Annual Report to Shareholders
MONUMENT SERIES FUND, INC.
For the Period Ended
October 31, 1998
<PAGE>
Monument Series Fund, Inc.
25th November, 1998
To Our Shareholders,
Background
The Monument Washington Regional Growth and the Monument Washington Regional
Aggressive Growth Funds are designed to capitalize on the growth potential of
the Washington/Baltimore Region in coming decades. Each fund invests primarily
in 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. Each Fund seeks to maximize long-term
growth of capital by primarily investing in common stocks and convertible
securities.
Each Fund is managed by Monument Advisors, Ltd. ("Advisors"), a registered
investment advisor. Advisors uses top down and bottom up analysis plus site
visits and technical analysis techniques to identify Washington Region companies
which Advisors believes to be well positioned for earnings growth, possess
outstanding management, and priced right in the market place for significant
capital appreciation. Advisors expects each Portfolio to be weighted toward
computer and software technology; communications; service industries; health
sciences; defense and biotechnology.
Fiscal Year 1998 Review
The first ten months of 1998 was clearly marked by the phenomenon of flight to
quality. The near collapse of the Asian financial system exerted tremendous
economic strains and caused political upheavals. Many countries saw their
currencies and stock markets drop fifty to eighty percent in a short period of
time. What was initially a seemingly innocuous credit problem in Thailand
cascaded into a full-blown recession in South East Asia and wreaked havoc in
other developing countries. The impact of the Asian flu is still being felt
throughout the world, including the US economy.
With so many uncertainties overshadowing economies worldwide, excess capital
that fled these countries naturally landed in the US, which had the best
performing economy, thereby strengthening the dollar and increasing liquidity in
the financial markets here. Record amounts of mergers and acquisitions, and
rising national income further boosted financial asset prices. Thus the famous
`irrational exuberance' characterization coined by Mr.
Greenspan.
In late summer investor psychology made a sudden turn after the Russian
government defaulted on its bonds. Liquidity in credit markets quickly dried up.
Long-Term Capital Management ("LTCM"), once a very successful hedge fund betting
on interest rate convergence, suddenly found itself at the brink of bankruptcy.
The New York Federal Reserve quickly intervened since a forced liquidation of
LTCM's huge positions could drastically destabilize the world financial market.
Markets around the world dove steeply as concerned investors rushed for the
exit. Finally, the Federal Reserve stepped in, cutting interest rates in rapid
succession and injecting liquidity into the credit markets.
Share prices rebounded immediately after Mr. Greenspan made an unscheduled
interest rate cut in mid October. From the lowest point in October, the S&P
rebounded 12.1% while the Russell 2000 added 9.6% by the end of October. Still
concerned about another incident similar to LTCM and a renewed fear of economic
slowdown, investors bid the share prices of large capitalization issues up
further, amplifying the three year divergence.
Outlook
The ripple effect of the Asian economic crisis finally reached the US in the
summer. The strong dollar and weak Asian demand reduced US exports and boosted
imports. Falling import prices also contributed to a deflationary environment
such that producers have practically no pricing power. In addition, wages keep
rising, thereby squeezing corporate profit margins.
Although consumers have become more cautious, we continue to expect a good
Christmas season for retailers, on-line and on Main Street. However, profit
margins may not be as good as those in previous years so we may see a marked
pull back of production and hiring plans after Christmas. In the first quarter
1999, if tax refunds are not as robust and timely as in the previous two years,
the US economy may slow to zero growth situation. However, a stronger yen and a
slowly recovering Japanese economy will likely begin to pull the battered S.E.
Asian economies out of a recession in the first half of 1999, thereby boosting
US exports in the second half. Therefore, the US economy may not fall into
recession at all.
In the short-term, easy monetary policy and strong employment may send share
prices to new highs, especially at the turn of the year when pension
contributions and bonus money flow into the market.
The Monument Washington Regional Growth Fund
Being under-represented in the Dow 30 and S&P 500, large capitalization
Washington Regional companies generally under-performed these indices. Moreover,
the carnage in technology and financial sectors in late summer impacted the
Growth Fund disproportionately. Year-to-date, the Monument Washington Regional
Growth Fund returned 3.2% after expenses, while the S&P 500 returned 14.4%.
However, we expect the Growth Fund to close the performance gap against the S&P
500 as technology and financial shares rebound. A general economic recovery in
Asia will boost technology shares since most technology companies have large
exposure to the Asian economies. Financial shares, in the meantime, will benefit
from lower interest rates, as the Federal Reserve attempts to avoid a recession.
The Monument Washington Regional Aggressive Growth Fund
For year-to-date, the Monument Washington Regional Aggressive Growth Fund
returned 7.8% as compared to a negative (13.47%) for the benchmark Russell 2000.
Many smaller, leading-edge companies, like those in telecommunication and
information technology sectors, performed relatively well, despite the heavy
toll taken on technology shares in general. We expect the Aggressive Fund to
continue to be highly volatile and encourage shareholders to maintain a
long-term investment horizon.
<PAGE>
The Washington Region
We continue to see tremendous growth in the Washington Region, particularly
among new wave industries: biotechnology, healthcare services,
telecommunications, information technology, and computer software. We expect the
regional economy to stay robust during the first half of 1999 when a slow down
of the national economy is expected. High demand for information/communications
services and infrastructure, and stable government spending, should provide the
Washington Region a growing economy and improving quality of life through 1999.
We believe the Washington Region to be one of the most promising areas in the
world for investors over the next five to ten years. We will work diligently to
help our shareholders participate in that potential.
Respectfully,
David A. Kugler Alexander C. Cheung, CFA
President Senior Portfolio Manager
<PAGE>
[Graph goes here]
Monument Washington
Regional Growth Fund S & P 500
-------------------- ---------
January 6, 1998 $ 9,525.00 $10,000.00
October 31, 1998 10,320.00 11.440.00
<PAGE>
MONUMENT WASHINGTON REGIONAL GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1998
Number
of Market
Shares Security Description Value
------ -------------------- -----
Common Stock: 83.34%
Airlines: 2.64%
100 US Airways Group, Inc. * $ 5,656
--------
Banking: 7.88%
100 BankAmerica Corporation 5,744
100 Crestar Financial Corporation 6,587
100 First Virginia Banks, Inc. 4,562
-----
16,893
------
Computer Services: 11.23%
100 America OnLine, Inc. * 12,706
100 Computer Sciences Corporation * 5,275
150 Electronic Data Systems Corporation 6,103
-----
24,084
------
Computer Software: 13.99%
100 Computer Associates International, Inc 3,938
100 Microsoft Corporation * 10,588
150 Network Associates, Inc. * 6,375
200 Oracle Corporation * 5,913
150 Peoplesoft, Inc. * 3,178
-----
29,992
------
Electronics and Semiconductors 4.16%
100 Intel Corporation 8,919
-----
Financial Services: 16.19%
100 Capital One Financial 10,175
150 Federal Home Loan Mortgage 8,625
150 Federal National Mortgage 10,622
200 Legg Mason, Inc. 5,313
-----
34,735
------
Hotels and Motels: 3.76%
300 Marriot International 8,062
-----
Oil/Energy: 3.53%
100 Mobil Corporation 7,569
-----
Publishing and Broadcasting: 4.10%
100 Gannett Company 6,188
200 Sinclair Broadcast Group Class A * 2,600
-----
8,788
-----
Retail: 3.37%
200 Circuit City Stores 7,237
-----
Telecommunications: 9.63%
250 Nextel Communications, Inc. Class A 4,531
150 MCI WorldCom, Inc. * 8,288
200 Qwest Communications International * 7,825
-----
20,644
------
Utilities-Electric: 2.86%
150 AES Corporation * 6,141
-----
Total Common Stock:
(Cost: $175,478) 178,720
-------
Short Term Investments:
27,179 Star Treasury Fund
(Cost: $27,179) 27,179
------
Total Investments
(Cost: $202,657)** 96.01% 205,899
Other assets, net 3.99% 8,550
---- -----
Net Assets 100.00% $214,449
====== ========
* Non-income producing
** Cost for Federal income tax purposes is $202,657 and net unrealized
appreciation consists of:
Gross unrealized appreciation $ 18,040
Gross unrealized depreciation (14,798)
-------
Net unrealized appreciation $ 3,242
=========
See Notes to Financial Statements
Statement of Assets and Liabilities
October 31,1998
- --------------------------------------------------------------------------------
ASSETS
Investments at value (identified
cost of $175,478)(Note 1) $178,720
Short-term investment 27,179
Receivables
Dividends $ 69
Interest 34
-- 103
Organization expenses (Note 1) 75,214
Prepaid expenses 888
Due from manager 33,453
------
TOTAL ASSETS 315,557
-------
LIABILITIES
Payables
Investment management fee 1,242
Administration fee 592
Custody fee 200
Transfer agent fee 559
Directors fee 8,000
Organization fee 89,943
Accounting fee 572
---
TOTAL LIABILITIES 101,108
-------
NET ASSETS $214,449
========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($214,449 / 20,784 shares outstanding $ 10.32
========
Net assets consist of:
Par value @.01 $ 208
Capital in excess of par 224,101
Accumulated undistributed net income 766
Accumulated undistributed realized
loss on investments (13,868)
Net unrealized appreciation 3,242
-----
Net Assets $214,449
========
See Notes to Financial Statement
Statement of Operations
January 6* to October 31, 1998
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income:
Dividends $ 727
Interest 39
--
Total income $ 766
Expenses:
Investment management fees (Note 1) 1,242
12B-1 fee (Note 1) 621
Administration fees (Note 2) 592
Custodian and accounting fees 772
Transfer agent fees 21,403
Professional fees 6,592
Organizational expenses (Note 1) 14,729
Directors fees 8,907
Registration 729
Other 3,248
-----
Total expenses 58,835
Expense reimbursements/advisor (58,214)
Expense reimbursements/distributor (621)
----
Expenses, net -0-
----
Net investment income 766
---
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (13,868)
Net change in unrealized appreciation on investments 3,242
Net loss on investments (10,626)
-------
Net decrease in net assets resulting from operations $(9,860)
-------
* Commencement of operations
See Notes to Financial Statements
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
January 6* to
October 31, 1998
----------------
OPERATIONS
Net investment income $ 766
Net realized loss on investments (13,868)
Net change in unrealized appreciation of investments 3,242
-----
Net decrease in net assets resulting from operations (9,860)
CAPITAL SHARE TRANSACTIONS
Net increase in net assets
resulting from capital
share transactions** 173,809
-------
Net increase in net assets 163,949
Net assets at beginning of the period 50,500
------
NET ASSETS at the end of the period $214,449
========
**A summary of capital share transactions follows:
January 6* to
October 31, 1998
----------------
Shares Value
------ -----
Shares sold 20,023 $220,013
Shares redeemed (4,290) (46,204)
------ -------
Net increase 15,733 $173,809
====== ========
* Commencement of operations
See Notes to Financial Statements
Financial Highlights
For a Share Outstanding Throughout The Period
- --------------------------------------------------------------------------------
January 6* to
October 31, 1998
----------------
Per Share Operating Performance
Net asset value,
beginning of the period $10.00
------
Income from investment
operations-
Net investment income 0.04
Net realized and unrealized
gain (loss) on investments 0.28
----
Total from investment operations 0.32
----
Net asset value, end of the period $10.32
======
Total Return 3.20%
Ratios/Supplemental Data
Net assets, end of period (000's) $214
Ratio to average net assets-
Expenses 51.07%
Net investment income .66%
Portfolio turnover rate 82.00%
* Commencement of operations
See Notes to Financial Statements
<PAGE>
[Graph goes here]
Monument Washington
Regional Aggressive
Growth Fund Russell 2000
----------- ------------
January 6, 1998 $ 9,525.00 $10,000.00
October 31, 1998 10,780.00 8,653.00
<PAGE>
MONUMENT WASHINGTON REGIONAL AGGRESSIVE GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1998
Number
of Market
Shares Security Description Value
------ --------------------- -----
Common Stock: 75.70%
Aerospace/Defense Equipment: 1.82%
100 Orbital Sciences Corporation * $ 3,300
-------
Banking: 1.55%
200 Columbia Bancorp 2,800
-----
Computers: 4.52%
200 MICROS Systems, Inc. * 4,413
200 RWD Technologies, Inc. * 3,775
-----
8,188
-----
Computer Services: 11.73%
300 Axent Technologies, Inc. * 7,537
150 Network Solutions, Inc. Class A * 8,006
200 Visual Networks, Inc. * 5,700
-----
21,243
------
Computer Software: 6.43%
300 Manugistics Group, Inc. * 4,312
300 PSINet, Inc. * 4,331
200 Software AG Systems, Inc. * 3,000
-----
11,643
------
Construction - Residential: 1.87%
100 NVR, Inc. * 3,400
-----
Consulting Services: 3.20%
200 Maximus, Inc. * 5,800
-----
Data Processing: 9.05%
200 American Management Systems * 6,137
200 Best Software, Inc. * 4,900
300 Deltek Systems, Inc. * 5,363
-----
16,400
------
Diagnostic Equipment: 3.30%
200 IGEN International, Inc. * 5,975
-----
Education/Educational Services: 5.29%
100 Strayer Education, Inc. 3,400
200 Sylvan Learning Systems, Inc. * 6,175
-----
9,575
-----
Financial: 4.71%
100 HealthCare Financial Partners, Inc. * 3,062
300 TeleBanc Capital Markets, Inc. * 5,475
-----
8,537
-----
Health Care Intemediary: 2.54%
200 United Payors and United Providers, Inc. * 4,600
-----
Pharmaceuticals: 5.57%
150 MedImmune, Inc. * 10,088
------
Research and Development: 2.98%
200 Pharmaceutical Product Development, Inc. * 5,400
-----
Retirement/Assisted Living Care: 5.94%
250 Sunrise Assisted Living, Inc. * 10,766
------
Telecommunications: 5.20%
100 Comsat Corporation 3,944
200 Transaction Network Services, Inc. * 5,475
-----
9,419
-----
Total Common Stock
(Cost: $131,976) 137,134
-------
Short Term Investments: 19.63%
35,569 Star Treasury Fund
(Cost: $35,569) 35,569
------
Total Investments:
(Cost: $167,545)** 95.33% 172,703
Other assets, net 4.67% 8,456
---- -----
Net Assets 100.00% $ 181,159
====== ==========
* Non-income producing
** Cost for Federal income tax purposes is $167,545 and net unrealized
appreciation/depreciation consists of:
Gross unrealized appreciation $ 20,778
Gross unrealized depreciation (15,620)
-------
Net unrealized appreciation $ 5,158
==========
See Notes to Financial Statements
Statement of Assets and Liabilities
October 31, 1998
- --------------------------------------------------------------------------------
ASSETS
Investments at value (identified
cost of $131,976)(Note 1) $ 137,134
Short-term investment 35,569
Interest receivable 39
Prepaid expenses 888
Due from manager 33,323
Organization expenses (Note 1) 75,214
------
TOTAL ASSETS 282,167
-------
LIABILITIES
Payables
Investment management fees 1,142
Administration fee 592
Custody fee 200
Transfer agent fee 559
Directors fee 8,000
Organization fee 89,943
Accounting fee 572
---
TOTAL LIABILITIES 101,008
-------
NET ASSETS $181,159
========
NET ASSET VALUE AND
REDEMPTION PRICE PER SHARE
($181,159 / 16,810 shares outstanding) $ 10.78
========
Net assets consist of:
Par value @.01 $ 168
Capital in excess of par 183,784
Accumulated undistributed net income 706
Accumulated undistributed realized
loss on investments (8,657)
Net unrealized appreciation on investments 5,158
------
Net Assets $181,159
========
See Notes to Financial Statements
Statement of Operations
January 6* to October 31, 1998
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income:
Dividends $ 659
Interest 47
--
Total income $ 706
Expenses:
Investment management fees (Note 2) 1,142
12B-1 fee (Note 2) 571
Administration fees (Note 2) 592
Custodian and accounting fees 774
Professional fees 6,592
Transfer agent fees 21,359
Organizational expenses (Note 1) 14,729
Directors fees 8,907
Registration fees 729
Other 3,246
-----
Total expenses 58,641
Expense reimbursements/advisor (58,070)
Expense reimbursements/distributor (571)
----
Expenses, net -0-
----
Net investment income 706
----
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (8,657)
Net change in unrealized appreciation on investments 5,158
-----
Net loss on investments (3,499)
------
Net decrease in net assets resulting from operations $ (2,793)
========
* Commencement of operations
See Notes to Financial Statements
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
January 6* to
October 31, 1998
----------------
OPERATIONS
Net investment income $ 706
Net realized loss on investments (8,657)
Net change in unrealized appreciation of investments 5,158
-----
Net decrease in net assets resulting from operations (2,793)
CAPITAL SHARE TRANSACTIONS
Net increase in net assets
resulting from capital
share transactions** 134,452
-------
Net increase in net assets 131,659
Net assets at beginning of the period 49,500
------
NET ASSETS at the end of the period $181,159
========
**A summary of capital share transactions follows:
January 6* to
October 31, 1998
----------------
Shares Value
------ -----
Shares sold 12,522 $141,837
Shares redeemed (662) (7,385)
---- ------
Net increase 11,860 $134,452
====== ========
* Commencement of operations
See Notes to Financial Statements
Financial Highlights
For a Share Outstanding Throughout The Period
- --------------------------------------------------------------------------------
January 6* to
October 31, 1998
----------------
Per Share Operating Performance
Net asset value, beginning of the period $ 10.00
-------
Income from investment operations-
Net investment income 0.04
Net realized and unrealized
gain (loss) on investments 0.74
----
Total from investment operations 0.78
----
Net asset value, end of the period $ 10.78
=======
Total Return 7.80%
Ratios/Supplemental Data
Net assets, end of period (000's) $181
Ratio to average net assets-
Expenses 58.25%
Net investment income .70%
Portfolio turnover rate 88.00%
* Commencement of operations
See Notes to Financial Statements
Monument Series Fund, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1--SIGNIFICANT ACCOUNTING POLICIES. Monument Series Fund, Inc. (the "Fund")
is an open-end, non-diversified management investment company registered
under the Investment Company Act of 1940. It was incorporated under the
laws of the State of Maryland on April 7, 1997. The Fund currently consists
of the Monument Washington Regional Growth Fund ("Growth Fund") and the
Monument Washington Regional Aggressive Growth Fund ("Aggressive Growth
Fund") (each a "Fund"; collectively the "Funds"). Prior to January 6, 1998
the Funds have had no operations other than those related to organizational
matters and the sale and issuance of initial shares (5,050 for the Growth
Fund and 4,950 for the Aggressive Growth Fund) to shareholders. The Fund is
authorized to issue 2,000,000,000 shares of $.001 par value capital stock.
Each Fund represents a separate series of shares of common stock of the
Monument Series Fund, Inc.
The following is a summary of significant accounting policies followed by
the Fund. The policies are in conformity with generally accepted
accounting principles.
A. Use of Estimates: The process of preparing financial statements in
conformity with generally accepted accounting principles require
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, as well as the
reported amounts of revenue and expenses during the reporting period.
Actual results could differ from these estimates.
B. Investment Valuation: Equity securities listed on an established
securities exchange or on the NASDAQ National Market System are value at
their last sale price on the exchange where primarily traded or, if there
is no reported sale, at the mean between the closing bid and asked price
on that day. Over-the-counter portfolio securities are value at the mean
between the last bid and asked prices based upon quotes furnished by
market markers for such securities. Exchange listed convertible debt
securities are value at the mean between the last bid and asked prices
obtained from broker-dealers or a comparable alternative, such as
Bloomberg or Telerate.
Other securities for which market quotes are readily available are valued
at the current market price, which may be obtained from a pricing service.
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.
<PAGE>
C. Investment Transactions: All securities are recorded on a trade date
basis. Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Realized gains and losses on
sales of securities are determined on the basis of identified cost.
D. Organization Expenses: All organizational expenses incurred in
connection with the organization and initial registration were paid by
Monument Advisors, Inc. However, the Funds will reimburse the investment
advisor for such cost. Organizational costs have been deferred and are
being amortized on a straight-line basis over a period of sixty months
from the date the Funds commenced investment operations. The Funds have
agreed with the Investment Advisor that if any of the initial shares of
the Funds are redeemed during the amortization period, the Funds will
reduce the redemption proceeds for the then unamortized organizational
expenses in the same ratio as the number of redeemed shares bears to the
number of initial shares at the time of such redemption.
E. Federal Income Taxes: Each Fund is treated as a separate entity for
Federal tax purposes. Each Fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal Revenue
Code, as amended. By so qualifying, the Funds will not be subject to
Federal income taxes to the extent that they distribute all of their
taxable income, including realized capital gains. In addition, by
distributing during each calendar year substantially all of their net
investment income, capital gains and certain other amounts, if any, the
Funds will not be subject to a Federal income excise tax.
F. Dividend and Distribution to Shareholders: The Fund intends to pay an
annual dividend to shareholders of record representing its entire net
investment income and to distribute all of its realized net capital gains
at least annually. Distributions are recorded on the ex-dividend date.
Income distributions and capital gains distributions are determined in
accordance with Federal income tax regulations, which may differ from
generally accepted accounting principles.
Note 2--INVESTMENT MANAGEMENT AND DISTRIBUTION AGREEMENTS. Monument Advisors,
Ltd. ("Monument Advisors"), a wholly-owned subsidiary of the Monument
Group, Inc. has been retained under an Investment Advisory Agreement (the
"Advisory Agreement") with the Funds, to supervise the management and the
investment program of the Fund. As full compensation for its services under
the Agreement, each Fund will pay the Advisor a monthly fee, 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. For the period ended October 31, 1998, Monument Advisors waived all
of its fees.
<PAGE>
Each Fund has approved a Plan of Distribution pursuant to Rule 12b-1
providing for the payment of a maximum distribution fee, equal to 0.50% of
its average daily net assets, to Monument Distributors, Inc. ("Monument
Distributors") the principal underwriter for each Fund. Monument
Distributors have agreed to waive the distribution fee for the first
twelve months of operations for the Growth Fund and Aggressive Growth
Fund. For the period ended October 31, 1998, Monument Distributors waived
$1,192.
The Advisor has voluntarily agreed to pay all operating expenses of the
Growth Fund and the Aggressive Growth Fund. For the period ended October
31, 1998, Monument Advisors have reimbursed, or have agreed to reimburse,
the Funds $58,070 and $58,214, respectively. This voluntary reimbursement
may be terminated at any time without notice.
On October 31, 1998, Monument Group, Inc. owned 5.4% of the outstanding
shares of the Aggressive Growth Fund.
Administrative Agreement--State Street Bank and Trust Company agreed to
provide certain administrative services to each Fund pursuant to an
administration agreement dated October 31, 1997. The Administrator
provided services to the Fund that related to administration, operations
and compliance. For its services, State Street Bank and Trust Company was
to receive 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 was greater. The agreement with State Street Bank and Trust
Company was terminated in October, 1998. As a result of this termination,
State Street Bank and Trust Company agreed to forego fees in the amount of
$182,000 that had been accrued under this agreement.
Pursuant to an Administration Agreement ("Administrative Agreement") dated
October 20, 1998, Commonwealth Shareholder Services, Inc. ("CSS") was
appointed administrative agent to the Fund. For its services under the
Administrative Agreement, CSS receives 0.20% of the average daily net
assets, or an annual fee of $18,000, whichever is greater, for each Fund.
Note 3--INVESTMENTS/CUSTODY. Purchases and sales of securities for the Monument
Washington Regional Growth Fund, other than short-term notes aggregated
$275,591 and $85,790, respectively. Purchases and sales of securities for
the Monument Washington Regional Aggressive Growth Fund, other than
short-term notes aggregated $218,275 and $77,642, respectively. Securities
for the Monument Washington Regional Aggressive Growth Fund, other than
short-term notes aggregated $218,275 and $77,642, respectively.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Monument Series Fund, Inc.
In planning and performing our audit of the financial statements of Monument
Series Fund, Inc. (the "Fund") for the period January 6, 1998 (commencement of
operations) to October 31, 1998 (on which we have issued our report dated
December 23, 1998), we considered its internal control, including control
activities for safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the financial statements
and to comply with the requirements of Form N-SAR, and not to provide assurance
on the Fund's internal control. The management of the Monument Series Fund, Inc.
is responsible for establishing and maintaining internal control. In fulfilling
this responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs of controls. Generally, controls
that are relevant to an audit pertain to the entity's objective of preparing
financial statements for external purposes that are fairly presented in
conformity with generally accepted accounting principles. Those controls include
the safeguarding of assets against unauthorized acquisition, use, or
disposition. Because of inherent limitations in any internal control, errors or
fraud may occur and not be detected. Also, projection of any evaluation of
internal control to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate. Our consideration of internal control
would not necessarily disclose all matters in internal control that might be
material weaknesses under standards established by the American Institute of
Certified Public Accountants. A material weakness is a condition in which the
design or operation of one or more of the internal control components does not
reduce to a relatively low level the risk that errors or fraud in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving internal control and its operation, including controls for
safeguarding securities, that we consider to be material weaknesses as defined
above as of October 31, 1998. This report is intended solely for the information
and use of management, the Board of Directors of the Fund and the Securities and
Exchange Commission.
Deloitte & Touche LLP
Princeton, New Jersey
December 23, 1998
<PAGE>
Investment Advisor:
Monument Advisors, Ltd.
4847 Cordell Avenue, Suite 290
Bethesda, Maryland 20814
Distributor:
Monument Distributors, Inc.
4847 Cordell Avenue, Suite 290
Bethesda, Maryland 20814
Independent Auditors:
Deloitte and Touche LLP
Princeton, New Jersey
Transfer Agent:
For account information, wire purchase or redemptions, call or write to Monument
Series Fund, Inc.'s Transfer Agent:
Fund Services, Inc.
Post Office Box 26305
Richmond, Virginia 23260
(800) 628-4077 Toll Free
More Information:
For 24 hour, 7 days a week price information, and for information on any
series of Monument Series Fund, Inc., investment plans, and other
shareholder services, call (888) 520-8637 Toll Free
