Rule 497(e)
File Nos. 33-34841 and 811-6011
THE MONTGOMERY FUNDS
Supplement dated January 25, 2000
to the Prospectus dated October 31, 1999
For Shareholders in the Montgomery
Select 50 Fund only
A shareholder meeting is scheduled for mid-March 2000 to seek
shareholder approval for two important changes for this Fund. (Only shareholders
who held shares on December 31, 1999 may vote on the proposals.)
The proposals are as follows:
(1) To change the investment objective of the Fund, which now seeks long-term
capital appreciation by investing in a portfolio of 50 securities with
approximately equal weighting in five different investment disciplines, to
instead seek long-term capital appreciation by investing in a concentrated
portfolio of 20 to 30, but not fewer than 20, securities of companies located
throughout the world.
(2) To change the Fund's sub-classification under the Investment Company Act of
1940, as amended, from a diversified investment company to a non-diversified
investment company, and eliminate the Fund's corresponding investment
restriction regarding diversification.
The Manager believes that the proposed change in the Fund's investment approach
would be in the best interests of shareholders because it would provide the
Manager with a greater ability to maximize potential returns by investing a
higher percentage of the Fund's assets in fewer stocks whose investment
potentials are believed to be especially attractive.
You should understand these changes result in additional risks for your
investment. For example, even though the Fund currently invests a portion of its
assets in emerging markets and, therefore, is already exposed to the types of
risks generally associated with investing in those markets, the Manager could
invest up to 30% of the Fund's assets in stocks of companies based in the
world's developing economies. No more than 40% of the Fund's assets or two times
the Fund's benchmark weight, whichever is greater, may be invested in any one
country. Investments in companies based in the United States are not subject to
that limit. This concentration would significantly magnify the Fund's
<PAGE>
exposure to those risks. Additionally, because the Fund may concentrate up to
35% of its assets in the stock of communications companies worldwide, its share
value may be more volatile than that of more diversified funds, and may reflect
trends in the global communications industry, which may be subject to greater
changes in governmental policies and regulation than many other industries.
While greater communication may prove beneficial when the issuers in which the
Fund invests prove to be good investments, greater concentration in fewer
issuers will also magnify negative performance by any one position. Furthermore,
because the Fund would be able to invest a relatively higher percentage of its
assets in the stocks of a limited number of issuers, it may be more susceptible
to any single economic, political or regulatory event than it currently is as a
diversified fund. You should consider the greater risk of investing in a
non-diversified fund compared to more diversified mutual funds.
Please may call us at 800.572.FUND [3863] with any questions about these changes
or about investing in this Fund.
