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<PAGE> PAGE 12
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<PAGE> PAGE 13
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SIGNATURE KAREN JACOPPO-WOOD
TITLE VP/ASST SECRETARY
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<CIK> 000930948
<NAME> THE MONTGOMERY FUNDS-VARIABLE SERIES
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<SHARES-COMMON-PRIOR> 874,235
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<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 19,648,521
<DIVIDEND-INCOME> 188,968
<INTEREST-INCOME> 76,358
<OTHER-INCOME> 0
<EXPENSES-NET> (194,228)
<NET-INVESTMENT-INCOME> 71,098
<REALIZED-GAINS-CURRENT> 1,447,036
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (11,607)
<DISTRIBUTIONS-OF-GAINS> (189,184)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,155,865
<NUMBER-OF-SHARES-REDEEMED> (973,289)
<SHARES-REINVESTED> 11,549
<NET-CHANGE-IN-ASSETS> 6,196,886
<ACCUMULATED-NII-PRIOR> 26,825
<ACCUMULATED-GAINS-PRIOR> 132,498
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 234,533
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<GROSS-EXPENSE> 348,645
<AVERAGE-NET-ASSETS> 15,463,573
<PER-SHARE-NAV-BEGIN> 15.39
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 3.13
<PER-SHARE-DIVIDEND> (0.01)
<PER-SHARE-DISTRIBUTIONS> (0.18)
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 000930948
<NAME> THE MONTGOMERY FUNDS-VARIABLE SERIES
<SERIES>
<NUMBER> 02
<NAME> EMERGING MARKETS PORTFOLIO
<MULTIPLIER> 1
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
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<OTHER-ITEMS-ASSETS> 3,970,792
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<SHARES-COMMON-PRIOR> 10,980,349
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 000930648
<NAME> THE MONTGOMERY FUNDS-VARIABLE SERIES
<SERIES>
<NUMBER> 04
<NAME> SMALL CAP OPPORTUNITIES
<MULTIPLIER> 1
<S> <C>
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<PERIOD-START> JAN-01-1999
<PERIOD-END> OCT-30-1999
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<INVESTMENTS-AT-VALUE> 1,898,000
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<OVERDISTRIBUTION-GAINS> 0
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</TABLE>
Report of Independent Accountants
To the Board of Trustees of
The Montgomery Funds III
In planning and performing our audits of the financial statements of The
Montgomery Variable Series: Growth Fund and The Montgomery Variable Series:
Emerging Markets Fund (constituting The Montgomery Funds III, hereafter
referred to as the "Funds") for the year ended December 31, 1999, we
considered their internal control, including control activities for
safeguarding securities, in order to determine our auditing procedures for
the purpose of expressing our opinion on the financial statements and to
comply with the requirments of Form N-SAR, not to provide assurance on
internal control
The management of the Funds is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs
of controls. Generally, controls that are relevant to an audit pertain to
the entity's objective of preparing financial statements for external
purposes that are fairly presented in conformity with generally accepted
accounting principles. Those controls include the safeguarding of assets
against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or fraud may
occur and not be detected. Also, projection of any evaluation of internal
control to future periods is subject to the risk that controls may become
inadequate because of changes in conditions or that the effectiveness of
their design and operation may deteriorate.
Our consideration of internal control would not necessarily disclose all
matters in internal control that might be material weaknesses under
standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or
operation of one or more of the internal control components does not reduce
to a relatively low level the risk that misstatements caused by error or
fraud in amounts that would be material in relation to the financial
statements being audited and not be detected within
a timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving internal control
and its operation, including controls for safeguarding securities, that we
consider to be material weaknesses as defined above as of December 31, 1999.
This report is intended solely for the information and use of the Board of
Trustees, management and the Securities and Exchange Commission and is not
intended to be and should not be used by anyone other than these specified
parties.
PricewaterhouseCoopers LLP
San Francisco, California
February 4, 2000
