As filed with the Securities and Exchange Commission on October 21, 1997.
Registration Nos.: 333-26223
811-8199
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. __ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 1 [X]
MONUMENT SERIES FUND, INC.
(Exact Name of Registrant As Specified in Charter)
8377 Cherry Lane, Laurel, Maryland 20707 - 4831
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 301-604-1626
DAVID A. KUGLER
President
The Monument Funds Group, Inc.
8377 Cherry Lane
Laurel, Maryland 20707 - 4831
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
The Registrant has registered an indefinite number or amount of the securities
of each of its two series under the Securities Act of 1933 pursuant to Rule
24f-2 under the Investment Company Act of 1940 on April 30, 1997. The
Registrant intends to file a Rule 24f-2 Notice by March 2, 1998.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
<TABLE>
Cross-reference Sheet Required by
Rule 495 under the Securities Act of 1933
<CAPTION>
Part A
Form N-1A Item No. Caption in Prospectus
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<C> <S>
1. Cover Page Cover Page
2. Synopsis Table of Fees and Expenses;
Summary
3. Condensed Financial Information Performance
4. General Description of Registrant General Information; The Funds; Special
Risk Considerations
5. Management of the Fund Management; General Information
5A. Management's Discussion of Fund Not Applicable
Performance
6. Capital Stock and Other General Information; Dividends and
Securities Distributions; Tax Considerations; Buying,
Redeeming and Exchanging Shares; Cover
Page
7. Purchase of Securities Buying, Redeeming, and Exchanging Shares;
Being Offered Services to Help You Manage Your Account
8. Redemption or Repurchase Buying, Redeeming, and Exchanging Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
<TABLE>
<CAPTION>
Part B Caption in
Form N-1A Item No. Statement of Additional Information
------------------ -----------------------------------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not applicable
13. Investment Objectives and Policies Investment Policies; Potential
Risks; Investment Restrictions
</TABLE>
i
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<TABLE>
<CAPTION>
Part B Caption in
Form N-1A Item No. Statement of Additional Information
------------------ -----------------------------------
<S> <C>
14. Management of the Fund Directors and Officers
15. Control Persons and Principal Holders of Principal Holders of Securities
Securities
16. Investment Advisory and Other Services Directors and Officers; Investment Advisory
and Other Services; The Company's
Principal Underwriter
17. Brokerage Allocation and Other Portfolio Transactions and Brokerage
Practices
18. Capital Stock and Other Securities Further Description of the Company's Shares
19. Purchase, Redemption and Pricing of Buying, Redeeming, and Exchanging Shares;
Securities Being Offered Valuation of Fund Shares
20. Tax Status Additional Information on Distributions
and Taxes
21. Underwriters The Company's Principal Underwriter
22. Calculation of Performance Data Performance Information
23. Financial Statements Not Applicable
</TABLE>
Part C
------
Information required to be set forth in Part C is set forth under the
appropriate item, so numbered, in Part C of the Registration Statement.
<PAGE>
MONUMENT SERIES FUND, INC.
MONUMENT WASHINGTON REGIONAL GROWTH FUND
MONUMENT WASHINGTON REGIONAL AGGRESSIVE GROWTH FUND
PROSPECTUS DATED __________, 1997
This Prospectus describes the Monument Washington Regional Growth Fund and the
Monument Washington Regional Aggressive Growth Fund (each, a "Fund";
collectively, the "Funds"). Each Fund represents a separate series of shares
of common stock of the Monument Series Fund, Inc. (the "Company"), a newly
organized mutual fund.
MONUMENT WASHINGTON REGIONAL GROWTH FUND ("GROWTH FUND") seeks to maximize
long-term appreciation of capital, by investing primarily in a non-diversified
portfolio of equity securities of Washington regional area companies with
market capitalizations of $2 billion or more at the time of purchase.
MONUMENT WASHINGTON REGIONAL AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH FUND")
seeks to maximize long-term appreciation of capital, by investing primarily in
a non-diversified portfolio of equity securities of Washington regional area
companies with market capitalizations of less than $2 billion at the time of
purchase.
As used herein, the phrase "Washington regional area companies" includes
companies that are organized or headquartered in, have a major place of
business in, and/or derive 50% of their revenues or operating earnings from,
Washington, D.C., Maryland or Virginia.
This Prospectus sets forth concisely the information about the Company that
you should know before investing. Please read it and retain it for future
reference. For more information about the Funds, you may wish to refer to the
Company's Statement of Additional Information ("SAI"), dated __________, 1997,
which is on file with the Securities and Exchange Commission ("SEC") and
incorporated herein by reference. You can obtain a free copy of the SAI upon
request by writing to "Monument," c/o National Financial Data Services, Inc.
("NFDS"), at P.O. Box 41332, Kansas City, MO 64141-6426 or by calling
1-888-520-9950. You may also direct inquiries regarding the Funds to the same
address or telephone number.
The SEC maintains a web cite (http://www.sec.gov) that contains the SAI,
material incorporated by reference, and other information regarding
registrants that file electronically with the SEC.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THE SECURITIES DESCRIBED IN THIS PROSPECTUS, OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
THE COMPANY'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE FUNDS' SHARES ARE NOT FEDERALLY INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE IS NO GUARANTEE THAT THE
FUNDS WILL ACHIEVE THEIR INVESTMENT OBJECTIVES. SHARES OF THE FUNDS INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
[COVER PAGE]
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
DESCRIPTION PAGE
<S> <C>
Table of Fees and Expenses................................................. 3
Summary.................................................................... 4
Performance................................................................ 5
The Funds.................................................................. 6
Investment Objectives and Programs.................................... 6
Investment Policies and Restrictions.................................. 8
Special Risk Considerations................................................ 10
Management................................................................. 11
Tax Considerations......................................................... 13
Dividends and Distributions................................................ 14
Buying, Redeeming, and Exchanging Shares................................... 15
Buying Fund Shares.................................................... 15
Redeeming and Exchanging Fund Shares.................................. 16
Waiver of Sales Charges............................................... 18
Rule 12b-1 Plan....................................................... 19
Proper Form........................................................... 19
Services to Help You Manage Your Account................................... 20
General Information........................................................ 21
</TABLE>
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TABLE OF FEES AND EXPENSES
The following table is designed to help you understand the various fees and
expenses that you may bear, both directly and indirectly, by investing in the
Funds.
<TABLE>
<CAPTION>
Aggressive
Growth Fund Growth Fund
Shareholder Transaction Expenses ------------ -----------
--------------------------------
<S> <C> <C>
Maximum Sales Charge (as a percentage
of offering price).............................................. 3.00% 3.00%
Maximum Sales Charge Imposed on Purchases (1)... 1.50%
Maximum Deferred Sales Charge (2)................1.50%
Maximum sales charge imposed on
reinvested income dividends and distributions.............. None None
Redemption Fees.............................................. None None
Exchange Fee................................................. None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Advisory Fee................................................. 1.00% 1.00%
12b-1 Fees (3)............................................... None (3) None (3)
Other Expenses (4)........................................... 0.40% (4) 0.40% (4)
----- -----
Total Fund Operating Expenses (4).......................... 1.40% (4) 1.40% (4)
-----------------------
</TABLE>
(1) Reduced rates apply to purchase payments over $50,000. See "Public
Offering Price" and "Rights of Accumulation."
(2) Does not apply to redemptions of Fund shares held for 12 months or
more from the date of purchase. See "Deferred Sales Charge."
(3) Each Fund has approved a Plan of Distribution providing for the
payment of a maximum distribution fee, equal to 0.35% of its average daily net
assets, to Monument Distributors, Inc. the principal underwriter for each
Fund. See "Rule 12b-1 Plan." Distributors has agreed to waive the distribution
fee for the next 12 months. Long-term investors may pay more than the economic
equivalent of the maximum front end sales charges permitted by the National
Association of Securities Dealers.
(4) Other expenses for each Fund are based on estimated amounts for the
current fiscal year.
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EXAMPLES. You would pay the following expenses on a $1,000 investment in
shares of a Fund, assuming (a) a 5% annual return and (b) redemption at the
end of each time period:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Growth Fund $44.04 $58.65
Aggressive Growth Fund $44.04 $58.65
</TABLE>
You would pay the following expenses on the same investment, assuming no
redemption:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Growth Fund $29.04 $58.65
Aggressive Growth Fund $29.04 $58.65
</TABLE>
The above examples assume payment of the maximum initial sales charge of 1.50%
at the time of purchase, and payment of the deferred sales charge of 1.50% as
of the last day of the first year. Shares held for 12 months or more are not
subject to the deferred sales charge. The sales charge varies depending upon
the amount of Fund shares that an investor purchases. Accordingly, your actual
expenses may vary.
THE ABOVE EXAMPLES ARE NOT REPRESENTATIVE OF A PARTICULAR FUND'S ACTUAL OR
FUTURE EXPENSES OR PERFORMANCE, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN.
THE EXAMPLES ASSUME REINVESTMENT OF ALL INCOME DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS AND A CONSTANT LEVEL OF TOTAL FUND OPERATING EXPENSES FOR EACH
YEAR.
SUMMARY
THE COMPANY. The Company is registered with the SEC as an open-end management
investment company. The Company currently offers shares of two Funds, each
with distinct investment objectives and investment strategies. See "The
Funds."
THE ADVISOR. Monument Advisors, Ltd. ("Monument Advisors" or "Advisors")
serves as each Fund's investment advisor and provides overall management of
the Company's business affairs. See "Management."
THE DISTRIBUTOR. Monument Distributors, Inc. ("Monument Distributors" or
"Distributors") an affiliate of Monument Advisors, serves as each Fund's
principal underwriter. See "Buying, Redeeming, and Exchanging Shares."
SHARE TRANSACTIONS. You can purchase and redeem Fund shares, or exchange
shares of one Fund for those of another, by contacting NFDS, the agent of the
Company's transfer and dividend disbursing agent, State Street Bank and Trust
Company ("State Street"), at the address
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set out on the cover page of this Prospectus or by telephoning 1-888-520-9950.
A sales charge may apply to your purchase or redemption. See "Buying,
Redeeming, and Exchanging Shares."
Initial investments in a Fund must be at least $2500 and additional
investments must be at least $100. A lower minimum applies to initial
investments made through tax-qualified retirement plans and accounts
established with an Automatic Investment Plan. See "Minimum Investments."
SUITABILITY FOR INVESTORS. Before investing in a Fund, you should consider
whether the Fund suits your financial objectives. You may wish to consider
such factors as the amount of your purchases, the length of time you expect to
hold Fund shares, the risk that the value of any mutual fund may decline, the
risks of investing in a geographically focused, non-diversified mutual fund
with a newly organized investment adviser, and whether you desire dividend
income. You should not rely on the Funds for short-term financial needs or for
short-term investment in the stock market. The Funds are intended to be part
of a well-balanced, comprehensive investment program. See "Special Risk
Considerations."
DISTRIBUTIONS. Each Fund currently intends to declare and pay dividends from
net investment income, if any, on an annual basis. Each Fund currently intends
to make distributions of realized capital gains, if any, on an annual basis.
You may reinvest income dividends and capital gain distributions that you
receive in additional Fund shares at current net asset value (i.e., without
payment of a sales charge). See "Dividends and Distributions" and "Tax
Considerations."
PERFORMANCE
Each Fund may, from time to time, include quotations of its total return in
advertisements, sales literature, and shareholder reports. The TOTAL RETURN of
a Fund refers to the percentage change in value of a hypothetical investment
in the Fund, including the deduction of a proportional share of Fund expenses,
and assuming the reinvestment of all income dividends and capital gain
distributions during the periods shown.
CUMULATIVE TOTAL RETURN reflects the total change in value of an investment in
a Fund over a specified period, including, for example, periods of one, five,
and ten years, or the period since the Fund's inception through a stated
ending date.
AVERAGE ANNUAL TOTAL RETURN is the constant rate of return that would produce
the cumulative total return over a specified period, if compounded annually.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN A FUND'S RETURN,
YOU SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR
RESULTS. Average annual total return figures are calculated according to a
formula prescribed by the SEC.
5
<PAGE>
To illustrate the components of overall performance, a Fund may separate its
cumulative and average annual total return information into income results and
capital gain or loss. To illustrate the effect of various charge assumptions,
a Fund may present its performance information without including the effect of
one or more sales charges, which tends to elevate a Fund's total return
figures as presented. Additionally, Monument Advisors may, from time to time,
assume and reimburse certain expenses of a Fund, thereby increasing that
Fund's total return.
Each Fund may compare its performance in advertisements, sales literature, and
shareholder reports to widely recognized indices and to other mutual funds.
See "Performance Information" in the SAI for more details.
The performance of each Fund will vary from time to time, depending on
variables such as economic and market conditions, and, to a lesser degree,
Fund operating expenses. Accordingly, past results are not necessarily
indicative of future results. Your investment in a Fund is not insured or
guaranteed. You should consider these factors before making an investment in a
Fund.
THE FUNDS
This section describes the investment objectives, and investment policies and
restrictions, of each Fund. Each Fund's investment objective is a fundamental
policy, which means that it can not be changed without the approval of a
majority of that Fund's outstanding shares (within the meaning of the
Investment Company Act of 1940 ("1940 Act")). Each Fund's investment policies
and restrictions are not fundamental, which means that, unless otherwise
required by law, they can be changed by the Company's Board of Directors
("Board of Directors" or "Directors") without shareholder approval. As with
any mutual fund, there can be no assurance that a Fund will meet its
investment objective.
INVESTMENT OBJECTIVES AND PROGRAMS
MONUMENT WASHINGTON REGIONAL GROWTH FUND. The Fund's investment objective is
to maximize long-term appreciation of capital. The Fund seeks to achieve its
objective by investing, under normal circumstances, primarily (i.e., at least
65% of its total assets) in equity securities of Washington regional area
companies with market capitalizations of $2 billion or more at the time of
purchase. Equity securities include common stocks, preferred stocks, warrants,
and securities convertible into or exchangeable for common stocks
("convertible securities").
When selecting investments for the Fund, Advisors will seek to identify
Washington regional area companies that it believes possess characteristics
that will lead to long-term appreciation of capital. These characteristics may
include, without limitation, the following: a history of consistent earnings
growth, leading or dominant market position in a growing industry, products
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or services that are in high or growing demand, and experienced and successful
management. Although the stocks in which the Fund may invest may sometimes pay
dividends, Advisors does not expect dividend income to be a primary criterion
for selection.
Although the Fund's emphasis will be on well-established companies, the Fund
also may invest in smaller companies of the type in which the Aggressive
Growth Fund may invest, although it will not invest in an issuer that has less
than three years continuous operation, including the operations of any
predecessor companies, if it would cause more than 5% of the Fund's total
assets to be invested in such issues. The securities of these companies
generally will be listed on national securities exchanges or traded in the
over-the-counter securities market ("OTC market").
For temporary defensive purposes, Advisors may invest up to 100% of the Fund's
assets in high quality, short-term debt instruments. In addition, the Fund
may, from time to time, invest a portion of its assets in cash or debt
securities when Advisors deems such positions advisable in light of economic
or market conditions. See "Investment Policies and Restrictions" for further
information on the types of investments that the Fund may make.
WASHINGTON REGIONAL AGGRESSIVE GROWTH FUND. The Fund's investment objective is
to maximize long-term appreciation of capital. The Fund seeks to achieve its
objective by investing, under normal circumstances, primarily (i.e., at least
65% of its total assets) in equity securities of Washington regional area
companies with market capitalizations of less than $2 billion at the time of
purchase.
When selecting investments for the Fund, Advisors will seek to identify
Washington regional area companies that it believes are likely to benefit from
new or innovative products, services or processes that are likely to enhance
the companies' prospects for future growth in earnings. Companies with these
characteristics are likely to be relatively unseasoned companies in new and
emerging industries. These companies generally will have no established
history of paying dividends, and dividend income, if any, is likely to be
incidental.
Although the Aggressive Growth Fund's emphasis will be on companies with
smaller market capitalizations than the companies in which Growth Fund will
primarily invest, the Fund intends to seek out growth companies suitable for
the Fund without regard to market capitalization. Accordingly, the Fund may
invest in well-established companies as well. The securities of these
companies may be listed on national securities exchanges or traded in the OTC
market.
For temporary defensive purposes, Advisors may invest up to 100% of the Fund's
assets in high quality, short-term debt instruments. In addition, the Fund
may, from time to time, invest a portion of its assets in cash or debt
securities when Advisors deems such positions advisable in light of economic
or market conditions. See "Investment Policies and Restrictions" for further
information on the types of investments that the Fund may make.
Because of its more aggressive investment program, you can expect this Fund to
be significantly more volatile than the Growth Fund.
7
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INVESTMENT POLICIES AND RESTRICTIONS
In pursuit of its investment objective, each Fund may invest in a variety of
securities and employ a variety of investment practices that comprise the
Fund's investment policies. The section below describes some of the types of
securities and investment practices that Advisors may use in its day-to-day
management of each Fund's assets. The section below also describes certain
restrictions applicable to each Fund's investments. See "Investment Policies"
and "Investment Restrictions" in the SAI for more information.
U.S. GOVERNMENT SECURITIES. Each Fund may invest in U.S. Government
securities, including, among other securities, U.S. Treasury obligations such
as Treasury Bills (maturities of one year or less) or Treasury Notes
(maturities of less than three years). The market value of U.S. Government
securities will fluctuate with changes in interest rate levels. Thus, if
interest rates increase from the time the security was purchased, the market
value of the security will decrease. Conversely, if interest rates decrease,
the market value of the security will increase.
WRITING COVERED CALL OPTIONS. Each Fund may write (sell) covered call options,
including those that trade in the OTC market, to increase its return (through
the receipt of premiums) or to provide a partial hedge against declines in the
market value of its portfolio securities. Neither Fund will engage in such
transactions for speculative purposes. A call option gives the purchaser the
right, and obligates the writer to sell, in return for a premium paid, a
particular security at a predetermined or "exercise" price during the period
of the option. A call option is "covered" if the writer owns the underlying
security that is the subject of the call option. Each Fund may write covered
call options on securities comprising no more than 25% of the value of each
Fund's net assets at the time of any writing. The writing of call options is
subject to risks, including the risk that the Fund will not be able to
participate in any appreciation in the value of the securities above the
exercise price. See "Investment Policies" in the SAI for more information.
ILLIQUID SECURITIES. Although each Fund may invest up to 15% of its net assets
in illiquid securities, each Fund presently intends to invest only up to 5% of
its net assets in such securities.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. Each Fund may
purchase securities on a "when-issued" basis, that is, delivery of and payment
for the securities is not fixed at the date of purchase, but is set after the
securities are issued (normally within forty-five days after the date of the
transaction). Each Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. A Fund will only make commitments to purchase
when-issued or delayed delivery securities with the intention of actually
acquiring such securities, but the Fund may sell these securities before the
settlement date if Advisors deems it advisable.
CONVERTIBLE SECURITIES. Each Fund may invest in bonds, notes, debentures,
preferred stocks and other securities that are convertible or that carry the
right to buy a certain amount of common stock of the same or a different
issuer within a specified period of time. A convertible security
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provides a fixed-income stream and the opportunity, through its conversion
feature, to participate in the capital appreciation resulting from a market
price advance in its underlying stock. As with a non-convertible fixed-income
security, a convertible security tends to increase in market value when
interest rates decline and decrease in value when interest rates rise. Like a
common stock, the value of a convertible security also tends to increase as
the market value of the underlying stock rises, and it tends to decrease as
the market value of the underlying stock declines. Because its value can be
influenced by both interest rate and market movements, a convertible security
generally is not as sensitive to interest rates as a similar fixed-income
security, nor is it as sensitive to changes in share price as its underlying
stock.
LOANS OF PORTFOLIO SECURITIES. Each Fund may lend its portfolio securities to
qualified securities dealers or other institutional investors, provided that
such loans do not exceed 10% of the value of the Fund's total assets at the
time of the most recent loan. The borrower must deposit with the Fund's
custodian collateral with an initial market value of at least 102% of the
initial market value of the securities loaned, including any accrued interest,
with the value of the collateral and loaned securities marked-to-market daily
to maintain collateral coverage of at least 100%. This collateral may consist
of cash, securities issued by the U.S. Government, its agencies or
instrumentalities, or irrevocable letters of credit. The lending of securities
is a common practice in the securities industry. The Funds may engage in
security loan arrangements with the primary objective of increasing the Fund's
income either through investing the cash collateral in short-term interest
bearing obligations or by receiving a loan premium from the borrower. Under
the securities loan agreement, as utilized by the Funds, the Funds continue to
be entitled to all dividends or interest on any loaned securities. As with any
extension of credit, there are risks of delay in recovery and loss of rights
in the collateral should the borrower of the security fail financially.
STOCK INDEX FUTURES CONTRACTS. Each Fund may enter into stock index futures
contracts. Neither Fund has a current intention of entering into a futures
contract if it would result in the obligations underlying all such instruments
exceeding 5% of net assets.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements. Neither
Fund has a current intention of entering into a repurchase agreement if it
would result in the obligations underlying all such instruments exceeding 5%
of net assets.
BORROWING. Each Fund may borrow money to meet redemption requests and for
other temporary or emergency purposes in an amount not exceeding 33 1/3% of
its total assets, including the amount borrowed (less liabilities other than
borrowings). While borrowings exceed 5% of a Fund's total assets, the Fund
will not make any additional investments.
OTHER INVESTMENT POLICIES AND RESTRICTIONS. The Funds have adopted a number of
additional investment restrictions that limit their activities to some extent.
Some of these restrictions may only be changed with shareholder approval. For
a list of these restrictions and more information about the Funds' investment
policies, see "Investment Policies" and "Investment Restrictions" in the SAI.
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PORTFOLIO TURNOVER. There are no limitations on the length of time that a Fund
must hold a portfolio security. A Fund may sell a portfolio security, and will
reinvest the proceeds, whenever Advisors deems such action prudent from the
viewpoint of a Fund's investment objective. A Fund's annual portfolio turnover
rate may vary significantly from year to year. A higher rate of portfolio
turnover may result in higher transaction costs, including brokerage
commissions. Also, to the extent that higher portfolio turnover results in a
higher rate of net realized capital gains to a Fund, the portion of a Fund's
distributions constituting taxable capital gains may increase. Advisors does
not expect the annual portfolio turnover rates for either Fund to exceed 120%.
SPECIAL RISK CONSIDERATIONS
When you own shares of a Fund, you not only have the ability to participate in
potential increases in share value, you also bear the risk that the value of
the Fund's shares may decline. This section discusses some of the special
risks associated with an investment in the Funds.
WASHINGTON REGIONAL AREA COMPANIES. Because each Fund intends to invest
primarily in Washington regional area companies, changes in the economic,
political, regulatory, and business environment in the Washington regional
area are likely to have a greater impact on the Funds than on mutual funds
whose investments are not likewise geographically focused.
SMALL COMPANIES. The Aggressive Growth Fund, and, to a lesser extent, the
Growth Fund, may invest in companies with small market capitalizations (i.e.,
less than $500 million) or companies that have relatively small revenues,
limited product lines, and a small share of the market for their products or
services (collectively, "small companies"). Small companies may lack depth of
management, they may be unable to internally generate funds necessary for
growth or potential development or to generate such funds through external
financing on favorable terms, and they may be developing or marketing new
products or services for which markets are not yet established and may never
become established. Due to these and other factors, small companies may suffer
significant losses, as well as realize substantial growth. Securities of small
companies present greater risks than securities of larger, more established
companies.
Historically, stocks of small companies have been more volatile than stocks of
larger companies and are, therefore, more speculative than investments in
larger companies. Among the reasons for the greater price volatility are the
less certain growth prospects of smaller companies, the lower degree of
liquidity in the markets for such stocks, and the greater sensitivity of small
companies to changing economic conditions. Besides exhibiting greater
volatility, small company stocks may, to a degree, fluctuate independently of
larger company stocks. Small company stocks may decline in price as large
company stocks rise, or rise in price as large company stocks decline. You
should therefore expect that the value of the Aggressive Growth Fund's shares
to be more volatile than the shares of a mutual fund, such as the Growth Fund,
that invests primarily in larger company stocks.
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TECHNOLOGY AND RESEARCH COMPANIES AND CURRENCY RISK. Consistent with its
investment objective, each Fund expects to invest a portion of its assets in
securities of companies involved in biological technologies, computing
technologies, and communication technologies (collectively, "technology
sectors"), and companies related to these industries. Typically, these
companies' products or services compete on a global, rather than a
predominately domestic or regional basis. The technology sectors historically
have been volatile and securities of companies in these sectors may be subject
to abrupt or erratic price movements. Advisors will seek to reduce such risks
through extensive research, and emphasis on more globally-competitive
companies. In addition, because these companies compete globally, the
securities of these companies may be subject to fluctuations in value due to
the effect of changes in the relative values of currencies on such companies'
businesses. The history of these markets reflect both decreases and increases
in worldwide currency valuations, and these may reoccur unpredictably in the
future.
DIVERSIFICATION. Each Fund is non-diversified under the 1940 Act, which means
that there is no restriction under the 1940 Act on how much each Fund may
invest in the securities of any one issuer. However, to qualify for tax
treatment as a regulated investment company under the Internal Revenue Code
("Code"), each Fund intends to comply, as of the end of each taxable quarter,
with certain diversification requirements imposed by the Code. Pursuant to
these requirements, each Fund will, among other things, limit its investments
in the securities of any one issuer (other than U.S. Government securities or
securities of other regulated investment companies) to no more than 25% of the
value of the Fund's total assets. In addition, each Fund, with respect to 50%
of its total assets, will limit its investments in the securities of any
issuer to 5% of the Fund's total assets, and will not purchase more than 10%
of the outstanding voting securities of any one issuer. Nevertheless, as a
general matter, the Funds may be more susceptible than a diversified mutual
fund to the effects of adverse economic, political or regulatory developments
affecting a single issuer or industry sector in which the Funds may maintain
investments.
EXPERIENCE. Monument Advisors is a newly organized investment adviser managing
the portfolio investments of qualified individuals, retirement plans, and
trusts. Monument Advisors had no previous experience in advising a mutual
fund, prior to advising the Funds. David A. Kugler, President of the Company,
and Alexander C. Cheung, an employee of Monument Advisors and portfolio
manager of each Fund, have served, respectively, as financial consultant to
individual investors and investment adviser to certain management accounts.
MANAGEMENT
BOARD OF DIRECTORS. The Board of Directors is responsible for managing each
Fund's business affairs.
INVESTMENT ADVISOR. Monument Advisors serves as the investment advisor to each
Fund pursuant to an investment advisory agreement, dated __________, 1997
("Advisory
11
<PAGE>
Agreement"). Subject to the supervision of the Board of Directors, Advisors is
responsible under the Advisory Agreement for selecting and managing each
Fund's portfolio investments in accordance with each Fund's investment
objective, policies and restrictions. Advisors also is responsible for placing
orders for the purchase and sale of each Fund's investments with broker-
dealers selected by Advisors. In addition, pursuant to the Advisory Agreement,
Advisors provides overall management of the Company's business affairs. Under
the Advisory Agreement, Advisors has, among other things, agreed to render
regular reports to the Board of Directors regarding its investment decisions
and brokerage allocation practices for each Fund, to assist each Fund's
custodian in valuing portfolio securities and computing each Fund's net asset
value, and to furnish each Fund with the assistance, cooperation, and
information necessary for the Fund to meet various legal requirements
regarding registration and reporting. See "Investment Advisory and Other
Services" in the SAI for further information.
Monument Advisors, located at 8377 Cherry Lane, Laurel, Maryland 20707-4831,
is a wholly-owned subsidiary of The Monument Group, Inc., which in turn is
principally owned and controlled by David A. Kugler, President of Advisors,
and President of the Company. David A. Kugler and Herbert Klein, III are each
affiliates of the Company and Monument Advisors. Monument Advisors is a newly
organized company that also manages the portfolio investments of qualified
individuals, retirement plans, and trusts. As of August, 1997, Advisors
managed approximately $15 million in assets.
For its services, Advisors receives, pursuant to the Advisory Agreement, a
monthly fee from each Fund equal to an annualized rate of 1.00% of the monthly
average net assets of such Fund through $50 million in net assets; 0.75% of
the monthly average net assets of such Fund greater than $50 million through
$100 million in net assets; and 0.625% of the average monthly net assets
exceeding $100 million in net assets.
PORTFOLIO MANAGERS. Alexander C. Cheung, C.F.A., serves as the portfolio
manager for both the Growth Fund and the Aggressive Growth Fund, and is
primarily responsible for the portfolios of both Funds. Mr. Cheung has managed
each Fund since its inception. Mr. Cheung has eight years investment
management experience and has been with Advisors since August 1997. Prior to
that, Mr. Cheung was Managing Director of Lion Rock Capital Management, Inc.,
and, prior to that, a portfolio manager at Anchor Asset Management, Inc.
Before joining Anchor Asset Management, Inc., Mr. Cheung worked as an
investment counselor at W.H. Newbold's Sons & Co.
ADMINISTRATOR. State Street Bank and Trust Company ("State Street") has agreed
to provide certain administrative services to each Fund pursuant to an
administration agreement, dated ____________, 1997 ("Administration
Agreement"). Among other things, State Street has agreed to oversee various
matters for each Fund, including the determination of net asset values by each
Fund's custodian, the maintenance of books and records by each Fund's
custodian, and the payment of fees to each Fund's investment adviser,
custodian, and transfer and dividend disbursing agent. State Street also has
agreed to assist with the preparation of each Fund's income tax returns;
prepare periodic reports to shareholders, proxy materials, and other
shareholder communications; prepare certain regulatory and other reports as
may be requested by
12
<PAGE>
the Board of Directors; make reports and recommendations to the Board of
Directors concerning the performance and fees paid to certain third party
service providers; assist each Fund's investment advisor with respect to
various compliance matters; perform certain blue sky services; prepare
amendments to the Company's registration statement; and prepare agenda and
background materials for Board of Directors meetings. For its services under
the Administration Agreement, State Street receives from each Fund A monthly
fee equal to an annualized rate of 0.10% of the Fund's average daily net
assets or an annual fee of $85,000, whichever is greater.
PORTFOLIO BROKERAGE. In accordance with policies established by the Board of
Directors, Advisors may take into account sales of shares of the Funds in
selecting broker-dealers to effect portfolio transactions on behalf of the
Funds. For a discussion of Advisors' brokerage allocation policies and
practices, see "Portfolio Transactions and Brokerage" in the SAI.
FUND EXPENSES. Each Fund will bear certain expenses attributable to it,
including the following: (a) advisory fees; (b) fees and expenses of
independent auditors and independent legal counsel retained by the Company;
(c) brokerage commissions for transactions in portfolio investments and
similar fees and charges for the acquisition, disposition, lending or
borrowing of such portfolio investments; (d) fees and expenses of the transfer
agent and administrator, custodian and any depository appointed for the
safekeeping of its cash, portfolio securities and other property; (e) all
taxes, including issuance and transfer taxes, and corporate fees payable by
the Fund to federal, state or other governmental agencies; (f) interest
payable on the Fund's borrowings; (g) extraordinary or non-recurring expenses,
such as legal claims and liabilities and litigation costs and indemnification
payments by the Fund in connection therewith; (h) all expenses of shareholders
and Board of Directors meetings (exclusive of compensation and travel expenses
of those Directors and employees of the Company who are "interested persons"
of the Company within the meaning of the 1940 Act, but including compensation
and travel expenses of those Directors who are not "interested persons" of the
Company within the meaning of the 1940 Act); (i) fees and expenses involved in
the preparation of all reports as required by federal or state law or
regulations; (j) fees and expenses involved in registering or otherwise
qualifying (by notice filing or otherwise) the Fund's shares with the SEC and
various states and other jurisdictions, and maintaining such registrations or
qualifications; (k) the expense of preparing, setting in type, printing in
quantity, and distributing to then-current shareholders such materials as
prospectuses, statements of additional information, and supplements thereto,
as well as periodic reports to shareholders, communications, and proxy
materials (including proxy statements and proxy cards) relating to the Fund,
and the processing, including tabulation, of the results of proxy
solicitations; (l) the expense of furnishing or causing to be furnished to
each shareholder statements of account, including the expense of mailing; (m)
membership or association dues for the Investment Company Institute or similar
organizations; (n) postage; and (o) the cost of the fidelity bond required by
1940 Act Rule 17g-1 and any errors and omissions insurance or other liability
insurance covering the Company and/or its officers, Directors and employees.
13
<PAGE>
TAX CONSIDERATIONS
THE FUNDS. Each Fund intends to qualify for special tax treatment afforded to
regulated investment companies under the Code. To establish and continue its
qualification, each Fund intends to diversify its assets as the Code requires.
Each Fund also intends to distribute substantially all of its net investment
income and capital gains to its shareholders to avoid federal income tax on
the income and gains so distributed.
SHAREHOLDERS. For federal income tax purposes, any income dividend that you
receive from the Funds, as well as any net short term capital gain
distribution, is generally taxable to you as ordinary income whether you have
elected to receive it in cash or in additional shares.
Distributions of net long-term capital gains are generally taxable to you as
long-term capital gains, regardless of how long you have owned your Fund
shares and regardless of whether you have elected to receive such
distributions in cash or in additional shares.
Generally, distributions are taxable to you for the year in which they are
paid. In addition, certain distributions that are declared and payable in
October, November or December, but which, for operational purposes, are paid
the following January, are taxable as though they were paid by December 31 of
the year in which they are declared.
Redemptions and exchanges of Fund shares are taxable events on which you may
realize a gain or loss.
TAX INFORMATION. The Funds will advise you promptly, after the close of each
calendar year, of the tax status for federal income tax purposes of all income
dividends and capital gain distributions paid for such year.
The foregoing is only a general discussion of applicable federal income tax
provisions. For further information, see "Additional Information on
Distributions and Taxes" in the SAI. YOU SHOULD CONSULT WITH YOUR OWN TAX
ADVISER ABOUT YOUR PARTICULAR TAX SITUATION.
DIVIDENDS AND DISTRIBUTIONS
Each Fund declares and pays income dividends from its net investment income,
usually in August and December, and distributes capital gains, if any,
annually, usually in December. Income dividends and capital gain distributions
are calculated and distributed the same way for each Fund. The amount of any
income dividends per share will differ, however, due to the individual
investment strategies of the Funds. Income dividend payments are not
guaranteed, are subject to the Board's discretion, and may vary from time to
time. NEITHER FUND PAYS "INTEREST" OR GUARANTEE ANY FIXED RATE OF RETURN ON AN
INVESTMENT IN THEIR SHARES.
14
<PAGE>
Each Fund will reinvest any income dividends and capital gains distributions
in additional shares of the Fund unless you select another option on your
application. You may change your distribution option at any time by notifying
us by mail or phone, as directed on the cover page of this Prospectus. Please
allow at least seven days prior to the record date for us to process the new
option.
BUYING, REDEEMING, AND EXCHANGING SHARES
PRINCIPAL UNDERWRITER. Monument Distributors, located at 8377 Cherry Lane,
Laurel, Maryland 20707-4831, serves as the principal underwriter of each Fund,
is a wholly-owned subsidiary of The Monument Group, Inc. Monument Advisors,
David A. Kugler and Herbert Klein, III are each affiliates of the Company and
Monument Distributors.
BUYING FUND SHARES
BY MAIL. You can buy shares of each Fund by sending a completed application,
along with a check, drawn on a U.S. bank in U.S. funds, to NFDS, at the
address set out on the cover page of this Prospectus. NFDS is the agent of the
Company's transfer and dividend disbursing agent, State Street. See "Proper
Form."
Third party checks are not accepted for purchase of Fund shares.
BY WIRE. You may also wire payments for Fund shares to the wire bank account
for the appropriate Fund. Before wiring funds, please call 1-888-520-9950 to
advise the Fund of your investment and to receive instructions as to how and
where to wire your investment. Please remember to return your completed and
signed application to the address set out on the cover page of this
Prospectus. See "Proper Form."
MINIMUM INVESTMENTS. The minimum initial investment in a Fund is $2500.
Subsequent investments must be at least $100. The minimum initial and
subsequent investments are $500 and $100, respectively, when purchasing
through a tax-qualified retirement plan.
PUBLIC OFFERING PRICE. When you buy shares of a Fund, you will receive the
public offering price per share next determined after your order is received.
Each Fund's public offering price per share is equal to the Fund's net asset
value per share plus a sale charge, described below, paid to Distributors.
15
<PAGE>
<TABLE>
SALES CHARGE AS A PERCENTAGE OF
<CAPTION>
Amount Paid To
Dealers as a
Percentage
Amount of Purchase at the Offering Net Amount of Offering
Public Offering Price Price Invested Price
------------------------- -------- --------- --------------
<S> <C> <C> <C>
$50,000 or less 1.50% 1.52% None
Over $50,000 through $100,000 1.00% 1.01% None
Over $100,000 through $1,000,000 0.50% 0.51% None
Above $1,000,000 0.25% 0.25% None
</TABLE>
RIGHT OF ACCUMULATION. You may reduce the sales charge by combining the amount
invested in a Fund with certain previous purchases of shares of either Fund.
Your shares in a Fund previously purchased will be taken into account on a
combined basis at the current net asset value per share of a Fund in order to
establish the aggregate investment amount to be used in determining the
applicable sales charge. Only previous purchases of Fund shares that were sold
subject to the sales charge that are still held in the Fund will be included
in the calculation. To take advantage of this privilege, you must give notice
at the time you place your initial order and subsequent orders that you wish
to combine purchases. When you send payment along with your request to combine
purchases, please specify your account number.
WHEN SHARES ARE PRICED. Each Fund is open for business each day the New York
Stock Exchange ("Exchange") is open. Each Fund determines its share price as
of the close of regular trading on the Exchange, generally 4:00 p.m. New York
time. It is expected that the Exchange will be closed during the next twelve
months on Saturdays and Sundays and on the observed holidays of New Year's
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day, plus on the preceding Friday or subsequent
Monday when one of these holidays falls on a Saturday or Sunday, respectively.
NET ASSET VALUE. Each Fund's share price is equal to the net asset value
("NAV") per share of the Fund. Each Fund calculates its NAV per share by
valuing and totaling its assets, subtracting any liabilities, and dividing the
remainder, called net assets, by the number of Fund shares outstanding. The
value of each Fund's portfolio securities is generally based on market quotes
if they are readily available. If they are not readily available, Advisors
will determine their market value in accordance with procedures adopted by the
Board. For information on how the Funds value their assets, see "Valuation of
Fund Shares" in the SAI.
REDEEMING AND EXCHANGING FUND SHARES
You can redeem shares of the Funds, or exchange shares of one Fund for those
of another, by submitting your order in proper form either in writing to NFDS
at the address set out on the cover page of this Prospectus, or by telephoning
1-888-520-9950. See "Proper Form."
16
<PAGE>
SMALL ACCOUNT REDEMPTIONS. Due to the relatively high cost of maintaining
accounts with smaller holdings, each Fund reserves the right to redeem your
shares if, as a result of redemptions, the value of your account drops below
each Fund's $500 minimum balance requirement ($250 in the case of IRAs, or
other retirement plans and custodial accounts). Each Fund will give you 30
days' advance written notice and a chance to increase your Fund balance to the
minimum requirement before the Fund redeems your shares.
REDEMPTION PRICE. Your redemption request will be processed based on the NAV
of the applicable Fund's shares next determined after receipt of your order in
proper form. Depending on the length of time you have held your Fund shares,
you may be subject to a deferred sales charge, described below.
REDEMPTION PROCEEDS. Redemption proceeds will generally be paid by the next
business day after processing, but in no event later than three business days
after receipt by NFDS of your redemption order in proper form, subject to the
following. If you are redeeming shares that you just purchased and paid for by
personal check, the mailing of your redemption proceeds may be delayed for up
to ten (10) calendar days to allow your check to clear (this holding period
does not apply to cashier's, certified, or treasurer's checks). Additionally,
the Company, on behalf of each Fund, may suspend the right of redemption or
postpone the date of payment during any period that the Exchange is closed, or
trading in the markets that a Fund normally utilizes is restricted, or during
any period that redemption is otherwise permitted to be suspended by the SEC.
REDEMPTIONS IN KIND. The Company reserves the right to redeem its shares in
kind, which means that upon tendering shares of a Fund, you could receive
assets other than cash in return. See "Buying, Redeeming, and Exchanging
Shares" in the SAI for more information.
DEFERRED SALES CHARGE. A deferred sales charge equal to 1.50% of the offering
price (1.52% of the net amount invested) may apply if you redeem all or a
portion of your investment in a Fund in less than 12 months from the date of
purchase. The purpose of the deferred sales charge, along with the initial
sales charge, is to compensate Distributors for costs that it incurs in
distributing Fund shares. These costs include, for example, the expense of
printing prospectuses that prospective investors receive. Distributors does
not currently offer Fund shares through broker-dealers but may begin doing so
at any time.
To reduce the impact of this charge, each Fund will redeem shares that are not
subject to the sales charge first. Each Fund will then redeem shares subject
to the deferred sales charge in the order in which you purchased them. When
you request the sale of a stated NUMBER OF SHARES, each Fund will deduct the
amount of any sales charge from the redemption proceeds. When you request the
sale of a stated DOLLAR AMOUNT, each Fund will redeem additional shares to
cover any deferred sales charge, unless you specify otherwise.
17
<PAGE>
WAIVER OF SALES CHARGES
No sales charge shall apply to:
(1) reinvestment of income dividends and capital gain distributions;
(2) exchanges of Fund shares for those of another Fund;
(3) redemptions by a Fund when an account falls below the minimum required
account size;
(4) purchases of Fund shares made by current or former Directors, officers,
or employees of the Company, Advisors, Monument Distributors, The Monument
Funds Group, Inc. or The Monument Group, Inc., and by members of their
immediate families;
(5) purchases of Fund shares by Distributors for its own investment account
for investment purposes only;
(6) a "qualified institutional buyer," as such term is defined under Rule
144A of the Securities Act of 1933, including, but not limited to, insurance
companies, investment companies registered under the 1940 Act, business
development companies registered under the 1940 Act, small business investment
companies, plans established by a state for the benefit of its employees,
employee benefit plans within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, trust funds, organizations described
in Section 501(c)(3) of the Internal Revenue Code ("Code"), investment
advisers registered under the Investment Advisors Act of 1940, and dealers
registered pursuant to Section 15 of the Securities Exchange Act of 1934, that
comply with the minimum investment and other requirements as set forth in Rule
144A;
(7) a tax qualified plan, including a plan under Sections 401(a), 401(k),
403(a), and 403(b)(7) of the Code, and tax favored plan, including a plan
under Section 457 of the Code;
(8) a charitable organization, as defined in Section 501(c)(3) of the Code,
as well as other charitable trusts and endowments, investing $50,000 or more;
(9) a charitable remainder trust, under Section 664 of the Code, or a life
income pool, established for the benefit of a charitable organization as
defined in Section 501(c)(3) of the Code; and
(10) investment advisers registered under the Advisers Act and broker-dealers
registered under the Exchange Act purchasing securities for their own
accounts.
Additional information regarding the waivers may be obtained by calling
1-888-520-9950. All account information is subject to acceptance and
verification by Monument Distributors.
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<PAGE>
RULE 12b-1 PLAN
The Board of Directors has adopted a Plan of Distribution pursuant to Rule
12b-1 under the 1940 Act ("Rule 12b-1 Plan"). Pursuant to the Plan, each Fund
may finance any activity or expense that is intended primarily to result in
the sale its shares. Under the Plan, each Fund may pay a fee ("12b-1 fee") to
Distributors up to a maximum of 0.35%, on an annualized basis, of its average
daily net assets. The Company may pay the 12b-1 fee for activities and
expenses borne in the past in connection with its shares as to which no 12b-1
fee was paid because of the maximum limitation.
The activities and expenses financed by the 12b-1 fee may include, but are not
limited to: (a) compensation to and expenses, including overhead and telephone
expenses, of employees of Distributors who engage in the distribution of the
shares of each Fund; (b) printing and mailing of prospectuses, statements of
additional information, and periodic reports to prospective shareholders of
each Fund; (c) expenses relating to the development, preparation, printing,
and mailing of advertisements, sales literature, and other promotional
materials describing and/or relating to each Fund; (d) compensation to
financial intermediaries and broker-dealers to pay or reimburse them for their
services or expenses in connection with the distribution of the shares of each
Fund; (e) expenses of holding seminars and sales meetings designed to promote
the distribution of the shares of each Fund; (f) expenses of obtaining
information and providing explanations to prospective shareholders of each
Fund regarding its investment objectives and policies and other information
pertaining to it, including its performance; (g) expenses of training sales
personnel offering and selling each Fund's shares; and (h) expenses of
personal services and/or maintenance of shareholder accounts with respect to
the shares of each Fund. Distributors has advised the Company that it intends
to waive the 12b-1 fee for each Fund's first year of operations. See "Rule
12b-1 Plan" in the SAI.
PROPER FORM
Your order to buy shares is in proper form when your completed and signed
shareholder application and check or wire payment is received. Your written
request to sell or exchange shares is in proper form when written instructions
signed by all registered owners, with a signature guarantee if necessary is
received.
WRITTEN INSTRUCTIONS. All registered owners must sign any written
instructions. To avoid any delay in processing your transaction, such
instructions should include:
o your name,
o the Fund's name,
o a description of the request,
o for exchanges, the name of the Fund you are
exchanging into,
o your account number,
o the dollar amount or number of shares, and
o your daytime or evening telephone number.
19
<PAGE>
SIGNATURE GUARANTEES. For our mutual protection, we require a signature
guarantee in the following situations:
o you wish to redeem over $50,000 worth of shares,
o you want redemption proceeds to be paid to someone
other than the registered owners,
o you want redemption proceeds to be sent to an address
other than the address of record, preauthorized bank
account, or preauthorized brokerage firm account,
o we receive instructions from an agent, not the
registered owners, or
o we believe a signature guarantee would protect us
against potential claims based on the instructions
received.
A signature guarantee verifies the authenticity of your signature. You can
obtain a signature guarantee from certain banks, brokers or other eligible
guarantors. YOU SHOULD VERIFY THAT THE INSTITUTION IS AN ELIGIBLE GUARANTOR
PRIOR TO SIGNING. A NOTARIZED SIGNATURE IS NOT SUFFICIENT.
SHARE CERTIFICATES. We do not issue share certificates. This eliminates the
costly problem of replacing lost, stolen or destroyed certificates.
RETIREMENT PLAN ACCOUNTS. You may not sell shares or change distribution
options on retirement plan accounts by telephone. While you may exchange
shares by phone, certain restrictions may be imposed on other retirement
plans. To obtain any required forms or more information about distribution or
transfer procedures, please call 1-888-520-9950.
SERVICES TO HELP YOU MANAGE YOUR ACCOUNT
AUTOMATIC INVESTMENT PLAN. Our automatic investment plan offers a convenient
way to invest in the Funds. Under the plan, you can automatically transfer
money from your checking account to the Fund(s) each month to buy additional
shares. If you are interested in this plan, please refer to the automatic
investment plan application. The value of the Funds' shares will fluctuate and
the systematic investment plan will not assure a profit or protect against a
loss. You may discontinue the plan at any time by notifying us by mail or
phone.
TELEPHONE TRANSACTIONS. You may redeem shares of a Fund, or exchange shares of
one Fund for that of another Fund, by telephone. Please refer to the sections
of this Prospectus that discuss the transaction you would like to make, or
call 1-888-520-9950. We may only be liable for losses resulting from
unauthorized telephone transactions if we do not follow reasonable procedures
designed to verify the identity of the caller. When you call, we will request
personal or other identifying information, and may also record calls. For your
protection, we may delay a
20
<PAGE>
transaction or not implement one if we are not reasonably satisfied that
telephone instructions are genuine. If this occurs, we will not be liable for
any loss. If our lines are busy or you are otherwise unable to reach us by
phone, you may wish to send written instructions to us, as described elsewhere
in this Prospectus. If you are unable to execute a transaction by telephone,
we will not be liable for any loss.
STATEMENTS AND REPORTS. You will receive transaction confirmations and account
statements on a regular basis. Confirmations and account statements will
reflect transactions in your account, including additional purchases and
reinvestments of income dividends and capital gain distributions. PLEASE
VERIFY THE ACCURACY OF YOUR STATEMENTS WHEN YOU RECEIVE THEM. You will also
receive semi-annual financial reports for each Fund in which you have
invested. To reduce Fund expenses, we attempt to identify related shareholders
within a household and send only one copy of a report. Please call
1-888-520-9950 if you would like an additional free copy of the Funds'
financial reports.
INSTITUTIONAL ACCOUNTS. Additional methods of buying, redeeming, or exchanging
shares of the Fund may be available to institutional accounts. For further
information, please call 1-888-520-9950.
GENERAL INFORMATION
THE COMPANY. The Company, a Maryland corporation organized on April 7, 1997,
is an open-end management investment company, whose Funds are non-diversified.
The Company's authorized capital consists of 2 billion shares of common stock
with a par value of $0.001 per share. The Company currently offers, on a
continuous basis, two series of common stock, namely, the Growth Fund and the
Aggressive Growth Fund, each of which is currently authorized to issue up to
250 million shares. The Company may offer additional series in the future.
Shares of each Fund, when issued, are fully-paid and non-assessable and have
equal rights as to redemption and participation in income dividends, earnings,
and assets remaining in liquidation. Shareholders have no preemptive or
conversion rights. As of the date of this Prospectus, ________________ may be
deemed to be a control person of each Fund as a result of their ownership of
more than 25% of each Fund's outstanding shares [to be supplied by amendment].
VOTING. Shares of each Fund have equal voting rights, except that shareholders
of each Fund will vote separately on matters affecting only that Fund.
Fractional shares have proportionately the same rights as do full shares. The
voting rights of each Fund's shares are non-cumulative, which means that the
holders of more than 50% of the shares of the Funds voting for the election of
Directors have the ability to elect all of the Directors, with the result that
the holders of the remaining voting shares will not be able to elect any
Director.
21
<PAGE>
The Company does not intend to hold annual shareholder meetings, though it
may, from time to time, hold special meetings of Fund shareholders, as
required by applicable law. The Board of Directors, in its discretion, as well
as the holders of at least 10% of the outstanding shares of a Fund, also may
call a shareholders meeting. The federal securities laws require that the
Funds help you communicate with other shareholders in connection with the
election or removal of members of the Board.
CUSTODIAN AND TRANSFER AGENT. Investors Fiduciary Trust Company, a subsidiary
of State Street located at 127 West 10th Street, Kansas City, MO 64105, serves
as custodian and an investment accounting agent for each Fund's portfolio
securities and other assets. State Street, 225 Franklin Street, Boston, MA
02110, serves as the transfer agent and dividend dispersing agent for each
Fund. State Street is affiliated with NFDS.
LEGAL COUNSEL. Freedman, Levy, Kroll & Simonds, Washington, D.C., has advised
the Company on certain federal securities law matters.
OTHER INFORMATION. This Prospectus does not report any financial information
or performance results for the Funds, which only recently commenced
operations. An audited balance sheet, showing the Company's assets and
liabilities, and the report of the Company's independent auditors thereon, are
located in the SAI. In the future, financial statements and performance
results of the Funds will appear in this Prospectus and the SAI. Additional
information about the performance of the Funds will appear in the Company's
annual report to shareholders, which the Company will provide free of charge.
Apart from the Prospectus and the SAI, the Company's registration statement
contains certain additional information that may be of interest to you. You
may obtain that information from the SEC by paying the charges prescribed
under its rules and regulations.
22
<PAGE>
This Prospectus does not constitute an offer to sell Fund shares in any state
or jurisdiction in which the offering is not authorized. No sales
representative, dealer, or other person is authorized to give any information
or make any representations other than those contained in this Prospectus or
in the SAI.
[BACK COVER PAGE]
23
<PAGE>
MONUMENT SERIES FUND, INC.
MONUMENT WASHINGTON REGIONAL GROWTH FUND
MONUMENT WASHINGTON REGIONAL AGGRESSIVE GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION DATED _________, 1997
This Statement of Additional Information ("SAI") is not a Prospectus. It
contains additional information that you should read in conjunction with the
prospectus, dated ________, 1997 ("Prospectus"), for the Monument Series Fund,
Inc. Capitalized terms appearing in this SAI that are not otherwise defined
herein have the same meaning given to them in the Prospectus. You may obtain a
copy of the Prospectus by writing "Monument," c/o NFDS, at P.O. Box 41332,
Kansas City, MO 64141-6426, or by calling 1-888-520-9950.
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
Investment Policies......................................................... 2
Potential Risks............................................................. 6
Investment Restrictions..................................................... 7
Directors and Officers...................................................... 8
Investment Advisory and Other Services...................................... 10
Portfolio Transactions and Brokerage........................................ 11
Buying, Redeeming, and Exchanging Shares.................................... 13
Principal Holders of Securities............................................. 14
Valuation of Fund Shares.................................................... 15
Additional Information on Distributions and Taxes........................... 16
Further Description of the Company's Shares................................. 19
The Company's Principal Underwriter......................................... 20
Performance Information..................................................... 21
Financial Statements........................................................ 23
Appendix: Performance Comparisons.......................................... 24
</TABLE>
<PAGE>
INVESTMENT POLICIES
The Prospectus describes the fundamental investment objectives and certain
investment policies and restrictions applicable to each Fund. The following is
additional information for your consideration.
ILLIQUID AND RESTRICTED SECURITIES. Each Fund does not presently intend to
invest more than 5% of its net assets in illiquid securities, including
repurchase agreements with maturities in excess of seven days. Subject to this
limitation, the Board of Directors has authorized each Fund to invest in
restricted securities where such investment is consistent with that Fund's
investment objective, and has authorized such securities to be considered
liquid to the extent Advisors determines that there is a liquid institutional
or other market for such securities - for example, restricted securities that
may be freely transferred among qualified institutional buyers under Rule 144A
of the Securities Act of 1933 ("1933 Act"), and for which a liquid
institutional market has developed. The Board of Directors will review any
determination by Advisors to treat a restricted security as a liquid security
on an ongoing basis, including Advisors' assessment of current trading
activity and the availability of reliable price information. In determining
whether a restricted security is properly considered a liquid security,
Advisors and the Board of Directors will take into account the following
factors: (1) the frequency of trades and quotes for the security; (2) the
number of dealers willing to buy or sell the security and the number of other
potential buyers; (3) dealer undertakings to make a market in the security;
(4) the nature of the security and marketplace trades, including the time
needed to dispose of the security, the method of soliciting offers, and the
mechanics of transfer, and (5) such other factors as Advisors may determine to
be relevant to such determination.
ENHANCED CONVERTIBLE SECURITIES. Each Fund may invest in convertible preferred
stocks that offer enhanced yield features, such as Preferred Equity Redemption
Cumulative Stocks ("PERCS"), which provide an investor with the opportunity to
earn higher dividend income than is available on a company's common stock.
PERCS are preferred stocks that generally feature a mandatory conversion date,
as well as a capital appreciation limit that is usually expressed in terms of
a stated price. Most PERCS expire three years from the date of issue, at which
time they are convertible into common stock of the issuer. PERCS are generally
not convertible into cash at maturity. Under a typical arrangement, after
three years PERCS convert into one share of the issuer's common stock if the
issuer's common stock is trading at a price below that set by the capital
appreciation limit, and into less than one full share if the issuer's common
stock is trading at a price above that set by the capital appreciation limit.
The amount of that fractional share of common stock is determined by dividing
the price set by the capital appreciation limit by the market price of the
issuer's common stock. PERCS can be called at any time prior to maturity, and
hence do not provide call protection. If called early, however, the issuer
must pay a call premium over the market price to the investor. This call
premium declines at a preset rate daily, up to the maturity date.
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Each Fund also may invest in other classes of enhanced convertible securities.
These include but are not limited to ACES (Automatically Convertible Equity
Securities), PEPS (Participating Equity Preferred Stock), PRIDES (Preferred
Redeemable Increased Dividend Equity Securities), SAILS (Stock Appreciation
Income Linked Securities), TECONS (Term Convertible Notes), QICS (Quarterly
Income Cumulative Securities), and DECS (Dividend Enhanced Convertible
Securities). ACES, PEPS, PRIDES, SAILS, TECONS, QICS, and DECS all have the
following features: they are issued by a company, the common stock of which
will be received in the event the convertible preferred stock is converted;
unlike PERCS, they do not have a capital appreciation limit; they seek to
provide the investor with high current income with some prospect of future
capital appreciation; they are typically issued with three or four-year
maturities; they typically have some built-in call protection for the first
two to three years; investors have the right to convert them into shares of
common stock at a preset conversion ratio or hold them until maturity, and
upon maturity they will necessarily convert into either cash or a specified
number of shares of common stock.
Similarly, there may be enhanced convertible debt obligations issued by an
operating company, whose common stock is to be acquired in the event the
security is converted, or by a different issuer, such as an investment bank.
These securities may be identified by names such as ELKS (Equity Linked
Securities) or similar names. Typically they share most of the salient
characteristics of an enhanced convertible preferred stock but will be ranked
as senior or subordinated debt in the issuer's corporate structure according
to the terms of the debt indenture. Each Fund also may invest in additional
types of convertible securities that are not specifically referred to herein
but which are similar to those described, so long as such investment is
consistent with the Fund's investment objective, and investment programs,
policies, and restrictions.
An investment in an enhanced convertible security or any other security may
involve certain risks to a Fund. A Fund may have difficulty disposing of such
securities because there may be a thin trading market for a particular
security at any given time. Reduced liquidity may have an adverse impact on
market price and the Fund's ability to dispose of particular securities, when
necessary, to meet that Fund's liquidity needs or in response to a specific
economic event, such as the deterioration in the credit worthiness of an
issuer. Reduced liquidity in the secondary market for certain securities also
may make it more difficult for a Fund to obtain market quotations based on
actual trades for purposes of valuing the Fund's portfolio. There can be no
assurance that a liquid secondary market for these securities will exist when
Advisors determines to dispose of a Fund's investment in such securities.
WRITING CALL OPTIONS. Each Fund may write (sell) covered call options. Covered
call options written by a Fund give the holder the right to buy the underlying
securities from the Fund at a stated exercise price. A call option written by
a Fund is "covered" if the Fund owns the underlying security that is subject
to the call or has an absolute and immediate right to acquire that security
without additional cash consideration (or for additional cash consideration
held in a segregated account by its custodian bank) upon conversion or
exchange of other securities held in its portfolio. A call option is also
covered if a Fund holds a call on the same security and in the
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<PAGE>
same principal amount as the call written where the exercise price of the call
held (a) is equal to or less than the exercise price of the call written or
(b) is greater than the exercise price of the call written if the difference
is maintained by the Fund in cash and high grade debt securities in a
segregated account with its custodian bank.
The premium paid by the buyer of an option will reflect, among other things,
the relationship of the exercise price to the market price and volatility of
the underlying security, the remaining term of the option, supply and demand
and interest rates.
The writer of a call option may have no control over when the underlying
securities must be sold because the writer may be assigned an exercise notice
at any time prior to the termination of the obligation. Whether or not an
option expires unexercised, the writer retains the amount of the premium. This
amount, of course, may, in the case of a covered call option, be offset by a
decline in the market value of the underlying security during the option
period. If a call option is exercised, the writer experiences a profit or loss
from the sale of the underlying security.
The writer of an option that wishes to terminate its obligation may effect a
"closing purchase transaction," by buying an option of the same series as the
option previously written. The effect of the purchase is that the writer's
position will be canceled by the clearing corporation. However, a writer may
not effect a closing purchase transaction after being notified of the exercise
of an option. There is no guarantee that a Fund will be able to effect a
closing purchase transaction for the options it has written.
Effecting a closing purchase transaction in the case of a written call option
will permit a Fund to write another call option on the underlying security
with either a different exercise price, expiration date or both. Also,
effecting a closing purchase transaction will permit the Fund to use cash or
proceeds from the concurrent sale of any securities subject to the option to
make other investments. If a Fund desires to sell a particular security from
its portfolio on which it has written a call option, it will effect a closing
purchase transaction before or at the same time as the sale of the security.
A Fund will realize a profit from a closing purchase transaction if the price
of the transaction is less than the premium received from writing the option.
A Fund will realize a loss from a closing purchase transaction if the price of
the transaction is more than the premium received from writing the option.
Because increases in the market price of a call option will generally reflect
increases in the market price of the underlying security, any loss resulting
from the repurchase of a call option is likely to be offset in whole or in
part by appreciation of the underlying security owned by a Fund.
WRITING COVERED OVER-THE-COUNTER ("OTC") OPTIONS. A Fund may write ("sell")
covered call options that trade in the OTC market to the same extent that it
will engage in exchange traded options. Just as with exchange traded options,
OTC call options give the holder the right to buy an underlying security from
an option writer at a stated exercise price. However, OTC options differ from
exchange traded options in certain material respects.
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<PAGE>
OTC options are arranged directly with dealers and not, as is the case with
exchange traded options, with a clearing corporation. Thus, there is a risk of
non-performance by the dealer. Because there is no exchange, pricing is
typically done by reference to information from market makers. However, OTC
options are available for a greater variety of securities, and in a wider
range of expiration dates and exercise prices, than exchange traded options,
and the writer of an OTC option is paid the premium in advance by the dealer.
There can be no assurance that a continuous liquid secondary market will exist
for any particular option at any specific time. When a Fund writes an OTC
option, it generally can close out that option prior to its expiration only by
entering into a closing purchase transaction with the dealer to which the Fund
originally wrote the option.
FUTURES CONTRACTS. Each Fund may buy and sell stock index futures contracts
traded on domestic stick exchanges to hedge the value of its portfolio against
changes in market conditions. A stock index futures contract is an agreement
between two parties to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the stock index value at
the close of the last trading day of the contract and the price at which the
futures contract is originally struck. A stock index futures contract does not
involve the physical delivery of the underlying stocks in the index. Although
stock index futures contracts call for the actual taking or delivery of cash,
in most cases, each Fund expects to liquidate its stock index futures
positions through offsetting transactions, which may result in a gain or a
loss, before cash settlement is required.
A Fund will incur brokerage fees when it purchases and sells stock index
futures contract, and, at the time a Fund purchases or sells a stock index
futures contract, it must make a good faith deposit known as the "initial
margin." Thereafter, a Fund may need to make subsequent deposits, known as
"variation margin," to reflect changes in the level of the stock index. A Fund
may buy or sell a stock index futures contract if, immediately thereafter, the
sum of the amount of margin deposits on open positions with respect to all
stock index futures contracts does not exceed 5% of the Fund's net assets.
To the extent a Fund enters into a stock index futures contract, it will
maintain with its custodian bank, to the extent required by the rules of the
SEC, assets in a segregated account to cover its obligations with respect to
such contract, which will consist of cash, cash equivalents or high quality
debt securities from its portfolio in an amount equal to the difference
between the fluctuating market value of such futures contract and the
aggregate value of the initial and variation margin payments made by the Fund
with respect to such futures contracts.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements. A
repurchase agreement is an instrument under which the Fund acquires ownership
of a debt security and the seller agrees, at the time of the sale, to
repurchase the obligation at a mutually agreed upon time and price, thereby
determining the yield during the Fund's holding period.
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<PAGE>
POTENTIAL RISKS
OPTIONS AND FUTURES. Although each Fund may write covered call options and
purchase and sell stock index futures contracts to hedge against declines in
market value of its portfolio securities, the use of these instruments
involves certain risks. As the writer of covered call options, a Fund receives
a premium, but loses any opportunity to profit from an increase in the market
price of the underlying securities above the exercise price during the option
period. A Fund also retains the risk of loss if the price of the security
declines, though the premium received may partially offset such loss.
Although stock index futures contracts may be useful in hedging against
adverse changes in the value of a Fund's portfolio securities, they are
derivative instruments that are subject to a number of risks. During certain
market conditions, purchases and sales of stock index futures contracts may
not completely offset a decline or rise in the value of a Fund's Portfolio. In
the futures markets, it may not always be possible to execute a buy or sell
order at the desired price, or to close out an open position due to market
conditions, limits on open positions and/or daily price fluctuations. Changes
in the market value of a Fund's portfolio may differ substantially from the
changes anticipated by the Fund when it established its hedged positions, and
unanticipated price movements in a futures contract may result in a loss
substantially greater than a Fund's initial investment in such contract.
Successful use of futures contracts depends upon Advisors' ability to predict
correctly movements in the direction of the securities markets generally or of
a particular segment of a securities market. No assurance can be given that
Advisors' judgment in this respect will be correct.
The CFTC and the various exchanges have established limits referred to as
"speculative position limits" on the maximum net long or net short position
that any person may hold or control in a particular futures contract. Trading
limits are imposed on the maximum number of contracts that any person may
trade on a particular trading day. An exchange may order the liquidation of
positions found to be in violation of these limits and it may impose other
sanctions or restrictions. Each Fund does not believe that these trading and
positions limits will have an adverse impact on its strategies for hedging its
securities.
REPURCHASE AGREEMENTS. Although each Fund will enter into repurchase
agreements only with institutions that Advisors believes present minimal
credit risk, it is conceivable that a repurchase agreement issuer could seek
relief under bankruptcy laws or otherwise default on its obligations under its
repurchase agreement. In that event, a Fund could experience both delays in
liquidating the underlying securities and losses, including: (a) a possible
decline in the value of the underlying security during the period while the
Fund seeks to enforce its rights thereto; (b) possible subnormal levels of
income and lack of access to income during this period; (c) a possible loss on
the sale of the underlying collateral; and (d) expenses of enforcing its
rights.
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<PAGE>
INVESTMENT RESTRICTIONS
The Company has adopted the following restrictions as fundamental policies for
each Fund as stated. These restrictions are fundamental policies of the Fund
and may not be changed for any given Fund without the approval of the lesser
of (i) more than 50% of the outstanding voting securities of the Fund or (ii)
67% or more of the voting securities present at a shareholder meeting of the
Fund if more than 50% of the outstanding voting securities of the Fund are
represented at the meeting in person or by proxy. The investment restrictions
of one Fund thus may be changed without affecting those of the other Fund.
Under the restrictions, each Fund MAY NOT:
1. issue senior securities, except to the extent permitted by the 1940 Act,
including permitted borrowings;
2. make loans, except for collateralized loans of portfolio securities in
an amount not exceeding 33 1/3% of the Fund's total assets (at the time
of the most recent loan). This limitation does not apply to purchases of
debt securities or to repurchase agreements;
3. borrow money, except for temporary or emergency purposes in an amount
not exceeding 33 1/3% of the Fund's total assets (including the amount
borrowed) less liabilities (other than borrowings). No Fund will
purchase securities when its borrowings exceed 5% of its total assets;
4. invest more than 25% of the Fund's total assets (at the time of the most
recent investment) in any single industry. This limitation does not
apply to investments in obligations of the US. Government or any of its
agencies or instrumentalities;
5. act as an underwriter, except to the extent that, in connection with the
disposition of portfolio securities, the Fund may be deemed to be an
underwriter for purposes of the 1933 Act;
6. invest in securities for the purpose of exercising management or control
of the issuer, except that each Fund may purchase securities of other
investment companies to the extent permitted by the 1940 Act,
regulations thereunder, or exemptions therefrom;
7. purchase or sell commodity contracts, except that each Fund may, as
appropriate and consistent with its investment objectives and policies,
enter into financial futures contracts, options on such futures
contracts, forward foreign currency exchange contracts, forward
commitments, and repurchase agreements;
8. effect short sales, unless at the time the Fund owns securities
equivalent in kind and amount to those sold;
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<PAGE>
9. purchase or sell real estate or any interest therein, except that each
Fund may, as appropriate and consistent with its investment objectives
and policies, invest in securities of corporate and governmental
entities secured by real estate or marketable interests therein, or
securities of issuers that engage in real estate operations or interests
therein, and may hold and sell real estate acquired as a result of
ownership of such securities; or
10. invest in the securities of other investment companies, except that each
Fund may acquire securities of another investment company pursuant to a
plan of reorganization, merger, consolidation or acquisition, or except
where the Fund would not own, immediately after the acquisition,
securities of other investment companies which exceed in the aggregate
(i) more than 3% of the issuer's outstanding voting stock, (ii) more
than 5% of the Fund's total assets, and (iii) together with the
securities of all other investment companies held by the Fund, exceed,
in the aggregate, more than 10% of the Fund's total assets, or except as
otherwise permitted by the 1940 Act and the regulations thereunder or
exemptions therefrom.
In addition to these fundamental policies, it is the present policy of each
Fund (which may be changed without the shareholder approval) not to pledge,
mortgage or hypothecate its assets as security for loans, nor to engage in
joint or joint and several trading accounts in securities, except that it may
participate in joint repurchase arrangements, or invest its short-term cash in
shares of a money market mutual fund (pursuant to the terms of any order, and
any conditions therein, issued by the SEC permitting such investments). Each
Fund may not invest in excess of 5% of its net assets, valued at the lower of
cost or market, in warrants, nor more than 2% of its net assets in warrants
not listed on either the New York or American Stock Exchange.
DIRECTORS AND OFFICERS
The Board of Directors has the responsibility for the overall management of
the Company, including general supervision and review of its investment
activities. The Board of Directors, in turn, elects the officers of the
Company who are responsible for administering the Company's day-to-day
operations. The affiliations of the officers and Board of Directors members
and their principal occupations for the past five years are shown below.
Members of the Board of Directors who are considered "interested persons" of
the Company under the 1940 Act are indicated by an asterisk (*).
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<TABLE>
<CAPTION>
Positions Held With Principal Occupations
Name, Address, and Age the Company During The Past Five Years
---------------------- -------------------- -----------------------------
<S> <C> <C>
* David A. Kugler (37) Director, President President and Director, The
8377 Cherry Lane and Treasurer Monument Group, Inc. (a
Laurel, MD 20707 holding company); President
and Director, The Monument
Funds Group, Inc. (a holding
company); President and
Director, Monument Advisors,
Ltd; President and Director,
Monument Distributors, Inc.;
Account Vice President, Paine
Webber, Inc.; Financial
Consultant, Merrill Lynch &
Co.
Herbert Klein, III (39) Vice President and Director and Principal, The
8377 Cherry Lane Secretary Monument Group, Inc.;
Laurel, MD 20707 Consultant, The Highland
Group (firm specializing in
operational aspects of
mergers and acquisitions),
1997-present; Managing
Associate, Coopers & Lybrand
L.L.P., Management Consulting
Services, 1994-1997; Andersen
Consulting L.L.P., Arthur
Andersen & Co., S.C., Systems
Integration Practice,
1988-1994.
</TABLE>
Directors and officers of the Company who are affiliated with Advisors and/or
Distributors receive no remuneration from the Company. Each Director who is
not an interested person of the Company receives an annual retainer of $______
for serving on the Board of Directors, an annual retainer of $____ for serving
on one or more committees of the Board of Directors, and a $____ fee for each
regular or special Board of Directors meeting he or she attends. The Directors
also receive reimbursement for their expenses incurred in attending any
meeting of the Board of Directors. The Board of Directors generally meets
quarterly.
Additionally, certain Directors and officers of the Company who are
shareholders of Advisors and/or Distributors may be deemed to receive indirect
remuneration by virtue of their interests in Advisors and/or Distributors,
respectively.
COMMITTEES OF THE BOARD OF DIRECTORS.
The Company has an Audit Committee, an Executive Committee and a Pricing and
Investment Committee. The duties of these three Committees and their present
membership are as follows:
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AUDIT COMMITTEE: The members of the Audit Committee consult with the Company's
independent auditors if the auditors deem it desirable, and will meet with the
Company's independent auditors at least once annually to discuss the scope and
results of the annual audit of the Funds and such other matters as the
Committee members deem appropriate or desirable. Directors _____, _____, and
_____ are members of the Audit Committee.
EXECUTIVE COMMITTEE: During intervals between meetings of the Board of
Directors, the Executive Committee possesses and may exercise all of the
powers of the Board of Directors in the management of the Company except as to
those matters that specifically require action by the Board of Directors.
Directors _____, _____, and _____ are members of the Executive Committee.
PRICING AND INVESTMENT COMMITTEE: During intervals between meetings of the
Board of Directors, the Pricing and Investment Committee reviews each Fund's
investments and confers with Advisors at such times and as to such matters as
the Committee members deem appropriate. Directors _____, _____, and _____ are
members of the Pricing and Investment Committee.
INVESTMENT ADVISORY AND OTHER SERVICES
ADVISORY AGREEMENT. Pursuant to the Advisory Agreement, Advisors provides
certain services to each Fund. The services provided by Advisors include: (1)
furnishing an investment program by determining what investments a Fund should
purchase, hold, sell, or exchange; determining the manner in which to exercise
any voting rights, rights to consent to corporate action, or other rights
pertaining to a Fund's investment securities; and rendering regular reports to
the Company regarding the investment decisions that it has made on behalf of
each Fund, the reasons for such decisions, the extent to which is has
implemented such decisions, and the manner in which it has exercised any
voting rights, rights to consent to corporate action, or other rights
pertaining to a Fund's investment securities; (2) placing orders for the
execution of each Fund's securities transactions, in accordance with any
applicable directions from the Board of Directors of Directors, and rendering
certain reports to the Company regarding brokerage business placed by
Advisors; (3) using its best efforts to recapture all available tender offer
solicitation fees in connection with tenders of the securities of any Fund,
and any similar payments; (4) advising the Board of Directors of Directors of
any fees or payments which it may be possible for Advisors or an affiliate
thereof to receive in connection with the purchase or sale of investment
securities for any Fund; (5) assisting the Custodian with the valuation of the
securities of each Fund, and in calculating the net asset value of each Fund;
(6) providing assistance to the Company with respect to the Company's
registration statements, regulatory reports, periodic reports to shareholders
and other documents required by applicable law; (7) providing assistance to
the Company with respect to the development and maintenance of a compliance
program; and (8) furnishing, at its own expense, adequate facilities and
personnel for the Directors and officers of the Company to manage the
Company's affairs.
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<PAGE>
Under the Advisory Agreement, the advisory fee for each Fund is payable at the
end of each calendar month, determined by applying the annual rates, as set
out in the Prospectus, to the average daily net assets of each Fund.
The Advisory Agreement was approved, with regard to each Fund, on
________________, 1997, by the Board of Directors, and was subsequently
approved by the initial shareholder of each Fund, following his investment of
the initial capitalization of each Fund. The Advisory Agreement will remain in
effect for two years from the date of its execution, with respect to each Fund
and will continue in effect from year to year thereafter for each Fund as long
as its continuance is specifically approved at least annually by a vote of the
Board of Directors (on behalf of such Fund) or by a vote of the holders of a
majority of such Fund's outstanding voting securities (as defined by the 1940
Act), and in either event, by a majority vote of the Board of Directors
members who are not interested persons of Advisors or the Company (other than
as members of the Board of Directors), cast in person at a meeting called for
the purpose of voting on such approval. The Advisory Agreement may be
terminated without penalty at any time by the Board of Directors, Advisors, or
with respect to any Fund, by a vote of a majority of that Fund's shareholders,
in each case on 60 days' written notice, and will automatically terminate in
the event of its assignment, as defined in the 1940 Act.
CUSTODIAN. Investors Fiduciary Trust Company acts as custodian of the
securities and other assets of each Fund, and for cash received in connection
with the purchase of Fund shares. The custodian does not participate in
decisions relating to the purchase and sale of portfolio securities.
INDEPENDENT AUDITORS. __________, located at ____________, serve as the
Company's independent auditors. Their auditing services include rendering an
opinion on the financial statements of the Company.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Advisors, pursuant to the Advisory Agreement, and subject to the general
control of the Board of Directors, places all orders for the purchase and sale
of securities of each Fund. In executing portfolio transactions and selecting
brokers and dealers, it is the Company's policy to seek the best combination
of price and execution ("best execution") available. Advisors will consider
such factors as it deems relevant, including the breadth of the market in the
security, the financial condition and execution capability of the
broker-dealer, and the reasonableness of the commission, if any, for the
specific transaction or on a continuing basis.
Advisors is authorized to pay brokerage commissions, on behalf of each Fund,
in an amount in excess of that which another broker might have charged that
Fund, in recognition of certain brokerage and research services provided by
that broker. More specifically, in the allocation of
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<PAGE>
brokerage business used to purchase securities for a Fund, Advisors may give
preference to those broker-dealers who provide brokerage and research or other
services to Advisors as long as there is no sacrifice in obtaining best
execution. Such services may include, for example: advice concerning the value
of securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or the purchasers or sellers of
securities; analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and performance of accounts;
and various functions incidental to effecting securities transactions, such as
clearance and settlement. The receipt of research from broker-dealers that
execute transactions on behalf of the Company may be useful to Advisors in
rendering investment management services to other clients (including
affiliates of Advisors), and conversely, such research provided by broker-
dealers who have executed transaction orders on behalf of other clients may be
useful to Advisors in carrying out its obligations to the Company. While such
research is available to and may be used by Advisors in providing investment
advice to all its clients (including affiliates of Advisors), not all of such
research may be used by Advisors for the benefit of the Company. Such research
and services will be in addition to and not in lieu of research and services
provided by Advisors, and the expenses of Advisors will not necessarily be
reduced by the receipt of such supplemental research.
When portfolio transactions are executed on a securities exchange, the amount
of commission paid by a Fund is negotiated between Advisors and the broker
executing the transaction. Advisors will ordinarily place orders to buy and
sell over-the-counter securities on a principal rather than agency basis with
a principal market maker unless, in the opinion of Advisors, a better price
and execution can otherwise be obtained. Purchases of portfolio securities
from underwriters will include a commission or concession paid by the issuer
to the underwriter, and purchases from dealers will include a spread between
the bid and ask price. Occasionally, securities may be purchased directly from
the issuer, which does not involve the payment of commissions.
Monument Distributors may sometimes receive certain fees when a Fund tenders
portfolio securities pursuant to a tender offer solicitation. As a means of
recapturing brokerage for the benefit of such Fund, any portfolio securities
tendered by the Fund will be tendered through Distributors if it is legally
permissible to do so. In turn, the next advisory fee payable to Advisors will
be reduced by the amount of any fees received by Distributors in cash, less
any costs and expenses incurred in connection with the tender.
Securities of the same issuer may be purchased, held, or sold at the same time
by the Company for both of its Funds, or by other accounts or companies for
which Advisors provides investment advice (including affiliates of Advisors).
On occasions when Advisors deems the purchase or sale of a security to be in
the best interest of the Company, as well as Advisors' other clients,
Advisors, to the extent permitted by applicable laws and regulations, may
aggregate such securities to be sold or purchased for the Company with those
to be sold or purchased for other customers in order to obtain best execution
and lower brokerage commissions, if any. In such event, Advisor will allocate
the securities so purchased or sold, as well as the expenses incurred in the
transaction, in the manner it considers to be most equitable and consistent
with its fiduciary obligations to all such customers, including the Company.
In some instances, this procedure may impact the price and size of the
position obtainable for the Company.
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<PAGE>
BUYING, REDEEMING, AND EXCHANGING SHARES
ADDITIONAL INFORMATION ON BUYING SHARES. The Company continuously offers
shares of the Funds through advertisements, mailings and, in the future, the
Internet. When you buy shares, if you submit a check or a draft that is
returned unpaid to the Company we may impose a $25 charge against your account
for each returned item.
REINVESTMENT DATE. Fund shares acquired through the reinvestment of dividends
will be purchased at the Fund's net asset value determined on the business day
following the dividend record date (sometimes known as the "ex-dividend
date"). The processing date for the reinvestment of dividends may vary and
does not affect the amount or value of the shares acquired.
ADDITIONAL INFORMATION ON REDEEMING SHARES: REDEMPTIONS IN KIND. The Board of
Directors reserves the right to make payments in whole or in part in
securities or other assets of a Fund, in case of an emergency, or if the
payment of such a redemption in cash would be detrimental to the existing
shareholders of the Fund. In these circumstances, the securities distributed
would be valued at the price used to compute the Fund's net assets and you may
incur brokerage fees in converting the securities to cash. The Company does
not intend to redeem illiquid securities in kind. If this happens, however,
you may not be able to recover your investment in a timely manner.
ADDITIONAL INFORMATION ON EXCHANGING SHARES. If you request the exchange of
the total value of your account from one Fund to another Fund, we will
reinvest any declared but unpaid income dividends and capital gain
distributions in the new Fund at the Fund's net asset value. Backup
withholding and information reporting may apply. Information regarding the
possible tax consequences of an exchange appears in the tax section in this
SAI.
If a substantial number of shareholders should, within a short period, sell
their shares of a Fund under the exchange privilege, the Fund might have to
sell portfolio securities that it might otherwise hold and would incur the
additional costs related to such transactions. On the other hand, increased
use of the exchange privilege may result in periodic large inflows of money.
If large inflows of money occur, it is each Fund's general policy to initially
invest this money in short-term, interest-bearing money market instruments.
However, if Advisors believes that attractive investment opportunities,
consistent with a Fund's investment objective and policies, exist immediately,
then it will invest such money in portfolio securities in as orderly a manner
as is possible.
The proceeds from the sale of shares of each Fund may not be available until
the third business day following the sale. The Fund you are seeking to
exchange into may delay issuing shares
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pursuant to an exchange until that third business day. The sale of Fund shares
to complete an exchange will be effected at net asset value of the Fund next
computed after Monument Distributors receives your request for exchange in
proper form. Please see "Buying, Redeeming, and Exchanging Shares" in the
Prospectus.
ADDITIONAL INFORMATION ON SALES CHARGES. As described in the Prospectus, the
offering and redemption price of each Fund's shares is based on that Fund's
NAV per share, plus an initial and deferred sales charge, respectively, that
is paid to Monument Distributors. See "Public Offering Price," "Redemption
Price," and "Net Asset Value" in the Prospectus. Initial and deferred sales
charges do not apply to certain classes of persons or transactions, as
described in "Waiver of Sales Charges" in the Prospectus. The reason for the
waiver of sales charges in these situations is that they do not involve the
same level of expenses that are associated with the sale of Fund shares to the
general public. In addition, as shown in the table under "Public Offering
Price" in the Prospectus, initial sales charges decline as the amount of Fund
shares purchased increases to reflect certain economies of scale in the
selling effort associated with larger purchases.
GENERAL INFORMATION. We will consider dividend checks that the U.S. Postal
Service returns marked "unable to forward" as a request by you to change your
dividend option to reinvest all distributions. We will reinvest the proceeds
in additional shares at the net asset value of the applicable Fund(s) until we
receive new instructions.
If mail is returned as undeliverable or we are unable to locate you or verify
your current mailing address, we may deduct, from your account, the costs of
our efforts to find you. These costs may include a percentage of the account
when a search company charges a percentage fee in exchange for its location
services.
All checks, drafts, wires and any other available payment mediums that you use
buy or sell shares of a Fund must be denominated in U.S. dollars. We may, in
our sole discretion, either (a) reject any order to buy or sell shares
denominated in any other currency or (b) honor the transaction or make
adjustments to your account for the transaction as of a date and with a
foreign currency exchange factor determined by the drawee bank.
PRINICIPAL HOLDERS OF SECURITIES
As of ________, 1997, no person controlled or was presumed to control either
the Growth Fund or the Aggressive Growth Fund. However, as of _______, 1997,
the following individuals owned of record and beneficially 5% or more of the
shares of the Growth Fund, and Aggressive Growth Fund, respectively: [TO BE
PROVIDED BY AMENDMENT.]
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As of _________, 1997, the Company's Directors and officers, as a group, owned
_____% of the shares of the Growth Fund, and ______% of the shares of the
Aggressive Growth Fund, respectively.
VALUATION OF FUND SHARES
For the purpose of determining the aggregate net assets of a Fund, cash and
receivables are valued at their realizable amounts. Interest is recorded as
accrued and dividends are recorded on the ex-dividend date. Portfolio
securities listed on a securities exchange or on the NASDAQ National Market
System for which market quotations are readily available are valued at the
last quoted sale price of the day or, if there is no such reported sale, at
the mean between the closing bid and asked prices on that day.
Over-the-counter portfolio securities (other than securities reported on the
NASDAQ National Market System) are valued at the mean between the last bid and
asked prices based upon quotes furnished by market makers for such securities.
Portfolio securities that are traded both in the over-the-counter market and
on a stock exchange are valued according to the broadest and most
representative market as determined by Advisors. Exchange listed convertible
debt securities are valued at the mean between the last bid and asked prices
obtained from broker-dealers or a comparable alternative, such as Bloomberg or
Telerate.
Portfolio securities underlying actively traded call options are valued at
their market price as determined above. The current market value of any option
held by a Fund is its last sale price on the relevant exchange prior to the
time when assets are valued. Lacking any sales that day or if the last sale
price is outside the bid and asked prices, options are valued within the range
of the current closing bid and asked prices if the valuation is believed to
fairly reflect the contract's market value.
Generally, trading in corporate bonds, U.S. government securities and money
market instruments is substantially completed each day at various times before
the scheduled close of the Exchange. The value of these securities used in
computing the net asset value of each Fund is determined as of such times.
Occasionally, events affecting the values of these securities may occur
between the times at which they are determined and the scheduled close of the
Exchange that will not be reflected in the computation of the net asset value
of a Fund. If events materially affecting the values of these securities occur
during this period, the securities will be valued at their fair value as
determined in good faith by the Board of Directors.
Other securities for which market quotations are readily available are valued
at the current market price, which may be obtained from a pricing service,
based on a variety of factors including recent trades, institutional size
trading in similar types of securities (considering yield, risk and maturity)
and/or developments related to specific issues. Securities and other assets
for which market prices are not readily available are valued at fair value as
determined following procedures approved by the Board of Directors. With the
approval of the Board of Directors, a Fund may utilize a pricing service to
perform any of the above described functions.
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<PAGE>
ADDITIONAL INFORMATION ON DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. You may receive two types of distributions from a Fund:
1. INCOME DIVIDENDS. Each Fund receives income generally in the form of
dividends, interest and other income derived from its investments. This
income, less the expenses incurred in the Fund's operations, is its net
investment income from which income dividends may be distributed. Thus,
the amount of dividends paid per share may vary with each distribution.
2. CAPITAL GAIN DISTRIBUTIONS. The Funds may derive capital gains or losses
in connection with sales or other dispositions of their portfolio
securities. Distributions by a Fund derived from net short-term and net
long-term capital gains (after taking into account any capital loss
carry forward or post-October loss deferral) may generally be made once
a year in December to reflect any net short-term and net long-term
capital gains realized by the Fund as of October 31 of the current
fiscal year and any undistributed capital gains from the prior fiscal
year. Each Fund may make more than one distribution derived from net
short-term and net long-term capital gains in any year or adjust the
timing of these distributions for operational or other reasons.
TAXES. As stated in the Prospectus, each Fund has elected to be treated as a
regulated investment company under Subchapter M of the Code. The Board of
Directors reserves the right not to maintain the qualification of a Fund as a
regulated investment company if it determines this course of action to be
beneficial to shareholders. In that case, that Fund will be subject to federal
and possibly state corporate taxes on its taxable income and gains. In either
case, distributions to shareholders will be taxable to the extent of the
Fund's available earnings and profits.
Subject to the limitations discussed below, all or a portion of the income
dividends paid by a Fund may be treated by corporate shareholders as
qualifying dividends for purposes of the dividends received deduction under
federal income tax law. If the aggregate qualifying dividends received by a
Fund (generally, dividends from U.S. domestic corporations, the stock in which
is not debt-financed by the Fund and is held for at least a minimum holding
period) is less than 100% of its distributable income, then the amount of the
Fund's income dividends paid to corporate shareholders which may be designated
as eligible for such deduction will be an amount that does not exceed the
aggregate qualifying dividends received by the Fund for the taxable year. The
amount or percentage of income qualifying for the corporate dividends-received
deduction will be declared by each Fund annually in the Company's annual
report to shareholders.
Corporate shareholders should note that income dividends and distributions
paid by a Fund from sources other than the qualifying dividends it receives
will not qualify for the dividends-received deduction. For example, any
interest income and net short-term capital gain (in excess of any net
16
<PAGE>
long-term capital loss or capital loss carryover) included in investment
company taxable income and distributed by a Fund as a dividend will not
qualify for the dividends-received deduction. Corporate shareholders should
also note that availability of the corporate dividends-received deduction is
subject to certain restrictions. For example, the deduction is eliminated
unless Fund shares have been held (or deemed held) for more than 45 days in a
substantially unhedged manner. The dividends-received deduction also may be
reduced to the extent interest paid or accrued by a corporate shareholder is
directly attributable to its investment in shares of a Fund. Corporate
shareholders whose investment in a Fund is "debt financed" for these tax
purposes should consult with their tax advisors concerning the availability of
the dividends-received deduction. The entire income dividend and capital gain
distribution, including the portion which is treated as a deduction, is
includable in the tax base on which the alternative minimum tax is computed
and may also result in a reduction in the shareholder's tax basis in its Fund
shares, under certain circumstances, if the shares have been held for less
than two years.
The Code requires each Fund to distribute at least 98% of its taxable ordinary
income earned during the calendar year and at least 98% of its capital gain
net income earned during the 12 month period ending October 31 of each year
(in addition to amounts from the prior year that were neither distributed nor
taxed to the Fund) to you by December 31 of each year in order to avoid the
imposition of a federal excise tax. Under these rules, certain capital gain
distributions that are declared in October, November or December but that, for
operational reasons, may not be paid to you until the following January, will
be treated for tax purposes as if paid by the Fund and received by you on
December 31 of the calendar year in which they are declared. Each Fund intends
as a matter of policy to declare such capital gain distributions, if any, in
December and to pay these capital gain distributions in December or January to
avoid the imposition of this tax, but does not guarantee that its capital gain
distributions will be sufficient to avoid any or all federal excise taxes.
Redemptions and exchanges of a Fund's shares are taxable transactions for
federal and state income tax purposes. For most shareholders, gain or loss
will be recognized in an amount equal to the difference between the
shareholder's basis in the shares and the amount realized from the
transaction, subject to the rules described below. If such shares are a
capital asset in the hands of the shareholder, gain or loss will be capital
gain or loss and will be long-term for federal income tax purposes if the
shares have been held for more than one year.
All or a portion of a loss realized upon a redemption of shares of a Fund will
be disallowed to the extent that other shares of the Fund are purchased
(through reinvestment of income dividends, capital gain distributions or
otherwise) within 30 days before or after such redemption. Any loss disallowed
under these rules will be added to the tax basis of the shares repurchased.
All or a portion of the sales charge incurred in buying shares of a Fund will
not be included in the federal tax basis of any of such shares sold or
exchanged within 90 days of their purchase (for purposes of determining gain
or loss with respect to such shares) if the sales proceeds are reinvested in
another Fund of the Company and a sales charge which would otherwise apply to
the reinvestment is reduced or eliminated. Any portion of such sales charge
excluded from the tax basis of the shares sold will be added to the tax basis
of the shares acquired in the reinvestment.
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<PAGE>
You should consult with your tax advisor concerning the tax rules applicable
to the redemption or exchange of a Fund's shares.
A Fund's investment in options and futures contracts, including any stock
options, stock index options, stock index futures and options on stock index
futures are subject to many complex and special tax rules. For example, OTC
options on debt securities and equity options, including options on stock and
on narrow-based stock indexes, will be subject to tax under Section 1234 of
the Code, generally producing a long-term or short-term capital gain or loss
upon exercise, lapse, or closing out of the option or sale of the underlying
stock or security. By contrast, a Fund's treatment of certain other options,
futures and forward contracts entered into by the Fund is generally governed
by Section 1256 of the Code. These "Section 1256" positions generally include
listed options on debt securities, options on broad-based stock indexes,
options on securities indexes, options on futures contracts, regulated futures
contracts and certain foreign currency contracts and options thereon.
Absent a tax election to the contrary, each Section 1256 position held by a
Fund will be marked-to-market (i.e., treated as if it were sold for fair
market value) on the last business day of the Fund's fiscal year, and all gain
or loss associated with fiscal year transactions and mark-to-market positions
at fiscal year end (except certain foreign currency gain or loss covered by
Section 988 of the Code) will generally be treated as 60% long-term capital
gain or loss and 40% short-term capital gain or loss. The effect of Section
1256 mark-to-market rules may be to accelerate income or to convert what
otherwise would have been long-term capital gains into short-term capital
gains or short-term capital losses into long-term capital losses within a
Fund. The acceleration of income on Section 1256 positions may require a Fund
to accrue taxable income without the corresponding receipt of cash. In order
to generate cash to satisfy the distribution requirements of the Code, a Fund
may be required to dispose of portfolio securities that it otherwise would
have continued to hold or to use cash flows from other sources such as the
sale of its shares. In these ways, any or all of these rules may affect the
amount, character and timing of income distributed to you by a Fund.
When a Fund holds an option or other contract that substantially diminishes
the Fund's risk of loss with respect to another position of the Fund (as might
occur in some hedging transactions), this combination of positions could be
treated as a straddle for tax purposes, resulting in possible deferral of
losses, adjustments in the holding periods of Fund securities and conversion
of short-term capital losses into long-term capital losses. Certain tax
elections exist for mixed straddles (i.e., straddles comprised of at least one
Section 1256 position and at least one non-Section 1256 position) which may
reduce or eliminate the operation of these straddle rules.
In order for each Fund to qualify as a regulated investment company, at least
90% of each Fund's annual gross income must consist of dividends, interest and
certain other types of qualifying income. Foreign exchange gains derived by a
Fund with respect to the Fund's business of investing in stock or securities,
or options or futures with respect to such stock or securities is qualifying
income for purposes of this 90% limitation.
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FURTHER DESCRIPTION OF THE COMPANY'S SHARES
VOTING RIGHTS. Under the Company's By-Laws and in accordance with applicable
Maryland law, no annual meeting of shareholders is required in any year in
which the election of Directors is not required to be acted upon under the
1940 Act. On any matter submitted to the shareholders, the holder of each Fund
share is entitled to one vote per share (with proportionate voting for
fractional shares) regardless of the relative NAV of the Fund's shares.
However, on matters affecting one Fund differently from the other Fund, a
separate vote of the shareholders of that Fund is required. Shareholders of a
Fund are not entitled to vote on any matter that does not affect that Fund.
Shares do not have cumulative voting rights, which means the holders of more
than 50% of the shares voting for the election of Directors can elect 100% of
the Board of Directors, and the holders of less than 50% of the shares voting
for the election of Directors will not be able to elect any person as a
Director. Shareholders of a particular Fund might have the power to elect all
of the Company's Directors because that Fund has a majority of the total
outstanding shares of the Company.
DIVIDEND RIGHTS. Income dividends and capital gain distributions on shares of
a particular Fund may be paid with such frequency as the Board of Directors
may determine, which may be daily or otherwise, pursuant to a standing
resolution or resolutions adopted with such frequency as the Board of
Directors may determine. Such dividends and distributions may be paid to the
holders of shares of a particular Fund, from such of the income and capital
gains, accrued or realized, attributable to the assets belonging to that Fund,
as the Board of Directors may determine, after providing for actual and
accrued liabilities belonging to that Fund. All such dividends and
distributions on shares of a particular series or class will be distributed
pro rata to the holders of that Fund in proportion to the number of shares of
that Fund held by such holders at the date and time of record established for
the payment of such dividends or distributions. The Board of Directors of
Directors may declare and distribute a stock dividend to holders of shares of
a Fund by the distribution of shares of another Fund.
LIQUIDATION RIGHTS. In the event of the liquidation of a Fund, the
shareholders of that Fund will be entitled to receive, when and as declared by
the Board of Directors of Directors, the excess of the assets belonging to
that Fund over the liabilities belonging to that Fund. The holders of shares
of a Fund will not be entitled thereby to any distribution upon liquidation of
any other Fund. The assets that may be distributed to the shareholders of a
Fund will be distributed among such shareholders in proportion to the number
of shares of that Fund held by each such shareholder and recorded on the books
of the Company. The liquidation of any particular Fund in which there are
shares then outstanding may be authorized by an instrument in writing signed
by a majority of the Directors then in office, subject to the affirmative vote
of "a majority of the outstanding voting securities" of that Fund, as the
quoted phrase is defined in the 1940 Act.
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PRE-EMPTIVE, CONVERSION AND TRANSFER RIGHTS. When issued, each Fund's shares
are fully paid and nonassessable, have no pre-emptive or subscription rights,
and are fully transferable (the Board of Directors may, however, from time to
time, adopt lawful rules and regulations with reference to the method of
transfer). Subject to the 1940 Act, the Board of Directors of Directors has
the authority to provide that the holders of shares of a Fund will have the
right to convert or exchange such shares for or into shares of the other Fund
in accordance with such requirements and procedures as the Board of Directors
may establish.
THE COMPANY'S PRINCIPAL UNDERWRITER
Pursuant to a distribution agreement ("Distribution Agreement"), Monument
Distributors has agreed to use its best efforts as principal underwriter to
promote the sale of each Fund's shares in a continuous public offering. The
Distribution Agreement will continue in effect for two years from the date of
its execution and thereafter, but only so long as its continuance is
specifically approved at least annually by a vote of the Board of Directors or
by a vote of the holders of a majority of the Company's outstanding voting
securities, and in either event by a majority vote of the Board of Directors
members who are not parties to the Distribution Agreement or interested
persons of any such party (other than as members of the Board of Directors),
cast in person at a meeting called for that purpose. The Distribution
Agreement terminates automatically in the event of its assignment and may be
terminated by either party on 60 days' written notice.
Monument Distributors pays the expenses of the distribution of the Company's
shares, including advertising expenses and the costs of printing sales
material and prospectuses used to offer shares to the public. The Company pays
the expenses of preparing and printing amendments to its registration
statements and prospectuses (other than those necessitated by the activities
of Monument Distributors) and of sending prospectuses to existing
shareholders.
For its services, Monument Distributors receives a sales commission on the
sale and redemption of the shares of each Fund in the amount set forth, and as
described, in the Prospectus.
RULE 12b-1 PLAN. On ________, 1997, the Board of Directors, on behalf of each
Fund, unanimously approved a Plan of Distribution pursuant to Rule 12b-1
("Plan"), pursuant to which Monument Distributors is entitled to receive a
12b-1 fee for certain activities and expenses that are intended to result in
the sale of Fund shares. See "Rule 12b-1 Plan" in the Prospectus for a
description of these activities and expenses and the maximum 12b-1 fee payable
under the Plan "Rule 12b-1 fee". As described in the Prospectus, Monument
Distributors has agreed to voluntarily waive the Rule 12b-1 fee for the first
year of operations of each Fund.
In adopting the Plan, the Board of Directors concluded that the increased
sales of Fund shares that may result from the Plan are reasonably likely to
benefit each Fund and its shareholders, over time, by lowering overall Fund
expenses per share through economies of scale. The Plan is in
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effect for an initial one year period, and will remain continuously in effect
thereafter, provided that the Board of Directors, including a majority of Rule
12b-1 Directors (described below) annually approves its continuance by votes
cast at an in person meeting called for the purpose of voting on the Plan.
Rule 12b-1 Directors include those Directors who are not interested persons of
the Company and who have no direct or indirect financial interest in the
operation of the Plan or any agreements related thereto.
A majority of the Rule 12b-1 Directors must approve any material amendment to
the Plan. In addition, the amount payable by a Fund under the Plan may not
materially increase without the approval of a majority of the outstanding
voting securities of that Fund. The Plan may be terminated at any time, with
respect to a Fund, by a majority of the Rule 12b-1 Directors or by a majority
of the outstanding voting securities of that Fund.
PERFORMANCE INFORMATION
From time to time, each Fund may state its average annual and cumulative total
returns in advertisements and sales literature. SUCH PERFORMANCE DOES NOT
REPRESENT THE ACTUAL EXPERIENCE OF ANY PARTICULAR INVESTOR, AND IS NOT
NECESSARILY INDICATIVE OF FUTURE RESULTS.
AVERAGE ANNUAL TOTAL RETURN. Each Fund computes its average annual total
return according to the following formula prescribed by the SEC:
n
P(1+T) = ERV
Where:
P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
investment made at the beginning of the one-,
five-, ten-year or shorter period shown
Average annual total return calculations will reflect the deduction of the
maximum front-end sales charge from the hypothetical initial $1,000 purchase,
and the reinvestment of income dividends and capital gain distributions at net
asset value. The calculations also will reflect the assessment of the deferred
sales charge at the end of the one-year or any shorter period. The
calculations will not reflect the deduction for the Rule 12b-1 fee until such
charge is actually assessed. Each Fund also may show average annual total
return calculations.
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CUMULATIVE TOTAL RETURN. Each Fund also may quote its cumulative total return
in advertisements and sales literature. Each Fund will compute cumulative
total return in a manner similar to average annual total return, except that
it will not annualize the results. The SEC has not prescribed a standard
formula for computing cumulative total return. Cumulative total return is
calculated according to the following formula:
C = (ERV/P) -1
Where:
P = a hypothetical initial investment of $1,000
C = cumulative total return
ERV = ending redeemable value of a hypothetical $1,000
investment made at the beginning of the one-,
five-, ten-year or shorter period shown
Cumulative total return calculations will reflect the deduction of the maximum
front-end sales charge from the hypothetical initial $1,000 purchase, and the
reinvestment of income dividends and capital gain distributions at net asset
value. The calculations also will reflect the assessment of the deferred sales
charge at the end of the one-year or any shorter period. The calculations will
not reflect the deduction for the Rule 12b-1 fee until such charge is actually
assessed.
OTHER PERFORMANCE QUOTATIONS. Each Fund may, from time to time, quote average
annual and cumulative total returns using different assumptions about
applicable sales charges.
VOLATILITY. Occasionally, a Fund may include in advertisements and sales
literature statistics that show the volatility or risk of an investment in the
Fund, as compared to a market index. One measure of volatility is beta. Beta
is the volatility of a Fund relative to the total market, as represented by an
index considered representative of the types of securities in which the Fund
invests. A beta of more than 1.00 indicates volatility greater than the market
and a beta of less than 1.00 indicates volatility less than the market.
Another measure of volatility or risk is standard deviation. Standard
deviation measures the variability of net asset value or total return of a
Fund around an average over a specified period of time. The greater the
standard deviation, the greater the assumed risk in achieving performance.
PERFORMANCE COMPARISONS. To help you better evaluate how an investment in a
Fund may satisfy your investment objectives, advertisements and sales
materials about a Fund may discuss certain measures of performance as reported
by various financial publications. These materials also may compare a Fund's
performance to that of other investments, indices, and averages. See the
Appendix for examples of the types of performance comparisons that a Fund may
make.
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FINANCIAL STATEMENTS
[to be filed by amendment]
23
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APPENDIX
PERFORMANCE COMPARISONS
Each Fund may compare its performance to the various averages, indices, and
investments listed below. In addition, advertisements and sales literature for
each Fund may discuss certain performance information set out in the various
financial publications listed below.
1. Dow Jones Composite Average or its component averages - an unmanaged
index composed of 30 blue-chip industrial corporation stocks (Dow Jones
Industrial Average), 15 utilities company stocks (Dow Jones Utilities
Average), and 20 transportation company stocks. Comparisons of performance
assume reinvestment of dividends.
2. Standard & Poor's 500 Stock Index or its component indices - an
unmanaged index composed of 400 industrial stocks, 40 financial stocks, 40
utilities stocks, and 20 transportation stocks. Comparisons of performance
assume reinvestment of dividends.
3. The New York Stock Exchange composite or component indices - an
unmanaged index of all industrial, utilities, transportation, and finance
stocks listed on the New York Stock Exchange.
4. Wilshire 5000 Equity Index - represents the return on the market value
of all common equity securities for which daily pricing is available.
Comparisons of performance assume reinvestment of dividends.
5. Lipper - Mutual Fund Performance Analysis and Lipper - Fixed Income
Fund Performance Analysis - measure of total return and average current yield
for the mutual fund industry and ranks individual mutual fund performance over
specified time periods, assuming reinvestment of all distributions, exclusive
of any applicable sales charges.
6. CDA Mutual Fund Report, published by CDA Investment Technologies, Inc.
- - analyzes price, current yield, risk, total return, and average rate of
return (average annual compounded growth rate) over specified time periods for
the mutual fund industry.
7. Mutual Fund Source Book, published by Morningstar, Inc. - analyzes
price, yield, risk, and total return for equity Fund.
8. Value Line Index - an unmanaged index which follows the stock of
approximately 1,700 companies.
9. Consumer Price Index (or Cost of Living Index), published by the U.S.
Bureau of Labor Statistics a statistical measure of change, over time, in the
price of goods and services in major expenditure groups.
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10. Historical data supplied by the research departments of First Boston
Corporation, the J.P. Morgan companies, Salomon Brothers, Merrill Lynch,
Lehman Brothers and Bloomberg L.P.
11. Financial publications: THE WALL STREET JOURNAL, BUSINESS WEEK,
CHANGING TIMES, FINANCIAL WORLD, FORBES, FORTUNE, and MONEY magazines -
provide performance statistics over specified time periods.
12. Russell 3000 Index - composed of 3,000 large U.S. companies by market
capitalization, representing approximately 98% of the U.S. equity market. The
average market capitalization (as of May 1995) is $1.74 billion.
13. Russell 2000 Small Stock Index - consists of the smallest 2,000
companies in the Russell 3000 Index, representing approximately 11% of the
Russell 3000 total market capitalization. The average market capitalization
(as of May 1995) is $288 million.
14. Stocks, Bonds, Bills, and Inflation, published by lbbotson Associates
- - historical measure of yield, price, and total return for common and small
company stock, long-term government bonds, Treasury bills, and inflation.
15. Morningstar - information published by Morningstar, Inc., including
Morningstar proprietary mutual fund ratings. The ratings reflect Morningstar's
assessment of the historical risk adjusted performance of a fund over
specified time periods relative to other funds within its class.
Advertisements also may compare a Fund's performance to the return on
certificate of deposits ("CDs") or other investments. You should be aware,
however, that an investment in a Fund involves the risk of fluctuation of
principal value, a risk generally not present in an investment in a CD issued
by a bank. For example, as the general level of interest rates rise, the value
of a Fund's fixed-income investments, if any, as well as the value of its
shares that are based upon the value of such portfolio investments, can be
expected to decrease. Conversely, when interest rates decrease, the value of a
Fund's shares can be expected to increase. CDs are frequently insured by an
agency of the U.S. Government. An investment in a Fund is not insured by any
federal, state or private entity.
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REGISTRATION STATEMENT ON FORM N-1A
PART C - OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) List of Financial Statements
1. PART A. Not Applicable.
2. PART B. The Registrant's Statement of Assets and Liabilities (showing the
Registrant's initial capitalization), and the report of the Company's
independent auditor's thereon, will be filed by amendment.
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit
No. Description Of Exhibits
------- -----------------------
<S> <C>
(1)(a) Articles of Incorporation of Monument Series Fund, Inc.*/
(1)(b) Articles of Amendment to Articles of Incorporation of Monument
Series Fund, Inc. are filed herewith.
(2) Bylaws of Monument Series Fund, Inc. */
(3) Not Applicable.
(4) Not Applicable.
(5) Form of Investment Advisory Agreement by and between Monument
Series Fund, Inc. and Monument Advisors, Ltd. is filed
herewith.
(6) Form of Distribution Agreement by and between Monument Series
Fund, Inc. and Monument Distributors, Inc. is filed herewith.
(7) Not Applicable.
(8) Form of Custody and Investment Accounting Agreement by and
between Monument Series Fund, Inc. and Investors Fiduciary
Trust Company is filed herewith.
(9)(a) Form of Transfer Agency and Service Agreement by and between
Monument Series Fund, Inc. and State Street Bank and Trust
Company is filed herewith.
</TABLE>
*/ Previously filed with the initial filing, on April 30, 1997, of this
Registration Statement.
1
<PAGE>
<TABLE>
<S> <C>
(9)(b) Form of Administration Agreement by and between Monument Series
Fund, Inc. and State Street Bank and Trust Company is filed
herewith.
(10) Opinion and Consent of Counsel as to the legality of the
securities being registered (to be filed by amendment).
(11) Consent of Independent Auditors (to be filed by amendment).
(12) Not Applicable.
(13) Form of Subscription Agreement is filed herewith.
(14) Not Applicable.
(15) Form of Plan of Distribution Pursuant to Rule 12b-1 is filed
herewith.
(16) Not Applicable.
(17) The Financial Data Schedule required to be filed pursuant to
Form N-1A, Item 24(b)(17) (to be filed by amendment as Exhibit
27, as dictated by the Commission's Electronic Data Gathering,
Analysis, and Retrieval System, with the inclusion of the
financial statements to be filed four to six months following
the effectiveness of this Registration Statement).
(18) Not Applicable.
(27) See response to Item 17.
</TABLE>
ITEM 25. Persons Controlled by or Under Common Control with Registrant
No person is controlled by the Registrant, and no person is under common
control with the Registrant. No person owns more than 25% of the Registrant's
shares of common stock. A form of subscription agreement pertaining to
Registrant's initial capitalization is filed as an exhibit in response to Item
24(b)(13) of this Registration Statement.
ITEM 26. Number of Holders of Securities
As of the date of filing of this Registration Statement, there were no
shareholders of the Registrant, because the Registrant had not yet commenced
operations.
ITEM 27. Indemnification
Under Section 2-418 of Maryland General Corporation Law, a corporation
may indemnify certain Directors, officers, employees, or agents. Consistent
with Maryland law, Article Seventh of Registrant's Articles of Incorporation
("Articles") permits it to indemnify its Directors and officers to the fullest
extent permitted by law. In addition, Section 10 of Registrant's By-Laws
permits it to insure and indemnify its Directors, officers, employees and
2
<PAGE>
agents to the fullest extent permitted by law. The above-cited provisions of
Registrant's Articles and By-Laws, which were filed with the initial filing of
this Registration Statement, are incorporated by reference into this Item.
The Registrant has entered into agreements with various service providers,
pursuant to which Directors, officers and employees of the Registrant have
been indemnified, to the extent permitted by applicable law. These agreements
have been filed as exhibits to this Registration Statement, and are hereby
incorporated by reference into this Item to the extent necessary.
Insofar as indemnification for liabilities arising under Securities Act of
1933 (the "1933 Act") may be permitted to Directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a Director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such Director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by a
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of
such issue.
ITEM 28. Business and Other Connections of Investment Adviser
Monument Advisors, Ltd. ("Advisors"), the Registrant's investment
adviser, located at 8377 Cherry Lane, Laurel, Maryland 20707-4831, acts as
manager or adviser to qualified individuals, retirement plans, charitable
foundations and trusts. David A. Kugler and Herbert Klein, III are both
officers of Advisors. Mr. Kugler was an account executive for Paine Webber,
Inc., located at 100 East Pratt Street, Baltimore, Maryland 21202, from
September 1994 through January 1997. Mr. Kugler now serves as President of The
Monument Group, Inc., Monument Distributors, Inc., and the Registrant, in
addition to Advisors. Mr. Klein worked as a managing associate at Coopers &
Lybrand, LLP, located at __________, from 1995 into 1997, and since that time
has been a consultant for the Highland Group, located at __________, which
specializes in operational aspects of mergers and acquisitions. In addition,
Mr. Klein now serves as Secretary of The Monument Group, Inc., and Monument
Distributors, Inc., and Vice President and Secretary of the Registrant, in
addition to Secretary of Advisors. The principal business address for each of
the Monument entities listed above is identical to that of Advisors.
3
<PAGE>
ITEM 29. Principal Underwriters
(a) Not applicable.
(b) Following is certain information concerning Directors and executive
officers of Monument Distributors, Inc.
<TABLE>
<CAPTION>
=============================================================================
NAME AND PRINCIPAL BUSINESS POSITION AND OFFICES POSITION AND
ADDRESS* WITH UNDERWRITER OFFICES WITH
REGISTRANT
-----------------------------------------------------------------------------
<S> <C> <C>
David A. Kugler Director, President Director,
and Treasurer President
and
Treasurer
-----------------------------------------------------------------------------
Herbert Klein, III Secretary Vice President
and Secretary
=============================================================================
<FN>
* The principal business address of David A. Kugler and Herbert Klein,
III is 8377 Cherry Lane, Laurel, Maryland 20707.
</FN>
</TABLE>
(c) Not applicable.
ITEM 30. Location of Accounts and Records
The following entities prepare, maintain and preserve the records
required by Section 31(a) of the 1940 Act for the Registrant. These services
are provided to the Registrant through written agreements between the parties
to the effect that such records will be maintained on behalf of the Registrant
for the periods prescribed by the rules and regulations of the Commission
under the 1940 Act and that such records are the property of the entity
required to maintain and preserve such records and will be surrendered
promptly on request:
(1) Monument Advisors, Ltd.
8377 Cherry Lane
Laurel, Maryland 20707
(2) Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
(3) State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
(4) Monument Distributors, Inc.
8377 Cherry Lane
Laurel, Maryland 20707
4
<PAGE>
ITEM 31. Management Services
Not Applicable.
ITEM 32. Undertakings
(a) Not applicable.
(b) Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be
certified, within four to six months from the effective date
of this Registration Statement.
(c) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, Registrant has duly caused this amended
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Laurel and the State of Maryland on
the 20th day of October, 1997.
MONUMENT SERIES FUND, INC.
BY: /s/DAVID A. KUGLER
-------------------------
David A. Kugler
President
MONUMENT SERIES FUND,INC.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
(SIGNATURE) (TITLE) (DATE)
<S> <C> <C>
/s/DAVID A. KUGLER Director, President (Principal October 20, 1997
------------------ Executive Officer) and
David A. Kugler Treasurer (Principal
Financial Officer and
Principal Accounting Officer)
</TABLE>
<PAGE>
EXHIBIT INDEX
(1)(b) Articles of Amendment to Articles of Incorporation of Monument
Series Fund, Inc.
(5) Form of Investment Advisory Agreement by and between Monument
Series Fund, Inc. and Monument Advisors, Ltd.
(6) Form of Distribution Agreement by and between Monument Series Fund,
Inc. and Monument Distributors
(8) Form of Custody and Investment Accounting Agreement by and between
Monument Series Fund, Inc. and Investors Fiduciary Trust Company
(9)(a) Form of Transfer Agency and Service Agreement by and between
Monument Series Fund, Inc. and State Street Bank and Trust Company
(9)(b) Form of Administration Agreement by and between Monument Series
Fund., Inc. and State Street Bank and Trust Company
(13) Form of Subscription Agreement
(15) Form of Plan of Distribution Pursuant to Rule 12b-1
<PAGE>
EXHIBIT 1(b)
MONUMENT SERIES FUND, INC.
ARTICLES OF AMENDMENT
Monument Series Fund, Inc., a Maryland corporation, having its principal
office in the State of Maryland in Laurel (hereinafter, "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Article FIFTH (A) of the Articles of Incorporation is hereby
amended by changing therein the designation Washington Area Growth Fund to
Monument Washington Regional Growth Fund, and by changing therein the
designation Washington Area Aggressive Growth Fund to Monument Washington
Regional Aggressive Growth Fund.
SECOND: The Amendment to the Articles of Incorporation of the Corporation
as hereinabove set forth was approved by a majority of the entire Board of
Directors of the Corporation, and no stock entitled to be voted on this matter
was outstanding or subscribed for at the time of approval.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be signed in its name and on its behalf by its President and
witnessed by its Secretary.
The undersigned President of the Corporation acknowledges these Articles
of Amendment to be the corporate act of the Corporation and states that to the
best of his knowledge, information and belief, the matters and facts set forth
herein with respect to the authorization and approval hereof are true in all
material respects and that this statement is made under the penalties for
perjury.
MONUMENT SERIES FUND, INC.
By: /s/ DAVID A. KUGLER
----------------------
David A. Kugler
President
ATTEST:
/s/ HERBERT KLEIN, III
----------------------
Herbert Klein, III
Secretary
<PAGE>
ARTICLES OF AMENDMENT
RESOLVED, that the Articles of Amendment to the Articles of Incorporation of
the Company, changing the designations of the Company's two initial series,
namely, Washington Area Growth Fund and Washington Area Aggressive Growth
Fund, to Monument Washington Regional Growth Fund and Monument Washington
Regional Aggressive Growth Fund, respectively, be, and hereby are, approved;
and
RESOLVED FURTHER, that the officers of the Corporation be, and they hereby
are, empowered and directed to take any and all steps, and to execute and
deliver any and all instruments in order to make such Articles of Amendment
effective; and
EXHIBIT 5
FORM OF
INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement ("Agreement") made this ____ day of
October, 1997 between MONUMENT SERIES FUND, INC., a Maryland corporation (the
"Company"), and MONUMENT ADVISORS, LTD., a Maryland corporation (the
"Advisor") (collectively, the "Parties").
WHEREAS, the Company is organized and intends to operate as an open-end
management investment company and is so registered under the Investment
Company Act of 1940, as amended, (the "Act"), and will register shares of each
Portfolio (defined below) under the Securities Act of 1933 ("1933 Act"), to
the extent required thereby, on Form N-1A (collectively, "Registration
Statement"); and
WHEREAS, the Company's Articles of Incorporation ("Articles") permit the
Company's Board of Directors ("Board" or "Directors") to establish and
authorize the issuance of shares of one or more series of common stock
("series") representing separate investment portfolios, each with its own
investment objectives, program, policies and restrictions; and
WHEREAS, the Board has established and authorized the issuance of the
shares of the series listed on Schedule A hereto (each, a "Portfolio" and
collectively, the "Portfolios"), as the same may be amended from time to time
by mutual written agreement of the Parties ("Schedule A"); and
WHEREAS, the Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, and is engaged principally in the business of
rendering investment advisory services; and
WHEREAS, the Company desires to have the Advisor perform the investment
advisory services and provide the facilities described herein, and the Advisor
desires to provide these services and facilities to the Company and each
Portfolio thereof; and
WHEREAS, the Company has entered into a Custody and Investment Accounting
Agreement, a Transfer Agency and Service Agreement, and an Administration
Agreement with other entities pursuant to which these entities have agreed to
provide a range of services to the Company and each Portfolio thereof.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration the receipt of which is
hereby acknowledged, the Parties agree as follows:
<PAGE>
1. APPOINTMENT OF THE ADVISOR.
(a) The Company hereby appoints the Advisor, and the Advisor hereby
accepts such appointment, to act as the investment adviser to each Portfolio
for the period and on the terms herein set forth, for the compensation
provided on Schedule A hereto.
(b) The Advisor shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Company or any Portfolio in any way or otherwise be deemed an agent of the
Company.
2. SERVICES AND FACILITIES TO BE PROVIDED BY THE Advisor.
The Advisor, at its own expense or pursuant to arrangements with others
to bear the expenses, shall furnish the services and facilities described
below to the Company, on behalf of each Portfolio, subject to the overall
supervision and review of the Company's Board of Directors and in accordance
with, as in effect from time to time, the provisions of the Company's
Articles, By-Laws, Registration Statement, and applicable law (including,
without limitation, the Act, the 1933 Act, and the Internal Revenue Code) and,
to the extent necessary or appropriate, in coordination with service
agreements entered into by the Company with other entities, such as, for
example, the Company's Custody and Investment Accounting Agreement, Transfer
Agency and Service Agreement, and Administration Agreement. The Advisor shall
give the Company and each Portfolio the benefit of its best judgment and
efforts in rendering its services as investment adviser.
(a) INVESTMENT PROGRAM. The Advisor shall continuously furnish an
investment program for each Portfolio. In connection therewith, the Advisor
shall:
(i) determine what investments each Portfolio shall purchase, hold, sell,
or exchange and what portion, if any, of each Portfolio's assets shall
remain uninvested, and shall take such steps as may be necessary to
implement the same;
(ii) determine the manner in which to exercise any voting rights, rights
to consent to corporate action, or other rights pertaining to a
Portfolio's investment securities; and
(iii) render regular reports to the Company, at regular meetings of its
Board and at such other times as may be reasonably requested by the
Board, of (w) the decisions which it has made with respect to the
investment of the assets of each Portfolio and the purchase and sale of
its investment securities, (x) the reasons for such decisions, (y) the
extent to which it has implemented those decisions, and (z) the manner in
which it has exercised any voting rights, rights to consent to corporate
action, or other rights pertaining to a Portfolio's investment
securities.
2
<PAGE>
(b) PORTFOLIO SECURITIES TRANSACTIONS. The Advisor, subject to and in
accordance with any directions that the Board may issue from time to time,
shall place orders for the execution of each Portfolio's securities
transactions. When placing orders, the Advisor shall seek to obtain the best
net price and execution ("best execution") for each Portfolio, but this
requirement shall not be deemed to obligate the Advisor to place any order
solely on the basis of obtaining the lowest commission rate if the other
standards set forth in this section have been satisfied. The Parties recognize
that there are likely to be many cases in which different broker-dealers are
equally able to provide best execution and that, in selecting among such
broker-dealers with respect to particular trades, it may be desirable to
choose those broker-dealers who furnish research, statistical, quotations and
other information to the Company and its Portfolios, as well as the Advisor,
in accordance with the standards set forth below. Moreover, to the extent that
it continues to be lawful to do so and so long as the Board determines that a
Portfolio will benefit, directly or indirectly, by doing so, the Advisor may
place orders with a broker-dealer who charges a commission for a securities
transaction which is in excess of the amount of commission that another
broker-dealer would have charged for effecting that transaction, provided that
the excess commission is reasonable in relation to the value of "brokerage and
research services" (as defined in Section 28(e)(3) of the Securities Exchange
Act of 1934) provided by that broker-dealer. Accordingly, the Company, on
behalf of each Portfolio, and the Advisor agree that the Advisor shall select
broker-dealers for the execution of each Portfolio's transactions from among:
(i) those broker-dealers who provide quotations and other services to the
Company, with respect to one or more Portfolios, specifically including
the quotations necessary to determine the net assets of the Portfolios,
in such amount of total brokerage as may reasonably be required in light
of such services; and
(ii) those broker-dealers who supply research, statistical and other data
to the Advisor or its affiliates, which the Advisor or its affiliates may
lawfully and appropriately use in their investment advisory capacities,
which relate directly to securities, actual or potential, of the
Portfolios, or which place the Advisor in a better position to make
decisions in connection with the management of each Portfolio's assets,
whether or not such data may also be useful to the Advisor and its
affiliates in managing other portfolios or advising other clients, in
such amount of total brokerage as may reasonably be required. The Advisor
also may consider the sale of Portfolio shares as a factor in the
selection of broker-dealers to execute each Portfolio's securities
transactions, subject to the Advisor's obligation to seek best execution
for each Portfolio.
The Advisor shall render regular reports to the Company, not less frequently
than quarterly, of how much total brokerage business has been placed by the
Advisor with broker-dealers falling into each of the categories referred to
above and the manner in which the allocation has been accomplished. The
Advisor agrees that no investment decision will be made or influenced by a
desire to provide brokerage for allocation in accordance with the foregoing,
and that the right to make such allocation of brokerage shall not interfere
with the Advisor's paramount duty to obtain the best execution for the
Company.
3
<PAGE>
(c) TENDER OFFER SOLICITATION FEES. The Advisor shall use its best
efforts to recapture all available tender offer solicitation fees in
connection with tenders of the securities of any Portfolio, and any similar
payments, provided, however, that neither the Advisor, nor any affiliate of
the Advisor shall be required to register as a broker-dealer for this purpose.
The Advisor shall advise the Board of any fees or payments of whatever type
that it may be possible for the Advisor or an affiliate of the Advisor to
receive in connection with the purchase or sale of investment securities for
any Portfolio.
(d) VALUATION OF INVESTMENTS. The Advisor shall assist the custodian of
the Company's assets ("Custodian") in (i) valuing the securities of each
Portfolio in such manner and on such basis as described in the then-current
prospectus and statement of additional information of the Company and (ii)
calculating the net asset value per share of each Portfolio, as described in
the then-current prospectus and statement of additional information of the
Company, at the close of the regular trading of the New York Stock Exchange
(the "Exchange"), usually 4:00 p.m. Eastern time, each Monday through Friday,
except days on which the Exchange is closed. The Company shall provide, or
arrange for others to provide, all necessary information for the calculation
of the net asset value per share of each Portfolio, including the total number
of shares outstanding of each Portfolio. The Company shall arrange for the
Custodian to provide the Advisor or its designee with the net asset value per
share of each Portfolio as soon as reasonably practical each day after the net
asset value per share has been calculated.
(e) ASSISTANCE WITH REGULATORY MATTERS. The Advisor shall provide such
assistance, cooperation, and information to the Company or its designee, as
the same may reasonably request from time to time, with respect to the the
following matters:
(i) the preparation, amendment, filing, and/or delivery of the Company's
registration statement, regulatory reports, periodic reports to
shareholders and other documents (including tax returns), required by
applicable law; and
(ii) the development, implementation, maintenance, and monitoring of a
compliance program for assuring compliance with all federal and state
securities law matters.
The Parties acknowledge that the Company or its designee shall have primary
responsibility for the foregoing matters.
(f) INFORMATION, RECORDS, AND CONFIDENTIALITY.
(i) The Company or its designees shall provide timely information to the
Advisor regarding such matters as purchases and redemptions of shares of
each Portfolio, the cash requirements and cash available for investment
in each Portfolio, and all other information as
4
<PAGE>
may be reasonably necessary or appropriate for the Advisor to perform its
responsibilities hereunder.
(ii) The Company shall own and control all records maintained hereunder
by the Advisor on the Company's behalf and, upon request of the Company
or in the event of termination of this Agreement with respect to any
Portfolio for any reason, the Advisor shall promptly return to the
Company all records relating to that Portfolio, free from any claim or
retention of rights by the Advisor and without charge by the Advisor
except for the Advisor's direct expense.
(iii) The Advisor shall not disclose or use any records or information
obtained pursuant hereto except as expressly authorized herein, and shall
keep confidential any information obtained pursuant hereto, and disclose
such information only if the Company has authorized such disclosure, or
if such disclosure is expressly required by applicable federal or state
regulatory authorities.
(g) FACILITIES AND PERSONNEL. The Advisor shall, at its expense, furnish
to the Company adequate facilities and personnel necessary for the Directors
and officers of the Company to manage the affairs and conduct of the Company's
business, including maintaining all internal bookkeeping, accounting and
auditing services and records in connection with the Company's investment and
business activities. The foregoing shall not be construed to require the
Advisor to provide facilities or personnel to any third party service provider
retained by the Company. Such facilities and personnel shall include:
(i) office space, which may be space within the offices of the Advisor or
in such other place as may be agreed upon from time to time,
(ii) office furnishings and supplies, including telephone service,
utilities, and simple business equipment, and
(iii) executive, secretarial and clerical personnel as may be reasonably
requested by the Company.
The Advisor shall compensate all Directors, officers and employees of the
Company who are directors, officers, stockholders, or employees of the Advisor
or its affiliates.
(h) DELEGATION TO SUB-ADVISORS. Subject to the approval of the Board and
the shareholders of the Portfolios, the Advisor may delegate to a sub-advisor
certain of its duties herein, provided that the Advisor shall continue to
supervise the performance of any such sub-advisor.
5
<PAGE>
3. EXPENSES OF THE COMPANY.
Except for expenses that the Advisor expressly assumes pursuant to this
Agreement, the Company shall bear, or cause others to bear, all expenses for
its operations and activities, and shall cause the Advisor to be reimbursed,
by the Company or others, for any such expense that the Advisor incurs. The
expenses borne by the Company include, without limitation:
(a) fees and expenses paid to the Advisor as provided herein;
(b) expenses of all audits by independent public accountants;
(c) expenses of transfer or dividend disbursing agent, registrar,
Custodian, or depository appointed for safekeeping of each Portfolio's cash,
securities, and other property, and shareholder record-keeping services,
including the expenses of issuing, repurchasing or redeeming Portfolio shares;
(d) expenses of obtaining quotations for calculating the value of the net
assets of each Portfolio;
(e) salaries and other compensation of executive officers of the Company
who are not directors, officers, stockholders or employees of the Advisor or
its affiliates;
(f) all taxes levied against the Company, including issuance and transfer
taxes, and corporate fees payable by the Company to federal, state or other
governmental agencies;
(g) brokerage fees and commissions in connection with the purchase and
sale of securities for each Portfolio, and similar fees and charges for the
acquisition, disposition, lending or borrowing of such securities;
(h) costs, including the interest expense, of borrowing money;
(i) costs incident to meetings of the Board and shareholders of the
Company, (exclusive of costs of those Directors and employees of the Company
who are "interested persons" of the Company within the meaning of the Act);
(j) fees and expenses of Directors who are not "interested persons" of
the Company within the meaning of the Act;
(k) legal fees, including the legal fees related to the registration and
continued qualification of the shares of each Portfolio for sale;
(l) costs and expense of registering and maintaining the registration of
the Company and the shares of each Portfolio under federal law, and making and
maintaining any notice filings and fees required under any applicable State
laws;
6
<PAGE>
(m) the preparation, setting in type, printing in quantity and
distribution of materials distributed to then-current shareholders of each
Portfolio of such materials as prospectuses, statements of additional
information, supplements to prospectuses and statements of additional
information, periodic reports, communications, and proxy materials (including
proxy statements and proxy cards) relating to the Company or the Portfolio and
the processing, including tabulation, of the results of voting instruction and
proxy solicitations;
(n) the fees and expenses involved in the preparation of all reports as
required by federal or state law;
(o) postage;
(p) extraordinary or non-recurring expenses, such as legal claims and
liabilities and litigation costs and indemnification payments by the Company
in connection therewith;
(q) trade association dues for the Investment Company Institute or
similar organizations; and
(r) the cost of the fidelity bond required by Rule 17g-1 under the Act,
and any errors and omissions or other liability insurance premiums covering
the Directors, officers, and employees.
4. COMPENSATION OF THE ADVISOR.
As compensation to the Advisor for services rendered and facilities
furnished hereunder, the Company shall pay the Advisor a fee in the amount and
manner set forth in Schedule A. The fee shall be reduced by any tender
solicitation fees received by the Advisor, or any affiliated person of the
Advisor, in connection with the tender of investments of any Portfolio or any
similar payments (less any direct expenses incurred by the Advisor, or any
affiliated person of the Advisor, in connection with such fees or payments).
5. ACTIVITIES OF THE ADVISOR.
The services of the Advisor to the Company under this Agreement are not
exclusive, and the Advisor and any of its affiliates shall be free to render
similar services to others, so long as its services hereunder are not impaired
thereby. Subject to and in accordance with the Company's Articles, By-Laws,
the Articles of Incorporation and By-Laws of the Adviser, and any applicable
requirements of the Act, it is understood that Directors, officers, agents and
shareholders of the Company are or may be interested persons of the Advisor or
its affiliates as directors, officers, agents, or stockholders, or otherwise;
that directors, officers, agents, or stockholders, of the Advisor or its
affiliates are or may be interested persons of the Company as Directors,
officers,
7
<PAGE>
agents, shareholders or otherwise; that the Advisor or its affiliates may be
interested in the Company as shareholders or otherwise; and the effect of such
interest shall be governed by the Act.
6. LIABILITIES OF THE ADVISOR.
The Advisor shall indemnify and hold harmless the Company and each of its
Directors and officers (or former Directors and officers) and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, "Indemnitees") from all loss, cost, liability, claim, damage,
or expense (including the reasonable cost of investigating and defending
against the same and any counsel fees reasonably incurred in connection
therewith) incurred by any Indemnitees under the 1933 Act or under common law
or otherwise which arise out of or are based upon or are a result of (i) the
Advisor's willful misfeasance, bad faith, or negligence in the performance of
its duties, or (ii) the reckless disregard of its obligations and duties under
this Agreement, or that of its officers, agents, and employees, in the
performance of this Agreement, or (iii) the failure at any time of any
Portfolio to operate as a regulated investment company in compliance with
Subchapter M of the Internal Revenue Code. This indemnity provision, however,
shall not operate to protect any officer or Director of the Company from any
liability to the Company or any shareholder by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of his or her duties.
In case any action shall be brought against any Indemnitee, the Advisor
shall not be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against any Indemnitee, unless the Indemnitee
shall have notified the Advisor in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon the Indemnitee (or after the Indemnitee
shall have received notice of such service on any designated agent), but
failure to notify the Advisor of any such claim shall not relieve it from
liability to the Indemnitees against whom such action is brought otherwise
than on account of this Section 6. The Advisor shall be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the
Advisor elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to the Indemnitees that are defendants
in the suit. In the event the Advisor elects to assume the defense of any such
suit and retain such counsel, the Indemnitees that are defendants in the suit
shall bear the fees and expenses of any additional counsel retained by them,
but, in case the Advisor does not elect to assume the defense of any such
suit, the Advisor will reimburse the Indemnitees that are defendants in the
suit for the reasonable fees and expenses of any counsel retained by them. The
Advisor shall promptly notify the Company of the commencement of any
litigation or proceedings in connection with the issuance or sales of the
shares.
8
<PAGE>
7. TERM AND TERMINATION.
(a) TERM. This Agreement shall become effective with respect to each
Portfolio on the date hereof, or, with respect to any Portfolio subsequently
included on Schedule A ("additional Portfolio"), on the date the Schedule is
amended to include such Portfolio. Unless terminated as herein provided, this
Agreement shall remain in full force and effect for two years from the date of
its execution with respect to each Portfolio and, with respect to each
additional Portfolio, until two years following the date on which such
Portfolio becomes a Portfolio hereunder, and shall continue in full force and
effect thereafter with respect to each Portfolio so long as such continuance
with respect to the Portfolio is approved at least annually (a) by either the
Directors of the Company or by vote of a majority of the outstanding voting
securities of the Portfolio, and (b) in either event by the vote of a majority
of the Directors of the Company who are not parties to this Agreement or
"interested persons" of any such party, cast in person at a meeting called for
the purpose of voting on such approval. Notwithstanding the foregoing, the
Directors may, from time to time, establish a new effective date for the
continuance of this Agreement with respect to any Portfolio and/or additional
Portfolio; provided, that such new effective date precedes the then current
termination date of the Agreement. Any approval of this Agreement by the
holders of a majority of the outstanding voting securities of any Portfolio
shall be effective to continue this Agreement with respect to that Portfolio
notwithstanding (i) that this Agreement has not been approved by the vote of a
majority of the outstanding voting securities of any other Portfolio affected
thereby, and (ii) that this Agreement has not been approved by the vote of a
majority of the outstanding voting securities of the Company, unless such
approval shall be required by any other applicable law or otherwise.
(b) TERMINATION. This Agreement:
(i) may at any time be terminated with respect to any Portfolio without
the payment of any penalty either by vote of the Board or by vote of a
majority of the outstanding voting securities of such Portfolio, on 60
days' written notice to the Advisor;
(ii) shall automatically and immediately terminate in the event of its
assignment; and
(iii) may be terminated with respect to any Portfolio by the Advisor on
60 days' written notice to the Company.
8. DEFINITIONS.
As used herein, the terms "net asset value," "offering price,"
"investment company," "open-end management investment company," "assignment,"
"investment adviser," "interested person," "affiliated person," and "majority
of the outstanding voting securities" shall have the meanings set forth in the
1933 Act or the Act, and the rules and regulations thereunder. Nothing herein
contained shall require the Company to take any action contrary to any
provision of its Articles, By-Laws, or any applicable statute or regulation.
9
<PAGE>
9. NOTICES.
Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed postage prepaid, to the other party at such address as
the other party may designate for the receipt of notices. Until further notice
to the other party, it is agreed that the address of both the Company and the
Advisor shall be 8377 Cherry Lane, Laurel, Maryland 20707.
10. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
11. CONFIDENTIALITY.
The Advisor shall not disclose or use any records or information obtained
pursuant to this Agreement, pursuant to its relationship with the Company, or
in the course of discharging its obligations hereunder, in any manner
whatsoever except as expressly authorized by this Agreement or in a writing by
the Company, or as expressly required by applicable federal or state
regulatory authorities.
12. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Maryland, notwithstanding the conflict of laws provisions
thereof, and shall be construed to promote the operation of the Company as an
open-end management investment company.
13. PARTIES TO COOPERATE.
The Company and the Advisor agree to fully cooperate with each other in
assuring compliance under this Agreement with all federal and state laws and
regulations.
10
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
effective as of the date first written above.
MONUMENT SERIES FUND, INC.
By:____________________________
David A. Kugler
President
ATTEST
By:________________________________
Herbert Klein, III
Secretary
MONUMENT ADVISORS, LTD.
By:____________________________
David A. Kugler
President
ATTEST
By:________________________________
Herbert Klein, III
Secretary
11
<PAGE>
SCHEDULE A
This schedule is an integral part of the Agreement to which it is
attached. Capitalized terms used herein have the same meaning as given to them
in the Agreement, except as otherwise noted. This schedule sets out the names
of the Portfolios covered by the Agreement and the compensation of the Advisor
for services rendered and facilities furnished with respect thereto.
The Company shall pay the Advisor, as full compensation for all services
rendered and all facilities furnished under the Agreement, an annual fee,
payable at the end of each calendar month, determined by applying the annual
rates set out below to the average daily net assets of each Portfolio named
below. The average daily net asset value of the Portfolios shall be determined
in the manner set forth in the Company's Articles and Registration Statement.
PORTFOLIO:
<TABLE>
MONUMENT WASHINGTON REGIONAL GROWTH FUND
ADVISORY FEE:
<CAPTION>
NET ASSETS ANNUAL RATES
<S> <C>
First $50,000,000 1.00%
Next $50,000,000 0.75%
Over $100,000,000 0.625%
</TABLE>
PORTFOLIO:
<TABLE>
MONUMENT WASHINGTON REGIONAL AGGRESSIVE GROWTH FUND
ADVISORY FEE:
<CAPTION>
NET ASSETS ANNUAL RATES
<S> <C>
First $50,000,000 1.00%
Next $50,000,000 0.75%
Over $100,000,000 0.625%
</TABLE>
Adopted: ___________, 1997
Last Amended: Not applicable
12
EXHIBIT 6
FORM OF
DISTRIBUTION AGREEMENT
Distribution Agreement ("Agreement") made this ______ day of October,
1997, by and between Monument Series Fund, Inc., a Maryland corporation (the
"Company"), on behalf of each of its Portfolios (as hereinafter defined), and
Monument Distributors, Inc., a Maryland corporation ("Distributors")
(collectively, the "Parties").
WHEREAS, the Company is organized and intends to operate as an open-end
management investment company and is so registered under the Investment
Company Act of 1940, as amended, (the "Act"), and will register shares of each
Portfolio (defined below) under the Securities Act of 1933 ("1933 Act"), to
the extent required thereby, on Form N-1A (collectively, "Registration
Statement"); and
WHEREAS, the Board of Directors of the Company ("Board") has established
and authorized the issuance of the shares of the series listed on Schedule A
hereto (each, a "Portfolio" and collectively, the "Portfolios"), as the same
may be amended from time to time by mutual written agreement of the Parties
("Schedule A"); and
WHEREAS, Distributors, a broker-dealer registered under the Securities
Exchange Act of 1934 ("1934 Act") and a member of the National Association of
Securities Dealers, Inc. ("NASD"), desires to act as the exclusive principal
underwriter of the shares of each Portfolio; and
WHEREAS, the Company has entered into a Custody and Investment Accounting
Agreement, a Transfer Agency and Service Agreement, and an Administration
Agreement with other entities pursuant to which these entities have agreed to
provide a range of services to the Company and each Portfolio thereof.
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the Parties agree as follows:
1. APPOINTMENT AND OBLIGATION OF UNDERWRITER.
The Company, on behalf of each Portfolio, hereby appoints Distributors as
the exclusive principal underwriter, and the distributor, for the sale of the
shares of each Portfolio (except for sales made directly by the Company
without sales charge), and Distributors hereby accepts such appointment.
Distributors shall be obligated to perform the services for the Fund as
described in this Agreement, and, to the extent necessary or appropriate,
shall do so in coordination with service agreements entered into by the
Company with other entities, such as, for example, the
<PAGE>
Company's Custody and Investment Accounting Agreement, Transfer Agency and
Service Agreement, and Administration Agreement.
2. SALE OF PORTFOLIO SHARES.
2.1 AVAILABILITY OF SHARES. The Company, on behalf of each Portfolio,
agrees to deliver such shares as Distributors may sell, in accordance with the
terms and conditions set forth herein and the disclosure in the Company's
Registration Statement.
2.2 BEST EFFORTS. Distributors agrees to use its best efforts to
promote the sale of each Portfolio's shares, but is not obligated to sell any
specific number of shares.
2.3 REJECTION OR SUSPENSION OF SALES; CORPORATE ACTIONS.
Notwithstanding anything herein to the contrary:
(a) Distributors may temporarily suspend its efforts to effectuate
sales of any Portfolio at any time when in its opinion no sales should be
made because of market or other economic considerations or abnormal
circumstances of any kind; and
(b) the Board may, at any time, reject for any reason any order to
purchase shares of any Portfolio. In addition, the Board may suspend or
terminate the offering of shares of any Portfolio, if such action is
required by law, judicial order, or by regulatory authorities having
jurisdiction, or if the Board, in its sole discretion, acting in good
faith and in light of its fiduciary duties under applicable law,
determines that such action is in the best interests of the shareholders
of that Portfolio. Further, the Company reserves the right at all times
to take any corporate actions, including, but not limited to, the
dissolution, merger, and sale of the assets of each Portfolio, solely
upon the authorization of its Board.
2.4 OFFERING PRICE. Distributors shall offer the shares of each
Portfolio for sale at the net asset value per share plus a sales charge, if
any, all as described in the Company's then effective prospectus and statement
of additional information, as each may be amended or supplemented from time to
time (collectively, "Prospectus," unless the context otherwise requires). On
each business day on which the Company is required by Rule 22c-1 under the Act
to calculate the net asset value per share of each Portfolio ("Business Day"),
the Company shall furnish, or cause to be furnished, to Distributors each
Portfolio's then current net asset value per share.
2.5 MANNER OF OFFERING. Distributors shall offer the shares of each
Portfolio for sale in the manner described in the Company's Prospectus, and
only in those jurisdictions where they have been properly registered or
qualified, or are exempt from registration.
2.6 SALES COMMISSIONS: INITIAL SALES CHARGE. Distributors shall be
entitled to a commission on the sale of the shares of each Portfolio in
accordance with Schedule A.
2
<PAGE>
2.7 ORDER AND PAYMENT PROCESSING. Distributors shall immediately
transmit any order to purchase shares of a Portfolio that it receives to the
Transfer Agent, and shall immediately pay, or cause to be paid, to the
Company's custodian ("Custodian"), for the Company's account on behalf of a
Portfolio, an amount in cash equal to the net asset value of such shares.
Distributors shall accept orders for the purchase of shares of each Portfolio
only to the extent of purchase orders actually received and not in excess of
such orders. Distributors shall not avail itself of any opportunity of making
a profit by expediting or withholding orders.
2.8 PURCHASES FOR OWN ACCOUNT. Distributors shall not purchase shares
for its own account for purposes of resale to the public. Distributors, to the
extent disclosed in the Prospectus, may purchase such shares for its own
investment account at net asset value upon its written assurance to the
Company that the purchase is for investment purposes only and that such shares
will not be resold except through redemption by the Company.
2.9 SALE OF SHARES TO AFFILIATES AND CERTAIN OTHER Persons.
Distributors may sell shares of each Portfolio at net asset value to certain
of its and the Company's affiliated persons, as well as certain other persons
identified in the Prospectus pursuant to the provisions of applicable law,
including Rule 22d-1 under the Act, and in accordance with the relevant
disclosures made in the Prospectus.
2.10 SELLING GROUP AGREEMENTS. Distributors may, from time to time,
effect offers and sales of the shares of each Portfolio through unaffiliated
broker-dealers that are registered under the 1934 Act, that are members of the
NASD, and that have entered into an appropriate selling group agreement with
Distributors, the form of which agreement shall be approved by the Company
prior to its implementation. Distributors may allow these broker-dealers such
commissions or discounts not exceeding the total sales commission set forth in
Schedule A, as it shall deem advisable, so long as any such commissions or
discounts are set forth in the Company's Prospectus to the extent required by
applicable law.
3. REDEMPTION OF PORTFOLIO SHARES.
3.1 RECEIPT OF REDEMPTION REQUESTS. Distributors shall promptly forward
any redemption request that it receives to the Transfer Agent, or its
designee, each Business Day.
3.2 CASH REDEMPTIONS. Subject to paragraph 3.3, below, the Company
shall arrange to effect any redemption request for full or fractional shares
of each Portfolio in cash at the net asset value per share next computed on
each Business Day, adjusted for a deferred sales charge, if any.
3.3 PAYMENT OF REDEMPTION PROCEEDS. To the extent that Distributors may
be deemed to effect any redemption of Fund shares, the Company shall request
that the Company's Transfer Agent or its designee provide for payment of
redemption proceeds no later than the third business day after receipt of any
redemption request by Distributors, pursuant to paragraph 3.1,
3
<PAGE>
above, or by the Company's Transfer Agent or its designee; provided that the
Company shall not be liable to Distributors in this connection.
3.4 REDEMPTIONS IN KIND. Notwithstanding anything herein to the
contrary, subject to compliance with the provisions of Section 18(f) of the
Act, the Company reserves the right to effect all or a portion of a redemption
request for shares of each Portfolio by payment in kind of portfolio
securities, if the Company's Board determines that it would be detrimental to
the best interests of the shareholders of a Portfolio to make a redemption
wholly or partially in cash.
3.5 SALES COMMISSIONS: DEFERRED SALES CHARGE. Distributors shall be
entitled to a sales commission upon the redemption of the shares of each
Portfolio in accordance with Schedule A.
3.6 DELAY IN PAYMENT OF REDEMPTION PROCEEDS; SUSPENSION OF REDEMPTION.
The Company, on behalf of each Portfolio, shall have the right to delay the
payment of redemption proceeds, and to suspend the redemption of shares of the
Portfolio, pursuant to the conditions set forth in the Prospectus.
4. ALLOCATION OF EXPENSES.
Except as set forth herein, each Party shall bear all expenses of
fulfilling its duties and obligations under this Agreement; provided, however,
that Distributors shall bear the expenses attributable to any sales or
promotional activity, other than those expenses borne by the Company pursuant
to a Plan of Distribution Pursuant to Rule 12b-1, or any redemption activity
that may be deemed to be an activity of Distributors.
5. MARKETING MATERIALS.
5.1 PREPARATION, PRINTING, AND DISTRIBUTION. Distributors, at its sole
cost, shall be responsible for preparing, printing, and distributing, or
causing the same to be done, all marketing materials to be used in connection
with the offer and sale of the shares of each Portfolio. As used herein,
"marketing materials" shall mean any "advertisement" or "sales literature," as
those terms are defined in Section 2210(a) of the NASD's Conduct Rules, as
amended from time to time, and shall include any so-called "dealer only"
materials, as well as any Prospectuses, periodic reports to shareholders
("Reports"), and other materials sent to persons other than the then current
shareholders of each Portfolio (except that the Company shall bear the cost of
preparing, printing, and distributing any Prospectuses, Reports, and other
materials specified in paragraph 6.3, below).
5.2 COMPANY APPROVAL. Distributors shall submit definitive copies of
all marketing materials to the Company for its approval, which shall not be
unreasonably withheld, at least five (5) business days prior to their first
use. The Company shall be deemed to have granted its approval of such
marketing materials unless it objects within such five (5) business day
period.
4
<PAGE>
5.3 REGULATORY APPROVALS. Distributors shall, to the extent required,
file in a timely manner all marketing materials with the NASD, the Securities
and Exchange Commission ("SEC"), or any other regulatory body, as appropriate,
and shall obtain any necessary approval of these regulatory bodies of any
marketing materials.
6. NON-MARKETING MATERIALS.
6.1 SHAREHOLDER CORRESPONDENCE. Distributors, at its sole cost, shall
be responsible for preparing, printing, and distributing, or causing the same
to be done, all correspondence with shareholders in its capacity as principal
underwriter, except for correspondence prepared, printed, and distributed by
Distributors at the Company's request. Distributors shall, from time to time,
make such correspondence available to the Company for review upon request.
6.2 CONFIRMATIONS. Distributors, at its sole cost, shall be responsible
for preparing, printing, and distributing in a timely manner, or causing the
same to be done, confirmations of shareholder transactions required to be
delivered to shareholders pursuant to applicable law. Notwithstanding the
foregoing, the Company may retain the services of a transfer agent, which
services may include the delivery of confirmations of shareholder
transactions.
6.3 PROSPECTUSES, REPORTS, ETC. The Company, at its sole cost, shall be
responsible for preparing, printing, and distributing, or causing the same to
be done, all Prospectuses, Reports, proxy materials, and other documents
required by applicable law to be provided to shareholders of each Portfolio,
and for filing such materials with the NASD, SEC or any other regulatory body,
as appropriate, and shall obtain any necessary approval of these regulatory
bodies of these materials.
6.4 DISTRIBUTORS APPROVAL. The Company shall provide Distributors with
definitive copies of all documents enumerated in paragraph 6.3 above for
Distributors' prior approval, which shall not be unreasonably withheld, at
least five (5) business days prior to their first use. Distributors shall be
deemed to have granted its approval of such materials unless it objects within
such five (5) business day period.
7. CONDUCT OF BUSINESS.
7.1 GENERAL. Distributors shall be subject to the direction and control
of the Company in the sale of the shares of each Portfolio. In selling
Portfolio shares, Distributors shall comply in all respects with the
requirements of all federal and state laws and regulations and the regulations
of the NASD, relating to the sale of the shares of each Portfolio. Neither
Distributors nor any other person is authorized by the Company to give any
information or to make any representations, other than those contained in the
Company's Registration Statement or Prospectus, and any marketing materials
authorized by responsible officers of the Company.
7.2 INDEPENDENT CONTRACTOR. Distributors shall undertake and discharge
its obligations hereunder as an independent contractor and shall, unless
otherwise expressly provided or
5
<PAGE>
authorized, have no authority to act for or represent the Company or any
Portfolio in any way and shall not be deemed to be an employee of the Company.
7.3 NON-EXCLUSIVE SERVICES. Distributors' services pursuant to this
Agreement shall not be deemed to be exclusive, and Distributors may render
similar services and act as an underwriter, distributor or dealer for other
investment companies in the offering of their shares, consistent with its best
efforts obligations to each Portfolio set forth herein.
7.4 RECORDS. Distributors shall maintain and preserve such records as
are necessary or appropriate to record its transactions with the Company, as
required by Section 31(a) of the Act. To the extent required, Distributors
shall promptly return to the Company all records relating to the Company, free
from any claim or retention of rights by Distributors and without charge by
Distributors except for its direct expense.
8. INDEMNIFICATION.
8.1 GENERAL. Distributors shall indemnify and hold harmless the Company
and each of its Directors and officers (or former Directors and officers) and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act (collectively, "Indemnitees") against any loss, liability,
claim, damage, or expense (including the reasonable cost of investigating and
defending against the same and any counsel fees reasonably incurred in
connection therewith) incurred by any Indemnitee under the 1933 Act or under
common law or otherwise, which arise out of or are based upon:
(a) any untrue or alleged untrue statement of a material fact
contained in information furnished to the Company by Distributors for use
in the Company's Registration Statement, Prospectus, Reports or other
documents sent to its shareholders,
(b) any omission or alleged omission to state a material fact in
connection with information furnished to the Company by Distributors for
use in the Company's Registration Statement, Prospectus, Reports or other
documents sent to its shareholders, which fact is required to be stated
in any of such documents or necessary to make such information not
misleading,
(c) any misrepresentation or omission or alleged misrepresentation
or omission to state a material fact on the part of Distributors or any
agent or employee of Distributors or any other person for whose acts
Distributors is responsible, unless such misrepresentation or omission or
alleged misrepresentation or omission was made in reliance on written
information furnished by the Company, or
(d) the willful misconduct or failure to exercise reasonable care
and diligence on the part of Distributors or any agent or employee of
Distributors or any other person for whose acts Distributors is
responsible with respect to services rendered under this Agreement. This
indemnity provision, however, shall not operate to protect any officer or
6
<PAGE>
Director of the Company from any liability to the Company or any
shareholder by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of his or her duties.
8.2 LIMITATIONS; NOTICE OF CLAIM; ASSUMPTION OF DEFENSE. In case any
action shall be brought against any Indemnitee, Distributors shall not be
liable under its indemnity agreement contained in paragraph 8.1, above, with
respect to any claim made against any Indemnitee, unless the Indemnitee shall
have notified Distributors in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon the Indemnitee (or after the Indemnitee
shall have received notice of such service on any designated agent), but
failure to notify Distributors of any such claim shall not relieve it from
liability to the Indemnitees against whom such action is brought otherwise
than on account of paragraph 8.1, above. Distributors shall be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if
Distributors elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to the Indemnitees that are defendants
in the suit. In the event Distributors elects to assume the defense of any
such suit and retain such counsel, the Indemnitees that are defendants in the
suit shall bear the fees and expenses of any additional counsel retained by
them, but, in case Distributors does not elect to assume the defense of any
such suit, Distributors will reimburse the Indemnitees that are defendants in
the suit for the reasonable fees and expenses of any counsel retained by them.
Distributors shall promptly notify the Company of the commencement of any
litigation or proceedings in connection with the issuance or sales of the
Company's shares.
9. TERM AND TERMINATION.
9.1 TERM. This Agreement shall become effective as of the date first
above written and shall remain in force for two years from the date of its
execution, and thereafter, but only so long as such continuance is
specifically approved at least annually by (i) the Board of Directors, or by
the vote of a majority of the outstanding voting securities of each Portfolio,
cast in person or by proxy, and (ii) a majority of those Directors who are not
parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, the Board of Directors may, from time to time,
establish a new effective date for the continuance of this Agreement with
respect to any Portfolio, provided that such new effective date precedes the
then current termination date of this Agreement. Any approval of this
Agreement by the holders of a majority of the outstanding voting securities of
any Portfolio shall be effective to continue this Agreement with respect to
that Portfolio notwithstanding (i) that this Agreement has not been approved
by the vote of a majority of the outstanding voting securities of any other
Portfolio affected thereby, and (ii) that this Agreement has not been approved
by the vote of a majority of the outstanding voting securities of the Company,
unless such approval shall be required by any other applicable law or
otherwise.
9.2 TERMINATION. This Agreement may be terminated at any time without
the payment of any penalty, by the Board of Directors, by vote of a majority
of the outstanding voting securities of a Portfolio, or by Distributors, on
sixty days' written notice to the other party. This Agreement shall
automatically terminate in the event of its assignment.
7
<PAGE>
10. DEFINITIONS.
As used herein the terms "net asset value," "offering price," "investment
company," "open-end management investment company," "assignment," "principal
underwriter," "interested person," "affiliated person," and "majority of the
outstanding voting securities" shall have the meanings set forth in the 1933
Act or the Act, and the rules and regulations thereunder. Nothing herein
contained shall require the Company to take any action contrary to any
provision of its Articles of Incorporation, By-Laws, or any applicable statute
or regulation.
11. NOTICES.
Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed postage prepaid, to the other party at such address as
the other party may designate for the receipt of notices. Until further notice
to the other party, it is agreed that the address of both the Company and
Distributors shall be 8377 Cherry Lane, Laurel, Maryland 20707.
12. SEVERABILITY.
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby.
13. CONFIDENTIALITY.
Distributors shall not disclose or use any records or information
obtained pursuant to this Agreement, pursuant to its relationship with the
Company, or in the course of discharging its obligations hereunder, in any
manner whatsoever except as expressly authorized by this Agreement or in a
writing by the Company, or as expressly required by applicable federal or
state regulatory authorities.
14. APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of Maryland,
notwithstanding any conflict of laws provisions thereof, and shall be
construed to promote the operation of the Company as an open-end management
investment company.
15. PARTIES TO COOPERATE.
The Company and Distributors agree to fully cooperate with each other in
assuring compliance under this Agreement with all federal and state laws and
regulations.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as
of the date first written above.
MONUMENT SERIES FUND, INC.
BY: _____________________________
David A. Kugler
President
Attest: ____________________________
Herbert Klein, III
Secretary
MONUMENT DISTRIBUTORS, INC.
BY: _____________________________
David A. Kugler
President
Attest: ____________________________
Herbert Klein, III
Secretary
9
<PAGE>
SCHEDULE A
This Schedule A is an integral part of the Agreement to which it is
attached. Capitalized terms used herein have the same meaning as given to them
in the Agreement, except as otherwise noted. This Schedule A sets out the
names of the Portfolios covered by the Agreement and the compensation of
Distributors for the services rendered with respect thereto.
NAMES OF PORTFOLIOS
Monument Washington Regional Growth Fund
Monument Washington Regional Aggressive Growth Fund
COMPENSATION
For its services rendered pursuant to the Agreement, Distributors shall
be entitled to receive, as full compensation therefor, the following sales
commissions (subject to any scheduled variations or eliminations of commission
as set forth in the Company's Prospectus):
<TABLE>
<CAPTION>
INITIAL SALES CHARGE (as a percentage of offering price)
<S> <C>
o applicable to purchase payments through $50,000.................... 1.50%
o applicable to purchase payments greater than $50,000
through $100,000................................................... 1.00%
o applicable to purchase payments greater than $100,000
through $1 million................................................. 0.50%
o applicable to purchase payments greater than $1 million............ 0.25%
</TABLE>
<TABLE>
<CAPTION>
DEFERRED SALES CHARGE (as a percentage of offering price)
<S> <C>
o applicable to shares held for less than 12 months.................. 1.50%
</TABLE>
If shares of a Portfolio are tendered to the Company for redemption or
repurchase within seven (7) business days after Distributors' acceptance of
the original purchase order for such shares, Distributors shall immediately
return to the Company the full sales commission (net of any allowances to
brokers or dealers) allowed to Distributors on the original sale, and shall
promptly, upon receipt thereof, pay to the Company any reallowance from
brokers or dealers of the balance of the sales commission reallowed by
Distributors. The Company shall notify Distributors, or cause Distributors to
be notified, of such tender for redemption within 10 days of the day on which
the Company receives notice of such tender for redemption.
10
EXHIBIT 8
CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT
This Agreement between MONUMENT SERIES FUND, INC., a corporation
organized and existing under the laws of Maryland, having its principal place
of business at 8377 Cherry lane, Laurel, Maryland, 20707 hereinafter called
"Fund", and INVESTORS FIDUCIARY TRUST COMPANY, a Missouri trust company,
having its principal place of business at 801 Pennsylvania, Kansas City,
Missouri 64105, hereinafter called "Custodian" (collectively, "Parties").
WITNESSETH:
WHEREAS, Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, Fund intends to initially offer shares in two series, the
Monument Washington Regional Growth Fund and Monument Washington Regional
Aggressive Growth Fund (such series together with all other series
subsequently established by Fund and made subject to this Agreement in
accordance with paragraph 15, being herein referred to as the "Portfolio(s)");
and
WHEREAS, State Street Bank & Trust Company ("State Street") serves as
Fund's transfer and service agent, and administrator; and
WHEREAS, Custodian has the qualifications prescribed in Section 26(a)(1)
of the Investment Company Act of 1940 (the "1940 Act") pursuant to Section
17(f) of the 1940 Act.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the Parties agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT. Fund hereby
employs Custodian as Custodian of the assets of the Portfolios of Fund,
including, in addition to cash, securities which Fund, on behalf of the
applicable Portfolio, desires to be held in places within the United States
("domestic securities") and investments (including foreign currencies) for
which the primary market is outside the United States ("foreign securities").
Fund on behalf of the Portfolio(s) agrees to deliver to Custodian all assets,
including securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock
of Fund representing interests in the Portfolios ("Shares"), as may be issued
or sold from time to time. Custodian shall not be responsible for any property
of a Portfolio held or received by the Portfolio and not delivered to
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians located in the United States (including,
without limitation, affiliates of Custodian), but only in accordance with and
upon receipt of a certified copy of an approving resolution of the Board of
Directors of Fund on behalf of the applicable Portfolio(s), and provided that
Custodian shall have
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no more or less responsibility or liability to Fund on account of any actions
or omissions of any sub-custodian so employed than any such sub-custodian has
to Custodian. Custodian may employ as sub-custodian for Fund's foreign
securities on behalf of the applicable Portfolio(s) the foreign banking
institutions and foreign securities depositories designated in Exhibit A
hereto but only in accordance with the provisions of Section 2.16.
2. DUTIES OF CUSTODIAN.
2.1 HOLDING SECURITIES. Custodian shall hold and physically segregate for the
account of each Portfolio all non-cash property, to be held by it in the
United States including all domestic securities owned by such Portfolio,
other than securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury and certain
federal agencies (each, a "U.S. Securities System").
2.2 DELIVERY OF SECURITIES. Custodian shall release and deliver domestic
securities owned by a Portfolio held by Custodian or in a U.S. Securities
System account of Custodian only upon receipt of Proper Instructions from
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the Parties, and only in the
following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
and in the case of repurchases that are effected through a U.S.
Securities System, subject to the requirements of Section 2.10
hereof;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in
any such case, the cash or other consideration is to be delivered
to Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
the Portfolio or into the name of any nominee or nominees of
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for exchange for
a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
PROVIDED that, in any such case, the new securities are to be
delivered to Custodian;
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7) Upon the sale of such securities for the account of the Portfolio,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided
that in any such case, Custodian shall have no responsibility or
liability for any loss arising from the delivery of such securities
prior to receiving payment for such securities except as may arise
from Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, BUT ONLY against receipt of adequate collateral as
agreed upon from time to time by Custodian and Fund on behalf of
the Portfolio, which may be in the form of cash or obligations
issued by the United States government, its agencies or
instrumentalities, except that in connection with any loans for
which collateral is to be credited to Custodian's account in the
book-entry system authorized by the U.S. Department of the
Treasury, Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the receipt
of such collateral;
11) For delivery as security in connection with any borrowings by Fund
on behalf of the Portfolio requiring a pledge of assets by Fund on
behalf of the Portfolio, BUT ONLY against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any agreement
among Fund on behalf of the Portfolio, Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Portfolio of Fund;
13) For delivery in accordance with the provisions of any agreement
among Fund on behalf of the Portfolio, Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Portfolio of Fund;
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14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may
be described from time to time in the currently effective
prospectus and statement of additional information of Fund, related
to the Portfolio ("Prospectus"), in satisfaction of requests by
holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, BUT ONLY upon receipt of,
in addition to Proper Instructions from Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board
of Directors or of the Executive Committee of the Board signed by
an officer of Fund and certified by the Secretary or an Assistant
Secretary, specifying the securities of the Portfolio to be
delivered, setting forth the purpose for which such delivery is to
be made, declaring such purpose to be a proper Fund purpose, and
naming the person or persons to whom delivery of such securities
shall be made.
In delivering any securities pursuant to this Section 2.2, Custodian
shall credit to the account of the Portfolio which held such securities
the cash or other property received therefor, except to the extent that
Custodian may be instructed otherwise by certified resolution meeting the
requirements of paragraph (15) of this Section 2.2.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by Custodian (other
than bearer securities) shall be registered in the name of each Portfolio
or in the name of any nominee of Fund on behalf of each Portfolio or of
any nominee of Custodian, or in the nominee name of any agent appointed
pursuant to Section 2.9 or in the nominee name of any sub-custodian
appointed pursuant to Article 1. Custodian shall clearly record on its
records the Portfolio for which each security of the Fund is being held.
All securities accepted by Custodian on behalf of the Portfolio under the
terms of this Agreement shall be in "street name" or other good delivery
form. If, however, Fund directs Custodian to maintain securities in
"street name", Custodian shall utilize its best efforts only to timely
collect income due Fund on such securities and to notify Fund on a best
efforts basis only of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or exchange offers.
2.4 BANK ACCOUNTS. Custodian shall open and maintain in the name of Custodian
a separate bank account or accounts in banks or trust companies in the
United States in the name of each Portfolio of Fund, subject only to
draft or order by Custodian acting pursuant to the terms of this
Agreement, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of the
Portfolio, other than cash maintained by the Portfolio in a bank account
established and used in accordance with Rule 17f-3 under the 1940 Act.
Funds held by Custodian for a Portfolio may be deposited by it to its
credit as Custodian in such banks or trust companies (including, without
limitation, affiliates of Custodian) as it may in its discretion deem
necessary or desirable; PROVIDED, however, that every such bank or trust
company shall be qualified to act as a custodian under the 1940 Act and
that each such bank or trust company and funds to be deposited with each
such bank or trust company shall on behalf
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of each applicable Portfolio be approved by vote of a majority of the
Board of Directors of Fund. Such funds shall be deposited by Custodian in
its capacity as Custodian and shall be withdrawable by Custodian only in
that capacity; provided, however that depositing such funds shall not
relieve Custodian of its responsibilities or liabilities hereunder.
Custodian shall take all reasonable and appropriate steps to help protect
Fund's cash against claims by Custodian's creditors in the event of
Custodian's insolvency, bankruptcy or similar circumstances, including
the daily investment of cash advances in temporary overnight investments,
as directed by Fund's investment adviser.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between Fund on
behalf of each applicable Portfolio and Custodian, Custodian shall, upon
the receipt of Proper Instructions from Fund on behalf of a Portfolio,
make federal funds available to such Portfolio as of specified times
agreed upon from time to time by Fund and Custodian in the amount of
checks received in payment for Shares of such Portfolio which are
deposited into the Portfolio's account.
2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, Custodian
shall collect on a timely basis all income and other payments with
respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to bearer domestic securities if, on the date
of payment by the issuer, such securities are held by Custodian or its
agent, or are held in a U.S. Securities System on such date of payment,
and shall credit such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the foregoing, Custodian
shall detach and present for payment all coupons and other income items
requiring presentation as and when they become due and shall collect
interest when due on securities held hereunder. Income due each Portfolio
on securities loaned pursuant to the provisions of Section 2.2 (10) shall
be the responsibility of Fund. Custodian will have no duty or
responsibility in connection therewith, other than to provide Fund with
such information or data as may be necessary to assist Fund in arranging
for the timely delivery to Custodian of the income to which the Portfolio
is properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from Fund on
behalf of the applicable Portfolio, which may be continuing instructions
when deemed appropriate by the parties, Custodian shall pay out monies of
a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the
Portfolio but only (a) against the delivery of such securities or
evidence of title to such options, futures contracts or options on
futures contracts to Custodian (or any bank, banking firm or trust
company doing business in the United States or abroad which is
qualified under the 1940 Act to act as a custodian and has been
designated by Custodian as its agent for this purpose pursuant to
Section 2.9 hereof) registered in the manner required for such
instruments to be held pursuant to this Agreement or in proper form
for transfer;
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(b) in the case of a purchase effected through a U.S. Securities
System, in accordance with the conditions set forth in Section 2.10
hereof; (c) in the case of repurchase agreements entered into
between Fund on behalf of the Portfolio and Custodian, or another
bank, or a broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificate form or for
securities purchased through a U.S. Securities System, in
accordance with the conditions set forth in Section 2.10 hereof or
(ii) through an agreement by Custodian or other bank or
broker-dealer to repurchase such securities from the Portfolio or
(d) for transfer to a time deposit account of Fund in any bank,
whether domestic or foreign; such transfer may be effected prior to
receipt of a confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions from Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio
as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for
the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses
of Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of Fund;
6) For payment of the amount of dividends received in respect of
securities sold short by a Portfolio;
7) For any other proper purpose, BUT ONLY upon receipt of, in addition
to Proper Instructions from Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Directors or of the
Executive Committee of Fund signed by an officer of Fund and
certified by its Secretary or an Assistant Secretary, specifying
the amount of such payment, setting forth the purpose for which
such payment is to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom such payment is
to be made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Agreement, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by Custodian in advance of receipt of the
securities purchased (i.e., as provided in greater detail in Section
2.7(1)) in the absence of specific written instructions from Fund on
behalf of such Portfolio to so pay in advance, Custodian shall be
absolutely liable to Fund for such securities to the same extent as if
the securities had been received by Custodian.
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2.9 APPOINTMENT OF AGENTS. Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the 1940 Act to act as a
custodian (including, without limitation, affiliates of Custodian), as
its agent to carry out such of the provisions of this Article 2 as
Custodian may from time to time direct; PROVIDED, however, that the
appointment of any agent shall not relieve Custodian of its
responsibilities or liabilities hereunder.
2.10 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. Custodian may deposit
and/or maintain securities owned by a Portfolio in a clearing agency
registered with the Securities and Exchange Commission under Section 17A
of the Exchange Act, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as "U.S.
Securities System" in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) Custodian may keep securities of the Portfolio in a U.S. Securities
System provided that such securities are represented in an account
("Account") of Custodian in the U.S. Securities System which shall
not include any assets of Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) Custodian shall pay for securities purchased for the account of the
Portfolio upon (i) receipt of written or electronically accessible
advice from the U.S. Securities System that such securities have
been transferred to the Account, and (ii) the making of an entry on
the records of Custodian to reflect such payment and transfer for
the account of the Portfolio. Custodian shall transfer securities
sold for the account of the Portfolio upon (i) receipt of written
or electronically accessible advice from the U.S. Securities System
that payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of
Custodian to reflect such transfer and payment for the account of
the Portfolio. Copies of all advices from the U.S. Securities
System of transfers of securities for the account of the Portfolio
shall identify the Portfolio, be maintained for the Portfolio by
Custodian and be provided to Fund at its request. Upon request,
Custodian shall furnish Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio in the form of a written advice or notice and shall
furnish to Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Portfolio. Custodian shall
comply with all requirements of Rule 17f-4, including 17f-4(d)(3),
under the 1940 Act;
4) Custodian shall provide Fund for the Portfolio with any report
obtained by Custodian on the U.S. Securities System's accounting
system, internal accounting
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controls and procedures for safeguarding securities deposited in
the U.S. Securities System. Custodian shall send to Fund such
reports on Custodian's own systems of internal accounting controls
as Fund may reasonably request from time to time. Custodian shall
send to Fund such reports automatically whenever there is a
material change in any such systems;
5) Custodian shall have received from Fund on behalf of the Portfolio
the initial or annual certificate, as the case may be, required by
Article 14 hereof;
6) Anything to the contrary in this Agreement notwithstanding,
Custodian shall be liable to Fund for the benefit of the Portfolio
for any loss or damage to the Portfolio resulting from use of the
U.S. Securities System by reason of any negligence, misfeasance or
misconduct of Custodian or any of its agents or of any of its or
their employees or from failure of Custodian or any such agent to
use reasonable efforts to enforce such rights as it may have
against the U.S. Securities System or any guarantee or insurance
fund; at the election of Fund, it shall be entitled to be
subrogated to the rights of Custodian or any agent with respect to
any claim against the U.S. Securities System or any other person or
fund which Custodian or agent may have as a consequence of any such
loss or damage if and to the extent that the Portfolio has not been
made whole for any such loss or damage.
2.11 SEGREGATED ACCOUNT. Custodian shall upon receipt of Proper Instructions
from Fund on behalf of each applicable Portfolio establish and maintain a
segregated account or accounts for and on behalf of each such Portfolio,
into which account or accounts may be transferred cash and/or securities,
including securities maintained in an account by Custodian pursuant to
Section 2.10 hereof, (a) in accordance with the provisions of any
agreement among Fund on behalf of the Portfolio, Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD
(or any futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities exchange
(or the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio, (b) for purposes of segregating cash or government securities
in connection with options purchased, sold or written by the Portfolio or
commodity futures contracts or options thereon purchased or sold by the
Portfolio, (c) for the purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered
investment companies and (d) to hold securities subject to repurchase
agreements, to the extent that certificates for such securities are held
in physical custody, and (e) for other proper corporate purposes, BUT
ONLY, in the case of clause (e), upon receipt of, in addition to Proper
Instructions from Fund on behalf of the applicable Portfolio, a certified
copy of a resolution of the Board of Directors or of the Executive
Committee of the Board signed by an officer of Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper Fund purposes.
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Custodian shall take all reasonable and appropriate steps to help protect
Fund's cash against claims by Custodian's creditors in the event of
Custodian's insolvency, bankruptcy or similar circumstances, including
the daily investment of cash advances in temporary overnight investments,
as directed by Fund's investment adviser.
2.12 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
2.13 PROXIES. Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name
of the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.14 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the
provisions of Section 2.3, Custodian shall transmit promptly to Fund for
each Portfolio all written information (including, without limitation,
pendency of calls and maturities of domestic securities and expirations
of rights in connection therewith and notices of exercise of call and put
options written by Fund on behalf of the Portfolio and the maturity of
futures contracts purchased or sold by the Portfolio) received by
Custodian from issuers of the securities being held for the Portfolio.
With respect to tender or exchange offers, Custodian shall transmit
promptly to the Portfolio all written information received by Custodian
from issuers of the securities whose tender or exchange is sought and
from the party (or his agents) making the tender or exchange offer. If
the Portfolio desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the Portfolio shall
notify Custodian at least three business days prior to the date on which
Custodian is to take such action.
2.15 ADOPTION OF PROCEDURES. Custodian and Fund hereby adopt the Funds
Transfer Operating Guidelines attached hereto as Exhibit B. Custodian and
Fund may from time to time adopt such additional procedures as they agree
upon, and Custodian may conclusively assume that no procedure approved or
directed by Fund conflicts with or violates any requirements of the
Prospectus, articles of incorporation, bylaws, any applicable law, rule
or regulation, or any order, decree or agreement by which Fund may be
bound. Fund will be responsible to notify Custodian of any changes in
statutes, regulations, rules, requirements or policies which might
necessitate changes in Custodian's responsibilities or procedures.
2.16 DUTIES OF CUSTODIAN WITH RESPECT TO PROPERTY OF FUND HELD OUTSIDE OF THE
UNITED States Each Portfolio's foreign securities and cash or cash
equivalents, in amounts deemed by Fund to be reasonably necessary to
effect such Portfolio's foreign securities transactions, may be held in
the custody of one or more banks or trust companies acting as
Subcustodians ("Global Subcustodian"), and thereafter, pursuant to a
written contract or
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contracts as approved by Fund, may be transferred to accounts maintained
by any such Global Subcustodian with eligible foreign custodians, as
defined in Rule 17f-5(a)(1)("Eligible Foreign Custodian"). Custodian will
be responsible to Fund for any loss, damage or expense suffered or
incurred by Fund resulting from the actions or omissions of any Eligible
Foreign Custodian only to the same extent such subcustodian is liable to
the Global Subcustodian. The provisions of Sections 2.2 and 2.7 of this
Agreement shall apply mutatis mutandis to the foreign securities of each
Portfolio held in the custody of a Global Subcustodian or outside of the
United States by an Eligible Foreign Custodian. Agreements employing
Global Subcustodians and Eligible Foreign Custodians shall require each
such institution to exercise reasonable care in the performance of its
duties and obligations and to indemnify, and hold harmless, Custodian and
each Portfolio from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with each such
institution's performance of its duties and obligations. Custodian shall
be liable to the Fund for the acts or omissions of any Global
Subcustodians or Eligible Foreign Custodians to the same extent that such
institutions are liable to the Fund. Fund and Custodian agree to comply
with all requirements of Rule 17f-5 under the 1940 Act, as amended from
time to time.
2.17 REPORTS TO FUND BY CUSTODIAN ON INSURANCE AND BONDING. Custodian shall
furnish to Fund upon request information concerning what insurance or
bonding coverage is applicable to Fund's securities. Such information
shall be similar in kind and scope to that furnished to Fund in
connection with the initial approval of this Agreement. In addition,
Custodian will promptly inform Fund in the event of any material adverse
change in its financial condition or any loss of the assets of Fund.
2.18 RECORDS. Custodian shall with respect to each Portfolio create and
maintain all records relating to its activities and obligations under
this Agreement in such manner as will meet the obligations of Fund under
the 1940 Act, with particular attention to Section 31 thereof and the
rules thereunder. All such records shall be the property of Fund and
shall at all times during the regular business hours of Custodian be open
for inspection by duly authorized officers, employees or agents of Fund
and employees and agents of the Securities and Exchange Commission.
Custodian shall, at Fund's request, supply Fund with a tabulation of
securities owned by each Portfolio and held by Custodian and shall, when
requested to do so by Fund and for such compensation as shall be agreed
upon between Fund and Custodian, include certificate numbers in such
tabulations.
3. DUTIES OF CUSTODIAN WITH RESPECT TO INVESTMENT ACCOUNTING. Fund hereby
appoints Custodian as its agent to perform certain accounting and
recordkeeping functions relating to portfolio transactions required of a duly
registered investment company under Section 31 of the 1940 Act and the rules
thereunder and to calculate the net asset value of the Portfolios.
3.1 ACCOUNTS AND RECORDS. Custodian will prepare and maintain, with the
direction and as interpreted by Fund, Fund's or Portfolio's accountants
and/or other advisors, in complete, accurate and current form all
accounts and records: (a) required to be maintained by Fund with respect
to portfolio transactions under Section 31 of the 1940 Act and the rules
thereunder; (b) required to be maintained as a basis for calculation of
each Portfolio's net asset value; and (c) as otherwise agreed upon by the
Parties. Fund will advise Custodian
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in writing of all applicable record retention requirements, other than
those set forth in the 1940 Act. Custodian will preserve such accounts
and records in the manner and for the periods prescribed in the 1940 Act
and rules thereunder or for such longer period as is agreed upon by the
Parties. Fund will furnish, in writing or its electronic or digital
equivalent, accurate and timely information needed by Custodian to
complete such accounts and records, including calls for redemption,
tender or exchange offers, declaration, record and payment dates and
amounts of any dividends or income, reorganization, recapitalization,
merger, consolidation, split-up of shares, change of par value, or
conversion, when such information is not readily available from generally
accepted securities industry services or publications.
3.2 ACCOUNTS AND RECORDS PROPERTY OF FUND. Custodian acknowledges that all of
the accounts and records maintained by Custodian pursuant hereto are the
property of Fund, and will be made available to Fund upon request, as
further specified by Section 2.18 hereof. Custodian will assist Fund's
independent auditors, or upon approval of Fund, or upon demand, any
regulatory body, in any requested review of Fund's accounts and records
but Fund will reimburse Custodian for all necessary and reasonable
expenses and employee time invested in any such review outside of routine
and normal periodic reviews. Upon receipt from Fund of the necessary
information or instructions, Custodian will supply information from the
books and records it maintains for Fund that Fund needs for tax returns,
questionnaires, periodic reports to shareholders and such other reports
and information to be given to appropriate governmental regulatory bodies
as Fund and Custodian agree upon from time to time.
3.3 CALCULATION OF NET ASSET VALUE. Fund will instruct Custodian with regard
to the outside pricing sources to be utilized as sources of each
Portfolio's asset prices ("Pricing Sources"). In the event that Fund
specifies Reuters America, Inc., it will enter into the Agreement
attached hereto as Exhibit C. Custodian will calculate each Portfolio's
net asset value, in accordance with the Portfolio's Prospectus, at the
close of the regular trading session of the New York Stock Exchange
("Exchange"), usually 4:00 p.m. Eastern time, each Monday through Friday,
except days on which the Exchange is closed. Custodian will price the
assets, including foreign currency holdings, of each Portfolio for which
market quotations are available from the Pricing Sources; all other
Portfolio assets will be priced in accordance with Fund's instructions.
4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF FUND.
Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of Fund and, on the date of receipt, deposit into the account
of the appropriate Portfolio such payments for Shares of that Portfolio issued
or sold from time to time by Fund. Custodian will provide timely notification
to Fund and the Transfer Agent of any receipt by it of payments for Shares of
such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors of Fund pursuant thereto, Custodian shall, upon receipt of
Proper Instructions from the
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Transfer Agent, make funds available for payment to holders of Shares who have
delivered to the Transfer Agent a request for redemption or repurchase of
their Shares. In connection with the redemption or repurchase of Shares of a
Portfolio, Custodian is authorized upon receipt of Proper Instructions from
the Transfer Agent to wire funds to or through a commercial bank designated by
the redeeming shareholders. In connection with the redemption or repurchase of
Shares of Fund, Custodian shall honor checks drawn on Custodian by a holder of
Shares, which checks have been furnished by Fund to the holder of Shares, when
presented to Custodian in accordance with such procedures and controls as are
mutually agreed upon from time to time between Fund and Custodian.
5. PROPER INSTRUCTIONS. Proper Instructions as used throughout this
Agreement means a writing signed or initialed by one or more person or persons
as the Board of Directors shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such action
is requested. Oral instructions will be considered Proper Instructions if
Custodian reasonably believes them to have been given by a person authorized
to give such instructions with respect to the transaction involved. Fund shall
cause all oral instructions to be confirmed in writing by either telecopier or
telex. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Directors of Fund
accompanied by a detailed description of procedures approved by the Board of
Directors, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Directors and Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by Custodian pursuant to any
three-party agreement which requires a segregated asset account in accordance
with Section 2.11.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. Custodian may in its
discretion, without express authority from Fund on behalf of each applicable
Portfolio: (a) make payments (not to exceed $10,000 with respect to any
Portfolio before an accounting shall be made to the Fund) to itself or others
for minor expenses of handling securities or other similar items relating to
its duties under this Agreement, PROVIDED that all such payments shall be
accounted for to Fund on behalf of the Portfolio; (b) surrender securities in
temporary form for securities in definitive form; (c) endorse for collection,
in the name of the Portfolio, checks, drafts and other negotiable instruments;
and (d) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other dealings with
the securities and property of the Portfolio except as otherwise directed by
the Board of Directors of Fund.
7. EVIDENCE OF AUTHORITY. Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other instrument or
paper reasonably believed by it to be genuine and to have been properly
executed by an authorized person by or on behalf of Fund. Custodian may
receive and accept a certified copy of a vote of the Board of Directors of
Fund as conclusive evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination or of any action by the
Board of Directors pursuant to the Articles of Incorporation as described in
such vote, and such vote may be considered as in full force and effect until
receipt by Custodian of written notice to the contrary.
8. OPINION OF FUND'S INDEPENDENT ACCOUNTANT. Custodian shall take all
reasonable action, as Fund on behalf of each applicable Portfolio may from
time to time request, to obtain from year to year favorable opinions from
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of Fund's Form N-1A, and Form N-SAR or other
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annual reports to the Securities and Exchange Commission and with respect to
any other requirements of such Commission.
9. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. Custodian shall
provide Fund, on behalf of each of the Portfolios at such times as Fund may
reasonably require, with reports by Custodian or by independent public
accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on
futures contracts, including securities deposited and/or maintained in a
Securities System, relating to the services provided by Custodian under this
Agreement; such reports shall be of sufficient scope and in sufficient detail
as may reasonably be required by Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there
are no such inadequacies, the reports shall so state.
10. COMPENSATION OF CUSTODIAN. Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian, as agreed upon in
writing from time to time between Fund on behalf of each applicable Portfolio
and Custodian.
11. RESPONSIBILITY OF CUSTODIAN. So long as and to the extent that it is in
the exercise of reasonable care, Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Agreement and shall be held
harmless in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options agreement. Custodian
shall indemnify and hold harmless Fund for all damages and expenses actually
incurred as a result of the negligent action, negligent inaction, or willful
misconduct of Custodian, any agent appointed by Custodian pursuant to Section
2.9, any sub-custodian appointed by Custodian pursuant to Article 1, or any of
their officers, or employees, in the performance of any function hereunder,
including, without limitation, reasonable attorney fees and investigation
expenses; but Custodian shall be indemnified by and shall be without liability
to Fund for any action taken or omitted by it in good faith without
negligence. It shall be entitled to rely on and may act upon advice of counsel
with nationally recognized expertise in the 1940 Act (who may be counsel for
Fund) on all matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
Except as may arise from Custodian's own negligence or willful misconduct
or the negligence or willful misconduct of a sub-custodian or agent, or as
otherwise provided in this Agreement, Custodian shall be without liability to
Fund for any loss, liability, claim or expense resulting from or caused by;
(i) events or circumstances beyond the reasonable control of Custodian or any
sub-custodian or Securities System or any agent or nominee of any of the
foregoing, including, without limitation, nationalization or expropriation,
imposition of currency controls or restrictions, the interruption, suspension
or restriction of trading on or the closure of any securities market, power or
other mechanical or technological failures or interruptions, computer viruses
or communications disruptions, acts of war or terrorism, riots, revolutions,
work stoppages, natural disasters or other similar events or acts; (ii) errors
by Fund or the Investment Advisor in their instructions to Custodian provided
such instructions have been in accordance with this Agreement; (iii) the
insolvency of or acts or omissions by a Securities System, except as provided
pursuant to Sections 2.10 and 2.16 hereof; (iv) any delay or failure of
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any broker, agent or intermediary, central bank or other commercially
prevalent payment or clearing system to deliver to Custodian's sub-custodian
or agent securities purchased or in the remittance or payment made in
connection with securities sold; (v) any delay or failure of any company,
corporation, or other body in charge of registering or transferring securities
in the name of Custodian, Fund, Custodian's sub-custodians, nominees or agents
or any consequential losses arising out of such delay or failure to transfer
such securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security
or Securities System, except as provided pursuant to Sections 2.10 and 2.16
hereof; and (vii) any provision of any present or future law or regulation or
order of the United States of America, or any state thereof, or any other
country, or political subdivision thereof or of any court of competent
jurisdiction.
Custodian shall be liable for the acts or omissions of Global
Subcustodians and Eligible Foreign Custodians as set forth in Section 2.16 to
the same extent as set forth with respect to sub-custodians generally in this
Agreement.
If Fund on behalf of a Portfolio requires Custodian to take any action
with respect to securities, which action involves the payment of money or
which action may, in the opinion of Custodian, result in Custodian or its
nominee assigned to Fund or the Portfolio being liable for the payment of
money or incurring liability of some other form, Fund on behalf of the
Portfolio, as a prerequisite to requiring Custodian to take such action, shall
provide indemnity to Custodian in an amount and form satisfactory to it.
If Fund requires Custodian, its affiliates, subsidiaries or agents, to
advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or
in the event that Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities (excluding
Custodian's operating overhead and taxes arising generally out of Custodian's
business) in connection with the performance of this Agreement, except such as
may arise from its or its officers', employees', agents' or nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the applicable Portfolio shall be security
therefor and should Fund fail to repay Custodian promptly, Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's assets
to the extent necessary to obtain reimbursement.
In no event shall Custodian be liable for indirect, special or
consequential damages, but Custodian shall be liable for all proximate
damages.
12. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT. This Agreement shall become
effective as of its execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed by registered mail, postage prepaid
to the other party, such termination to take effect not sooner than thirty
(30) days after the date of such delivery or mailing; PROVIDED, however that
Custodian shall not with respect to a Portfolio act under Section 2.10 hereof
in the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors of Fund has approved the
initial use of a particular Securities System by such Portfolio, as required
by Rule 17f-4 under the 1940 Act;
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PROVIDED FURTHER, however, that Fund shall not amend or terminate this
Agreement in contravention of any applicable federal or state regulations, or
any provision of the Articles of Incorporation, and further provided, that
Fund on behalf of one or more of the Portfolios may at any time by action of
its Board of Directors (a) substitute another bank or trust company for
Custodian by giving notice as described above to Custodian, or (b) immediately
terminate this Agreement in the event of the appointment of a conservator or
receiver for Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate regulatory agency
or court of competent jurisdiction.
Upon termination hereof, Fund on behalf of each applicable Portfolio
shall pay to Custodian such compensation as may be due as of the date of such
termination and shall likewise reimburse Custodian for its costs, expenses and
disbursements in discharging its responsibilities hereunder, excluding
Custodian's operating overhead.
13. SUCCESSOR CUSTODIAN. If a successor custodian for Fund, of one or more of
the Portfolios shall be appointed by the Board of Directors of Fund, Custodian
shall, upon termination, deliver to such successor custodian at the office of
Custodian, duly endorsed and in the form for transfer, all securities and
other assets of each applicable Portfolio then held by it, its agents, or
subcustodians hereunder, shall transfer to an account of the successor
custodian or subcustodian all of the securities of each such Portfolio held in
a Securities System, and shall cause all securities held by subcustodians to
be transferred to the accounts of the successor custodian or its subcustodian,
as the successor custodian may direct.
If no such successor custodian shall be appointed, Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of Fund, deliver at the office of Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered
to Custodian on or before the date when such termination shall become
effective, then Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the 1940 Act, of its own selection,
having an aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $25,000,000, all securities, funds and
other properties held by Custodian on behalf of each applicable Portfolio and
all instruments held by Custodian relative thereto and all other property held
by it under this Agreement on behalf of each applicable Portfolio and to
transfer to an account of such successor custodian all of the securities of
each such Portfolio held in any Securities System. Thereafter, such bank or
trust company shall be the successor of Custodian under this Agreement.
In the event that securities, funds and other properties remain in the
possession of Custodian, or in Custodian's account with a U.S. Securities
System, after the date of termination hereof owing to failure of Fund to
procure the certified copy of the vote referred to or of the Board of
Directors to appoint a successor custodian, Custodian shall be entitled to
fair compensation for its services during such period as Custodian retains
possession of such securities, funds and other properties and the provisions
of this Agreement relating to the duties and obligations of Custodian shall
remain in full force and effect.
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14. INTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with the operation
of this Agreement, Custodian and Fund on behalf of each of the Portfolios, may
from time to time agree on such provisions interpretive of or in addition to
the provisions of this Agreement as may in their joint opinion be consistent
with the general tenor of this Agreement. Any such interpretive or additional
provisions shall be in a writing signed by both parties and shall be annexed
hereto, PROVIDED that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of the
Articles of Incorporation of Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment
of this Agreement.
15. ADDITIONAL FUNDS. In the event that Fund establishes one or more series
of Shares in addition to those set forth above with respect to which it
desires to have Custodian render services under the terms hereof, it shall so
notify Custodian in writing, and if Custodian agrees in writing to provide
such services, such series of Shares shall become a Portfolio hereunder.
16. MISSOURI LAW TO APPLY. This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with laws of the State
of Missouri.
17. PRIOR CONTRACTS. This Agreement supersedes and terminates, as of the date
hereof, all prior contracts between Fund on behalf of each of the Portfolios
and Custodian relating to the custody of Fund's assets.
18. REPRODUCTION OF DOCUMENTS. This Agreement and all schedules, exhibits,
attachments and amendments hereto may be reproduced by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process. The Parties all/each agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding, whether or not the original is in existence and
whether or not such reproduction was made by a party in the regular course of
business, and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
19. SHAREHOLDER COMMUNICATIONS. Rule 14b-2 under the Exchange Act requires
banks which hold securities for the account of customers to respond to
requests by issuers of securities for the names, addresses and holding of
beneficial owners of securities of that issuer held by the bank unless the
beneficial owner has expressly objected to disclosure of this information. In
order to comply with the rule, Custodian needs Fund to indicate whether it
authorizes Custodian to provide Fund's name, address, and share position to
requesting companies whose securities Fund owns. If Fund tells the Custodian
"no," Custodian will not provide this information to requesting companies. If
Fund tells Custodian "yes" or does not check either "yes" or "no" below,
Custodian is required by the rule to treat fund as consenting to disclosure of
this information for all securities owned by Fund or any Portfolios or
Accounts established by Fund. For Fund's protection, the rule prohibits the
requesting company from using Fund's name and address for any purpose other
than corporate communications. Please indicate below whether the Fund consents
or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
20. OTHER FUND SERVICE PROVIDERS. Custodian acknowledges that State Street,
in its capacity as the Fund's transfer and service agent, and administrator,
is performing certain functions on behalf of Fund, and that State Street may,
in certain instances, act on behalf of Fund. Therefore, the Parties agree that
this Agreement will be read to refer to State Street, or other Fund service
providers, as necessary or appropriate, in lieu of Fund.
21. THE SYSTEMS; CONFIDENTIALITY.
21.1 If Custodian provides Fund direct access to the computerized investment
portfolio custody systems used by Custodian ("Systems") or if Custodian
and Fund agree to utilize any electronic system of communication, Fund
agrees to implement and enforce appropriate security policies and
procedures to prevent unauthorized or improper access to or use of the
Systems or such other system.
21.2 Fund will preserve the confidentiality of the Systems and the tapes,
books, reference manuals, instructions, records, programs, documentation
and information of, and other materials relevant to, the Systems and the
business of Custodian ("Confidential Information"). Fund agrees that it
will not voluntarily disclose any such Confidential Information to any
other person other than its own employees who reasonably have a need to
know such information pursuant hereto. Fund will return all such
Confidential Information to Custodian upon termination or expiration
hereof.
21.3 Fund has been informed that the Systems are licensed for use by Custodian
from one or more third parties ("Licensors"), and Fund acknowledges that
Custodian and Licensors have proprietary rights in and to the Systems and
all other Custodian or Licensor programs, code, techniques, know-how,
data bases, supporting documentation, data formats, and procedures,
including without limitation any changes or modifications made at the
request or expense or both of Fund (collectively, the "Protected
Information"). Fund acknowledges that the Protected Information
constitutes confidential material and trade secrets of Custodian and
Licensors. Fund will preserve the confidentiality of the Protected
Information, and Fund hereby acknowledges that any unauthorized use,
misuse, disclosure or taking of Protected Information, residing or
existing internal or external to a computer, computer system, or computer
network, or the knowing and unauthorized accessing or causing to be
accessed of any computer, computer system, or computer network, may be
subject to civil liabilities and criminal penalties under applicable law.
Fund will so inform employees and agents who have access to the Protected
Information or to any computer equipment capable of accessing the same.
Licensors are intended to be and are third party beneficiaries of Fund's
obligations and undertakings contained in this Section.
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21.4 Fund hereby represents and warrants to Custodian that it has determined
to its satisfaction that the Systems are appropriate and suitable for its
use. THE SYSTEMS ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. CUSTODIAN
EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS OF A PARTICULAR PURPOSE.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the ____ day of October, 1997.
INVESTORS FIDUCIARY TRUST COMPANY MONUMENT SERIES FUND, INC.
By: ______________________________ By: ______________________________
Title: ____________________________ Title: ____________________________
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EXHIBIT B -- FUNDS TRANSFER OPERATING GUIDELINES
I. OBLIGATION OF THE SENDER: Custodian ("IFTC") is authorized to promptly
debit Fund's ("Client's") account(s) upon the receipt of a payment order
in compliance with any of the Security Procedures chosen by the Client,
from those offered on the attached selection form (and any updated
selection forms hereafter executed by the Client, which will be made
part of this Exhibit B following such execution), for funds transfers
and in the amount of money that IFTC has been instructed to transfer.
IFTC is hereby instructed to accept funds transfer instructions only via
the delivery methods and Security Procedures indicated on the attached
selection form (and any updated executed by the Client). The Client
agrees that the Security Procedures are reasonable and adequate for its
wire transfer transactions and agrees to be bound by any payment orders,
amendments and cancellations, whether or not authorized, issued in its
name and accepted by IFTC after being confirmed by any of the selected
Security Procedures. The Client also agrees to be bound by any other
valid and authorized payment order accepted by IFTC in accordance with
these procedures. IFTC shall execute payment orders in compliance with
the selected Security Procedures and with the Client's/Investment
Manager's instructions on the execution date provided that such payment
order is received by the customary deadline for processing such a
request, unless the payment order specifies a later time. IFTC will use
reasonable efforts to execute on the execution date payment orders
received after the customary deadline, but if it is unable to execute
any such payment order on the execution date, such payment order will be
deemed to have been received on the next business day.
II. SECURITY PROCEDURES: The Client acknowledges that the selected Security
Procedures were selected by the Client from Security Procedures offered
by IFTC. The Client shall restrict access to confidential information
relating to the Security Procedures to authorized persons as
communicated in writing to IFTC. The Client must notify IFTC immediately
if it has reason to believe unauthorized persons may have obtained
access to such information or of any change in the Client's authorized
personnel. IFTC shall verify the authenticity of all instructions
according to the selected Security Procedures.
III. ACCOUNT NUMBERS: IFTC shall process all payment orders on the basis of
the account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the
account number, the account number shall take precedence and govern.
Financial institutions that receive payment orders initiated by IFTC at
the instruction of the Client may also process payment orders on the
basis of account numbers, regardless of any name included in the payment
order. IFTC will also rely on any financial institution identification
numbers included in any payment order, regardless of any financial
institution name included in the payment order.
IV. REJECTION: IFTC reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected
balance in the account to be charged at the time of IFTC's receipt of
such payment order; (b) if initiating such payment order would cause
IFTC, in IFTC's sole judgment, to exceed any applicable volume,
aggregate dollar, network, time, credit or similar limits upon wire
transfers; or (c) if IFTC, in good faith, is unable to satisfy itself
that the transaction has been properly authorized.
V. CANCELLATION OR AMENDMENT: IFTC shall use reasonable efforts to act on
all authorized requests to cancel or amend payment orders received in
compliance with the selected Security Procedures provided that such
requests are received in sufficient time to afford IFTC a reasonable
opportunity to act prior to executing the payment order. However, IFTC
assumes no liability if the request for amendment or cancellation cannot
be satisfied by IFTC's reasonable efforts.
VI. ERRORS: IFTC shall assume no responsibility for failure to detect any
erroneous payment order provided that IFTC complies with the payment
order instructions as received and IFTC complies with the selected
Security Procedures. The Security Procedures are established for the
purpose of authenticating payment orders only and not for the detection
of errors in payment orders.
VII. INTEREST AND LIABILITY LIMITS: Provided that IFTC complies with all
provisions in the Agreement relating to Proper Instructions, including
Sections 2.2, 2.7 and 5, IFTC shall assume no responsibility for lost
interest with respect to the refundable amount of any unauthorized
payment order, unless IFTC is notified of the unauthorized payment order
within thirty (30) days of notification by IFTC of the acceptance of
such payment order. In the event that IFTC does not comply with the
provisions in the Agreement relating to Proper Instructions, the general
liability provisions of the Agreement will apply. In no event (including
but not limited to failure to execute a payment order) shall IFTC be
liable for special, indirect or consequential damages, even if advised
of the possibility of such damages, but IFTC shall be liable for all
proximate damages.
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VIII. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS:
When the Client initiates or receives ACH credit and debit entries
pursuant to these Guidelines and the rules of the National Automated
Clearing House Association and the Mid-America Payment Exchange or other
similar body, IFTC or its agent will act as an Originating Depository
Financial Institution and/or Receiving Depository Financial Institution,
as the case may be, with respect to such entries. Credits given with
respect to an ACH credit entry are provisional until final settlement
for such entry is received from the Federal Reserve Bank. If such final
settlement is not received, the Client agrees to promptly refund the
amount credited to the Client in connection with such entry, and the
party making payment to the Client via such entry shall not be deemed to
have paid the amount of the entry.
IX. CONFIRMATIONS: Confirmation of IFTC's execution of payment orders shall
be provided within 24 hours. Notice may be delivered through IFTC's
account statements, advices, information systems, or by facsimile or
callback. The Client must report any objections to the execution of a
payment order within 30 days.
X. MISCELLANEOUS: IFTC may use the Federal Reserve System Fedwire to
execute payment orders, and any payment order carried in whole or in
part through Fedwire will be subject to applicable Federal Reserve Board
rules and regulations. IFTC and the Client agree to cooperate to attempt
to recover any funds erroneously paid to wrong parties, regardless of
any fault of IFTC or the Client, but the party responsible for the
erroneous payment shall bear all costs and expenses incurred in trying
to effect such recovery. These Guidelines may not be amended except by a
written agreement signed by the parties.
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SECURITY PROCEDURES SELECTION FORM
Please select one or more of the funds transfer security procedures indicated
below.
[ ] SWIFT SWIFT (Society for Worldwide Interbank Financial
Telecommunication) is a cooperative society owned and operated by member
financial institutions that provides telecommunication services for its
membership. Participation is limited to securities brokers and dealers,
clearing and depository institutions, recognized exchanges for
securities, and investment management institutions. SWIFT provides a
number of security features through encryption and authentication to
protect against unauthorized access, loss or wrong delivery of messages,
transmission errors, loss of confidentiality and fraudulent changes to
messages. SELECTION OF THIS SECURITY PROCEDURE WOULD BE MOST APPROPRIATE
FOR EXISTING SWIFT MEMBERS.
[ ] REMOTE BATCH TRANSMISSION Wire transfer instructions are delivered via
Computer-to-Computer (CPU-CPU) data communications between the Client
and/or its agent and IFTC and/or its agent. Security procedures include
encryption and/or the use of a test key by those individuals authorized
as Automated Batch Verifiers or a callback procedure to those
individuals. CLIENTS SELECTING THIS OPTION SHOULD HAVE AN EXISTING
FACILITY FOR COMPLETING CPU-CPU TRANSMISSIONS. THIS DELIVERY MECHANISM
IS TYPICALLY USED FOR HIGH-VOLUME BUSINESS SUCH AS SHAREHOLDER
REDEMPTIONS AND DIVIDEND PAYMENTS.
[ ] TELEPHONE CONFIRMATION (CALL BACK) This procedure requires Clients to
designate individuals as authorized initiators and authorized verifiers.
IFTC will verify that the instruction contains the signature of an
authorized person and prior to execution of the payment order, will
contact someone other than the originator at the Client's location to
authenticate the instruction. Non-repetitive wire transfers with the
original signatures of 2 authorized persons are acceptable and do not
require a call back. SELECTION OF THIS ALTERNATIVE IS APPROPRIATE FOR
CLIENTS WHO DO NOT HAVE THE CAPABILITY TO USE OTHER SECURITY PROCEDURES.
[ ] TEST KEY Test Key confirmation will be used to verify all non-repetitive
funds transfer instructions received via facsimile or phone. IFTC will
provide test keys if this option is chosen. IFTC will verify that the
instruction contains the signature of an authorized person and prior to
execution of the payment order, will authenticate the test key provided
with the corresponding test key at IFTC. Non-repetitive wire transfers
with the original signatures of 2 authorized persons are acceptable and
do not require a test key. SELECTION OF THIS ALTERNATIVE IS APPROPRIATE
FOR CLIENTS WHO DO NOT HAVE THE CAPABILITY TO USE OTHER SECURITY
PROCEDURES.
[ ] REPETITIVE WIRES For situations where funds are transferred periodically
from an existing authorized account to the same payee (destination bank
and account number) and only the date and currency amount are variable,
a repetitive wire may be implemented. Repetitive wires will be subject
to a $10 million limit. If the payment order exceeds the $10 million
limit, the instruction will be confirmed by telephone or test key prior
to execution. Repetitive wire instructions must be reconfirmed annually.
Clients may establish Repetitive Wires by following the agreed upon
security procedures for Non-Repetitive Wire Transfers as described by
Telephone Confirmation (Call Back) or Test Key. THIS ALTERNATIVE IS
RECOMMENDED WHENEVER FUNDS ARE FREQUENTLY TRANSFERRED BETWEEN THE SAME
TWO ACCOUNTS.
[ ] STANDING INSTRUCTIONSFunds are transferred by IFTC to a counter party on
the Client's established list of authorized counter parties. Only the
date and the dollar amount are variable. Clients may establish Standby
Instructions by following the agreed upon security procedures for
Non-Repetitive Wire Transfers as described by Telephone Confirmation
(Call Back) or Test Key. THIS OPTION IS USED FOR TRANSACTIONS THAT
INCLUDE BUT ARE NOT LIMITED TO FOREIGN EXCHANGE CONTRACTS, TIME DEPOSITS
AND TRI-PARTY REPURCHASE AGREEMENTS.
[ ] AUTOMATED CLEARING HOUSE (ACH) IFTC or its agent receives an automated
transmission from a Client for the initiation of payment (credit) or
collection (debit) transactions through the ACH network. The
transactions contained on each transmission or tape must be
authenticated by the Client. The transmission is sent from the Client's
or its agent's system to IFTC's or its agent's system with encryption.
21
<PAGE>
KEY CONTACT INFORMATION
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
___________________________ ___________________________
Name Name
___________________________ ___________________________
Address Address
___________________________ ___________________________
City/State/Zip Code City/State/Zip Code
___________________________ ___________________________
Telephone Number Telephone Number
___________________________
Facsimile Number
___________________________
SWIFT Number
MONUMENT SERIES FUND, INC.
By:______________________________
Title:___________________________
Date:____________________________
22
<PAGE>
EXHIBIT C--REUTERS DATA SERVICE AGREEMENT
The undersigned acknowledges and agrees that some of the data being provided
in the service by Custodian ("IFTC") to Fund contains information supplied to
IFTC by Reuters America Inc. ("Reuters") (the "Data"). Fund agrees that:
(i) although Reuters makes every effort to ensure the accuracy and
reliability of the Data, Fund acknowledges that Reuters, its
employees, agents, contractors, subcontractors, contributors and
third party providers will not be liable for any loss, cost or
damage suffered or incurred by Fund arising out of any fault,
interruption or delays in the Data or out of any inaccuracies,
errors or omissions in the Data however such faults, interruptions,
delays, inaccuracies, errors or omissions arise, unless due to the
gross negligence or willful misconduct of Reuters;
(ii) it will not transfer, transmit, recirculate by digital or analogue
means, republish or resell all or part of the Data; and
(iii) certain parts of the Data are proprietary and unique to Reuters.
The undersigned further agrees that the benefit of this clause will inure to
the benefit of Reuters.
MONUMENT SERIES FUND, INC.
By:______________________________
Title:___________________________
Date:____________________________
23
EXHIBIT 9(a)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
MONUMENT SERIES FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
1G - Domestic Corp/Series
<PAGE>
TABLE OF CONTENTS
PAGE
1. Terms of Appointment; Duties of the Bank.......................1
2. Fees and Expenses..............................................4
3. Representations and Warranties of the Bank.....................4
4. Representations and Warranties of the Fund.....................5
5. Wire Transfer Operating Guidelines.............................5
6. Data Access and Proprietary Information........................7
7. Indemnification................................................8
8. Standard of Care...............................................9
9. Covenants of the Fund and the Bank............................10
10. Termination of Agreement......................................10
11. Additional Funds..............................................11
12. Assignment....................................................11
13. Amendment.....................................................11
14. Massachusetts Law to Apply....................................11
15. Force Majeure.................................................11
16. Consequential Damages.........................................12
17. Merger of Agreement...........................................12
18. Counterparts..................................................12
19. Reproduction of Documents.....................................12
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the ____ day of October, 1997, by and between MONUMENT
SERIES FUND, INC., a Maryland corporation, having its principal office and
place of business at 8377 Cherry Lane, Laurel, Maryland 20707 (the "Fund"),
and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having
its principal office and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in two series, such series
shall be named in the attached Schedule A which may be amended by the parties
from time to time (each such series, together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with Article 11, being herein referred to as a "Portfolio", and
collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as
its transfer agent, dividend disbursing agent, custodian of certain retirement
plans and agent in connection with certain other activities, and the Bank
desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
l. TERMS OF APPOINTMENT; DUTIES OF THE BANK
1.1 Subject to the terms and conditions set forth in this Agreement, the
Fund, on behalf of the Portfolios, hereby employs and appoints the Bank
to act as, and the Bank agrees to act as its transfer agent for the
Fund's authorized and issued shares of its common stock, $ .001 par
value, ("Shares"), dividend disbursing agent, custodian of certain
retirement plans and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of each of the
respective Portfolios of the Fund ("Shareholders") and set out in the
currently effective prospectus and statement of additional information
("prospectus") of the Fund on behalf of the applicable Portfolio,
including without limitation any periodic investment plan or periodic
withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund on behalf of each of the Portfolios, as
applicable and the Bank, the Bank shall:
<PAGE>
(i) Receive for acceptance and scan into computer system and
record with date of receipt, the orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation thereof to the Custodian of the Fund (the
"Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
accounts;
(iii) Receive for acceptance, scan into the computer system and
record with date of receipt, redemption requests and
redemption directions and deliver the appropriate
documentation thereof to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with
broker-dealers authorized by the Fund;
(v) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay
over or cause to be paid over in the appropriate manner such
monies as instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit to Shareholders or Shareholder accounts
payments received from the Custodian for dividends and
distributions declared by the Fund on behalf of the
applicable Portfolio or, as directed by Shareholders,
automatically reinvest all such dividends or distributions in
additional Shares;
(viii)Receive inquiries from Shareholders of the Fund and offerees
of Shares, and respond to the inquiries or, as necessary or
appropriate, refer inquiries from offerees to Monument
Distributors, Inc., the Fund's principal underwriter;
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. The
Bank shall also provide the Fund on a regular basis with the
total number of shares which are authorized and
3
<PAGE>
issued and outstanding and shall have no obligation, when
recording the issuance of shares, to monitor the issuance of
such shares or to take cognizance of any laws relating to the
issue or sale of such shares, which functions shall be the
sole responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i)
perform the customary services of a transfer agent, dividend
disbursing agent, custodian of certain retirement plans and, as
relevant, agent in connection with accumulation, open-account or
similar plans (including without limitation any periodic investment
plan or periodic withdrawal program), including but not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing and tabulating Shareholder proxies, mailing
Shareholder reports, prospectuses and statements of additional
information to current Shareholders or offerees of Shares,
withholding taxes on U.S. resident and non-resident alien accounts,
preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders,
preparing and mailing confirmation forms and statements of account
to Shareholders for all purchases and redemptions of Shares and
other confirmable transactions in Shareholder accounts, preparing
and mailing activity statements for Shareholders, and providing
Shareholder account information and (ii) provide a system which
will enable the Fund to monitor the total number of Shares sold in
each State.
(c) In addition, the Fund shall (i) identify to the Bank in writing
those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of
transactions for each State on the system prior to activation and
thereafter monitor the daily activity for each State. The
responsibility of the Bank under this Agreement for the Fund's blue
sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by the
Fund and the reporting of such transactions to the Fund as provided
above.
(d) Procedures as to who shall provide certain of these services in
Section 1 may be established from time to time by agreement between
the Fund on behalf of each Portfolio and the Bank per the attached
service responsibility schedule. In accordance with the attached
service responsibility schedule, the Bank may at times perform only
a portion of these services and the Fund or its agent may perform
these services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the Fund
(i.e., escheatment services) which may be agreed upon in writing
between the Fund and the Bank.
4
<PAGE>
2. FEES AND EXPENSES
2.1 For the performance by the Bank pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay the Bank an annual
maintenance fee for each Shareholder account as set out in the initial
fee schedule attached hereto. Such fees and out-of-pocket expenses and
advances identified under Section 2.2 below may be changed from time to
time subject to mutual written agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees on
behalf of each of the Portfolios to reimburse the Bank for necessary and
reasonable out-of-pocket expenses incurred in connection with providing
the services set out in the attached service responsibility and fee
schedules, including but not limited to confirmation production, postage,
forms, telephone, microfilm, microfiche, mailing and tabulating proxies,
records storage, or advances incurred by the Bank. In addition, any other
expenses incurred by the Bank at the request or with the written consent
of the Fund, will be reimbursed by the Fund on behalf of the applicable
Portfolio.
2.3 The Fund agrees on behalf of each of the Portfolios to pay all fees and
reimbursable expenses within five (5) business days following the receipt
of the respective billing notice. Postage for mailing of dividends,
proxies, Fund reports and other mailings to all shareholder accounts
shall be advanced to the Bank by the Fund at least seven (7) business
days prior to the mailing date of such materials.
2.4 The Transfer Agent recognizes that (i) the fees for certain services that
the Transfer Agent agrees to provide under this Agreement (such as the
furnishing of confirmations of transactions in Shares and responding to
inquiries from offerees of Shares) may be deemed to be properly
chargeable to sales or promotional activities and (ii) as a result, the
Fund may be required to arrange for another entity to pay to the Transfer
Agent the fees for the services (or to reimburse the Fund for the Fund's
payment of the fees for the services).
3. REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Fund that:
3.1 It is a trust company duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in The Commonwealth of
Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
5
<PAGE>
3.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Bank that:
4.1 It is a corporation duly organized and existing and in good standing
under the laws of the State of Maryland.
4.2 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Articles of Incorporation and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.4 It is an open-end management investment company registered under the
Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as amended, on
behalf of the Portfolios is currently effective and will remain
effective, and appropriate state securities law filings have been made
and will continue to be made, with respect to all Shares of the Fund
being offered for sale.
5. WIRE TRANSFER OPERATING GUIDELINES/ARTICLES 4A OF THE UNIFORM COMMERCIAL
CODE
5.1 The Bank is authorized to promptly debit the appropriate Fund account(s)
upon the receipt of a payment order in compliance with the selected
security procedure (the "Security Procedure") chosen for funds transfer
and in the amount of money that the Bank has been instructed to transfer.
The Bank shall execute payment orders in compliance with the Security
Procedure and with the Fund instructions on the execution date provided
that such payment order is received by the customary deadline for
processing such a request, unless the payment order specifies a later
time. All payment orders and communications received after this the
customary deadline will be deemed to have been received the next business
day.
5.2 The Fund acknowledges that the Security Procedure it has designated on
the Fund Selection Form, attached to this Agreement was selected by the
Fund from security procedures offered by the Bank. The Fund shall
restrict access to confidential information relating to the Security
Procedure to authorized persons as communicated to the Bank in writing.
The Fund must notify the Bank immediately if it has reason to
6
<PAGE>
believe unauthorized persons may have obtained access to such information
or of any change in the Fund's authorized personnel. The Bank shall
verify the authenticity of all Fund instructions according to the
Security Procedure.
5.3 The Bank shall process all payment orders on the basis of the account
number contained in the payment order. In the event of a discrepancy
between any name indicated on the payment order and the account number,
the account number shall take precedence and govern.
5.4 The Bank reserves the right to decline to process or delay the processing
of a payment order which (a) is in excess of the collected balance in the
account to be charged at the time of the Bank's receipt of such payment
order; (b) if initiating such payment order would cause the Bank, in the
Bank's sole judgement, to exceed any volume, aggregate dollar, network,
time, credit or similar limits which are applicable to the Bank; or (c)
if the Bank, in good faith, is unable to satisfy itself that the
transaction has been properly authorized.
5.5 The Bank shall use reasonable efforts to act on all authorized requests
to cancel or amend payment orders received in compliance with the
Security Procedure provided that such requests are received in a timely
manner affording the Bank reasonable opportunity to act. However, the
Bank assumes no liability if the request for amendment or cancellation
cannot be satisfied.
5.6 The Bank shall assume no responsibility for failure to detect any
erroneous payment order provided that the Bank complies with the payment
order instructions as received and the Bank complies with the Security
Procedure. The Security Procedure is established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.
5.7 The Bank shall assume no responsibility for lost interest with respect to
the refundable amount of any unauthorized payment order, unless the Bank
is notified of the unauthorized payment order within thirty (30) days of
notification by the Bank of the acceptance of such payment order. In no
event (including failure to execute a payment order) shall the Bank be
liable for special, indirect or consequential damages, even if advised of
the possibility of such damages.
5.8 When the Fund initiates or receives Automated Clearing House credit and
debit entries pursuant to these guidelines and the rules of the National
Automated Clearing House Association and the New England Clearing House
Association, the Bank will act as an Originating Depository Financial
Institution and/or receiving depository Financial Institution, as the
case may be, with respect to such entries. Credits given by the Bank with
respect to an ACH credit entry are provisional until the Bank receives
final settlement for such entry from the Federal Reserve Bank. If the
Bank does not receive such final settlement, the Fund agrees that the
Bank shall receive a refund of the
7
<PAGE>
amount credited to the Fund in connection with such entry, and the party
making payment to the Fund via such entry shall not be deemed to have
paid the amount of the entry.
5.9 Confirmation of Bank's execution of payment orders shall be provided
within twenty four (24) hours notice of which may be delivered through
the Bank's proprietary information systems, or by facsimile or call-back.
Fund must report any objections to the execution of an order within
thirty (30) days.
6. DATA ACCESS AND PROPRIETARY INFORMATION
6.1 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability
to access certain Fund-related data ("Customer Data") maintained by the
Bank on data bases under the control and ownership of the Bank ("Data
Access Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary Information") of
substantial value to the Bank or other third party. In no event shall
Proprietary Information be deemed Customer Data. The Fund agrees to treat
all Proprietary Information as proprietary to the Bank and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without limiting the
foregoing, the Fund agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as may be designated
in writing by the Bank and solely in accordance with the Bank's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose of
such information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing the data acquired hereunder
from being retransmitted to any other computer facility or other
location, except with the prior written consent of the Bank;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in Proprietary
Information at common law, under federal copyright law and under
other federal or state law.
8
<PAGE>
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 6. The obligations of this Section shall
survive any earlier termination of this Agreement.
6.2 If the Fund notifies the Bank that any of the Data Access Services do not
operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely
manner to correct such failure. Organizations from which the Bank may
obtain certain data included in the Data Access Services are solely
responsible for the contents of such data and the Fund agrees to make no
claim against the Bank arising out of the contents of such third-party
data, including, but not limited to, the accuracy thereof. DATA ACCESS
SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE
BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED
HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
6.3 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information, then in such event the Bank shall be
entitled to rely on the validity and authenticity of such instruction
without undertaking any further inquiry as long as such instruction is
undertaken in conformity with security procedures established by the Bank
and the Fund from time to time.
7. INDEMNIFICATION
7.1 The Bank shall not be responsible for, and the Fund shall on behalf of
the applicable Portfolio indemnify and hold the Bank harmless from and
against, any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors required to
be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct;
(b) The Fund's lack of good faith, negligence or willful misconduct
which arise out of the breach of any representation or warranty of
the Fund hereunder;
(c) The reliance on or use by the Bank or its agents or subcontractors
of information, records, documents or services which (i) are
received by the Bank or its agents or subcontractors, and (ii) have
been prepared, maintained or performed by the Fund or any other
person or firm on behalf of the Fund
9
<PAGE>
including but not limited to any previous transfer agent or
registrar;
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund on
behalf of the applicable Portfolio;
(e) The offer or sale of Shares in violation of federal or state
securities laws or regulations requiring that such Shares be
registered or in violation of any stop order or other determination
or ruling by any federal or any state agency with respect to the
offer or sale of such Shares; and
(f) The negotiations and processing of checks made payable to
prospective or existing Shareholders tendered to the Bank for the
purchase of Shares, such checks are commonly known as "third party
checks."
7.2 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the
Bank under this Agreement, and the Bank and its agents or subcontractors
shall not be liable and shall be indemnified by the Fund on behalf of the
applicable Portfolio for any action taken or omitted without negligence
by it in reliance upon such instructions or upon the opinion of such
counsel. The Bank, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document, reasonably believed to
be genuine and to have been signed by the proper person or persons, or
upon any instruction, information, data, records or documents provided
the Bank or its agents or subcontractors by machine readable input,
telex, CRT data entry or other similar means authorized by the Fund, and
shall not be held to have notice of any change of authority of any
person, until receipt of written notice thereof from the Fund.
7.3 In order that the indemnification provisions contained in this Section 7
shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Bank, the Bank shall promptly notify the Fund
of such assertion, and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank. The Bank
shall in no case confess any claim or make any compromise in any case in
which the Fund may be required to indemnify the Bank except with the
Fund's prior written consent.
8. STANDARD OF CARE
The Bank shall at all times act in good faith and agrees to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall
not be liable for loss or damage due to errors unless said errors are
caused by its negligence, bad faith, or willful misconduct or that of its
employees.
10
<PAGE>
9. COVENANTS OF THE FUND AND THE BANK
9.1 The Fund shall on behalf of each of the Portfolios promptly furnish to
the Bank the following:
(a) A certified copy of the resolution of the Board of Directors of the
Fund authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the Fund and
all amendments thereto.
9.2 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
9.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Fund Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared
or maintained by the Bank relating to the services to be performed by the
Bank hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such Section and Rules,
and will be surrendered promptly to the Fund on and in accordance with
its request.
9.4 The Bank and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily
disclosed to any other person, except as may be required by law.
9.5 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, the Bank will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the Shareholder
records to such person.
10. TERMINATION OF AGREEMENT
10.1 This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other.
10.2 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated
11
<PAGE>
with the movement of records and material will be borne by the Fund on
behalf of the applicable Portfolio(s). Additionally, the Bank reserves
the right to charge for any other necessary and reasonable expenses
associated with such termination.
11. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to the series named in the attached Schedule A with respect to
which it desires to have the Bank render services as transfer and service
agent under the terms hereof, it shall so notify the Bank in writing, and
if the Bank agrees in writing to provide such services, such series of
Shares shall become a Portfolio hereunder.
12. ASSIGNMENT
12.1 Except as provided in Section 12.3 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
12.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
12.3 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly
registered as a transfer agent pursuant to Section 17A(c)(2) of the
Securities Exchange Act of 1934, as amended ("Section 17A(c)(2)"), (ii) a
BFDS subsidiary duly registered as a transfer agent pursuant to Section
17A(c)(2) or (iii) a BFDS affiliate; provided, however, that the Bank
shall be as fully responsible to the Fund for the acts and omissions of
any subcontractor as it is for its own acts and omissions.
13. AMENDMENT
This Agreement may be amended or modified by a written agreement executed
by both parties and authorized or approved by a resolution of the Board
of Directors of the Fund.
14. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of The Commonwealth of
Massachusetts.
15. FORCE MAJEURE
In the event either party is unable to perform its obligations under the
terms of this
12
<PAGE>
Agreement because of acts of God, strikes, equipment or transmission
failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages
to the other for any damages resulting from such failure to perform or
otherwise from such causes.
16. CONSEQUENTIAL DAMAGES
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
17. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
18. COUNTERPARTS
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.
19. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties
hereto each agree that any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or
not such reproduction was made by a party in the regular course of
business, and that any enlargement, facsimile or further reproduction
shall likewise be admissible in evidence.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
MONUMENT SERIES FUND, INC.
BY:__________________________
David A. Kugler
President
ATTEST:
_________________________________
Herbert Klein, III
Secretary
STATE STREET BANK AND TRUST
COMPANY
BY:__________________________
Executive Vice President
ATTEST:
_________________________________
14
<PAGE>
<TABLE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
<CAPTION>
SERVICE PERFORMED RESPONSIBILITY
BANK FUND
<S> <C> <C> <C>
1. Receives orders for the purchase X
of Shares.
2. Issue Shares and hold Shares in X
Shareholders accounts.
3. Receive redemption requests and X
deliver to Custodian.
4. Effect transactions 1-3 above X
directly with broker-dealers.
5. Pay over monies to redeeming X
Shareholders.
6. Effect transfers of Shares. X
7. Prepare and transmit dividends X
and distributions.
8. Issue Replacement Certificates. N/A
9. Reporting of abandoned property. X
10. Receive inquiries from Shareholders and X
offerees of Fund Shares
11. Maintain records of account. X
12. Maintain and keep a current and X
accurate control book for each
issue of securities.
13. Mail proxies. X
14. Mail Shareholder reports. X
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
SERVICE PERFORMED RESPONSIBILITY
BANK FUND
<S> <C> <C> <C>
15. Mail prospectuses to current X
Shareholders.
16. Withhold taxes on U.S. resident X
and non-resident alien accounts.
17. Prepare and file U.S. Treasury X
Department forms.
18. Prepare and mail account and X
confirmation statements for
Shareholders.
19. Provide Shareholder account X
information.
20. Blue sky reporting. X
</TABLE>
* Such services are more fully described in Section 1.2 (a), (b) and (c) of
the Agreement.
MONUMENT SERIES FUND, INC.
BY:______________________________
David A. Kugler
President
ATTEST:
_____________________________
Herbert Klein, III
Secretary
STATE STREET BANK AND TRUST
COMPANY
BY:_____________________________
Executive Vice President
ATTEST:
_____________________________
16
<PAGE>
SCHEDULE A
Monument Washington Regional Growth Fund
Monument Washington Regional Aggressive Growth Fund
17
EXHIBIT 9(b)
ADMINISTRATION AGREEMENT
Agreement dated as of October ____, 1997 by and between State
Street Bank and Trust Company, a Massachusetts trust company (the
"Administrator"), and Monument Series Fund, Inc. (the "Fund").
WHEREAS, the Fund is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund desires to retain the Administrator to furnish
certain administrative services to the Fund, and the Administrator is willing
to furnish such services, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
The Fund hereby appoints the Administrator to act as administrator
with respect to the Fund for purposes of providing certain administrative
services for the period and on the terms set forth in this Agreement. The
Administrator accepts such appointment and agrees to render the services
stated herein.
The Fund will initially consist of the portfolio(s) and/or
class(es) of shares (each an "Investment Fund") listed in Schedule A to this
Agreement. In the event that the Fund establishes one or more additional
Investment Funds with respect to which it wishes to retain the Administrator
to act as administrator hereunder, the Fund shall notify the Administrator in
writing. Upon written acceptance by the Administrator, such Investment Fund
shall become subject to the provisions of this Agreement to the same extent as
the existing Investment Funds, except to the extent that such provisions
(including those relating to the compensation and expenses payable by the Fund
and its Investment Funds) may be modified with respect to each additional
Investment Fund in writing by the Fund and the Administrator at the time of
the addition of the Investment Fund.
2. DELIVERY OF DOCUMENTS
The Fund will promptly deliver to the Administrator copies of each
of the following documents and all future amendments and supplements, if any:
a. The Fund's charter document and by-laws;
b. The Fund's currently effective registration statement under
the Securities Act of 1933, as amended (the "1933 Act"), and
the 1940 Act and the Fund's Prospectus(es) and Statement(s) of
Additional Information relating to all Investment Funds and
all amendments and supplements thereto as in effect from time
to time;
<PAGE>
c. Certified copies of the resolutions of the Board of Directors
of the Fund (the "Board") authorizing (1) the Fund to enter
into this Agreement and (2) certain individuals on behalf of
the Fund to give instructions to the Administrator pursuant to
this Agreement;
d. A copy of the investment advisory agreement between the Fund
and its investment adviser; and
e. Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem
necessary or appropriate in the proper performance of its
duties.
3. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to the Fund that:
a. It is a Massachusetts trust company, duly organized, existing
and in good standing under the laws of The Commonwealth of
Massachusetts;
b. It has the corporate power and authority to carry on its
business in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or
threatened which would impair the Administrator's ability to
perform its duties and obligations under this Agreement; and
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Administrator or any law or regulation
applicable to it.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Administrator that:
a. It is a corporation duly organized and existing and in good
standing under the laws of Maryland;
b. It has the corporate power and authority under applicable laws
and by its charter and by-laws to enter into and perform this
Agreement;
c. All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
2
<PAGE>
d. It is an investment company properly registered under the 1940
Act;
e. A registration statement under the 1933 Act and the 1940 Act
has been filed and will be effective and remain effective
during the term of this Agreement;
f. No legal or administrative proceedings have been instituted or
threatened which would impair the Fund's ability to perform
its duties and obligations under this Agreement;
g. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Fund or any law or regulation applicable to
it; and
h. As of the close of business on the date of this Agreement, the
Fund is authorized to issue shares of capital stock, and it
will initially offer shares, in an amount not to exceed the
authorized amounts as set forth in Schedule A to this
Agreement.
5. ADMINISTRATION SERVICES
The Administrator shall provide the following services, in each
case, subject to the control, supervision and direction of the Fund and the
review and comment by the Fund's auditors and legal counsel and in accordance
with procedures which may be established from time to time between the Fund
and the Administrator:
a. Oversee the determination and publication of the Fund's net
asset value in accordance with the Fund's policy as adopted
from time to time by the Board;
b. Oversee the maintenance by the Fund's custodian of certain
books and records of the Fund as required under Rule 31a-1(b)
of the 1940 Act;
c. Prepare the Fund's federal, state and local income tax returns
for review by the Fund's independent accountants and filing by
the Fund's treasurer;
d. Review calculation, submit for approval by officers of the
Fund and arrange for payment of the Fund's expenses;
e. Prepare for review and approval by officers of the Fund the
Fund's semi-annual and annual reports, excluding any
applicable disclosure required by sections (a) and (c) of Item
5A of Form N1-A (Management's Discussion of Fund's
Performance) and President's letters to shareholders,
financial information for proxy materials and other
communications required or otherwise to be sent to Fund
shareholders, and arrange for the printing and dissemination
of such reports and communications to shareholders;
3
<PAGE>
f. Prepare for review by an officer of and legal counsel for the
Fund the Fund's periodic financial reports required to be
filed with the Securities and Exchange Commission ("SEC") on
Form N-SAR and financial information required by Form N-1A and
such other reports, forms or filings as may be mutually agreed
upon;
g. Prepare reports relating to the business and affairs of the
Fund as may be mutually agreed upon and not otherwise prepared
by the Fund's investment adviser, custodian, legal counsel or
independent accountants;
h. Make such reports and recommendations to the Board concerning
the performance of the independent accountants as the Board
may reasonably request;
i. Make such reports and recommendations to the Board concerning
the performance and fees of the Fund's custodian and transfer
and dividend disbursing agent ("Transfer Agent") as the Board
may reasonably request or deems appropriate;
j. Oversee and review calculations of fees paid to the Fund's
investment adviser, custodian and Transfer Agent;
k. Consult with the Fund's officers, independent accountants,
legal counsel, custodian and Transfer Agent in establishing
the accounting policies of the Fund;
l. Respond to, or refer to the Fund's officers or Transfer Agent,
any shareholder inquiries relating to the Fund received by the
Administrator;
m. Provide periodic testing of portfolios to assist the Fund's
investment adviser in complying with Internal Revenue Code
mandatory qualification requirements, the requirements of the
1940 Act and Fund prospectus limitations as may be mutually
agreed upon;
n. Perform Blue Sky services pursuant to the specific
instructions of the Fund and as detailed in Schedule C to this
Agreement;
o. Review and provide assistance on shareholder communications;
p. Maintain general corporate calendar;
q. Maintain copies of the Fund's charter and by-laws;
4
<PAGE>
r. File annual and semi-annual shareholder reports with the
appropriate regulatory agencies; review text of President's
letters to shareholders and sections of Management's
Discussion of Fund's Performance not already prepared by the
Administrator pursuant hereto (which shall also be subject to
review by the Fund's legal counsel);
s. Organize, attend and prepare minutes of shareholder meetings;
t. Provide consultation on regulatory matters relating to
portfolio management, Fund operations and any potential
changes in the Fund's investment policies, operations or
structure; act as liaison to legal counsel to the Fund and,
where applicable, to legal counsel to the Fund's independent
Board members;
u. Maintain continuing awareness of significant emerging
regulatory and legislative developments which may affect the
Fund, update the Board and the investment adviser on those
developments and provide related planning assistance where
requested or appropriate;
v. Develop or assist in developing guidelines and procedures to
improve overall compliance by the Fund and its various agents;
w. Counsel and assist the Fund in the handling of routine
regulatory examinations and work closely with the Fund's legal
counsel in response to any non-routine regulatory matters;
Subject to review and comment by the Fund's legal counsel:
x. Prepare and file with the SEC amendments to the Fund's
registration statement, including updating the Prospectus and
Statement of Additional Information (and any supplements
thereto), and arrange for the printing and dissemination of
Prospectuses (and any supplements thereto) to existing
shareholders, at least annually, or more often if required by
applicable law;
y. To the extent not already prepared pursuant to 5.e. hereof,
prepare prospectus disclosure pertaining to Management's
Discussion of Fund's Performance excluding any disclosure
required by sections (a) and (c) of Item 5A of Form N1-A;
z. Prepare and file with the SEC proxy materials including proxy
statements; provide consultation on proxy solicitation and
tabulation matters;
aa. Prepare agenda and background materials for Board meetings,
make presentations where appropriate, prepare minutes and
follow-up on matters raised at Board meetings; and
bb. Prepare and file with the SEC Rule 24f-2 notices.
5
<PAGE>
The Administrator shall provide the office facilities and the personnel
required by it to perform the services contemplated herein.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from the Fund such compensation for
the Administrator's services provided pursuant to this Agreement as may be
agreed to from time to time in a written fee schedule approved by the parties
and initially set forth in Schedule B to this Agreement. The fees are accrued
daily and billed monthly and shall be due and payable upon receipt of the
invoice. Upon the termination of this Agreement before the end of any month,
the fee for the part of the month before such termination shall be prorated
according to the proportion which such part bears to the full monthly period
and shall be payable upon the date of termination of this Agreement. In
addition, the Fund shall reimburse the Administrator for its necessary and
reasonable out-of-pocket costs incurred in connection with this Agreement. The
Administrator shall not incur out-of-pocket expenses chargeable to an
Investment Fund in excess of ten percent of such Investment Fund's annual fees
charged hereunder in any Fund fiscal year without the prior written consent of
the Fund.
The Fund agrees promptly to reimburse the Administrator for any
equipment and supplies specially ordered by or for the Fund through the
Administrator and for any other expenses not contemplated by this Agreement
that the Administrator may incur on the Fund's behalf at the Fund's request or
with the Fund's written consent.
The Fund will bear all expenses that are incurred in its operation
and not specifically assumed by the Administrator as provided elsewhere in
this Agreement, particularly Section 5. Expenses to be borne by the Fund,
include, but are not limited to: organizational expenses; cost of services of
independent accountants and outside legal and tax counsel (including such
counsel's review of the Fund's registration statement, proxy materials,
federal and state tax qualification as a regulated investment company and
other reports and materials prepared by the Administrator under this
Agreement); cost of any services contracted for by the Fund directly from
parties other than the Administrator; cost of trading operations and brokerage
fees, commissions and transfer taxes in connection with the purchase and sale
of securities for the Fund; investment advisory fees; taxes, insurance
premiums and other fees and expenses applicable to its operation; costs
incidental to any meetings of shareholders including, but not limited to,
legal and accounting fees, proxy filing fees and the costs of preparation
(except as provided elsewhere herein), printing and mailing of any proxy
materials; costs incidental to Board meetings, including fees and expenses of
Board members; the salary and expenses of any officer, director or employee of
the Fund; costs incidental to the preparation (except as provided elsewhere
herein), printing and distribution of the Fund's registration statements and
any amendments thereto and shareholder reports (excluding any portion of these
costs that may be deemed to be properly chargeable to sales or promotional
activities and therefore borne by an entity other than the Fund or the
Administrator); cost of typesetting and printing of prospectuses (excluding
any portion of these costs that may be deemed to be properly chargeable to
sales or promotional activities and therefore borne by an entity other than
the Fund or the Administrator); cost of preparation (except as provided
elsewhere herein) and filing of the Fund's tax returns, Form N-1A and Form
N-SAR, and all notices, registrations and amendments associated with
applicable federal and state tax and securities laws; all applicable
registration fees and filing fees required under federal and state
6
<PAGE>
securities laws; fidelity bond and directors' and officers' liability
insurance; and cost of independent pricing services used in computing the
Fund's net asset value.
The Administrator is authorized to and may employ or associate with such
person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided, however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to the Fund for the acts
and omissions of any such person or persons as it is for its own acts and
omissions.
7. INSTRUCTIONS AND ADVICE
At any time, the Administrator may apply to any officer of the Fund
for instructions and may consult with outside counsel for the Fund or the
independent accountants for the Fund at the expense of the Fund, or with its
own legal counsel at its own expense with respect to any matter arising in
connection with the services to be performed by the Administrator under this
Agreement. The Administrator shall not be liable, and shall be indemnified by
the Fund, for any action taken or omitted by it in good faith and without
negligence in reliance upon any such instructions or advice or upon any paper
or document believed by it to be genuine and to have been signed by the proper
person or persons. The Administrator shall not be held to have notice of any
change of authority of any person until receipt of written notice thereof from
the Fund. Nothing in this paragraph shall be construed as imposing upon the
Administrator any obligation to seek such instructions or advice, or to act in
accordance with such advice when received.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall be responsible for the performance of only
such duties as are set forth in this Agreement and, except as otherwise
provided under Section 6, shall have no responsibility for the actions or
activities of any other party, including other service providers. The
Administrator shall have no liability for any error of judgement or mistake of
law or for any loss or damage resulting from the performance or nonperformance
of its duties hereunder unless solely caused by or resulting from the
negligence or willful misconduct of the Administrator, its officers or
employees. The Administrator shall not be liable for any special, indirect,
incidental, or consequential damages of any kind whatsoever (including,
without limitation, attorneys' fees) under any provision of this Agreement or
for any such damages arising out of any act or failure to act hereunder. In
any event, the Administrator's liability under this Agreement shall be limited
to its total annual compensation earned and fees paid hereunder during the
preceding twelve months for any liability or loss suffered by the Fund
including, but not limited to, any liability relating to qualification of the
Fund as a regulated investment company or any liability relating to the Fund's
compliance with any federal or state tax or securities statute, regulation or
ruling.
The Administrator shall not be responsible or liable for any
failure or delay in performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
control, including without limitation, work stoppage, power or other
mechanical failure, computer virus, natural disaster, governmental action or
communication disruption, nor shall any such failure or delay give the Fund
the right to terminate this Agreement.
7
<PAGE>
The Fund shall indemnify and hold the Administrator harmless from
all loss, cost, damage and expense, including reasonable fees and expenses for
counsel, incurred by the Administrator resulting from any claim, demand,
action or suit in connection with the Administrator's acceptance of this
Agreement, any action or omission by it in the performance of its duties
hereunder, or as a result of acting upon any instructions reasonably believed
by it to have been duly authorized by the Fund, provided that this
indemnification shall not apply to actions or omissions of the Administrator,
its officers or employees in cases of its or their own negligence or willful
misconduct.
The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above. In the
event the Fund elects to assume the defense of any such suit and retain
counsel, the Administrator or any of its affiliated persons, named as
defendant or defendants in the suit, may retain additional counsel but shall
bear the fees and expenses of such counsel unless (i) the Fund shall have
specifically authorized the retaining of such counsel or (ii) the
Administrator shall have determined in good faith that the retention of such
counsel is required as a result of a conflict of interest.
The indemnification contained herein shall survive the termination
of this Agreement.
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by law
or in connection with any required disclosure to a banking or other regulatory
authority, it will keep confidential all records and information in its
possession relating to the Fund or its shareholders or shareholder accounts
and will not disclose the same to any person except at the request or with the
written consent of the Fund.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
The Fund assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations applicable
to it.
In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Administrator agrees that all records which it maintains for the Fund
shall at all times remain the property of the Fund, shall be readily
accessible during normal business hours, and shall be promptly surrendered
upon the termination of the Agreement or otherwise on written request. The
Administrator further agrees that all records which it maintains for the Fund
pursuant to Rule 31a-1 under the 1940 Act will be preserved for the periods
prescribed by Rule 31a-2 under the 1940 Act unless any such records are
earlier surrendered as provided above. Records shall be surrendered in usable
machine-readable form.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to the Fund are not to be deemed
exclusive, and the Administrator shall be free to render similar services to
others. The Administrator shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Fund
from time to time, have no authority to act or represent the Fund in any way
or otherwise be deemed an agent of the Fund.
8
<PAGE>
12. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective on the date the Fund first
accepts money for investment and shall remain in full force and effect for an
initial term of two years. This Agreement shall automatically continue in full
force and effect after such initial term unless either party terminates this
Agreement by written notice to the other party at least sixty (60) days prior
to the expiration of the initial term. Either party may terminate this
Agreement at any time after the initial term upon at least sixty (60) days'
prior written notice to the other party. Termination of this Agreement with
respect to any given Investment Fund shall in no way affect the continued
validity of this Agreement with respect to any other Investment Fund. Upon
termination of this Agreement, the Fund shall pay to the Administrator such
compensation and any reimbursable expenses as may be due under the terms
hereof as of the date of such termination, including reasonable out-of-pocket
expenses associated with such termination. This Agreement may be modified or
amended from time to time by mutual written agreement of the parties hereto.
13. NOTICES
Any notice or other communication authorized or required by this
Agreement to be given to either party shall be in writing and deemed to have
been given when delivered in person or by confirmed facsimile, or posted by
certified mail, return receipt requested, to the following address (or such
other address as a party may specify by written notice to the other): if to
the Fund: Monument Series Fund, Inc., 8377 Cherry Lane, Laurel, Maryland
20707, Attn: David A. Kugler, fax: (301) 604-2119; if to the Administrator:
State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy,
Massachusetts 02171, Attn: Mutual Funds Legal Division, fax: (617) 985-2497.
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by either party hereto without
the prior consent in writing of the other party, except that the Administrator
may assign this Agreement to a successor of all or a substantial portion of
its business, or to a party controlling, controlled by or under common control
with the Administrator.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit
of the Fund and the Administrator and their respective successors and
permitted assigns.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
previous representations, warranties or commitments regarding the services to
be performed hereunder whether oral or in writing.
9
<PAGE>
17. WAIVER
The failure of a party to insist upon strict adherence to any term
of this Agreement on any occasion shall not be considered a waiver nor shall
it deprive such party of the right thereafter to insist upon strict adherence
to that term or any term of this Agreement. Any waiver must be in writing
signed by the waiving party.
18. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
19. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
20. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and
amendments hereto may be reproduced by any photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar process. The
parties hereto all/each agree that any such reproduction shall be admissible
in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not
such reproduction was made by a party in the regular course of business, and
that any enlargement, facsimile or further reproduction of such reproduction
shall likewise be admissible in evidence.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written
above.
MONUMENT SERIES FUND, INC.
By: _________________________________
Name: David A. Kugler
Title: President
STATE STREET BANK AND TRUST COMPANY
By: _________________________________
Name: Kathleen C. Cuocolo
Title: Senior Vice President
10
<PAGE>
ADMINISTRATION AGREEMENT
Monument Series Fund, Inc.
<TABLE>
SCHEDULE A
Listing Of Investment Funds And Authorized Shares
<CAPTION>
Investment Fund Authorized Shares
<S> <C>
Monument Washington Regional Growth Fund 250,000,000
Monument Washington Regional Aggressive Growth Fund 250,000,000
</TABLE>
11
<PAGE>
ADMINISTRATION AGREEMENT
Monument Series Fund, Inc.
SCHEDULE B
Fees And Expenses
12
<PAGE>
ADMINISTRATION AGREEMENT
Monument Series Fund, Inc.
SCHEDULE C
Notice Filing With
State Securities Administrators
AT THE SPECIFIC DIRECTION OF THE FUND, THE ADMINISTRATOR WILL PREPARE REQUIRED
DOCUMENTATION AND MAKE NOTICE FILINGS IN ACCORDANCE WITH THE SECURITIES LAWS
OF EACH JURISDICTION IN WHICH FUND SHARES ARE TO BE OFFERED OR SOLD PURSUANT
TO INSTRUCTIONS GIVEN TO THE ADMINISTRATOR BY THE FUND.
THE FUND SHALL BE SOLELY RESPONSIBLE FOR THE DETERMINATION (I) OF THOSE
JURISDICTIONS IN WHICH NOTICE FILINGS ARE TO BE SUBMITTED AND (II) THE NUMBER
OF FUND SHARES TO BE PERMITTED TO BE SOLD IN EACH SUCH JURISDICTION. IN THE
EVENT THAT THE ADMINISTRATOR BECOMES AWARE OF (A) THE SALE OF FUND SHARES IN A
JURISDICTION IN WHICH NO NOTICE FILING HAS BEEN MADE OR (B) THE SALE OF FUND
SHARES IN EXCESS OF THE NUMBER OF FUND SHARES PERMITTED TO BE SOLD IN SUCH
JURISDICTION, THE ADMINISTRATOR SHALL REPORT SUCH INFORMATION TO THE FUND, AND
IT SHALL BE THE FUND'S RESPONSIBILITY TO DETERMINE APPROPRIATE CORRECTIVE
ACTION AND INSTRUCT THE ADMINISTRATOR WITH RESPECT THERETO.
The Blue Sky services shall consist of the following:
1. Filing of Fund's Initial Notice Filings, as directed by the Fund;
2. Filing of Fund's renewals and amendments as required;
3. Filing of amendments to the Fund's registration statement where
required;
4. Filing Fund sales reports where required;
5. Payment at the expense of the Fund of all Fund Notice Filing fees;
6. Filing the Prospectuses and Statements of Additional Information
and any amendments or supplements thereto where required;
7. Filing of annual reports and proxy materials where required; and
8. The performance of such additional services as the Administrator
and the Fund may agree upon in writing.
Unless otherwise specified in writing by the Administrator, Blue Sky services
by the Administrator shall not include determining the availability of
exemptions under a jurisdiction's blue sky law. Any such determination shall
be made by the Fund or its legal counsel. In connection with the services
described herein, the Fund shall issue in favor of the Administrator a power
of attorney to submit Notice Filings on behalf of the Fund, which power of
attorney shall be substantially in the form of Exhibit I attached hereto.
13
<PAGE>
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of ____________, 199_ that the undersigned
MONUMENT SERIES FUND, INC. with principal offices at _________________
(individually the "Fund") makes, constitutes, and appoints STATE STREET BANK
AND TRUST COMPANY (the "Administrator") with principal offices at 225 Franklin
Street, Boston, Massachusetts its lawful attorney-in-fact for it to do as if
it were itself acting, the following:
1. NOTICE FILINGS FOR FUND SHARES. The power to submit notice filings for
the Fund in each jurisdiction in which Fund shares are offered or sold
and in connection therewith the power to prepare, execute, and deliver
and file any and all Fund applications, including without limitation,
applications to provide notice for Fund's shares, consents, including
consents to service of process, reports, including without limitation,
all periodic reports, claims for exemption, or other documents and
instruments now or hereafter required or appropriate in the judgment of
the Administrator in connection with the notice filings of Fund shares.
2. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney,
individuals holding the titles of Officer, Blue Sky Manager, or Senior Blue
Sky Administrator at the Administrator shall have authority to act on behalf
of the Fund with respect to item 1 above.
The execution of this limited power of attorney shall be deemed coupled with
an interest and shall be revocable only upon receipt by the Administrator of
such termination of authority. Nothing herein shall be construed to constitute
the appointment of the Administrator as or otherwise authorize the
Administrator to act as an officer, director or employee of the Fund.
IN WITNESS WHEREOF, the Fund has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
MONUMENT SERIES FUND, INC.
By:______________________________
Title:___________________________
Date:____________________________
14
EXHIBIT 13
SUBSCRIPTION AGREEMENT
This Subscription Agreement ("Agreement") between Monument Series Fund,
Inc. ("Company"), a corporation organized under the laws of the State of
Maryland, and _______________________________ (the "undersigned")
(collectively, the "Parties").
In consideration of the mutual promises set forth herein, the Parties
agree as follows:
1. The Company agrees to sell to the undersigned, and the undersigned agrees
to purchase, __________ shares of common stock of the Company ("Shares") at a
price of ten dollars ($10.00) per Share for one or both of each series of the
Company in the following amounts: __________ Shares of Monument Washington
Regional Growth Fund, and ________ Shares of Monument Washington Regional
Aggressive Growth Fund, on a date to be specified by the Company, prior to the
effective date of the Company's Form N-1A Registration Statement under the
Securities Act of 1933 ("1933 Act").
2. The undersigned represents and warrants to the Company that the Shares
are being acquired solely for investment purposes and not with a view towards
resale or disposition of all or any part thereof, and that he or she has no
present plan or intention to sell or otherwise dispose of the Shares or any
part thereof.
3. The undersigned represents and warrants that he or she has such knowledge
and experience of financial and business matters to evaluate the merits and
risks of the prospective investment and to make an informed decision.
4. The undersigned acknowledges that the Shares have not been registered
under any state or federal securities laws and that, therefore, the Company is
relying on certain exemptions therein from such registration requirements,
including exemptions dependent on the intent of the undersigned in acquiring
the Shares.
5. The undersigned represents and warrants that the sale of any of the
Shares will only be made by redemption to the Company and not by a transfer to
any third party.
6. The undersigned agrees to withdraw any request to redeem any of the
Shares to the extent that the Company informs the undersigned that the effect
of such redemption could have a material adverse effect on the series of the
Company.
7. The undersigned agrees not to otherwise dispose of the Shares or any part
thereof unless a registration statement with respect to such Shares is then in
effect under the 1933 Act and under any applicable state securities laws or
unless the undersigned shall have delivered to the Company an opinion of
counsel, in form and substance acceptable to the Company, that no such
registration is necessary.
<PAGE>
8. The Parties acknowledge that there are no agreements or arrangements
between the undersigned and any of the Company's officers, directors,
employees or its investment adviser, or any affiliated persons thereof with
respect to the redemption of the Shares or the future distribution of Fund
shares.
9. The undersigned acknowledges that he or she is fully aware that the
organization expenses of the Company, including the costs and expenses of
registration of the Shares, are being charged to the operation of the Company
over a period of five years, and that in the event the undersigned redeems any
portion of these Shares prior to the end of said amortization period, the
undersigned will reimburse the Company for the pro rata share of the amortized
organization expenses (by reduction of the redemption proceeds) in the same
proportion as the number of Shares being redeemed bears to the total number of
remaining initial Shares acquired by the undersigned hereunder.
10. The undersigned acknowledges that he or she is aware that in issuing and
selling these Shares, the Company is relying upon the representations,
warranties and acknowledgments contained herein.
IN WITNESS WHEREOF, the Parties hereto have executed this agreement on this
______ day of ______________, 1997.
MONUMENT SERIES FUND, INC. NAME OF SUBSCRIBER
BY: ________________________ ________________________
EXHIBIT 15
FORM OF
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12B-1
I. INTRODUCTION
This Plan sets out the terms and conditions by which Monument Series
Fund, Inc., a Maryland corporation (the "Company"), may, in effect, act as
distributor of the shares of which it is the issuer, pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "Act").
The Board of Directors ("Board") of the Company, including all of the
Independent Directors (as defined herein), has approved this Plan on behalf of
each series of the Company listed on Schedule A hereto (each, a "Portfolio,"
collectively, "Portfolios"), which may be amended from time to time in
accordance herewith ("Schedule A"). The Board approved this Plan, with respect
to each Portfolio, at an in-person meeting, held on October 27, 1997, that was
called for the purpose of voting upon this Plan.
In approving this Plan, the Board concluded, in the exercise of
reasonable business judgment, and in light of its fiduciary duties under
applicable law, including state law and Sections 36(a) and (b) of the Act,
that there is a reasonable likelihood that the Plan will benefit each
Portfolio and its shareholders.
II. AUTHORIZED PAYMENTS
The Company, on behalf of each Portfolio, shall pay a fee ("Distribution
Fee") to the principal underwriter and distributor of the shares of the
Portfolio ("Distributor"), for the activities and expenses described in
Section III. below. The maximum Distribution Fee payable by the Company, on
behalf of each Portfolio, shall be thirty-five one hundredths of one percent
(0.35%) per annum of the average daily net assets of each Portfolio. The
average daily net assets of each Portfolio shall be computed in the manner
described in the then current prospectus for the Portfolio, as effective under
the Securities Act of 1933. Each Portfolio shall accrue the Distribution Fee
daily, as appropriate, and shall pay the Fee monthly or at such other
intervals as the Board, in its sole discretion, shall determine. Subject to
maximum limit set forth above, the Company, on behalf of a Portfolio, may pay
the Distribution Fee for activities and expenses borne in the past in
connection with its shares as to which no Distribution Fee was paid on account
of such limitation.
<PAGE>
III. ACTIVITIES AND EXPENSES
The Company, on behalf of each Portfolio, may use some or all of the
Distribution Fee to directly or indirectly finance any activity or expense
that is primarily intended to result in the sale of shares of the Portfolio
(within the meaning of Rule 12b-1(a)(2) under the Act), including, for
example:
(a) compensation to and expenses, including overhead and telephone
expenses, of employees of Distributor who engage in the
distribution of the shares of the Portfolio;
(b) printing and mailing of prospectuses, statements of additional
information, and periodic reports to prospective shareholders of
the Portfolio;
(c) expenses relating to the development, preparation, printing, and
mailing of advertisements, sales literature, and other promotional
materials describing and/or relating to the Portfolio;
(d) compensation to financial intermediaries and broker-dealers to pay
or reimburse them for their services or expenses in connection with
the distribution of the shares of the Portfolio;
(e) expenses of holding seminars and sales meetings designed to promote
the distribution of the shares of the Portfolio;
(f) expenses of obtaining information and providing explanations to
prospective shareholders of the Portfolio regarding its investment
objectives and policies and other information pertaining to it,
including its performance;
(g) expenses of training sales personnel offering and selling the
Portfolio's shares; and
(h) expenses of personal services and/or maintenance of shareholder
accounts with respect to the shares of the Portfolio.
IV. TERM AND TERMINATION
A. TERM. The Plan shall take effect, with respect to each Portfolio, as
of the effective date ("Effective Date") set out next to the name of the
Portfolio on Schedule A. The Plan shall remain in effect, with respect to each
Portfolio, for a period of more than one year after the Effective Date, only
for so long as its continuance is specifically approved, along with any
related agreement(s), at least annually by vote of a majority (or whatever
greater or lesser percentage that may, from time to time, be required by
Section 12(b) of the Act and/or the rules
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<PAGE>
thereunder, as administered by the Securities and Exchange Commission ("SEC"))
of both (a) the Board, and (b) the Independent Directors, cast in person, at a
meeting called for the purpose of voting on the Plan and any related
agreement(s).
B. TERMINATION. The Plan may be terminated at any time, with respect to
each Portfolio, by vote of a majority of the Independent Directors or by vote
of a majority of the outstanding voting securities of that Portfolio. If this
Plan is terminated, the obligation of the Company, on behalf of a Portfolio,
to make payments pursuant to this Plan shall also cease and the Company shall
not be required to make any payments beyond the termination date even with
respect to expenses incurred prior to the termination date.
V. REPORTS TO BOARD
Distributor shall provide to the Directors and the Directors shall
review, at least quarterly, a written report of the amounts of the
Distribution Fee expended and the purposes for which such expenditures were
made.
VI. AMENDMENT OF PLAN
The Plan may not be amended, with respect to any Portfolio, to materially
increase the amount of the Distribution Fee permitted by Section II. hereof
until such amendment has been approved by a vote of at least the majority of
the outstanding voting securities of that Portfolio. All material amendments
to the Plan must approved in the manner described in Section IV.A above.
VII. SELECTION OF DIRECTORS
To the extent required by Rule 12b-1(c) under the Act, or any successor
provision, as administered by the SEC, while the Plan is in effect, the
selection and nomination of the Independent Directors shall be committed
solely to the discretion of the Independent Directors then in office.
VIII. RECORDS
The Company shall preserve copies of the Plan, any related agreements and
all reports made pursuant to Section V hereof, for a period of not less than
six years from the date of the Plan, any such agreement, or any such report,
as the case may be, the first two years in an easily accessible place.
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<PAGE>
IX. AGREEMENTS RELATED TO PLAN
Any agreement related to the Plan shall be in writing, and shall provide,
with respect to each Portfolio, that:
(a) the agreement may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Directors, or
by a majority of the outstanding voting securities of that
Portfolio, on not more than sixty (60) days' written notice;
(b) the agreement shall automatically terminate in the event of its
assignment; and
(c) the agreement shall continue in effect for a period of more than
one year from the date of its execution or adoption only so long as
such continuance is specifically approved at least annually by the
Board and the Independent Directors, in the manner described in
Section IV.A., above.
X. TERMINOLOGY
As used herein, the terms "assignment," "interested person," and
"majority of the outstanding voting securities" shall have the respective
meanings specified in the Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the SEC. The term "Independent
Directors" shall mean those Directors of the Company who are not "interested
persons" of the Company (as that term is defined by Section 2(a)(19) of the
Act) and who have no direct or indirect financial interest in the operation of
the Plan or any agreements related thereto.
Adopted as of __________, 1997
Last Amended: Not Applicable
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<PAGE>
SCHEDULE A
This schedule is an integral part of the Agreement to which it is
attached. Capitalized terms used herein have the same meaning as given to them
in the Agreement, except as otherwise noted.
<TABLE>
<CAPTION>
NAME OF PORTFOLIO EFFECTIVE DATE
<S> <C>
Monument Washington Regional Growth Fund
Monument Washington Regional Aggressive Growth Fund
</TABLE>
Adopted as of __________, 1997
Last Amended: Not Applicable
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