UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
o | Preliminary Proxy Statement |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)2) |
x | Definitive Proxy Statement |
o | Definitive Additional Materials |
o | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
Montgomery Street Income Securities, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
| 1) | Title of each class of securities to which transaction applies: |
| 2) | Aggregate number of securities to which transaction applies: |
| 3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| 4) | Proposed maximum aggregate value of transaction: |
| 5) | Total fee paid: |
o | Fee paid previously with preliminary materials. |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| 1) | Amount Previously Paid: |
| 2) | Form, Schedule or Registration Statement No.: |
| 3) | Filing Party: |
| 4) | Date Filed: |
Annual Meeting
of Stockholders
and
Proxy Statement
Richard J. Bradshaw | Mark D.Nerud | ||
Chairman of the Board of Directors | President and Chief Executive Officer |
Notice of Annual Meeting of Stockholders
May 10, 2007
c/o Jackson Fund Services
225 West Wacker Drive, Suite 950
Chicago, Illinois 60606
(866) 255-1935
RECORD DATE: April 23, 2007 | MAILING DATE: May 10, 2007 |
• | Providing written notice to the Fund at the following address: |
Montgomery Street Income Securities, Inc. c/o Proxy Tabulator P.O. Box 18011 Hauppauge, NY 11788-8811; |
• | Giving a later proxy; or |
• | Attending the Annual Meeting and voting your shares in person. |
Meeting. Proxies that are marked to withhold voting, as well as proxies returned by brokers or others who have not received voting instructions and do not have discretion to vote for their clients (“broker non-votes”), will be counted towards this quorum. Withheld votes and broker non-votes will not be counted in favor of, but will have no other effect on, the election of Directors. Broker non-votes are not likely to be relevant to the Annual Meeting because the New York Stock Exchange currently considers an uncontested election of Directors to be routine and within the discretion of brokers to vote if customer instructions are not received.
Position | Amount of Shares Beneficially Owned in the Fund(1) | Dollar Range of Equity Securities in the Fund | Aggregate Dollar Range of Equity Securities in all Funds Overseen in Family of Investment Companies(2) | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Independent Directors | |||||||||||||||||||
Richard J. Bradshaw | Chairman and Director | 9,550 | (3) | Over $100,000 | Over $100,000 | ||||||||||||||
Victor L. Hymes | Director | 6,534 | (4) | Over $100,000 | Over $100,000 | ||||||||||||||
John T. Packard | Director | 1,500 | $ | 10,001–$50,000 | $ | 10,001–$50,000 | |||||||||||||
Wendell G. Van Auken | Director | 33,306 | (5) | Over $100,000 | Over $100,000 | ||||||||||||||
James C. Van Horne | Director | 2,500 | $ | 10,001–$50,000 | $ | 10,001–$50,000 | |||||||||||||
Executive Officers | |||||||||||||||||||
Mark D. Nerud | President, Chief Executive Officer and Principal Executive Officer | 0 | 0 | 0 | |||||||||||||||
Daniel W. Koors | Treasurer, Chief Financial Officer and Principal Financial Officer | 0 | 0 | 0 | |||||||||||||||
All Directors and Executive Officers as a Group | 53,390 | (3),(4),(5) | Over $100,000 |
(1) | The information as to beneficial ownership is based on statements furnished to the Fund by each Director, nominee and executive officer. Unless otherwise indicated, each person has sole voting and investment power over the shares reported. |
(2) | Consists of all funds overseen by the Director, managed by Hartford Investment Management Company, and holding themselves out as related for purposes of investment and investor services. The Fund is the only fund meeting these criteria. |
(3) | Includes 6,520 shares held with sole voting and investment power and 3,030 shares held with shared voting and investment power. |
(4) | Includes 5,839 shares held with sole voting and investment power and 695 shares held with shared voting and investment power. |
(5) | Includes 32,206 shares held with sole voting and investment power and 1,100 shares held with shared voting and investment power. |
Nominee (Age) | Principal Occupation or Employment during Past Five Years and Other Directorships in Publicly Held Companies | Year First Became a Director of the Fund | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Independent Directors | ||||||||||
Richard J. Bradshaw (58) | Executive Director, Cooley Godward Kronish LLP (law firm). Chairman of the Board of Directors of the Fund (since 2004). | 1991 | ||||||||
Victor L. Hymes (49) | Chief Executive Officer and Chief Investment Officer of Legato Capital Management LLC (investment adviser) (2004 – present). Formerly, Chief Operating Officer and Chief Investment Officer of Cazenave Partners, LLC (investment adviser) (2003 – 2004); Managing Director, Zurich Scudder Investments, Inc. (a former adviser of the Fund) (1997 – 2002); and President of the Fund (2000 – 2002). | 2005 | ||||||||
John T. Packard (73) | Executive Vice President of Mt. Eden Investment Advisors LLC (since 2005). Formerly, Managing Director, Weiss, Peck & Greer LLC (investment adviser and broker-dealer) (2002 – 2004); Advisory Managing Director of the same firm (2000 – 2002); Advisory Managing Director, Zurich Scudder Investments, Inc. (a former adviser of the Fund) (1999 – 2000); Managing Director of the same firm (1985 – 1998); and President of the Fund (1988 – 2000). | 2001 | ||||||||
Wendell G. Van Auken (62) | Managing Director of several venture capital funds affiliated with Mayfield Fund. Directorship: Advent Software (portfolio software company). | 1994 | ||||||||
James C. Van Horne (71) | A.P. Giannini Professor of Finance, Graduate School of Business, Stanford University. Directorship: Synnex Corporation (information technology distributor). Formerly, Chairman of the Board of the Fund (1991 – 2004). | 1985 |
Independent Director, if elected, was selected and nominated solely by the current Independent Directors of the Fund.
of the current Audit Committee Charter is attached to this Proxy Statement as Exhibit A.
John T. Packard
James C. Van Horne
Fiscal Year | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 | $ | 41,500 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
2006 | $ | 43,000 | $ | 0 | $ | 6,000 | (1) | $ | 0 |
(1) | Tax Fees for 2006 represent fees for services rendered to the Fund for tax return preparation and review of income and capital gains distributions. |
Fiscal Year | Audit-Related Fees | Tax Fees | All Other Fees | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005 | $ | 268,900 | (1) | $ | 197,605 | (2) | $ | 104,635 | (3) | |||||
2006 | $ | 62,552 | (4) | $ | 0 | $ | 0 |
(1) | Deutsche reported that Audit-Related Fees for 2005 were the aggregate fees billed for services in connection with the assessment of internal controls and additional related procedures that are reasonably related to the performance of audits or the review of financial statements of Adviser Entities. |
(2) | Deutsche reported that Tax Fees for 2005 were the aggregate fees billed to Adviser Entities for professional services for tax advice, tax compliance, and tax planning. |
(3) | Deutsche reported that All Other Fees for 2005 were the aggregate fees billed to Adviser Entities for services in connection with risk management and process improvement initiatives. |
(4) | Audit-Related Fees for 2006 included fees for an attestation engagement relating to Hartford’s performance presentations. |
approved by the Audit Committee was compatible with maintaining PwC’s and Deloitte’s independence.
Name (Age) | | Position with the Fund and Principal Occupation or Employment During the Past Five Years | | Year First Became an Officer(1) | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Mark D. Nerud (40) | President, Chief Executive Officer, and Principal Executive Officer. President of Jackson National Asset Management, LLC (“JNAM”) and Jackson Fund Services (“JFS”) (2006 – present); President and Trustee/Manager of 92 portfolios comprising the JNL Series Trust, JNL Investors Series Trust, JNL Variable Fund LLC, and JNLNY Variable Fund I LLC (2007 – present); Chief Financial Officer of JNAM and JFS (2000 – 2006); Managing Board Member of JNAM (2000 – 2003 and 2007 – present); Vice President (1999 – 2006), Treasurer and Chief Financial Officer of other investment companies advised by JNAM (2002 – 2006); Vice President — Fund Accounting & Administration of Jackson National Life Insurance Company (“Jackson”) (2000 – present). | 2006 | ||||||||
Daniel W. Koors (36) | Treasurer, Chief Financial Officer, and Principal Financial Officer. Vice President and Chief Financial Officer of JNAM and JFS (2007 – present); Vice President, Treasurer and Chief Financial Officer of other investment companies advised by JNAM (2006 – present); Assistant Treasurer of other investment companies advised by JNAM (2006); Assistant Vice President — Fund Administration of Jackson (2006 – present); Partner of Deloitte & Touche LLP (2003 – 2006); Senior Manager of the same firm (2000 – 2003). | 2006 |
Name (Age) | | Position with the Fund and Principal Occupation or Employment During the Past Five Years | | Year First Became an Officer(1) | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Susan S. Rhee (35) | Secretary and Chief Legal Officer. Secretary of JNAM (2000 – present); Vice President, Counsel, and Secretary of other investment companies advised by JNAM (2004 – present); Assistant Vice President of Jackson (2003 – present); Associate General Counsel of Jackson (2001 – present). | 2006 | ||||||||
Toni M. Bugni (33) | Chief Compliance Officer. Compliance Manager of JFS (2006 – present); Legal Assistant, MetLife Advisers, LLC (2004 – 2006); Regulatory Administration Senior Specialist, PFPC Inc. (2003 – 2004); Reporting and Compliance Senior Specialist, Investors Bank & Trust (2001 – 2003). | 2006 |
(1) | All officers are appointed annually by, and serve at the discretion of, the Board of Directors. |
Column (1): | Each Director who received compensation from the Fund. |
Column (2): | Aggregate compensation received by a Director from the Fund. |
Column (3): | Total compensation received by a Director from the Fund and Fund Complex. No member of the Board serves as a Director for any other fund in the Fund Complex nor does any Director receive any pension or retirement benefits from the Fund. |
For the Fiscal Year Ended December 31, 2006
(1) | | (2) | | (3) | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Name of Director and Position | | Aggregate Compensation from the Fund | | Total Compensation from the Fund and the Fund Complex | ||||||
Independent Directors | ||||||||||
Richard J. Bradshaw, Chairman of the Board of Directors and Director | $ | 42,500 | $ | 42,500 | ||||||
Victor L. Hymes, Valuation Committee Chair and Director | $ | 22,250 | $ | 22,250 | ||||||
John T. Packard, Director | $ | 24,500 | $ | 24,500 | ||||||
Wendell G. Van Auken, Audit Committee Chair and Director | $ | 29,250 | $ | 29,250 | ||||||
James C. Van Horne, Director | $ | 25,000 | $ | 25,000 |
Susan S. Rhee
Secretary
May 10, 2007
(“Fund”)
1. | Organization. The Committee shall be composed of three or more members of the Fund’s Board of Directors who are not “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the Fund, who do not accept directly or indirectly any consulting, advisory or other compensatory fees from the Fund or from the Fund’s investment adviser or its affiliates (except fees for services as a Director), and who satisfy any requirements with respect to independence, expertise and/or availability established by the exchange on which the Fund’s shares are traded. |
2. | Meetings. The Committee shall meet on a regular basis as necessary or appropriate and is empowered to hold special meetings as circumstances require. |
3. | Committee Purposes. The purposes of the Committee are as follows: |
(a) | To review the Fund’s accounting and financial reporting policies and practices, the Fund’s internal controls over financial reporting (including disclosure controls and procedures) and, as the Committee deems appropriate, the internal controls over financial reporting of certain Fund service providers; |
(b) | To review the quality, objectivity and integrity of the Fund’s financial statements and the independent audit thereof; |
(c) | To review the Fund’s compliance with legal and regulatory requirements that relate to the Fund’s accounting and financial reporting, internal controls over financial reporting, and independent audits; |
(d) | To exercise direct responsibility for the appointment, compensation, retention and oversight of the work performed by the Fund’s independent auditors for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for |
the Fund, and, in connection therewith, to review the independent auditors’ qualifications and independence; and |
(e) | To act as a liaison between the independent auditors and the full Board of Directors; and |
(f) | To prepare an audit committee report to be included in the Fund’s annual proxy statement. |
4. | Duties and Powers. To carry out the purposes specified in Paragraph 3 above, the Committee shall have the following duties and powers: |
(a) | To approve the selection, retention or termination of the independent auditors, to review and approve the terms and scope of the annual audit of the Fund and any special audits, and to approve the fees and other compensation to be paid to the independent auditors by or on behalf of the Fund; |
(b) | To request and evaluate on an annual basis a formal written statement from the independent auditors delineating all significant relationships that the independent auditors have with the Fund and the investment adviser and its affiliates, and to consider whether the provision of non-audit services rendered by the independent auditors to the Fund and the Fund’s investment adviser and its affiliates is compatible with the independent auditors’ independence; |
(c) | To obtain and review, at least annually, a report by the independent auditors describing: the audit firm’s internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the audit firm, and any steps taken to deal with any such issues; and (to assess the auditor’s independence) all relationships between the independent auditor and the Fund; |
(d) | (i) To review and discuss with management and the independent auditors the Fund’s annual audited financial statements, including management’s discussion of the Fund’s performance, and discuss any matters of concern relating thereto, including any adjustments |
to such statements recommended by the auditors, regulatory and tax compliance matters considered in the preparation of the financial statements, or other results of said audit(s); (ii) to review with the independent auditor any audit problems or difficulties and management’s response; (iii) to consider the auditors’ comments with respect to the Fund’s financial policies and procedures, internal accounting controls and disclosure controls and procedures, and management’s responses thereto; (iv) to review the form of the opinion the auditors propose to render to the Board of Directors and the shareholders of the Fund; (v) to review any other reports, representations or communications from the independent auditors regarding matters within the scope of the Committee’s responsibilities under this Charter; (vi) as the Committee or the Chairman of the Committee, pursuant to delegation, may deem necessary, to review and discuss with management and/or the independent auditors the Fund’s semi-annual and quarterly financial statements; and (vii) to consider, at the Committee’s discretion, such other information that the Committee believes may be relevant to the audit and the Fund’s financial policies and procedures, internal accounting controls and disclosure controls and procedures; |
(e) | To determine whether to recommend to the Board of Directors that the Fund’s audited financial statements be included in the Annual Report and to perform such additional functions as may be required under rules and regulations promulgated by the Securities and Exchange Commission and the New York Stock Exchange; |
(f) | To meet separately, periodically, with management and with the independent auditors to discuss any matters that the Committee or such parties believe necessary or appropriate to raise, and to review and consider any reports or communications from any such parties relating to the operations of the Fund; |
(g) | To establish procedures for the approval, in advance, of the engagement of the independent auditors to provide (i) audit or permissible non-audit services to the Fund, and (ii) non-audit services to the Fund’s investment adviser (and any affiliate that provides services to the Fund) that relate directly to the Fund’s operations and financial reporting; |
(h) | To review, annually, with Fund management and the independent auditors, the Fund’s disclosure controls and procedures, a report by Fund management covering any Form N-CSR filed, and any required certification of such filing, along with the results of Fund |
management’s most recent evaluation of the Fund’s disclosure controls and procedures; |
(i) | To establish procedures for the receipt, retention and treatment of complaints received by the Fund regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by officers of the Fund or employees of the investment adviser, administrator, principal underwriter, or any other provider of accounting related services to the Fund of concerns regarding suspected fraud of any type related to the Fund, including without limitation questionable accounting or auditing matters; and |
(j) | To report its activities to the full Board of Directors on a regular basis and to make such recommendations with respect to the above and other matters as the Committee may deem necessary or appropriate. |
5. | Other Responsibilities. The Committee shall (i) discuss generally the Fund’s policies with respect to risk assessment and risk management; (ii) set clear hiring policies for the Fund and the investment adviser with respect to employees or former employees of the independent auditors; (iii) discuss generally the Fund’s earnings press releases, as well as any financial information and earnings guidance provided to analysts and rating agencies; and (iv) review, annually, the performance of the Committee. |
6. | Role of Independent Auditors. The Fund’s independent auditors are ultimately accountable to the Committee and must report directly to the Committee. |
7. | Resources and Authority. The Committee shall have the resources and authority appropriate for purposes of discharging its responsibilities under this Charter, including the authority to engage independent counsel and/or to retain, at the Fund’s expense, such experts or consultants as the Committee deems necessary or appropriate to fulfill such responsibilities. |
8. | Periodic Review of Charter. The Committee shall review this Charter at least annually and recommend any changes to the full Board of Directors. |
Revised: February 15, 2007
THE FUND OFFERS STOCKHOLDERS OF RECORD FOUR VOTING OPTIONS
Read your proxy statement and have it at hand when voting.
VOTE ON THE INTERNET Log on to: https://vote.proxy-direct.com Follow the on-screen instructions available 24 hours (until 5:00 p.m. Eastern time on July 11, 2007) | VOTE BY PHONE Call 1-866-241-6192 Follow the recorded instructions available 24 hours (until 5:00 p.m. Eastern time on July 11, 2007) | VOTE BY MAIL Vote, sign and date this Proxy Card and return in the postage-paid envelope | VOTE IN PERSON Attend Shareholder Meeting 101 California St., 5th Floor San Francisco, CA 94111 on July 12, 2007 at 10:00 a.m. (Pacific time) |
6DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED ONLY IF YOU ARE VOTING BY MAIL6
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE DIRECTOR NOMINEES NAMED BELOW.
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK. Example: <
1. | ELECTION OF DIRECTORS | FOR | WITHHOLD | FOR ALL | ||||||
ALL | ALL | EXCEPT | ||||||||
01. Richard J. Bradshaw | 02. Victor L. Hymes | 03. John T. Packard | ||||||||
04. Wendell G. Van Auken | 05. James C. Van Horne | ¨ | ¨ | ¨ | ||||||
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark the box “FOR ALL EXCEPT” and write the nominee’s number on the line provided below. | |||||
The proxies are authorized to vote in their discretion on any other business that may properly come before the Annual Meeting and any adjournments or postponements thereof. | |||||
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. | |||||
Signature | |||||
Signature of joint owner, if any | |||||
Date | MST_17707 |
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
MST_17707
6TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE6
MONTGOMERY STREET INCOME SECURITIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS – JULY 12, 2007
The undersigned stockholder hereby appoints Mark D. Nerud and Toni M. Bugni as proxies of the undersigned, with full power of substitution to each, and hereby authorizes each of them to represent the undersigned and to vote at the Annual Meeting of Stockholders of Montgomery Street Income Securities, Inc. (the “Fund”) to be held at 101 California Street, 5th Floor, San Francisco, California, on Thursday, July 12, 2007 at 10:00 a.m. (Pacific time) (the “Annual Meeting”) and at any and all adjournments thereof, all shares of the Fund which the undersigned would be entitled to vote if personally present, in accordance with the following instructions.
The undersigned hereby revokes any and all proxies with respect to such shares previously given by the undersigned. The undersigned acknowledges receipt of the Proxy Statement relating to the Annual Meeting.
This proxy may be revoked at any time prior to its exercise at the Annual Meeting by execution of a subsequent proxy card, by written notice to the Fund, c/o Proxy Tabulator, P.O. Box 18011, Hauppauge, NY 11788-8811, or by voting at the Annual Meeting.
This proxy, if properly executed, will be voted in the manner directed. If properly executed and no instructions are indicated, the undersigned’s vote will be cast FOR the election of the Director nominees named herein.
PLEASE BE SURE TO MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
MST_17707