The Montgomery Funds RULE 497(e):
101 California Street 33-34841; 811-6011
San Francisco, California 94111
(800) 572-FUND
Prospectus
January 21, 1997
Class R shares of the Montgomery Total Return Bond Fund (the "Fund") are offered
in this Prospectus. The Fund seeks to obtain maximum total return (which
consists of both income and capital appreciation), consistent with preservation
of capital and prudent investment management as a secondary consideration. The
Fund invests primarily in a broad range of fixed income securities, including
marketable corporate debt securities, U.S. government securities,
mortgage-related securities, other asset-backed securities and cash or money
market instruments. It seeks higher yields than money market funds generally and
with less fluctuation in the value of its shares than long-term bond funds. This
fund does not maintain a stable net asset value of $1.00 per share. As is the
case for all mutual funds, attainment of the Fund's investment objective cannot
be assured.
The Fund's shares are sold at net asset value with no sales load, no
commissions, no Rule 12b-1 fees and no exchange fees. In general, the minimum
initial investment in the Fund is $1,000, and subsequent investments must be at
least $100. The Manager or the Distributor, under any circumstances that either
deems appropriate, may waive these minimums. See "How to Invest in the Fund."
The Fund, which is a separate series of The Montgomery Funds, an open-end
management investment company, is managed by Montgomery Asset Management, L.P.
(the "Manager"), an affiliate of Montgomery Securities (the "Distributor").
Please read this Prospectus before investing and retain it for future reference.
A Statement of Additional Information dated January 21, 1997, as may be revised,
has been filed with the Securities and Exchange Commission, is incorporated by
this reference and is available without charge by calling (800) 572-FUND. If you
are viewing the electronic version of this prospectus through an on-line
computer service, you may request a printed version free of charge by calling
(800) 572-FUND.
The Internet address for The Montgomery Funds is www.xperts.montgomery.com/1.
The Fund may offer other classes of shares to investors eligible to purchase
those shares. The other classes of shares may have different fees and expenses
than the class of shares offered in this Prospectus, and those different fees
and expenses may affect performance. To obtain information concerning the other
classes of shares not offered in this Prospectus, call The Montgomery Funds at
(800) 572-FUND or contact sales representatives or financial intermediaries who
offer those classes.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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TABLE OF CONTENTS
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Fees And Expenses Of The Fund 3
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Manager Investment Returns 4
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The Fund's Investment Objective And Policies 5
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Portfolio Securities 5
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Other Investment Practices 7
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Risk Considerations 10
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Management Of The Fund 11
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How To Invest In The Fund 13
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How To Redeem An Investment In The Fund 16
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Exchange Privileges And Restrictions 17
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How Net Asset Value Is Determined 19
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Dividends And Distributions 19
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Taxation 19
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General Information 20
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Backup Withholding Instructions 21
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Glossary 22
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Fees And Expenses Of The Fund
Shareholder Transaction Expenses for the Fund
<TABLE>
An investor would pay the following charges when buying or redeeming shares of
the Fund:
<CAPTION>
Maximum Sales Load Maximum Sales Load Deferred Sales Load Redemption Fees Exchange Fees
Imposed on Purchases Imposed on Reinvested
Dividends
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<S> <C> <C> <C> <C>
None None None None+ None
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</TABLE>
Estimated Annual Operating Expenses (as a percentage of average net assets)
Montgomery Total Return Bond Fund
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Management Fee 0.50%
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Other Expenses 0.20%
(after reimbursement)*
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Total Fund Operating Expenses* 0.70%
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The previous tables are intended to assist the investor in understanding the
various direct and indirect costs and expenses of the Fund. Operating expenses
are paid out of the Fund's assets and are factored into the Fund's share price.
The Fund estimates that it will have the expenses listed (expressed as a
percentage of average net assets) for the current fiscal year.
+ Shareholders effecting redemptions via wire transfer may be required to pay
fees, including the wire fee and other fees, that will be directly deducted
from redemption proceeds. The Fund reserves the right, upon 60 days'
advance notice to shareholders, to impose a redemption fee of up to 1.00%
on shares redeemed within 90 days of purchase. See "How to Redeem an
Investment in the Fund."
* Expenses for the Fund are estimated. The Manager will reduce its fees and
may absorb or reimburse the Fund for certain expenses to the extent
necessary to limit total annual fund operating expenses to the lesser of
the amount indicated in the table for the Fund or the maximum allowed by
applicable state expense limitations. The Fund is required to reimburse the
Manager for any reductions in the Manager's fee only during the two years
following that reduction and only if such reimbursement can be achieved
within the foregoing expense limits. The Manager generally seeks
reimbursement for the oldest reductions and waivers before payment by the
Fund for fees and expenses for the current year. Absent the reduction,
actual total Fund operating expenses are estimated to be 1.50% (1.00% other
expenses). The Manager may terminate these voluntary reductions at any
time. See "Management of the Fund."
Example of Expenses for the Fund
Assuming, hypothetically, that the Fund's annual return is 5% and that its
operating expenses are as set forth above, an investor buying $1,000 of the
Fund's shares would have paid the following total expenses upon redeeming such
shares:
Montgomery Total Return Bond Fund
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1 Year $7
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3 Years $22
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5 Years N/A
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10 Years N/A
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This example is to help potential investors understand the effect of expenses.
Investors should understand that this example does not represent past or future
expenses or returns and that actual expenses and returns may vary.
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Manager Investment Returns
Set forth in the table below is certain performance data provided by the Manager
relating to a performance record of the Manager for three investment advisory
accounts utilizing the specific investment approach specified for the Fund under
"Investment Objective and Policies." These three investment advisory accounts
constitute all of the accounts managed by the Manager that have an identical or
similar investment objective or investment approach as the Fund. The Montgomery
Core Fixed Income Performance Record (the "Performance Record") is comprised of
three separate accounts, two of which have since closed. From July 1, 1992
through February 28, 1994, the Manager managed a separate fixed income account
(the "1992 Account"). From March 1, 1994 to September 30, 1994, the Manager
managed the Intermediate Duration Fund. Starting October 1, 1994, the Manager
also manages the fixed income component of the Montgomery Asset Allocation Fund.
The Montgomery Asset Allocation Fund has two separate investment components
(each can be regarded as a separate account) -- an equity account and a fixed
income account. The 1992 Account, the Montgomery Intermediate Duration Fund and
the fixed income account of the Asset Allocation Fund are collectively called
the "Account." The Account has been managed with investment objective and
investment policies and strategies substantially similar to those to be employed
by the portfolio managers in managing the Fund. The results presented are not
intended to predict or suggest the return to be experienced by the Fund or the
return an investor might achieve by investing in the Fund. Investors should not
rely on the following performance data as an indication of future performance of
the Manager or of the Fund.
INVESTMENT TOTAL RETURNS
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Year Ended June 30,
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1996 1995 1994 1993
---- ---- ---- ----
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Montgomery 4.51% 12.53% -0.71% 14.31%a
Core Fixed Income Performance Record
Lehman Brothers Aggregate Bond Index 5.01% 12.55% -1.31% 11.79%
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a The 1992 Account commenced operations on July 1, 1992.
Please read the following important notes concerning the Account.
1. The results account for both income and capital appreciation or depreciation
(total return). Returns are time-weighted and net of all applicable fees and
expenses.
2. Annual rate of return is calculated using the modified Dietz method, which is
defined as the portfolio gain (including all realized and unrealized gains and
losses as well as all income) over the average capital for the period. Average
capital is the beginning market value plus/minus weighted
subscriptions/redemptions. Calculation is done monthly, but is subject to
revaluation during the month when there is a cash flow that exceeds 10% of the
beginning market value of the Account.
3. Investors should note that the Fund will compute and disclose its average
annual compounded rate of return using the standard formula set forth in
Securities and Exchange Commission ("SEC") rules, which differs in certain
respects from returns for the Account noted above. The SEC total return
calculation method calls for computation and disclosure of an average annual
compounded rate of return for one, five and ten year periods or shorter periods
from inception. The SEC formula provides a rate of return that equates a
hypothetical initial investment of $1,000 to an ending redeemable value. The
returns shown for the Account are net of advisory fees in accordance with the
SEC calculation formula, which requires that returns be shown for the Fund be
net of advisory fees as well as all other applicable Fund operating expenses.
4. When calculating the performance of the fixed income account of the Asset
Alloaction Fund, all fund level fees and expenses are apportioned pro rata
according to relative net assets of the different accounts of the Asset
Allocation Fund.
5. The Performance Record includes the three accounts managed by the Manager
that meets the Manager's criteria for inclusion in the Performance Record for
each period presented.
6. The Lehman Brothers Aggregate Bond Index includes fixed-rate debt issues
rated investment grade or higher by Moody's, S&P or Fitch.
7. Accounts in the Performance Record were valued on a trade date basis.
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The Fund's Investment Objective And Policies
The investment objective and general investment policies of the Fund are
described below. Specific portfolio securities that may be purchased by the Fund
are described in "Portfolio Securities" beginning on page 5. Specific investment
practices that may be employed by the Fund are described in "Other Investment
Practices" beginning on page 7. Certain risks associated with investments in the
Fund are described in those sections as well as in "Risk Considerations"
beginning on page 9. CERTAIN TERMS USED IN THE PROSPECTUS ARE DEFINED IN THE
GLOSSARY FOUND AT THE END OF THE PROSPECTUS.
The Investment objective of the Fund is to seek maximum total return (which
consists of both income and capital appreciation), consistent with preservation
of capital and prudent investment management. Under normal conditions, the Fund
seeks to achieve its investment objective by investing at least 65% (and
typically more than 90%) of its total assets in a broad range of
investment-grade fixed income securities, including marketable corporate debt
securities, U.S. government securities, mortgage-related securities, other
asset-backed securities and cash or money market instruments. The Fund may also
invest up to 20% of its assets in securities denominated in foreign currencies,
and may invest beyond this limit in U.S. dollar-denominated securities of
foreign issuers. See "Portfolio Securities."
Duration. Traditionally, a debt security's "term to maturity" characterizes a
security's sensitivity to changes in interest rates. However, "term to maturity"
measures only the time until a debt security provides its final payment, taking
no account of pre-maturity payments. Most debt securities provide interest
("coupon") payments in addition to a final ("par") payment at maturity, and some
securities have call provisions allowing the issuer to repay the instrument in
full before maturity date, each of which affect the security's response to
interest rate changes. "Duration" is considered a more precise measure of
interest rate risk than "term to maturity." Determining duration may involve the
Manager's estimates of future economic parameters, which may vary from actual
future values. Fixed-income securities with effective durations of three years
are more responsive to interest rate fluctuations than those with effective
durations of one year. For example, if interest rates rise by 1%, the value of
securities having an effective duration of three years will generally decrease
by approximately 3%.
Duration of the Fund. The Fund expects that, under normal circumstances, the
dollar-weighted average maturity (or period until the next interest rate reset
date) of its portfolio securities may be longer than three years but the Fund
does not restrict its investments only to individual securities that are below a
specific maturity. The Fund, however, seeks to maintain an average portfolio
effective duration of between 4 to 5.5 years.
William C. Stevens and Peter D. Wilson are responsible for managing the Fund's
portfolio. See "Management of the Fund."
Portfolio Securities
Investment Companies
The Fund may invest up to 10% of its total assets in shares of other investment
companies investing exclusively in securities in which it may otherwise invest.
The Fund does not intend to invest in other investment companies unless, in the
Manager's judgment, the potential benefits exceed associated costs. As a
shareholder in an investment company, the Fund bears its ratable share of that
investment company's expenses, including advisory and administration fees.
Debt Securities
In selecting debt securities, the Manager seeks out good credits and analyzes
interest rate trends and specific developments that may affect individual
issuers. As an operating policy which may be changed by the Board, the Fund will
not invest more than 5% of its total assets in debt securities rated lower than
investment grade (BBB by S&P, Baa by Moody's or BBB by Fitch), or in unrated
debt securities deemed to be of comparable quality by the Manager using
guidelines approved by the Board of Trustees. These securities are sometimes
known as "junk bonds" or "high risk/high yield" bonds. Subject to this
limitation, the Fund may invest in any debt security, including securities in
default. After its purchase by the Fund a debt security may cease to be rated or
its rating may be reduced below that required for purchase by the Fund. Neither
event would require elimination of that security from the Fund's portfolio.
However, a security downgraded below the Fund's minimum credit levels generally
would be retained only if retention was determined by the Manager and
subsequently by the Board to be in the best interests of the Fund. See "Risk
Considerations."
In addition to traditional corporate, government and supranational debt
securities, the Fund may invest in external (i.e., to foreign lenders) debt
obligations issued by the governments, governmental entities and companies of
foreign countries. The Fund will not invest more than 5% of its total assets in
debt securities of foreign issuers.
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U.S. Government Securities
The Fund may invest in fixed rate and floating or variable rate U.S. government
securities. Certain of the obligations, including U.S. Treasury bills, notes and
bonds, and mortgage-related securities of the GNMA, are issued or guaranteed by
the U.S. government. Other securities issued by U.S. government agencies or
instrumentalities are supported only by the credit of the agency or
instrumentality, for example those issued by the Federal Home Loan Bank, while
others, such as those issued by the FNMA, Farm Credit System and Student Loan
Marketing Association, have an additional line of credit with the U.S.
Treasury.
Short-term U.S. government securities generally are considered to be among the
safest short-term investments. However, the U.S. government does not guarantee
the net asset value of the Fund's shares. With respect to U.S. government
securities supported only by the credit of the issuing agency or instrumentality
or by an additional line of credit with the U.S. Treasury, there is no guarantee
that the U.S. government will provide support to such agencies or
instrumentalities. Accordingly, such U.S. government securities may involve risk
of loss of principal and interest.
Mortgage-Related Securities and Derivative Securities
The Fund may invest in mortgage-related securities. A mortgage-related security
is an interest in a pool of mortgage loans and is considered a derivative
security. Most mortgage-related securities are pass-through securities, which
means that investors receive payments consisting of a pro rata share of both
principal and interest (less servicing and other fees), as well as unscheduled
prepayments, as mortgages in the underlying mortgage pool are paid off by the
borrowers. Certain mortgage-related securities are subject to high volatility.
The Fund uses these derivative securities in an effort to enhance return and as
a means to make certain investments not otherwise available to the Fund. See
"Hedging and Risk-Management Practices" for a discussion of other reasons why
the Fund invests in derivative securities.
Agency Mortgage-Related Securities
Investors in the Fund should note that the dominant issuers or guarantors of
mortgage-related securities today are GNMA, FNMA and the FHLMC. GNMA creates
pass-through securities from pools of government guaranteed or insured (Federal
Housing Authority or Veterans Administration) mortgages. FNMA and FHLMC issue
pass-through securities from pools of conventional and federally insured and/or
guaranteed residential mortgages. The principal and interest on GNMA
pass-through securities are guaranteed by GNMA and backed by the full faith and
credit of the U.S. government. FNMA guarantees full and timely payment of all
interest and principal, and FHLMC guarantees timely payment of interest and
ultimate collection of principal of its pass-through securities. Securities from
FNMA and FHLMC are not backed by the full faith and credit of the U.S.
government but are generally considered to offer minimal credit risks. The
yields provided by these mortgage-related securities have historically exceeded
the yields on other types of U.S. government securities with comparable "lives"
largely due to the risks associated with prepayment. See "Risk Considerations."
Adjustable rate mortgage securities ("ARMs") are pass-through securities
representing interests in pools of mortgage loans with adjustable interest rates
determined in accordance with a predetermined interest rate index and which may
be subject to certain limits. The adjustment feature of ARMs tends to lessen
their interest rate sensitivity.
The Fund considers GNMA, FNMA and FHLMC-issued pass-through certificates, CMOs
and other mortgage-related securities to be U.S. government securities for
purposes of their investment policies. However, the Fund limits its stripped
mortgage securities investments to 10% of total assets. The liquidity of IOs and
POs issued by the U.S. government or its agencies and instrumentalities and
backed by fixed-rate mortgage-related securities will be determined by the
Manager under the direct supervision of the Trust's Pricing Committee and
reviewed by the Board, and all other IOs and POs will be deemed illiquid for
purposes of the Fund's limitation on illiquid securities. The Fund may invest in
derivative securities known as "floaters" and "inverse floaters," the values of
which vary in response to interest rates. These securities may be illiquid and
their values may be very volatile.
Privately Issued Mortgage-Related Securities/Derivatives.
The Fund may invest in mortgage-related securities offered by private issuers,
including pass-through securities for pools of conventional residential mortgage
loans; mortgage pay-through obligations and mortgage-backed bonds, which are
considered to be obligations of the institution issuing the bonds and are
collateralized by mortgage loans; and bonds and CMOs collateralized by
mortgage-related securities issued by GNMA, FNMA, FHLMC or by pools of
conventional mortgages, multi-family or commercial mortgage loans.
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Private issuer mortgage-related securities generally offer a higher rate of
interest (but greater credit and interest rate risk) than U.S. government and
agency mortgage-related securities because they offer no direct or indirect
governmental guarantees. However, many issuers or servicers of mortgage-related
securities guarantee or provide insurance for timely payment of interest and
principal. The Fund may purchase some mortgage-related securities through
private placements that are restricted as to further sale. See "Illiquid
Securities." The value of these securities may be very volatile.
Structured Notes and Indexed Securities.
The Fund may invest in structured notes and indexed securities. Structured notes
are debt securities, the interest rate or principal of which is determined by an
unrelated indicator. Indexed securities include structured notes as well as
securities other than debt securities, the interest rate or principal of which
is determined by an unrelated indicator. Index securities may include a
multiplier that multiplies the indexed element by a specified factor and,
therefore, the value of such securities may be very volatile. To the extent the
Fund invests in these securities, however, the Manager analyzes these securities
in its overall assessment of the effective duration of the Fund's portfolio in
an effort to monitor the Fund's interest rate risk.
Zero Coupon Bonds
The Fund may invest in zero coupon bonds. Zero coupon bond prices are highly
sensitive to changes in market interest rates. The original issue discount on
the zero coupon bonds must be included ratably in the income of the Fund as the
income accrues even though payment has not been received. The Fund nevertheless
intends to distribute an amount of cash equal to the currently accrued original
issue discount, and this may require liquidating securities at times they might
not otherwise do so and may result in capital loss. See "Tax Information" in the
Statement of Additional Information.
Asset-Backed Securities, Custodial Receipts, Participation Interests and Tender
Option Bonds
The Fund may invest up to 5% of its total assets in asset-backed securities.
Like mortgage-related securities, these securities are subject to the risk of
prepayment. See "Risk Considerations."
Other Investment Practices
The Fund also may engage in the investment practices described below, each of
which may involve certain special risks. The Statement of Additional
Information, under the heading "Investment Objective and Policies of the Fund,"
contains more detailed information about certain of these practices, including
limitations designed to reduce risks.
Repurchase Agreements
The Fund may enter into repurchase agreements. Pursuant to a repurchase
agreement, the Fund acquires a U.S. government security or other high-grade
liquid debt instrument from a financial institution that simultaneously agrees
to repurchase the same security at a specified time and price. The repurchase
price reflects an agreed-upon rate of return not determined by the coupon rate
on the underlying security. Under the Investment Company Act, repurchase
agreements are considered to be loans by the Fund and must be fully
collateralized by cash, letters of credit, U.S. government securities or other
high-grade liquid debt or equity securities ("collateral assets"). If the seller
defaults on its obligation to repurchase the underlying security, the 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.
Borrowing
The Fund may borrow money from banks and engage in reverse repurchase
transactions, in an amount not to exceed one-third of the value of its total
assets to meet temporary or emergency purposes, and the Fund may pledge its
assets in connection with such borrowings. The Fund may not purchase securities
if such borrowings exceed one-third of its total assets.
Reverse Repurchase Agreements
The Fund may enter into reverse repurchase agreements. In a reverse repurchase
agreement, the Fund sells to a financial institution a security that it holds
and agrees to repurchase the same security at an agreed-upon price and date.
Leverage
The Fund may leverage its portfolio to increase total return. Although leverage
creates an opportunity for increased income and gain, it also creates special
risk considerations. For example, leveraging may magnify changes in the net
asset values of
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the Fund's shares and in the yield on its portfolio. Although the principal of
such borrowings will be fixed, the Fund's assets may change in value while the
borrowing is outstanding. Leveraging creates interest expenses that can exceed
the income from the assets retained.
Securities Lending
The Fund may lend securities to brokers, dealers and other financial
organizations. These loans may not exceed 30% of the Fund's total assets. Each
securities loan is collateralized with collateral assets in an amount at least
equal to the current market value of the loaned securities, plus accrued
interest. There is a risk of delay in receiving collateral or in recovering the
securities loaned or even a loss of rights in the collateral should the borrower
of the securities fail financially.
When-Issued and Forward Commitment Securities
The Fund may purchase U.S. government or other securities on a "when-issued"
basis and may purchase or sell securities on a "forward commitment" or "delayed
delivery" basis. The price is fixed at the time the commitment is made, but
delivery and payment for the securities take place at a later date, normally 7
to 15 days or, in the case of certain CMO issues, 45 to 60 days later.
When-issued securities and forward commitments may be sold prior to the
settlement date, but the Fund will enter into when-issued and forward
commitments only with the intention of actually receiving or delivering the
securities, as the case may be. No income accrues on securities that have been
purchased pursuant to a forward commitment or on a when-issued basis prior to
delivery to the Fund. If the Fund disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss.
At the time the Fund enters into a transaction on a when-issued or forward
commitment basis, it supports its obligation with collateral assets equal to the
value of the when-issued or forward commitment securities and causes the
collateral assets to be marked to market daily. There is a risk that the
securities may not be delivered and that the Fund may incur a loss.
Hedging and Risk Management Practices
In seeking to protect against the effect of adverse changes in financial markets
or against currency exchange rate or interest rate changes that are adverse to
the present or prospective positions of the Fund, the Fund may employ certain
risk management practices using the following derivative securities and
techniques (known as "derivatives"): forward currency exchange contracts,
currency options, futures contracts and options on futures contracts on foreign
government securities and currencies. The Board of the Trust has adopted
derivative guidelines that require the Board to review each new type of
derivative that may be used by the Fund. Markets in some countries currently do
not have instruments available for hedging transactions relating to currencies
or to securities denominated in such currencies or to securities of issuers
domiciled or principally engaged in business in such countries. To the extent
that such markets do not exist, the Manager may not be able to hedge its
investment effectively in such countries. Furthermore, the Fund engages in
hedging activities only when the Manager deems it to be appropriate and does not
necessarily engage in hedging transactions with respect to each investment.
Forward Currency Contracts
A forward currency contract is individually negotiated and privately traded by
currency traders and their customers and creates an obligation to purchase or
sell a specific currency for an agreed-upon price at a future date. The Fund
normally conducts its foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate in the foreign currency exchange market at
the time of the transaction, or through entering into forward contracts to
purchase or sell foreign currencies at a future date. The Fund generally does
not enter into forward contracts with terms greater than one year.
The Fund generally enters into forward contracts only under two circumstances.
First, if the Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it any desire to "lock in" the U.S. dollar
price of the security by entering into a forward contract to buy the amount of a
foreign currency needed to settle the transaction. Second, if the Manager
believes that the currency of a particular foreign country will substantially
rise or fall against the U.S. dollar, it may enter into a forward contract to
buy or sell the currency approximately the value of some or all of the Fund's
portfolio securities denominated in such currency. The Fund will not enter into
a forward contract if, as a result, it would have more than one-third of total
assets committed to such contracts (unless it owns the currency that it is
obligated to deliver or has caused its custodian to segregate Segregable Assets
having a value sufficient to cover its obligations). Although forward contracts
are used primarily to protect the Fund from adverse currency movements, they
involve the risk that currency movements will not be accurately predicted.
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Futures and Options on Futures
To protect against the effect of adverse changes in interest rates, the Fund may
purchase and sell interest rate futures contracts. An interest rate futures
contract is an agreement to purchase or sell debt securities, usually U.S.
government securities, at a specified date and price. In addition, the Fund may
purchase and sell put and call options on interest rate futures contracts in
lieu of entering into the underlying interest rate futures contracts. The Fund
will have collateral assets equal to the purchase price of the portfolio
securities represented by the underlying interest rate futures contracts it has
an obligation to purchase.
The Fund does not enter into any futures contracts or related options if the sum
of initial margin deposits on futures contracts, related options and premiums
paid for any such related options would exceed 5% of its total assets. The Fund
does not purchase futures contracts or related options if, as a result, more
than one-third of its total assets would be so invested.
Hedging Considerations
Hedging transactions involve certain risks. While the Fund may benefit from the
use of hedging transactions, unanticipated changes in interest rates or
securities prices may result in poorer overall performance for the Fund than if
it had not entered into a hedging position. If the correlation between a hedging
position and a portfolio position is not properly protected, the desired
protection may not be obtained and the Fund may be exposed to risk of financial
loss. In addition, the Fund pays commissions and other costs in connection with
such investments.
Illiquid Securities
The Fund may not invest more than 15% of its net assets in illiquid securities.
The Fund treats any securities subject to restrictions on repatriation for more
than seven days and securities issued in connection with foreign debt conversion
programs that are restricted as to remittance of invested capital or profit as
illiquid. The Fund also treats repurchase agreements with maturities in excess
of seven days as illiquid. Illiquid securities do not include securities that
meet the requirements of Rule 144A under the Securities Act of 1933 and that,
subject to the review by the Board and guidelines adopted by the Board, the
Manager has determined to be liquid.
Defensive Investments and Portfolio Turnover
Notwithstanding its investment objective, the Fund may adopt up to a 100% cash
or cash equivalent position for temporary defensive purposes to protect against
erosion of its capital base. Depending upon the Manager's analysis of the
various markets and other considerations, all or part of the assets of the Fund
may be held in cash and cash equivalents (denominated in U.S. dollars or foreign
currencies), such as U.S. government securities or obligations issued or
guaranteed by the government of a foreign country or by an international
organization designed or supported by multiple foreign governmental entities to
promote economic reconstruction or development, high-quality commercial paper,
time deposits, savings accounts, certificates of deposit, bankers' acceptances
and repurchase agreements with respect to all of the foregoing. Such investments
also may be made for temporary purposes pending investment in other securities
and following substantial new investment in the Fund.
Portfolio securities are sold whenever the Manager believes it appropriate,
regardless of how long the securities have been held. The Manager therefore
changes the Fund's investments whenever it believes doing so will further the
Fund's investment objective or when it appears that a position of the desired
size cannot be accumulated. Portfolio turnover generally involves some expense
to the Fund, including brokerage commissions, dealer mark-ups and other
transaction costs, and may result in the recognition of capital gains that may
be distributed to shareholders. Generally, portfolio turnover in excess of 100%
is considered high and increases such costs. The annual portfolio turnover for
the Fund is expected to be approximately 100%. Even if the portfolio turnover
for the Fund is in excess of 100%, the Fund would not consider portfolio
turnover as a limiting factor. Furthermore, in the case of the Fund, which is a
fixed-income fund, portfolio turnover tends to have a less material effect on
the performance of the Fund and the tax consequences to its shareholders.
Investment Restrictions
The investment objective of the Fund is fundamental and may not be changed
without shareholder approval, but unless otherwise stated, the Fund's other
investment policies may be changed by the Board. If there is a change in the
investment objective or policies of the Fund, shareholders should consider
whether the Fund remains an appropriate investment in light of their
then-current financial positions and needs. The Fund is subject to additional
investment policies and restrictions described in the Statement of Additional
Information, some of which are fundamental.
9
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The Fund has reserved the right, if approved by the Board, to convert in the
future to a "feeder" fund that would invest all of its assets in a "master" fund
having substantially the same investment objective, policies and restrictions.
At least 30 days' prior written notice of any such action would be given to all
shareholders if and when such a proposal is approved, although no such action
has been proposed as of the date of this Prospectus.
Risk Considerations
Lower Quality Debt
The Fund is authorized to invest in medium-quality (rated or equivalent to BBB
by S&P or Fitch's or Baa by Moody's) and in limited amounts of high-risk, lower
quality debt securities (i.e., securities rated below BBB or Baa) or, if
unrated, deemed to be of equivalent investment quality as determined by the
Manager. Medium quality debt securities have speculative characteristics, and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than with higher
grade debt securities.
As an operating policy, which may be changed by the Board without shareholder
approval, the Fund does not invest more than 5% of its total assets in debt
securities rated lower than BBB by S&P or Baa by Moody's or, if unrated, deemed
to be of comparable quality as determined by the Manager using guidelines
approved by the Board. The Board may consider a change in this operating policy
if, in its judgment, economic conditions change such that a higher level of
investment in high-risk, lower quality debt securities would be consistent with
the interests of the Fund and its shareholders. Unrated debt securities are not
necessarily of lower quality than rated securities but may not be attractive to
as many buyers. Regardless of rating levels, all debt securities considered for
purchase (whether rated or unrated) are analyzed by the Manager to determine, to
the extent reasonably possible, that the planned investment is sound. From time
to time, the Fund may purchase defaulted debt securities if, in the opinion of
the Manager, the issuer may resume interest payments in the near future.
Foreign Securities
In addition to the risks discussed above, there are general risks associated
with investments in foreign securities.
Foreign investments involve the possibility of expropriation, nationalization or
confiscatory taxation, taxation of income earned in foreign nations (including,
for example, withholding taxes on interest and dividends) or other taxes imposed
with respect to investments in foreign nations, foreign exchange controls (which
may include suspension of the ability to transfer currency from a given country
and repatriation of investments), default in foreign government securities, and
political or social instability or diplomatic developments that could adversely
affect investments. In addition, there is often less publicly available
information about foreign issuers than those in the U.S. Foreign companies are
often not subject to uniform accounting, auditing and financial reporting
standards. Further, the Fund may encounter difficulties in pursuing legal
remedies or in obtaining judgments in foreign courts. Additional risk factors,
including use of domestic and foreign custodian banks and depositories, are
described elsewhere in the Prospectus and in the Statement of Additional
Information.
Brokerage commissions, fees for custodial services and other costs relating to
investments by the Fund in other countries are generally greater than in the
U.S. Foreign markets, have different clearance and settlement procedures from
those in the U.S., and certain markets have experienced times when settlements
did not keep pace with the volume of securities transactions and resulted in
settlement difficulty. The inability of the Fund to make intended security
purchases due to settlement difficulties could cause it to miss attractive
investment opportunities. Inability to sell a portfolio security due to
settlement problems could result in loss to the Fund if the value of the
portfolio security declined or result in claims against the Fund if it had
entered into a contract to sell the security. In certain countries, there is
less government supervision and regulation of business and industry practices,
stock exchanges, brokers, and listed companies than in the U.S. The securities
markets of many of the countries in which the Fund may invest may also be
smaller, less liquid, and subject to greater price volatility than those in the
U.S.
Because the securities owned by the Fund may be denominated in foreign
currencies, the value of such securities will be affected by changes in currency
exchange rates and in exchange control regulations, and costs will be incurred
in connection with conversions between currencies. A change in the value of a
foreign currency against the U.S. dollar results in a corresponding change in
the U.S. dollar value of the Fund's securities denominated in the currency. Such
changes also affect the Fund's income and distributions to shareholders. The
Fund may be affected either favorably or unfavorably by changes in the relative
rates of exchange between the currencies of different nations, and the Fund may
therefore engage in foreign currency hedging strategies. Such strategies,
however, involve certain transaction costs and investment risks, including
dependence upon the Manager's ability to predict movements in exchange rates.
10
<PAGE>
Some countries in which the Fund may invest may also have fixed or managed
currencies that are not freely convertible at market rates into the U.S. dollar.
Certain currencies may not be internationally traded. A number of these
currencies have experienced steady devaluation relative to the U.S. dollar, and
such devaluations in the currencies may have a detrimental impact on the Fund.
Many countries in which the Fund may invest have experienced substantial, and in
some periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuation in inflation rates may have negative effects on certain
economies and securities markets. Moreover, the economies of some countries may
differ favorably or unfavorably from the U.S. economy in such respects as the
rate of growth of gross domestic product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments.
Certain countries also limit the amount of foreign capital that can be invested
in their markets and local companies, creating a "foreign premium" on capital
investments available to foreign investors such as the Fund. The Fund may pay a
"foreign premium" to establish an investment position which it cannot later
recoup because of changes in that country's foreign investment laws.
Interest Rates
The market value of debt securities sensitive to prevailing interest rates is
inversely related to actual changes in interest rates. That is, a decline in
interest rates produces an increase in the market value of these securities
while an increase in interest rates produces a decrease. Moreover, the longer
the effective duration of a security, the greater the risk of interest rate
change. Changes in the ability of an issuer to make payments of interest and
principal and in the market's perception of its creditworthiness also affect the
market value of that issuer's debt securities.
Management Of The Fund
The Montgomery Funds has a Board of Trustees that establishes the Fund's
policies and supervises and reviews its management. Day-to-day operations of the
Fund are administered by the officers of the Trust and by the Manager pursuant
to the terms of an investment management agreement with the Fund.
Montgomery Asset Management, L.P., is the Fund's Manager. The Manager, a
California limited partnership, was formed in 1990 as an investment adviser
registered as such with the SEC under the Investment Advisers Act of 1940, as
amended, and since then has advised private accounts as well as the Fund. Its
general partner is Montgomery Asset Management, Inc., and its sole limited
partner is Montgomery Securities, the Fund's Distributor. Under the Investment
Company Act, both Montgomery Asset Management, Inc. and Montgomery Securities
may be deemed control persons of the Manager. Although the operations and
management of the Manager are independent from those of Montgomery Securities,
the Manager may draw upon the research and administrative resources of
Montgomery Securities in its discretion and consistent with applicable
regulations.
Portfolio Manager
The Fund is managed by William C. Stevens and Peter D. Wilson.
Mr. Stevens is a managing director and a senior portfolio manager. At Barclays
de Zoete Wedd Securities from 1991 to 1992, he started its CMO and asset-backed
securities trading. Mr. Stevens traded stripped mortgage securities and
mortgage-related interest rate swaps for the First Boston Corporation from 1990
to 1991, and while with Drexel Burnham Lambert from 1984 to 1990 was responsible
for the origination and trading of all derivative mortgage-related securities.
Mr. Wilson is a portfolio manager. Mr. Wilson joined the Manager's fixed income
team in April, 1994. From 1992 to 1994 he was an Associate in the Fixed income
Client Services Department of BARRA in Berkeley, Claifornia. At BARRA, Mr.
Wilson directed research and development teams on mortgage, CMO and other fixed
income projects. Prior to that, he was an Associate in the structured financae
department at Securitiy Pacific Merchant Bank as well as on the mortgage trading
desk at Chemical Bank.
Management Fees and Other Expenses
The Manager provides the Fund with advice on buying and selling securities,
manages the Fund's investments, including the placement of orders for portfolio
transactions, furnishes the Fund with office space and certain administrative
services, and provides personnel needed by the Fund with respect to the
Manager's responsibilities under the Manager's Investment Management Agreement
with the Fund. The Manager also compensates the members of the Board who are
interested persons
11
<PAGE>
of the Manager, and assumes the cost of printing prospectuses and shareholder
reports for dissemination to prospective investors. As compensation, the Fund
pays the Manager a monthly management fee (accrued daily but paid when requested
by the Manager) based upon the value of its average daily net assets, according
to the following table.
Average Daily Net Assets Annual Rate
- -------------------------------------------------------------------------------
Montgomery Total Return Bond Fund First $500 million 0.50%
Over $500 million 0.40%
- -------------------------------------------------------------------------------
The Manager also serves as the Fund's Administrator (the "Administrator"). The
Administrator performs services with regard to various aspects of the Fund's
administrative operations. As compensation, the Fund pays the Administrator a
monthly fee at the annual rate of five one-hundredths of one percent (0.05%) of
average daily net assets (0.04% of daily net assets over $500 million).
The Fund is responsible for its own operating expenses including, but not
limited to: the Manager's fees; taxes, if any; brokerage and commission
expenses, if any; interest charges on any borrowings; transfer agent,
administrator, custodian, legal and auditing fees; shareholder servicing fees
including fees to third party servicing agents; fees and expenses of Trustees
who are not interested persons of the Manager; salaries of certain personnel;
costs and expenses of calculating its daily net asset value; costs and expenses
of accounting, bookkeeping and recordkeeping required under the Investment
Company Act; insurance premiums; trade association dues; fees and expenses of
registering and maintaining registration of its shares for sale under federal
and applicable state securities laws; all costs associated with shareholders
meetings and the preparation and dissemination of proxy materials, except for
meetings called solely for the benefit of the Manager or its affiliates;
printing and mailing prospectuses, statements of additional information and
reports to shareholders; and other expenses relating to the Fund's operations,
plus any extraordinary and nonrecurring expenses that are not expressly assumed
by the Manager.
The Manager has agreed to reduce its management fee if necessary to keep total
annual operating expenses at or below the lesser of the maximum allowable by
applicable state expense limitations or seven-tenths of one percent (.70%) of
the Fund's average net assets. The Manager also may voluntarily reduce
additional amounts to increase the return to the Fund's investors. The Manager
may terminate these voluntary reductions at any time. Any reductions made by the
Manager in its fees are subject to reimbursement by the Fund within the
following two years, provided that the Fund is able to effect such reimbursement
and remain in compliance with applicable expense limitations. The Manager
generally seeks reimbursement for the oldest reductions and waivers before
payment by the Fund for fees and expenses for the current year.
In addition, the Manager may elect to absorb operating expenses that the Fund is
obligated to pay in order to increase the return to the Fund's investors. To the
extent the Manager performs a service or assumes an operating expense for which
the Fund is obligated to pay and the performance of such service or payment of
such expense is not an obligation of the Manager under the Investment Management
Agreement, the Manager is entitled to seek reimbursement from the Fund for the
Manager's costs incurred in rendering such service or assuming such expense. The
Manager, out of its own funds, also may compensate broker-dealers who distribute
the Fund's shares as well as other service providers of shareholder and
administrative services. In addition, the Manager, out of its own funds, may
sponsor seminars and educational programs on the Fund for financial
intermediaries and shareholders.
The Manager considers a number of factors in determining which brokers or
dealers to use for the Fund's portfolio transactions. While these factors are
more fully discussed in the Statement of Additional Information, they include,
but are not limited to, reasonableness of commissions, quality of services and
execution and availability of research that the Manager may lawfully and
appropriately use in its investment management and advisory capacities. Provided
the Fund receives prompt execution at competitive prices, the Manager also may
consider sale of the Fund's shares as a factor in selecting broker-dealers for
the Fund's portfolio transactions. It is anticipated that Montgomery Securities
may act as one of the Fund's brokers in the purchase and sale of portfolio
securities and, in that capacity, will receive brokerage commissions from the
Fund. The Fund will use Montgomery Securities as its broker only when, in the
judgment of the Manager and pursuant to review by the Board, Montgomery
Securities will obtain a price and execution at least as favorable as that
available from other qualified brokers. See "Execution of Portfolio
Transactions" in the Statement of Additional Information for further information
regarding Fund policies concerning execution of portfolio transactions.
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105, serves as the master transfer agent for the Fund (the "Master Transfer
Agent") and performs certain recordkeeping and accounting functions. The Master
Transfer Agent delegates certain transfer agent functions to DST Systems, Inc.,
P.O. Box 419073, Kansas City, Missouri 64141-6073, the Fund's transfer agent
(the "Transfer Agent"). Morgan Stanley Trust Company, located at One Pierrepont
Plaza, Brooklyn, New York 11201, serves as the Fund's principal custodian (the
"Custodian").
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<PAGE>
How To Invest In The Fund
The Fund's shares are offered directly to the public, with no sales load, at
their next-determined net asset value after receipt of an order with payment.
The Fund's shares are offered for sale by Montgomery Securities, the Fund's
Distributor, 600 Montgomery Street, San Francisco, California 94111, (800)
572-3863, and through selected securities brokers and dealers.
If an order, together with payment in proper form, is received by the Transfer
Agent, Montgomery Securities or certain administrators of 401(k) and other
retirement plans by 4:00 p.m., New York time, on any day that the New York Stock
Exchange ("NYSE") is open for trading, Fund shares will be purchased at the
Fund's next-determined net asset value. Orders for Fund shares received after
4:00 p.m., New York time, will be purchased at the next-determined net asset
value after receipt of the order. Shares of the Fund will not be priced on a
national bank holiday.
The minimum initial investment in the Fund is $1,000 (including IRAs) and $100
for subsequent investments. The Manager or the Distributor, in its discretion,
may waive these minimums. Purchases may also be made in certain circumstances by
payment of securities. See the Statement of Additional Information for further
details.
Initial Investments
Minimum Initial Investment (including IRAs):
$1,000
Mail your completed application and any checks to:
The Montgomery Funds
c/o DST Systems, Inc.
P.O. Box 419073
Kansas City, MO 64141-6073
- --------------------------------------------------------------------------------
Initial Investments by Check
- --------------------------------------------------------------------------------
o Complete the Account Application. Tell us which Fund(s) you want
to invest and make your check payable to The Montgomery Funds.
o We do not accept third party checks or cash investments. Checks
must be made in U.S. dollars and, to avoid fees and delays, drawn
only on banks located in the U.S.
o A charge may be imposed on checks that do not clear.
- --------------------------------------------------------------------------------
Initial Investments by Wire
- --------------------------------------------------------------------------------
o Notify the Transfer Agent at (800) 572-3863 that you intend to
make your initial investment by wire. Provide the Transfer Agent
with your name, dollar amount to be invested and the Fund in
which you want to invest. They will provide you with further
instructions to complete your purchase. Complete information
regarding your account must be included in all wire instructions
to ensure accurate handling of your investment.
o Request your bank to transmit immediately available funds by wire
for purchase of shares in your name to the following:
Investors Fiduciary Trust Company
ABA #101003621
For: DST Systems, Inc.
Account #7526601
Attention: The Montgomery Funds
For Credit to: (shareholder(s) name)
Shareholder Account Number: (shareholder(s) account number)
Name of Fund: Montgomery Total Return Bond Fund
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
o Your bank may charge a fee for any wire transfers.
o The Fund and the Distributor each reserve the right to reject any
purchase order in whole or in part.
- --------------------------------------------------------------------------------
Subsequent Investments
Minimum Subsequent Investment: $100
Mail any checks and investment instructions to:
The Montgomery Funds
c/o DST Systems, Inc.
P.O. Box 419073
Kansas City, MO 64141-6073
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Subsequent Investments by Check
- --------------------------------------------------------------------------------
o Make your check payable to The Montgomery Total Return Bond Fund.
o Enclose an investment stub from your confirmation statement.
o If you do not have an investment stub, mail your check with
written instructions indicating the Fund name and account number
to which your investment should be credited.
o We do not accept third party checks or cash investments. Checks
must be made in U.S. dollars and, to avoid fees and delays, drawn
only on banks located in the U.S.
o A charge may be imposed on checks that do not clear.
- --------------------------------------------------------------------------------
Subsequent Investments by Wire
- --------------------------------------------------------------------------------
o You do not need to contact the Transfer Agent prior to making
subsequent investments by wire. Instruct your bank to wire funds
to the Transfer Agent's affiliated bank by using the bank wire
information under "Initial Investments by Wire."
- --------------------------------------------------------------------------------
Subsequent Investments by Telephone
- --------------------------------------------------------------------------------
o Shareholders are automatically eligible to make telephone
purchases by calling the Transfer Agent at (800) 572-3863 before
the Fund cutoff time.
o Shares of IRAs are not eligible for telephone purchases.
o The maximum telephone purchase is an amount up to five times your
account value on the previous day.
o Payments for shares purchased must be received by the Transfer
Agent within three business days after the purchase request.
Write your confirmed purchase number on your check or include it
in your wire instructions.
o You should do one of the following to ensure payment is received
in time:
o Transfer funds directly from your bank account by
sending a letter and a voided
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
check or deposit slip (for a savings account) to the
Transfer Agent.
o Send a check by overnight or 2nd day courier service.
Address courier packages to:
The Montgomery Funds, c/o DST Systems, Inc., 1004
Baltimore St., Kansas City, MO 64105.
o Instruct your bank to wire funds to the Transfer
Agent's affiliated bank by using the bank wire
information under the section titled Initial
Investments by Wire.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Complete information regarding your account must be included in all wire
instructions in order to facilitate the prompt and accurate handling of
investments. Investors may obtain further information from their own banks about
wire transfers and any fees that may be imposed. The Fund and the Distributor
each reserve the right to reject any purchase order in whole or in part.
Automatic Account Builder ("AAB")
o AAB will be established on existing accounts only. You may not
use an AAB investment to open a new account.
o The minimum automatic investment amount is the Fund's subsequent
investment minimum.
o Your bank must be a member of the Automated Clearing House.
o To establish AAB, attach a voided check (checking account) or
preprinted deposit slip (savings account) from your bank account
to your Montgomery account application or your letter of
instruction. Investments will automatically be transferred into
your Montgomery account from your checking or savings account.
o Investments may be transferred either monthly or quarterly on or
up to two business days before the 5th or 20th day of the month.
If no day is specified on your account application or your letter
of instruction, the 20th of each month will be selected.
o You should allow 20 business days for this service to become
effective.
o You may cancel your AAB at any time by sending a letter to the
Transfer Agent. Your request will be processed upon receipt.
Telephone Transactions
You agree to reimburse the Fund for any expenses or losses that it may incur in
connection with transfers from your accounts, including any caused by your
bank's failure to act in accordance with your request or its failure to honor
your debit. If your bank makes erroneous payments or fails to make payment after
shares are purchased on your behalf, any such purchase may be canceled and this
privilege terminated immediately. This privilege may be discontinued at any time
by the Fund upon 30-days' written notice or any time by you by written notice to
the Fund. Your request will be processed upon receipt.
Although Fund shares are priced at the net asset value next-determined after
receipt of a purchase request, shares are not purchased until payment is
received. Should payment not be received when required, the Transfer Agent will
cancel the telephone purchase request and you may be responsible for any losses
incurred by the Fund. The Fund and the Transfer Agent will not be liable for
following instructions communicated by telephone reasonably believed to be
genuine. The Fund employs reasonable procedures to confirm that instructions
communicated by telephone are genuine. These procedures include recording the
telephone call, sending a confirmation and requiring the caller to give a
special authorization number or other personal information not likely to be
known by others. The Fund and Transfer Agent may be liable for any losses due to
unauthorized or fraudulent telephone transactions only if such reasonable
procedures are not followed.
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<PAGE>
Retirement Plans
Shares of the Fund are available for purchase by any retirement plan, including
Keogh plans, 401(k) plans, 403(b) plans and IRAs. Neither the Fund nor the
Manager administers or acts as custodian for retirement account plans. The Fund
may be available for purchase through administrators for retirement plans.
Investors who purchase shares as a part of a retirement plan should address
inquiries and seek investment servicing from their plan administrators. Plan
administrators may receive compensation from the Fund for performing shareholder
services.
Share Certificates
Share certificates will not be issued by the Fund. All shares are held in
non-certificated form registered on the books of the Fund and the Transfer Agent
for the account of the shareholder.
How To Redeem An Investment In The Fund
The Fund will redeem all or any portion of an investor's outstanding shares upon
request. Redemptions can be made on any day that the NYSE is open for trading
(except national bank holidays). The redemption price is the net asset value per
share next determined after the shares are validly tendered for redemption and
such request is received by the Transfer Agent or, in the case of repurchase
orders, Montgomery Securities or other securities dealers. Payment of redemption
proceeds is made promptly regardless of when redemption occurs and normally
within three days after receipt of all documents in proper form, including a
written redemption order with appropriate signature guarantee. Redemption
proceeds will be mailed or wired in accordance with the shareholder's
instructions. The Fund may suspend the right of redemption under certain
extraordinary circumstances in accordance with the rules of the SEC. In the case
of shares purchased by check and redeemed shortly after the purchase, the
Transfer Agent will not mail redemption proceeds until it has been notified that
the monies used for the purchase have been collected, which may take up to 15
days from the purchase date. Shares tendered for redemptions through brokers or
dealers (other than the Distributor) may be subject to a service charge by such
brokers or dealers. Procedures for requesting a redemption are set forth below.
Shareholders should note that the Fund reserves the right upon 60 days' advance
notice to shareholders to impose a redemption fee of up to 1.00% on shares
redeemed within 90 days of purchase.
- --------------------------------------------------------------------------------
Redeeming by Written Instruction
- --------------------------------------------------------------------------------
o Write a letter indicating your name, account number, the name of
the Fund from which you wish to redeem and the dollar amount or
number of shares you wish to redeem.
o Signature guarantee your letter if you want the redemption
proceeds to go to a party other than the account owner(s), your
predesignated bank account or if the dollar amount of the
redemption exceeds $50,000. Signature guarantees may be provided
by an eligible guarantor institution such as a commercial bank,
an NASD member firm such as a stock broker, a savings association
or national securities exchange. Contact the Transfer Agent if
you need more information.
o If you do not have a predesignated bank account and want to wire
your redemption proceeds, include a voided check or deposit slip
with your letter. The minimum amount that may be wired is $500
(wire charges, if any, will be deducted from redemption
proceeds). The Fund reserves the right to permit lesser wire
amounts or fees in the Manager's discretion.
o Mail your instructions to:
The Montgomery Funds
c/o DST Systems, Inc.
P.O. Box 419073
Kansas City, MO 64141
- --------------------------------------------------------------------------------
Redeeming By Telephone
- --------------------------------------------------------------------------------
o Unless you have declined telephone redemption privileges on your
account application, you
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
may redeem shares up to $50,000 by calling the Transfer Agent
before the Fund cutoff time.
o If you included bank wire information on your account application
or made subsequent arrangements to accommodate bank wire
redemptions, you may request that the Transfer Agent wire your
redemption proceeds to your bank account. Allow at least two
business days for redemption proceeds to be credited to your bank
account. If you want to wire your redemption proceeds to arrive
at your bank on the same business day (subject to bank cutoff
times), there is a $10 fee.
o Telephone redemption privileges will be suspended 30 days after
an address change. All redemption requests during this period
must be in writing with a guaranteed signature.
o This service is not available for IRA accounts.
o Telephone redemption privileges may be canceled after an account
is opened by instructing the Transfer Agent in writing. Your
request will be processed upon receipt.
- --------------------------------------------------------------------------------
By establishing telephone redemption privileges, a shareholder authorizes the
Fund and the Transfer Agent to act upon the instruction of the shareholder or
his or her designee by telephone to redeem from the account for which such
service has been authorized and transfer the proceeds to a bank or other account
designated in the Authorization. When a shareholder appoints a designee on the
Account Application or by written authorization, the shareholder agrees to be
bound by the telephone redemption instructions given by the shareholder's
designee. The Fund may change, modify or terminate these privileges at any time
upon 60-days' notice to shareholders. The Fund will not be responsible for any
loss, damage, cost or expense arising out of any transaction that appears on the
shareholder's confirmation after 30 days following mailing of such confirmation.
See discussion of Fund telephone procedures and liability under "Telephone
Transactions."
Shareholders may experience delays in exercising telephone redemption privileges
during periods of abnormal market activity. During periods of volatile economic
or market conditions, shareholders may wish to consider transmitting redemption
orders by telegram (not available for IRAs) or overnight courier.
Systematic Withdrawal Plan
Under a Systematic Withdrawal Plan, a shareholder with an account value of
$1,000 or more in the Fund may receive (or have sent to a third party) periodic
payments (by check or wire). The minimum payment amount is $100 from the Fund
account. Payments may be made either monthly or quarterly on the 1st of each
month. Depending on the form of payment requested, shares of the Fund will be
redeemed up to five business days before redemption proceeds are scheduled to be
received by the shareholder. The redemption may result in recognition of gain or
loss for income tax purposes.
Small Accounts
Due to the relatively high cost of maintaining smaller accounts, the Fund will
redeem shares from any account if at any time, because of redemptions by the
shareholder, the total value of a shareholder's account is less than $1,000. If
the Fund decides to make an involuntary redemption, the shareholder will first
be notified that the value of the shareholder's account is less than the minimum
level and will be allowed 30 days to make an additional investment to bring the
value of that account at least to the minimum investment required to open an
account before the Fund takes any action.
Exchange Privileges And Restrictions
Exchange Privileges
Shares of the Fund may be exchanged for shares of the other series of the Trust
and The Montgomery Funds II (together with the Fund, the "Montgomery Funds"),
with restrictions noted below, on the basis of their relative net asset values
(with no sales charge or exchange fee) next determined after the time of the
exchange request and provided that you have the current prospectus for the fund
into which you are exchanging shares of the Fund. You are automatically eligible
to make telephone exchanges with your Montgomery account. See discussion of Fund
telephone procedures and limitations of liability under
17
<PAGE>
"Telephone Transactions." Shareholders should note that an exchange may result
in recognition of a gain or loss for income tax purposes.
Exchange Restrictions
A shareholder's privilege of exchanging shares of the Fund has the following
restrictions:
o Shareholders may exchange for shares of a Montgomery fund only in states
where that fund's shares are qualified for sale.
o A shareholder may not exchange for shares of a Montgomery fund that is not
open to new shareholders unless the shareholder has an existing account
with that Montgomery fund.
o Shares of the Fund may not be exchanged for shares of another Montgomery
fund unless the amount to be received in the exchange satisfies that fund's
minimum investment requirement.
o The Trust reserves the right to refuse exchanges by any person or group if,
in the Manager's judgment, the Fund would be unable effectively to invest
the money in accordance with its investment objective and policies, or
would otherwise be potentially adversely affected. A shareholder's
exchanges may be restricted or refused if the Fund receives, or the Manager
anticipates, simultaneous orders affecting significant portions of the
Fund's assets and, in particular, a pattern of exchanges coinciding with a
"market timing" strategy. Although the Trust attempts to provide prior
notice to affected shareholders when it is reasonable to do so, it may
impose these restrictions at any time. The Trust reserves the right to
terminate or modify the exchange privileges of Fund shareholders in the
future.
Automatic Transfer Service ("ATS")
You may elect systematic exchanges out of the Fund into any other Montgomery
Funds. The minimum exchange is $100. Periodically investing a set dollar amount
into the Fund is also referred to as dollar-cost averaging because the number of
shares purchased will vary depending on the price per share. Your account with
the Fund must meet the applicable minimum of $1,000.
Directed Dividend Service
If you own shares of the Fund, you may elect to use your monthly dividends to
automatically purchase additional shares of another fund. Your account with the
recipient fund must meet the applicable minimum of $1,000.
Brokers and Other Intermediaries
Investing through Securities Brokers, Dealers and Financial Intermediaries.
Investors may purchase shares of the Fund from other selected securities
brokers, dealers or through financial intermediaries such as benefit plan
administrators. Investors should contact these agents directly for appropriate
instructions, as well as information pertaining to accounts and any service or
transaction fees that may be charged by these agents. Purchase orders through
securities brokers, dealers and other financial intermediaries are effected at
the next-determined net asset value after receipt of the order by such agent,
provided the agent transmits such order on a timely basis to the Transfer Agent
so that it is received by 4:00 p.m., New York time, on days that the Fund issues
shares. Orders received after that time will be purchased at the next-determined
net asset value. To the extent these agents perform shareholder servicing
activities for the Fund, they may receive fees from the Fund for such services.
Repurchase Orders Through Brokerage Accounts
Shareholders also may sell shares back to the Fund by wire or telephone through
Montgomery Securities or selected securities brokers or dealers. Shareholders
should contact their securities broker or dealer for appropriate instructions
and for information concerning any transaction or service fee that may be
imposed by the broker or dealer. Shareholders are entitled to the net asset
value next determined after receipt of a repurchase order by such broker-dealer,
provided the broker-dealer
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transmits such order on a timely basis to the Transfer Agent so that it is
received by 4:00 p.m., New York time, on a day that the Fund redeems shares.
Orders received after that time are entitled to the net asset value next
determined after receipt.
How Net Asset Value Is Determined
The net asset value of the Fund is determined once daily as of 4:00 p.m., New
York time, on each day that the NYSE is open for trading (except for bank
holidays). Per-share net asset value is calculated by dividing the value of the
Fund's total net assets by the total number of the Fund's shares then
outstanding.
As more fully described in the Statement of Additional Information, 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 fixed income securities, the mean between the closing bid and asked
price. Securities for which market quotations are not readily available or which
are illiquid are valued at their fair values as determined in good faith under
the supervision of the Trust's officers, and by the manager and the Pricing
Committee of the Board respectively, in accordance with methods that are
specifically authorized by the Board. Short-term obligations with maturities of
60 days or less are valued at amortized cost as reflecting fair value.
The value of securities denominated in foreign currencies and traded on foreign
exchanges or in foreign markets will be translated into U.S. dollars at the last
price of their respective currency denomination against U.S. dollars quoted by a
major bank or, if no such quotation is available, at the rate of exchange
determined in accordance with policies established in good faith by the Board of
Trustees. Because the value of securities denominated in foreign currencies must
be translated into U.S. dollars, fluctuations in the value of such currencies in
relation to the U.S. dollar may affect the net asset value of Fund shares even
if there has not been any change in the foreign-currency denominated values of
such securities.
Because foreign securities markets may close prior to the time the Fund
determines its net asset values, events affecting the value of portfolio
securities occurring between the time prices are determined and the time the
Fund calculates its net asset values may not be reflected in the Fund's
calculation of net asset values unless the Manager, under supervision of the
Board, determines that a particular event would materially affect the Fund's net
asset values.
Dividends And Distributions
The Fund distributes substantially all of its net investment income and net
capital gains to shareholders each year. Dividends are declared daily and paid
monthly on or about the last business day of each month. Capital gains are
declared and paid in November or December each year. Additional distributions,
if necessary, may be made following the Fund's fiscal year end (June 30) in
order to avoid the imposition of tax on the Fund. The amount and frequency of
Fund distributions are not guaranteed and are at the discretion of the Board.
Unless investors request cash distributions in writing at least seven business
days prior to the distribution, or on the Account Application, all dividends and
other distributions will be reinvested automatically in additional shares of the
Fund and credited to the shareholder's account at the closing net asset value on
the reinvestment date.
Taxation
The Fund intends to qualify and elect as soon as possible to be treated as a
regulated investment company under Subchapter M of the Code, by distributing
substantially all of its net investment income and net capital gains to its
shareholders and meeting other requirements of the Code relating to the sources
of its income and diversification of assets. Accordingly, the Fund generally
will not be liable for federal income tax or excise tax based on net income
except to the extent its earnings are not distributed or are distributed in a
manner that does not satisfy the requirements of the Code pertaining to the
timing of distributions. If the Fund is unable to meet certain requirements of
the Code, it may be subject to taxation as a corporation. The Fund may also
incur tax liability to the extent it invests in "passive foreign investment
companies." See the Statement of Additional Information.
For federal income tax purposes, any dividends derived from net investment
income and any excess of net short-term capital gain over net long-term capital
loss that investors (other than certain tax-exempt organizations that have not
borrowed to purchase Fund shares) receive from the Fund are considered ordinary
income. Part of the distributions paid by the Fund may be eligible for the
dividends-received deduction allowed to corporate shareholders under the Code.
Distributions of the excess of net long-term capital gain over net short-term
capital loss from transactions of the Fund are treated by shareholders as
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long-term capital gains regardless of the length of time the Fund's shares have
been owned. Distributions of income and capital gains are taxed in the manner
described above, whether they are taken in cash or are reinvested in additional
shares of the Fund.
The Fund will inform its investors of the source of their dividends and
distributions at the time they are paid, and will promptly after the close of
each calendar year advise investors of the tax status of those distributions and
dividends. Investors (including tax-exempt and foreign investors) are advised to
consult their own tax advisers regarding the particular tax consequences to them
of an investment in shares of the Fund. Additional information on tax matters
relating to the Fund and its shareholders is included in the Statement of
Additional Information.
General Information
The Trust
The Fund is a series of The Montgomery Funds, a Massachusetts business trust
organized on May 10, 1990 (the "Trust"). The Trust's Agreement and Declaration
of Trust permits the Board to issue an unlimited number of full and fractional
shares of beneficial interest, $.01 par value, in any number of series. The
assets and liabilities of each series within the Trust are separate and distinct
from those of each other series.
This Prospectus relates only to the Class R shares of the Fund. The Fund has
designated other classes of shares and may in the future designate other classes
of shares for specific purposes.
Shareholder Rights
Shares issued by the Fund have no preemptive, conversion or subscription rights.
Each whole share is entitled to one vote as to any matter on which it is
entitled to vote and each fractional share is entitled to a proportionate
fractional vote. Shareholders have equal and exclusive rights as to dividends
and distributions as declared by the Fund and to the net assets of the Fund upon
liquidation or dissolution. The Fund, as a separate series of the Trust, votes
separately on matters affecting only the Fund (e.g., approval of the Investment
Management Agreement); all series of the Trust vote as a single class on matters
affecting all series of the Trust jointly or the Trust as a whole (e.g.,
election or removal of Trustees). Voting rights are not cumulative, so that the
holders of more than 50% of the shares voting in any election of Trustees can,
if they so choose, elect all of the Trustees. Except as set forth herein, all
classes of shares issued by the Fund shall have identical voting, dividend,
liquidation and other rights, preferences, and terms and conditions. The only
differences among the various classes of shares relate solely to the following:
(a) each class may be subject to different class expenses; (b) each class may
bear a different identifying designation; (c) each class may have exclusive
voting rights with respect to matters solely affecting such class; (d) each
class may have different exchange privileges; and (e) each class may provide for
the automatic conversion of that class into another class. While the Trust is
not required and does not intend to hold annual meetings of shareholders, such
meetings may be called by the Board at its discretion, or upon demand by the
holders of 10% or more of the outstanding shares of the Trust for the purpose of
electing or removing Trustees. Shareholders may receive assistance in
communicating with other shareholders in connection with the election or removal
of Trustees pursuant to the provisions of Section 16(c) of the Investment
Company Act.
Performance Information
From time to time, the Fund may publish its total return, such as in
advertisements and communications to investors. Total return information
generally will include the Fund's average annual compounded rate of return over
the most recent four calendar quarters and over the period from the Fund's
inception of operations. The Fund may also advertise aggregate and average total
return information over different periods of time. The Fund's average annual
compounded rate of return is determined by reference to a hypothetical $1,000
investment that includes capital appreciation and depreciation for the stated
period according to a specific formula. Aggregate total return is calculated in
a similar manner, except that the results are not annualized. Total return
figures will reflect all recurring charges against the Fund's income.
Investment results of the Fund will fluctuate over time, and any presentation of
the Fund's total return for any prior period should not be considered as a
representation of what an investor's total return or current yield may be in any
future period.
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Legal Opinion
The validity of shares offered by this Prospectus will be passed on by Heller,
Ehrman, White & McAuliffe, 333 Bush Street, San Francisco, California 94104.
Shareholder Reports and Inquiries
Unless otherwise requested, only one copy of each shareholder report or other
material sent to shareholders will be mailed to each household with accounts
under common ownership and the same address regardless of the number of
shareholders or accounts at that household or address. A confirmation statement
will be mailed to your record address each time you request a transaction except
for pre-authorized automatic investment and redemption services (quarterly). All
transactions are recorded on quarterly account statements which you will receive
at the end of each calendar quarter. Your fourth-quarter account statement will
be a year-end statement, listing all transaction activity for the entire year.
Retain this statement for your tax records.
In general, shareholders who redeemed shares from a qualifying Montgomery
account should expect to receive an Average Cost Statement in February of the
following year. Your statement will calculate your average cost using the
average cost single-category method.
Any questions should be directed to The Montgomery Funds at 800-572-FUND
(800-572-3863).
Backup Withholding Instructions
Shareholders are required by law to provide the Fund with their correct Social
Security or other Taxpayer Identification Number ("TIN"), regardless of whether
they file tax returns. Failure to do so may subject a shareholder to penalties.
Failure to provide a correct TIN or to check the appropriate boxes in the
Account Application and to sign the shareholder's name could result in backup
withholding by the Fund of an amount of federal income tax equal to 31% of
distributions, redemptions, exchanges and other payments made to a shareholder's
account. Any tax withheld may be credited against taxes owed on a shareholder's
federal income tax return.
A shareholder who does not have a TIN should apply for one immediately by
contacting the local office of the Social Security Administration or the IRS.
Backup withholding could apply to payments made to a shareholder's account while
awaiting receipt of a TIN. Special rules apply for certain entities. For
example, for an account established under the Uniform Gifts to Minors Act, the
TIN of the minor should be furnished. If a shareholder has been notified by the
IRS that he or she is subject to backup withholding because he or she failed to
report all interest and dividend income on his or her tax return and the
shareholder has not been notified by the IRS that such withholding will cease,
the shareholder should cross out the appropriate item in the Account
Application. Dividends paid to a foreign shareholder's account by the Fund may
be subject to up to 30% withholding instead of backup withholding.
A shareholder that is an exempt recipient should furnish a TIN and check the
appropriate box. Exempt recipients include certain corporations, certain
tax-exempt entities, tax-exempt pension plans and IRAs, governmental agencies,
financial institutions, registered securities and commodities dealers and
others. For further information, see Section 3406 of the Code and consult with a
tax adviser.
---------------------------------
This Prospectus is not an offering of the securities herein described in any
state in which the offering is unauthorized. No salesman, dealer or other person
is authorized to give any information or make any representation other than
those contained in this Prospectus, the Statement of Additional Information, or
in the Fund's official sales literature.
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Glossary
--------
o Asset backed securities. Asset backed securities are secured by and payable
from, pools of assets, such as motor vehicle installment sales contracts,
installment loan contracts, leases of various types of real and personal
property and receivables from revolving credit (e.g., credit card)
agreements.
o Cash Equivalents. Cash equivalents are short-term, interest bearing
instruments or deposits and may include, for example, commercial paper,
certificates of deposit, repurchase agreements, bankers' acceptances, U.S.
Treasury bills, bank money market deposit accounts, master demand notes and
money market mutual funds. These consist of high-quality debt obligations,
certificates of deposit and bankers' acceptances rated at least A-1 by S&P
or Prime-1 by Moody's, or the issuer has an outstanding issue of debt
securities rated at least A by S&P or Moody's, or are of comparable quality
in the opinion of the Manager.
o Collateralized Mortgage Obligations (CMOs). Derivative mortgage-related
securities that separate the cash flows of mortgage pools into different
classes or tranches. Stripped mortgage securities are CMOs that allocate
different proportions of interest and principal payments on a pool of
mortgages. One class may receive all of the interest (the interest only or
"IO" class) while another may receive all of the principal (principal only
or "PO" class). The yield to maturity on any IO or PO class is extremely
sensitive not only to changes in interest rates but also to the rate of
principal payments and prepayments on underlying mortgages. In the most
extreme cases, an IO class may become worthless.
o Derivatives include forward currency exchange contracts, currency options,
futures contracts, swaps and options on futures contracts on U.S.
government and foreign government securities and currencies.
o Dollar roll transaction. A dollar roll transaction is similar to a reverse
repurchase agreement except it requires a Fund to repurchase a similar
rather than the same security.
o FHLMC. The Federal Home Loan Mortgage Corporation.
o FNMA. The Federal National Mortgage Association.
o Forward currency contracts. A forward currency contract is a contract
individually negotiated and privately traded by currency traders and their
customers and creates an obligation to purchase or sell a specific currency
for an agreed-upon price at a future date. The Fund generally do not enter
into forward contracts with terms greater than one year. The Fund generally
enters into forward contracts only under two circumstances. First, if the
Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may desire to "lock in" the U.S.
dollar price of the security by entering into a forward contract to buy the
amount of a foreign currency needed to settle the transaction. Second, if
the Manager believes that the currency of a particular foreign country will
substantially rise or fall against the U.S. dollar, it may enter into a
forward contract to buy or sell the currency approximating the value of
some or all of the Fund's portfolio securities denominated in such
currency. The Fund will not enter into a forward contract if, as a result,
it would have more than one-third of total assets committed to such
contracts (unless it owns the currency that it is obligated to deliver or
has collateral assets sufficient to cover its obligations). Although
forward contracts are used primarily to protect the Fund from adverse
currency movements, they involve the risk that currency movements will not
be accurately predicted.
o Futures and options on futures. An interest rate futures contract is an
agreement to purchase or sell debt securities, usually U.S. government
securities, at a specified date and price. For example, the Fund may sell
interest rate futures contracts (i.e., enter into a futures contract to
sell the underlying debt security) in an attempt to hedge against an
anticipated increase in interest rates and a corresponding decline in debt
securities it owns. The Fund will have collateral assets equal to the
purchase price of the portfolio securities represented by the underlying
interest rate futures contracts it has an obligation to purchase.
o GNMA. The Government National Mortgage Association.
o Highly rated debt securities. Debt securities rated within the three
highest grades by Standard & Poor's Corporation ("S&P") (AAA to A), Moody's
Investors Services, Inc. ("Moody's") (Aaa to A) or Fitch Investor Services,
Inc. ("Fitch") (AAA to A), or in unrated debt securities deemed to be of
comparable quality by the Manager using guidelines approved by the Board of
Trustees. See the Appendix to the Statement of Additional Information for a
description of these ratings.
o Illiquid securities. The Fund treats any securities subject to restrictions
on repatriation for more than seven days and securities issued in
connection with foreign debt conversion programs that are restricted as to
remittance of invested capital or profit as illiquid. The Fund also treats
repurchase agreements with maturities in excess of seven days as illiquid.
Illiquid securities do not include securities that are restricted from
trading on formal markets for some period of time but for which an active
informal market exists, or securities that meet the requirements of Rule
144A under the Securities Act of 1933 and that, subject to the review by
the Board and guidelines adopted by the Board, the Manager has determined
to be liquid.
o Investment grade. Investment grade debt securities are those rated within
the four highest grades by S&P (at least BBB), Moody's (at least Baa) or
Fitch (at least Baa) or in unrated debt securities deemed to be of
comparable quality by the Manager using guidelines approved by the Board of
Trustees.
o Leverage. Some Funds may use leverage in an effort to increase return.
Although leverage creates an opportunity for increased income and gain, it
also creates special risk considerations. Leveraging also creates interest
expenses that can exceed the income from the assets retained.
o Repurchase agreement. With a repurchase agreement, a Fund acquires a U.S.
government security or other high-grade liquid debt instrument (for the
Money Market Funds, the instrument must be rated in the highest grade) from
a financial institution that simultaneously agrees to repurchase the same
security at a specified time and price.
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o 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.
o Reverse repurchase agreement. In a reverse repurchase agreement, a Fund
sells to a financial institution a security that it holds and agrees to
repurchase the same security at an agreed-upon price and date.
o Securities lending. A fund may lend securities to brokers, dealers and
other financial organizations. Each securities loan is collateralized with
collateral assets in an amount at least equal to the current market value
of the loaned securities, plus accrued interest. There is a risk of delay
in receiving collateral or in recovering the securities loaned or even a
loss of rights in collateral should the borrower fail financially.
o U.S. government securities include U.S. Treasury bills, notes, bonds and
other obligations issued or guaranteed by the U.S. government, its agencies
or instrumentalities.
o When-issued and forward commitment securities. The Fund may purchase U.S.
government or other securities on a "when-issued" basis and may purchase or
sell securities on a "forward commitment" or "delayed delivery" basis. The
price is fixed at the time the commitment is made, but delivery and payment
for the securities take place at a later date. When-issued securities and
forward commitments may be sold prior to the settlement date, but a Fund
will enter into when-issued and forward commitments only with the intention
of actually receiving or delivering the securities. No income accrues on
securities that have been purchased pursuant to a forward commitment or on
a when-issued basis prior to delivery to a Fund. At the time a Fund enters
into a transaction on a when-issued or forward commitment basis, it
supports its obligation with collateral assets equal to the value of the
when-issued or forward commitment securities and causes the collateral
assets to be marked to market daily. There is a risk that the securities
may not be delivered and that the Fund may incur a loss.
o Zero coupon bonds. Zero coupon bonds are debt obligations that do not pay
current interest and are consequently issued at a significant discount from
face value. The discount approximates the total interest the bonds will
accrue and compound over the period to maturity or the first
interest-payment date at a rate of interest reflecting the market rate of
interest at the time of issuance.
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Investment Manager
Montgomery Asset Management, L.P.
101 California Street
San Francisco, California 94111
1-800-572-FUND
Distributor
Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
1-415-627-2485
Custodian
Morgan Stanley Trust Company
One Pierrepont Plaza
Brooklyn, New York 11201
Transfer Agent
DST Systems, Inc.
P.O. Box 419073
Kansas City, Missouri 64141-6073
1-800-447-4210
Legal Counsel
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
