1,334,200 7,025,368 5.27 9,486,224 0.70
China Steel
Corporation....... 05/23/95 3,412,000 3,078,039 0.90 3,176,139 0.31
Confab.............. 10/25/94 1,437,000 1,061,553 0.74 2,490,828 0.11
</TABLE>
------------------ 119 ------------------
<PAGE> 127
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
EMERGING MARKETS FUND--(CONTINUED)
6/30/95 MARKET
ACQUISITION MARKET VALUE PER % OF TOTAL
SECURITY DATE SHARES VALUE SHARE COST NET ASSETS
- -------------------- ----------- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Dandot Cement....... 11/18/93 237,968 $ 228,527 $ 0.96 $ 697,720 0.02%
DG Khan............. 12/01/94 751,000 1,060,597 1.41 1,053,101 0.11
East India Hotels... 03/16/95 7,500 101,513 13.54 91,905 0.01
EFES................ 07/12/94 4,602,600 239,421 0.05 344,989 0.02
Egis
Gyogyszergyar..... 05/15/94 97,200 2,110,723 21.72 2,131,356 0.21
Engro Chemical...... 09/27/94 171,840 865,329 5.04 1,148,998 0.09
Finolex Cables...... 12/01/93 1,600 15,287 9.55 22,035 0.00#
Formosa Plastics.... 05/20/94 1,615,320 2,964,465 1.84 3,377,030 0.30
Global Telesystems
Group Inc......... 06/17/94 46,389 626,251 13.50 479,627 0.06
Grasim Industries
Ltd............... 01/18/93 86,250 1,659,076 19.24 1,717,611 0.17
Great Eastern
Shipping.......... 10/04/93 343,300 508,390 1.48 884,033 0.05
Great Eastern
Shipping, New..... 02/18/94 277,080 410,325 1.48 649,024 0.04
Grupo Mexico,
Class B........... 06/06/95 510,000 2,448,000 4.80 2,383,075 0.25
Gujarat Ambuja
Cement............ 11/09/93 106,800 809,503 7.58 548,995 0.08
Housing Development
and Finance
Corporation....... 06/07/93 74,580 5,665,072 75.96 4,988,274 0.57
Innovative Marine
Products.......... 07/20/93 184,000 87,897 0.48 187,302 0.01
I.C.I.C.I., 2.500%
due 04/03/00...... 05/01/93 635,950 1,944,306 3.06 2,798,914 0.19
ICI Pakistan........ 11/18/93 235,800 620,346 2.63 463,367 0.06
ICI Pakistan, New... 06/27/95 518,760 1,364,761 2.63 1,051,157 0.14
ITI Ltd............. 12/24/93 346,300 297,774 0.86 2,070,129 0.03
KASB................ 09/19/94 305,006 351,979 1.15 1,029,233 0.04
Kohinoor
Industries........ 04/26/93 82,225 24,553 0.30 94,978 0.00#
Kotak Mahindra...... 03/17/94 222,800 1,284,293 5.76 1,668,657 0.13
Lok Holdings........ 02/17/95 149,700 553,032 3.69 635,211 0.06
Marcopolo, SA, "B"
Shares, NPV....... 05/25/94 6,920,000 1,165,086 0.17 1,059,286 0.12
Nan Ya Plastics..... 05/20/94 2,716,975 5,217,669 1.92 5,509,458 0.52
Nishat Mills,
Rights............ 06/29/95 121,767 34,393 0.28 0 0.00#
Nishat Textile...... 08/12/93 811,782 753,373 0.93 1,494,649 0.08
Pakistan
International
Airlines.......... 08/16/93 223,437 72,125 0.32 96,622 0.01
Pakistan Electron... 12/06/93 379,705 612,843 1.61 1,109,815 0.06
</TABLE>
------------------ 120 ------------------
<PAGE> 128
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
EMERGING MARKETS FUND--(CONTINUED)
6/30/95 MARKET
ACQUISITION MARKET VALUE PER % OF TOTAL
SECURITY DATE SHARES VALUE SHARE COST NET ASSETS
- -------------------- ----------- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Pakistan State
Oil............... 10/28/92 182,977 $ 2,214,932 $ 12.10 $1,008,212 0.22%
Phoenixtec Power.... 07/19/94 2,256,500 4,979,886 2.21 5,103,318 0.50
Reliance
Industries Ltd.... 03/26/93 102,350 860,522 8.41 709,438 0.09
Rolta India Ltd..... 10/20/94 2,100,000 1,789,013 0.85 2,209,117 0.18
Taiwan Semiconductor
Company........... 11/11/94 2,037,600 9,900,836 4.86 7,337,351 0.99
The Indian Hotels
Company, Ltd...... 07/16/93 64,900 1,045,841 16.11 504,802 0.10
The Templeton
Russia Fund....... 06/15/95 130,700 1,901,685 14.55 1,901,685 0.19
Titan Watch......... 06/24/93 311,700 1,310,331 4.20 1,266,699 0.13
United
Microelectronics
Corporation....... 05/24/95 207,000 1,061,929 5.13 1,044,537 0.11
Upcom Cables........ 10/28/93 1,350 2,558 1.89 2,053 0.00#
Wielkopolski Bank
Kredilowy......... 11/23/94 8,509 20,718 2.43 19,143 0.00#
----------- ----
$90,744,401 9.09%
=========== ====
</TABLE>
- ------------
# Amount equals less than 0.01%.
The following securities held by the Funds on June 30, 1995 are
unrestricted securities for which reliable market prices can be established.
These securities are valued at their market prices. However, because the process
of re-registering the securities in the Fund's name can take more than seven
days, the following shares of each of these securities were deemed temporarily
restricted in the hands of the Fund at June 30, 1995. The Fund bears the cost of
re-registering these securities:
EMERGING MARKETS FUND:
<TABLE>
<CAPTION>
6/30/95 MARKET
ACQUISITION MARKET VALUE PER % OF TOTAL
SECURITY DATE SHARES VALUE SHARE COST NET ASSETS
- -------------------- ----------- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Arab Malaysian
Corporation....... 05/09/95 1,115,000 $ 3,978,876 $ 3.57 $3,816,744 0.40%
Arab Malaysian
Finance (F)....... 02/16/94 294,000 1,187,818 4.04 953,860 0.12
Arab Malaysian
Merchant Bank..... 03/07/94 630,000 7,493,847 11.90 6,126,672 0.75
</TABLE>
------------------ 121 ------------------
<PAGE> 129
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
EMERGING MARKETS FUND--(CONTINUED)
6/30/95 MARKET
ACQUISITION MARKET VALUE PER % OF TOTAL
SECURITY DATE SHARES VALUE SHARE COST NET ASSETS
- -------------------- ----------- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bank Bali (F)....... 01/27/93 256,500 650,752 2.54 730,759 0.07%
Dankos
Laboratories
(F)............... 07/22/94 167,500 534,014 3.19 486,165 0.05
DCB Holdings
Corporation....... 06/29/93 620,000 1,818,294 2.93 1,475,151 0.18
Genting Berhad...... 06/22/92 159,000 1,571,739 9.89 1,246,369 0.16
Hong Leong Credit... 03/18/94 356,000 1,796,062 5.05 1,747,589 0.18
IJM Corporation
Berhad............ 05/27/92 383,000 1,523,831 3.98 1,250,568 0.15
International
Indorayon Utama... 12/24/92 879,000 1,815,626 2.07 2,035,755 0.18
IOI Corporation
Berhad............ 04/06/95 2,535,000 3,327,318 1.31 3,360,453 0.33
Kian Joo Can
Factory........... 08/05/93 97,000 379,963 3.92 276,911 0.04
Leader Universal
Holdings.......... 03/22/94 940,000 3,354,389 3.57 3,293,457 0.34
Pabrik Kertas Tjiwi
Kimia (F)......... 05/12/95 804,000 1,615,582 2.01 1,055,028 0.16
Resorts World
Berhad............ 12/01/92 30,000 175,964 5.87 168,262 0.02
Semen Gresik (F).... 11/22/93 30,000 201,392 6.71 139,932 0.02
Sime Darby.......... 05/25/93 653,000 1,821,329 2.79 1,443,207 0.18
Tanjong PLC......... 12/30/93 596,000 2,053,487 3.45 2,359,791 0.21
Telekom Malaysia.... 01/27/94 292,000 2,215,750 7.59 2,252,218 0.22
United Engineers.... 03/25/94 232,000 1,474,980 6.36 1,196,497 0.15
----------- ----
$38,991,013 3.91%
=========== ====
</TABLE>
8. CAPITAL LOSS CARRYFORWARDS:
At June 30, 1995, the following funds had available for federal tax
purposes unused capital losses as follows:
<TABLE>
<CAPTION>
EXPIRING EXPIRING
FUND IN 2002 IN 2003
-------------------------------------------------- -------- --------
<S> <C> <C>
Global Opportunities Fund......................... -- $143,750
International Small Cap Fund...................... -- 790,579
Short Government Bond Fund........................ -- 480,154
Government Reserve Fund........................... $ 12,270 20,906
California Tax-Free Intermediate Bond Fund........ -- 80,892
</TABLE>
------------------ 122 ------------------
<PAGE> 130
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Under current tax law, net capital and currency losses realized after
October 31 may be deferred and treated as occurring on the first day of the
following fiscal year. In the fiscal year ended June 30, 1995 the following
Funds elected to defer losses occurring between November 1, 1994 and June 30,
1995 under these rules as follows:
<TABLE>
<CAPTION>
FUND AMOUNT
----------------------------------------------------- -----------
<S> <C>
Global Opportunities Fund............................ $ 1,319,188
Global Communications Fund........................... 21,935,054
International Small Cap Fund......................... 5,675,016
Emerging Markets Fund................................ 23,480,023
Short Government Bond Fund........................... 26,123
Government Reserve Fund.............................. 4,542
California Tax-Free Intermediate Bond Fund........... 61,932
California Tax-Free Money Fund....................... 1,324
</TABLE>
Such deferred losses will be treated as arising on the first day of the
fiscal year ending June 30, 1996.
------------------ 123 ------------------
<PAGE> 131
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and the Shareholders of The Montgomery Funds and The
Montgomery Funds II:
We have audited the accompanying statements of assets and liabilities,
including the portfolio of investments, of the Montgomery Growth Fund, the
Montgomery Micro Cap Fund, the Montgomery Small Cap Fund, the Montgomery Equity
Income Fund, the Montgomery Asset Allocation Fund (formerly the Montgomery
Strategic U.S. Fund), the Montgomery Global Opportunities Fund, the Montgomery
Global Communications Fund, the Montgomery International Small Cap Fund, the
Montgomery Emerging Markets Fund, the Montgomery Short Government Bond Fund
(formerly Montgomery Short Duration Government Fund), the Montgomery Government
Reserve Fund, the Montgomery California Tax-Free Intermediate Bond Fund
(formerly Montgomery California Tax-Free Short/Intermediate Fund) and the
Montgomery California Tax-Free Money Fund (the Funds) (all portfolios of The
Montgomery Funds, except for the Asset Allocation Fund which is a portfolio of
The Montgomery Funds II) as of June 30, 1995, and the related statements of
operations for the period ended June 30, 1995, the statements of changes in net
assets for the periods ended June 30, 1995 and 1994, the statement of cash flows
for the period ended June 30, 1995 and financial highlights for each of the
periods ended June 30, 1995, 1994, 1993 and 1992. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The Montgomery Small Cap Fund's
financial highlights for the year ended June 30, 1991 and for the period July
13, 1990 (effective date of registration) to June 30, 1991 were audited by other
auditors whose report dated July 31, 1991, expressed an unqualified opinion on
such financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at June 30,
1995 by correspondence with the custodian and brokers; where replies were not
received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Funds as of June
30, 1995, the results of their operations, the changes in their net assets, and
their financial highlights for the respective stated periods, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
San Francisco, California
August 11, 1995
------------------ 124 ------------------
<PAGE> 132
-----------------------------------------
THE MONTGOMERY FUNDS
-----------------------------------------
TAX INFORMATION (UNAUDITED)
FISCAL YEAR ENDED JUNE 30, 1995
The amount of long term capital gain paid for the fiscal year ended June 30,
1995 was as follows:
<TABLE>
<S> <C>
Small Cap Fund.................................................. $12,840,565
Global Communications Fund...................................... 523,480
Emerging Markets Fund........................................... 36,824,352
</TABLE>
Of the distributions made from investment income the following percentages are
tax exempt for regular Federal income tax purposes:
<TABLE>
<S> <C>
California Tax-Free Intermediate Bond Fund........................ 99.03%
California Tax-Free Money Fund.................................... 99.82%
A portion of this income may be subject to alternative minimum tax.
</TABLE>
Of the distributions made by the following Funds the corresponding percentage
represents the amount of each distribution which will qualify for the dividends
received deduction available to corporate shareholders:
<TABLE>
<S> <C>
Growth Fund....................................................... 13.05%
Micro Cap Fund.................................................... 7.74%
Equity Income Fund................................................ 69.67%
Asset Allocation Fund............................................. 1.59%
Global Opportunities Fund......................................... 24.38%
</TABLE>
Of the distributions made by the following Funds from investment income the
corresponding percentage represents the portion of each distribution derived
from investments in U.S. Government and Agency obligations. All or a portion of
the distributions made from this income may be exempt from taxation at the state
level. Please consult your tax advisor for state specific information:
<TABLE>
<S> <C>
Growth Fund....................................................... 0.69%
Micro Cap Fund.................................................... 0.32%
Asset Allocation Fund............................................. 26.61%
Short Government Bond Fund........................................ 82.36%
Government Reserve Fund........................................... 48.07%
</TABLE>
For the fiscal year ended June 30, 1995, foreign income and foreign taxes paid
relating to foreign sources and possessions in the United States, on a per share
basis were as follows:
<TABLE>
<CAPTION>
FOREIGN FOREIGN
INCOME TAXES
------- -------
<S> <C> <C>
Global Opportunities Fund.................................. $0.3783 $0.0246
International Small Cap Fund............................... 0.3956 0.0269
Emerging Markets Fund...................................... 0.2596 0.0494
</TABLE>
The above figures may differ from those cited elsewhere in this report due to
differences in the calculation of income and capital gains for Securities and
Exchange Commission (book) purposes and Internal Revenue Service (tax) purposes.
------------------ 125 ------------------
<PAGE> 133
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