MONUMENT SERIES FUND
MONUMENT DIGITAL TECHNOLOGY FUND
(formerly Monument Internet Fund)
MONUMENT MEDICAL SCIENCES FUND
MONUMENT GENOMICS FUND
MONUMENT TELECOMMUNICATIONS FUND
November 15, 2000
Dear Shareholder:
Monument Series Fund has a new prospectus
dated November 15, 2000, reflecting some
important changes that have been made on behalf
of the Funds. We are writing to summarize those
changes for you and to include a current
prospectus. If you have questions or comments
please call us at 888-420-9950. Of course, you
can also find the prospectus and additional
information on our website at
www.monumentfunds.com.
As you can see by the header to this
letter, Monument Internet Fund has now become
Monument Digital Technology Fund. This change
reflects our view that the Internet company
market has matured into the second stage of the
"Internet economy," and we have broadened the
Fund's investment strategy to reflect
opportunities in that stage. In light of the
recent market downturn in first stage internet
stocks, a fundamental market shift has taken
place in the sector. Accordingly, the Fund began
months ago to shift its focus to leading
companies providing infrastructure, enabling
technologies, and communications. In this
regard, changing the name to Monument Digital
Technology Fund more accurately reflects the
Fund's current holdings and its anticipated
future direction.
Monument Advisor's portfolio management
team includes members with specific scientific
and technical expertise that has enabled Monument
Series Fund to add a portfolio specializing in
genomics-related companies. You can learn more
about the Monument Genomics Fund in the
prospectus.
We also wish to bring to your attention an
important change to the expense limitation
arrangement. The Funds have each entered into an
agreement with the investment advisor to cap
expenses at a certain level. Given market
conditions and other circumstances, the Board of
Trustees has voted to raise the cap from the
previous increase instituted effective June 30,
2000. Specifically, the new prospectus reflects
that the Digital Technology, Medical Sciences and
Telecommunications Funds have an expense cap of
2.75% on Class A Shares (up from 2.25%), and
3.25% on Class B and Class C Shares (up from
3.00%). There is no guarantee that the current
levels will be maintained. At the same time,
given the increased asset size of the Funds,
expenses have come down considerably. While the
result is that the Fund's expenses may not exceed
the cap, so that the Advisor no longer needs to
waive or reduce its fee, this also gives the
Advisor an opportunity to recoup fees waived or
expenses reimbursed in the past. Overall, the
Board of Trustees has determined that this change
is in the best interests of the Funds.
Again, if you have any questions, please
call us at 888-420-9950.
Sincerely,
Dave
David A. Kugler
President
[MONUMENT FUNDS GROUP, INC. LOGO]
MONUMENT SERIES FUND
MONUMENT DIGITAL TECHNOLOGY FUND
(formerly Monument Internet Fund)
MONUMENT GENOMICS FUND
MONUMENT MEDICAL SCIENCES FUND
MONUMENT TELECOMMUNICATIONS FUND
Prospectus dated November 15, 2000
This Prospectus describes the Monument Digital
Technology Fund (formerly Monument Internet
Fund), Monument Genomics Fund, Monument Medical
Sciences Fund, and Monument Telecommunications
Fund (each, a "Fund"; collectively, the "Funds").
Each Fund represents a separate series of common
stock of Monument Series Fund (the "Company").
Each series offers four classes of shares: Class
A Shares with a front-end sales charge, Class B
Shares subject to a contingent deferred sales
charge, Class C Shares with a reduced front-end
sales charge and a contingent deferred sales
charge, and Class Y Shares for certain
institutional investors. Class A Shares, B Shares
and C Shares are offered by this prospectus.
Class Y Shares are offered pursuant to a separate
prospectus, which may be obtained by contacting
Monument Series Fund. (See "Buying Fund Shares.")
Monument Digital Technology Fund (formerly
Monument Internet Fund) seeks to maximize long-
term appreciation of capital by investing
primarily in a diversified portfolio of equity
securities of companies involved in or supporting
digital technology industries, including
Internet-related businesses.
Monument Genomics Fund seeks to maximize long-
term appreciation of capital by investing
primarily in a diversified portfolio of equity
securities of companies facilitating genomics
research.
Monument Medical Sciences Fund seeks to
maximize long-term appreciation of capital by
investing primarily in a diversified portfolio of
equity securities of medical sciences companies.
Monument Telecommunications Fund seeks to
maximize long-term appreciation of capital by
investing primarily in a diversified portfolio of
equity securities of telecommunications
companies.
The U.S. Securities and Exchange Commission
has not approved or disapproved these securities
or passed on the accuracy or completeness of this
Prospectus. It is a criminal offense to suggest
otherwise.
TABLE OF CONTENTS
Page
The Funds
3
Investment
Objectives
3
Principal
Investment
Strategies
3
Temporary
Defensive
Positions
4
Specific Risk
Considerations
4
General Risk
Considerations
4
Table of Fees and
Expenses
10
The Company
13
Buying Fund Shares
14
Distribution
Arrangements
15
Exchanging Fund
Shares
18
Redeeming Fund
Shares
18
Dividends and
Distributions
19
Tax Considerations
19
Services To Help
You Manage Your
Account
20
Proper Form
20
Share Certificates
21
Retirement Plan
Accounts
21
Financial
Highlights
Information
22
THE FUNDS
The following discussion describes the
investment objectives, principal strategies and
risks of each Fund. Investment objectives are
fundamental policies and cannot be changed
without the approval of a majority of the
relevant Fund's outstanding shares. As with any
mutual fund, there can be no guarantee that
investment objectives will be met.
Investment Objectives
Monument Digital Technology Fund (formerly
Monument Internet Fund). The Digital Technology
Fund's investment objective is to maximize long-
term appreciation of capital.
Monument Genomics Fund. The Genomics Fund's
investment objective is to maximize long-term
appreciation of capital.
Monument Medical Sciences Fund. The Medical
Sciences Fund's investment objective is to
maximize long-term appreciation of capital.
Monument Telecommunications Fund. The
Telecommunications Fund's investment objective is
to maximize long-term appreciation of capital.
Principal Investment Strategies
Digital Technology Fund (formerly Monument
Internet Fund). The Fund seeks to achieve its
objective by investing, under normal
circumstances, at least 65% of its total assets
in the common stock of companies involved in or
supporting digital technology industries,
including Internet or Internet-related
businesses. Digital technology industries
include, but are not limited to: communications
and communications equipment; computer hardware,
peripherals and software; networking equipment;
digital consumer electronics; semiconductors and
semiconductor equipment; and other emerging
technologies that utilize digital processes. The
industry also includes companies engaging in
"second-phase" Internet-related businesses that
involve infrastructure, enabling technologies and
communications, and typically derive at least 50%
of their assets, gross income, or net profits
from the research, design, development,
manufacture, or distribution of products,
processes or services for use with Internet or
Intranet-related businesses.
The Internet is a global matrix of computers
and computer networks connected by a high-speed
infrastructure, which allows users to communicate
quickly, and easily with each other. An Intranet
is the application of Internet tools and concepts
within a company's internal communications
network. Currently, the most popular application
on the Internet is the World Wide Web ("www"), a
graphic-user-interface which allows information
sharing and data transfer. Other Internet
applications include e-mail, Intranet, extranet,
and electronic commerce.
Genomics Fund. The Fund seeks to achieve its
objective by investing, under normal
circumstances, at least 65% of its total assets
in the common stocks of companies engaged in
genomics research, or companies providing
equipment or services to companies in genomics-
related fields. Such companies may include, but
are not limited to, entities involved in gene
therapy, biodiversity projects, healthcare and
drug development and design.
Medical Sciences Fund. The Fund seeks to
achieve its objective by investing, under normal
circumstances, at least 65% of its total assets
in the common stock of companies principally
engaged in research, development, production and
distribution of medical products and services.
Companies in these fields include, but are not
limited to, pharmaceutical firms; companies that
design, manufacture or sell medical supplies,
equipment and support services; and companies
engaged in medical, diagnostic, biochemical and
biotechnological research and development.
Telecommunications Fund. The Fund seeks to
achieve its objective by investing, under normal
circumstances, at least 65% of its total assets
in the common stock of companies engaged in
virtually all aspects of communications services
and technologies. These companies may provide
network systems and equipment; serve as public
and private carriers, whether land-based,
wireless or satellite, or provide or distribute
value-added services or products.
When selecting investments, Monument Advisors,
Ltd., the investment advisor to each of the Funds
("Monument Advisors" or "Advisors"), will choose
from among the companies that it believes are
developing new or innovative products, services
or processes that can enhance the companies'
prospects for future earnings growth. Some of
these companies may not have an established
history of revenue or earnings at the time a Fund
becomes an investor. Dividend income, if any, is
likely to be incidental.
TEMPORARY DEFENSIVE POSITIONS
For temporary defensive purposes, each Fund
may make investments that are inconsistent with
its principal investment strategies in attempting
to respond to adverse market, economic, political
or other conditions. If that occurs, the Fund may
not achieve its investment objective. The Funds
may also engage in transactions that are not part
of their principal investment strategies, such as
trading in derivatives, including options, and
lending portfolio securities. These strategies
are discussed in the Statement of Additional
Information ("SAI").
SPECIFIC RISK CONSIDERATIONS
Digital Technology Fund. The Digital
Technology Fund invests primarily in companies
involved in or supporting digital technology
industries, which includes those engaged in
Internet and Intranet-related activities. The
value of this type of company is particularly
vulnerable to rapidly changing technology,
extensive government regulation and relatively
high risks of obsolescence caused by scientific
and technological advances. Therefore, the
Digital Technology Fund may experience greater
volatility than funds not subject to these types
of risks. The Digital Technology Fund is
diversified, and may also invest in small
companies and technology and research companies,
the risks of which are described below under
"General Risk Considerations."
Genomics and Medical Sciences Funds. The
economic prospects of health and life sciences
companies can dramatically fluctuate due to
changes in the regulatory and competitive
environment in which these companies operate. A
substantial portion of health services and
research may be funded or subsidized by the
government, and so changes in government policy
at the federal or state level may affect the
demand for health care products or services, and
the continuation or success of research and
development efforts. Regulatory approvals often
entail lengthy application and testing procedures
and are generally required before new drugs and
certain medical devices may be introduced.
Medical sciences and genomics companies face
lawsuits related to product liability and other
issues. Many products and services provided by
medical science companies and businesses engaged
in genomics-related activities require
substantial capital investment and are subject to
rapid obsolescence. Moreover, research efforts
undertaken by companies in which the Genomics
Fund invests may not result in the production of
commercially viable products. The Medical
Sciences and Genomics Funds may also invest in
small companies, as well as technology and
research companies, the risks of which are
described below under "General Risk
Considerations."
Telecommunications Fund. The economic
prospects of telecommunications companies can
dramatically fluctuate due to regulatory and
competitive environment changes around the world.
Most products or services provided by
telecommunications companies require substantial
investment and are subject to competitive
obsolescence. Telecommunications companies are
particularly subject to political and currency
risks. The Telecommunications Fund is
diversified, and may also invest in small
companies, the risks of which are described below
under "General Risk Considerations".
GENERAL RISK CONSIDERATIONS
Small Companies. Each of the Funds may invest
in companies with small market capitalization
(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 are also
characterized by the following: (1) they may lack
depth of management; (2) 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 (3) 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. Thus, 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
following: (1) the less certain growth prospects
of smaller companies; (2) the lower degree of
liquidity in the markets for such stocks; and (3)
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 the value of any Fund investing
in small company shares to be more volatile than
the shares of mutual funds investing primarily in
larger company stocks.
Technology and Research Companies. Consistent
with its investment objective, each of the Funds
expects to invest a portion of its assets in
securities of companies involved in biological
technologies, computing technologies, or
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.
Other Investments. In addition to the
investment strategies described above, each of
the Funds may engage in other strategies such as
derivatives, securities lending and foreign
investing. Investments in derivatives, such as
options, can significantly increase a Fund's
exposure to market risk or credit risk of the
counterparty, as well as improper valuation and
imperfect correlation. The risk in lending
portfolio securities, as with other extensions of
secured credit, consists of possible delay in
receiving additional collateral, or in the
recovery of the securities or possible loss of
rights in the collateral should the borrower fail
financially. Foreign investing involves currency
risk and the possibility of adverse change in the
investment or political climate of the
jurisdiction in which the securities are sold.
The Funds may also invest in unregistered equity
offerings which may or may not subsequently be
offered to the public. Unregistered offerings are
subject to the investment limitations associated
with investments in restricted and/or illiquid
securities. See the SAI for more detail.
[DIGITAL TECHNOLOGY FUND GRAPH CLASS A SHARES]
Monument
Digital
Technology
Fund Class A
Nasdaq-
100 Index
Inter@
ctive
Since Inception
(November 16, 1998)
313.65%
151.50%
236.52
%
1 Year ended December
31, 1999
271.74%
102.10%
167.57
%
During the period shown in the bar chart the
highest return for a calendar quarter was 91.86%
(quarter ended 3/31/99) and the lowest return for
a calendar quarter was 1.17% (quarter ended
9/30/99). The return for the quarter ended
9/30/00 was (10.28%).
Past performance is not predictive of future
performance. Performance figures in the bar chart
do not include deduction of the maximum
applicable sales charge of 4.75%, which was in
effect during the performance period. There is
currently a maximum sales charge of 5.75% imposed
on the purchase of Monument Digital Technology
Fund Class A Shares. Reduced sales charges may
apply. Had the sales charge been included,
returns would have been less than those shown.
Average Annual Total Returns
for the periods ended December 31, 1999
1
Year
Since
inception
(November
16, 1998)
Monument Digital
Technology Fund Class A
271.
74%
313.65%
Nasdaq-100 Index
102.
10%
151.50%
Inter@ctive Week
Internet Index
167.
57%
236.52%
The Nasdaq-100 Index(R) represents the largest
and most active non-financial domestic and
international issues listed on The Nasdaq Stock
Market(R) based on market capitalization. The
companies included in the index reflect the
Nasdaq stock market's largest companies across
major industry groups, which include computer
hardware and software, telecommunications,
retail/wholesale trade and biotechnology. The
index was established in January 1985, and as of
December 21, 1998 the Nasdaq-100 Index was re-
balanced to a modified market capitalization
weighted index. Weightings are adjusted as needed
on a quarterly basis. Numbers shown reflect the
reinvestment of dividends.
The Fund previously used the S&P 500 as its
broad-based index, but has replaced that index
with The Nasdaq-100 Index as being more
representative of the focus of the Fund. The S&P
500 Index is an unmanaged index containing common
stocks of 500 industrial, transportation, utility
and financial companies, regarded as generally
representative of the United States market.
The Inter@ctive Week Internet Index is a
modified capitalization-weighted index of
companies involved with providing digital
interactive services, developing and marketing
digital interactive software, and manufacturing
digital interactive hardware. The index was
developed with a base value of 66.66 as of August
15, 1995. Effective on March 22, 1999, there was
a 3-1 split of the index.
[MEDICAL SCIENCES GRAPH CLASS A SHARES]
Monument
Medical
Sciences
Fund Class A
S&P
500
Russel
l 2000
Since Inception
(January 6, 1998)
45.98%
24.4
%
9.48%
1 Year ended
December 31, 1999
66.96%
19.4
7%
21.29%
During the period shown in the bar chart the
highest return for a calendar quarter was 57.35%
(quarter ended 12/31/99) and the lowest return
for a calendar quarter was (0.98%) (quarter ended
3/31/99). The return for the quarter ended
9/30/00 was 9.55%.
Past performance is not predictive of future
performance. Performance figures in the bar chart
do not include deduction of the maximum
applicable sales charge of 4.75%, which was in
effect during the performance period. There is
currently a maximum sales charge of 5.75% imposed
on the purchase of Monument Medical Sciences Fund
Class A Shares. Reduced sales charges may apply.
Had the sales charge been included, and had
certain fees and expenses not been voluntarily
waived or reimbursed, returns would have been
less than those shown.
Average Annual Total Returns
(for the periods ended December 31, 1999)
1 Year
Since
inception
(January
6, 1998)
Monument Medical
Sciences Fund Class A
66.96%
45.98%
S&P 500 Index
19.47%
24.40%
Russell 2000 Index
21.29%
9.48%
The S&P 500 is an unmanaged index containing
common stocks of 500 industrial, transportation,
utility and financial companies, regarded as
generally representative of the United States
market. The index reflects the reinvestment of
income dividends and capital gain distributions,
if any, but does not reflect fees, brokerage
commissions, or other expenses of investing.
The Russell 2000 Index is comprised of the
smallest 2000 companies in the Russell 3000
Index, representing approximately 11% of the
Russell 3000 total market capitalization.
[TELECOMMUNICATIONS FUND GRAPH CLASS A SHARES]
Monument
Telecommunicat
ions Fund
Class A
S&P
500
NASDAQ
Telecommuni
cations
Since Inception
(January 6, 1998)
59.92%
25.1
9%
82.79%
1 Year ended
December 31, 1999
90.58%
20.9
8%
102.47%
During the period shown in the bar chart the
highest return for a calendar quarter was 33.25%
(quarter ended 12/31/99) and the lowest return
for a calendar quarter was 6.56% (quarter ended
9/30/99). The return for the quarter ended
9/30/00 was (15.08%).
Past performance is not predictive of future
performance. Performance figures in the bar chart
do not include deduction of the maximum
applicable sales charge of 4.75%, which was in
effect during the performance period. There is
currently a maximum sales charge of 5.75% imposed
on the purchase of Monument Telecommunications
Fund Class A Shares. Reduced sales charges may
apply. Had the sales charge been included, and
had certain fees and expenses not been
voluntarily waived or reimbursed, returns would
have been less than those shown.
Average Annual Total Returns
(for periods ended December 31, 1999)
1
Year
Since
inception
(January
6, 1998)
Monument
Telecommunications Fund
Class A
90.5
8%
59.92%
S&P 500 Index
20.9
8%
25.19%
NASDAQ
Telecommunications Index
102.
47%
82.79%
The S&P 500 is an unmanaged index containing
common stocks of 500 industrial, transportation,
utility and financial companies, regarded as
generally representative of the United States
market. The index reflects the reinvestment of
income dividends and capital gain distributions,
if any, but does not reflect fees, brokerage
commissions, or other expenses of investing.
The NASDAQ Telecommunications Index is a
capitalization-weighted index designed to measure
the performance of all NASDAQ stocks in the
telecommunications sector. The index was
developed with a base value of 100 as of February
5, 1971.
TABLE OF FEES AND EXPENSES
The following table is designed to help you
understand the fees and expenses that you may
pay, both directly and indirectly, by investing
in each of the Funds.
Shareholder Fees
(fees paid directly from your
investment)
Clas
s A
Clas
s B
Clas
s C
Maximum Sales Charge (Load)(1)
5.75
%
None
1.00
%
Maximum Deferred Sales Charge
(Load)
None
5.00
%(2)
1.00
%(3)
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends
and Distributions
None
None
None
Redemption Fees
None
None
None
Exchange Fees
None
None
None
Annual Fund Operating Expenses
(expenses that are deducted from
fund assets as a percentage
of average net assets)
Digital Technology
Fund
(formerly Internet
Fund)
Class
A
Class
B
Class
C
Advisory Fee
1.25%
1.25%
1.25%
Distribution (12b-1)
Fees(4)
0.50%
1.00%
1.00%
Other Expenses
0.4
7%
0.6
9%
1.1
8%
Total Annual Fund
Operating Expenses(5)
2.22%
2.94%
3.43%
Genomics Fund
Class
A
Class
B
Class
C
Advisory Fee
1.25%
1.25%
1.25%
Distribution (12b-1)
Fees(4)
0.50%
1.00%
1.00%
Other Expenses(6)
1.7
3%
1.9
3%
1.9
3%
Total Annual Fund
Operating Expenses(5)
3.48%
4.18%
4.18%
Medical Sciences
Fund
Class
A
Class
B
Class
C
Advisory Fee
1.25%
1.25%
1.25%
Distribution (12b-1)
Fees(4)
0.50%
1.00%
1.00%
Other Expenses
0.9
1%
0.7
5%
1.0
9%
Total Annual Fund
Operating Expenses(5)
2.66%
3.00%
3.34%
Telecommunications
Fund
Class
A
Class
B
Class
C
Advisory Fee
1.25%
1.25%
1.25%
Distribution (12b-1)
Fees(4)
0.50%
0.50%
1.00%
Other Expenses
1.1
3%
1.1
3%
1.5
1%
Total Annual Fund
Operating Expenses(5)
2.88%
3.38%
3.76%
(1) As a percentage of offering price. Reduced
rates apply to purchases over $50,000, and the
sales charge is waived for certain classes of
investors. See "Buying Fund Shares-Public
Offering Price" and "Buying Fund Shares-Rights of
Accumulation."
(2) A 5.00% deferred sales charge as a
percentage of the original purchase price will
apply to any redemption made within the first
year. During the second year, redeemed shares
will incur a 4.00% sales charge. During years
three and four the sales charge is reduced to
3.00%, during year five 2.00%, and during year
six 1.00%. The contingent deferred sales charge
is eliminated after the sixth year. Class B
Shares automatically convert to Class A Shares
eight years after the calendar month end in which
the Class B Shares were purchased.
(3) A contingent deferred sales charge of 1.00%
is imposed on the proceeds of Class C Shares
redeemed within one year. The charge is a
percentage of net asset value at the time of
purchase.
(4) The Company has approved a Plan of
Distribution Pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for Class A, B and
C Shares, providing for the payment of
distribution fees to Monument Distributors, Inc.,
the principal underwriter for each Fund ("12b-1
Plan"). Class A Shares pay a maximum distribution
fee of 0.50% of average daily net assets, and
Class B and Class C Shares pay a maximum
distribution fee of 1.00% of average daily net
assets. See "Rule 12b-1 Fees." The higher 12b-1
fees borne by Class B and Class C Shares may
cause long-term investors to pay more than the
economic equivalent of the maximum front end
sales charge permitted by the National
Association of Securities Dealers.
(5) With respect to the Digital Technology,
Medical Sciences and Telecommunications Funds,
the Advisor has contractually agreed to waive its
fees and pay expenses to the extent necessary to
cap Class A Share total operating expenses at
2.75%, and Class B and Class C Share total
operating expenses at 3.25% of the Fund's average
daily net assets through an initial term of May
1, 2001. The Fund and Advisors may agree to
extend the term of the agreement. Nevertheless,
the Board of Trustees of the Fund may change the
maximum amount of expenses to be borne by the
Fund if it deems the change to be in the best
interests of the Fund and its shareholders. The
Board has elected to raise the cap on several
occasions, and there is no guarantee that the
stated amounts will remain in place in the
future. Amounts waived by the Advisor may be
recouped in the future. See "Expense Waivers" for
additional information.
(6) Based on estimated amounts for the current
fiscal year.
After fee waivers and/or expense
reimbursements, the net expenses paid by each of
the Funds are estimated to be as follows:
Digital Technology
Fund
Class
A
Class
B
Class
C
Total Annual Fund
Operating Expenses
2.22%
2.94%
3.43%
Fee Waivers and/or
Expense Reimbursements
-
-
0.18%
Net Expenses
2.22%
2.94%
3.25%
Medical Sciences
Fund
Class
A
Class
B
Class
C
Total Annual Fund
Operating Expenses
2.66%
3.00%
3.34%
Fee Waivers and/or
Expense Reimbursements
-
-
0.09%
Net Expenses
2.66%
3.00%
3.25%
Telecommunications
Fund
Class
A
Class
B
Class
C
Total Annual Fund
Operating Expenses
2.88%
3.38%
3.76%
Fee Waivers and/or
Expense Reimbursements
0.13%
0.13%
0.51%
Net Expenses
2.75%
3.25%
3.25%
Example. This example is intended to help you
compare the cost of investing in the Fund with
the cost of investing in other mutual funds with
similar investment objectives. The example
assumes that you invest $10,000 in a class of
shares of the Fund for the time periods indicated
then redeem all of your shares at the end of
those periods. The example also assumes that your
investment has a 5% return each year and that the
operating expenses of the relevant class remain
the same. Although your actual cost may be higher
or lower, based on these assumptions your cost
would be:
Digital
Technology
Genomics
Clas
s A
Class B
Cla
ss
C
Cla
ss
A
Cla
ss
B
Cla
ss
C
1
Year
*
787
782
446
905
919
520
3
Year
s*
1,22
9
1,664
1,053
1,580
1,569
1,269
5
Year
s*
1,69
6
2,170
1,784
-
-
-
10
Year
s*
2,98
2
3,649
3,712
-
-
-
Medical
Sciences
Telecommunicat
ions
Cla
ss
A
Cla
ss
B
Cla
ss
C
Cla
ss
A
Cla
ss
B
Clas
s C
1
Yea
r*
829
787
437
849
824
478
3
Yea
rs*
1,354
1,681
1,027
1,416
1,787
1,149
5
Yea
rs*
1,904
2,198
1,742
2,006
2,372
1,939
10
Yea
rs*
3,396
3,702
3,631
3,595
4,031
4,002
With respect to Class A Shares, the above
examples assume payment of the maximum initial
sales charge of 5.75% at the time of purchase.
The sales charge varies depending upon the amount
of Fund shares that an investor purchases.
Accordingly, your actual expenses may vary. With
respect to Class B Shares, the above examples
assume payment of the deferred sales charge
applicable at the time of redemption. The ten-
year figure takes into account the shares'
conversion to Class A Shares after eight years.
For time periods during which the contractual
agreement to waive or reimburse fees is in place,
your actual expenses may be lower.
*If the advisor continues to maintain a cap
under the Expense Limitation Agreement for the
periods shown below, your cost would be:
Digital Technology
Medical Sciences
Class
A
Class
B
Class
C
Class
A
Class
B
Class
C
1
Year
787
782
428
829
787
428
3
Years
1,229
1,664
1,001
1,354
1,681
1,001
5
Years
1,696
2,170
1,698
1,904
2,198
1,698
10
Years
2,982
3,649
3,549
3,396
3,702
3,549
Telecommunications
Class
A
Class
B
Class
C
1
Year
837
811
428
3
Years
1,379
1,751
1,001
5
Years
1,946
2,313
1,698
10
Years
3,478
3,920
3,549
THE COMPANY
The Company. Monument Series Fund is an open-
end management investment company registered with
the Securities and Exchange Commission ("SEC").
The Company was originally organized as a
Maryland corporation on April 7, 1997, and
converted to a Delaware business trust effective
June 30, 2000. Other funds available in the
Monument family are the Sansom Street Money
Market Fund and Monument EuroNet Fund.
The Advisor. Monument Advisors, Ltd. serves
as each Fund's investment advisor and provides
overall management of the Company's business
affairs. See "Investment Advisory and Other
Services" in the SAI. Under its Investment
Advisory Agreement with the Fund, Advisors is
entitled to earn a fee of 1.25% of the assets of
the Fund. For the fiscal year ended October 31,
2000, Advisors earned 0.78% for managing the
Monument Internet Fund (now Monument Digital
Technology Fund), 0.56% for managing the Monument
Medical Sciences Fund, and 0.27% for managing the
Monument Telecommunications Fund. The total fees
earned were less than 1.25% since the rate was 1%
through June 29, 2000, and Advisors waived a
portion of its fee to help reduce the expenses of
the Fund.
Monument Advisors, located at 7201 Wisconsin
Avenue, Suite 650, Bethesda, Maryland 20814, is a
wholly-owned subsidiary of The Monument Group,
Inc., which in turn is principally-owned and
controlled by David A. Kugler, President and a
director of both Advisors and the Company.
Monument Advisors also manages the portfolio
investments of qualified individuals, retirement
plans, and trusts. As of October 31, 2000,
Advisors managed or supervised in excess of $175
million in assets.
Expense Waivers. In the interest of limiting
expenses of the Digital Technology, Medical
Sciences and Telecommunications Funds, Monument
Advisors has entered into an Expense Limitation
Agreement with the Company. Pursuant to the
agreement, Monument Advisors has agreed to waive
or limit its fees and to assume other expenses so
that the total annual operating expenses for
Class A, B and C Shares of the Funds covered by
the agreement are limited to 2.75% for Class A
Shares and 3.25% for Class B and C Shares with an
original term through May 1, 2001. The limit does
not apply to interest, taxes, brokerage
commissions, other expenditures capitalized in
accordance with generally accepted accounting
principles or other extraordinary expenses not
incurred in the ordinary course of business. The
Board of Trustees has the ability to change the
limit imposed from time to time if, in its
discretion, the Board believes the change will be
in the best interests of the Fund and its
shareholders. The Board has increased the cap
several times in the past, and there is no
guarantee that the cap will remain in place or at
the same level in the future.
The Digital Technology, Medical Sciences and
Telecommunications Funds may reimburse the
Advisor for fees waived or limited and other
expenses assumed and paid by the Advisor under
the Expense Limitation Agreement. Reimbursement
is conditioned on the Fund having reach a
sufficient asset size to permit the reimbursement
to be made without causing the total annual
expense ratio of the Fund to exceed the
percentage limit stated in the agreement.
Reimbursements must be approved by the Board of
Trustees on a quarterly basis.
Portfolio Management. Advisors uses a team
approach to Management of the Funds under the
direction of the Chief Investment Officer, Bob
Grandhi. Mr. Grandhi has over 20 years experience
in the investment management field, having
previously worked with firms including Daiwa
Securities, Kemper Securities and E.F. Hutton.
Principal Underwriter. Monument Distributors,
Inc. has its principal place of business at 7920
Norfolk Avenue, Suite 500, Bethesda, Maryland
20814. It is a wholly-owned subsidiary of The
Monument Group, Inc., is an affiliate of Monument
Advisors, and serves as the principal underwriter
of each Fund. David A. Kugler, Peter L. Smith and
Bob Grandhi are officers of both the Company and
Monument Distributors.
Other Information. Advisors or its affiliates
may make payments to broker-dealers, financial
advisors, banks or other financial institutions
for certain services to the Funds and/or their
shareholders, including (but not limited to) sub-
administration, sub-transfer agency and
shareholder servicing. These payments come out of
the resources of the entity making the payment so
that there are no additional costs to the Funds
or their shareholders.
BUYING FUND SHARES
Share Class Alternatives. The Fund offers
investors four different classes of shares. Class
A, Class B and Class C Shares are offered by this
Prospectus. Class Y Shares are offered by a
separate Prospectus. The different classes of
shares represent investments in the same
portfolio of securities, but the classes are
subject to different expenses and may have
different share prices. When you buy shares be
sure to specify the class of shares in which you
choose to invest. If you do not select a class
your money will be invested in Class A Shares.
Because each share class has a different
combination of sales charges, expenses and other
features, you should consult your financial
advisor to determine which class best meets your
financial objectives. Additional details about
each of the share class alternatives may be found
below under "Distribution Arrangements."
Class A
Shares
Class B
Shares
Class C
Shares
Max. initial
sales
5.75%
None
1%
Charge.
(Subject to
reductions
See
"Distribution
beginning
with
Arrangements"
for a
investments
schedule
itemizing
of $50,000)
reduced sales
charges.
Contingent
deferred
None
Year 1
5%
Year 1
1%
sales charge
Year 2
4%
Years 2+
None
("CDSC")
Year 3
3%
Imposed when
shares are
Year 4
3%
redeemed
(percentage
Year 5
2%
based on
purchase
Year 6
1%
price). Years
are based
Year 7
None
on a twelve-
month
Year 8
None
Period.
See below for
information
regarding
applicable
waivers of
the CDSC.
Rule 12b-1
fees.
0.50%
1.00%
1.00%
See
"Distribution
Arrangements"
for
important
information
about Rule
12b-1
fees.
Conversion to
Class A
N/A
Automaticall
y after
No
conversion
feature.
about 8
years, at
which
Rule 12b-1
fees remain
time
applicable
Rule
higher than
those of
12b-1 fees
are reduced.
Class A
Shares for
life
of account.
Appropriate
for:
All
investors,
Investors
who plan to
Investors
who intend
to
particularl
y those who
hold their
shares at
hold their
shares for
intend to
hold their
least 6
years.
at least 1
year, but
shares for
a long
less than 6
years.
period of
time and/or
invest a
substantial
amount in
the Fund.
Share Transactions. You may purchase and
redeem Fund shares, or exchange shares of one
Fund for those of another, by contacting any
broker authorized by the distributor to sell
shares of the Company or by contacting PFPC,
Inc., the Company's subtransfer and dividend
disbursing agent, at P.O. Box 61503, King of
Prussia, PA 19406-0903 or by telephoning 1-888-
420-9950. A sales charge may apply to your
purchase. Brokers may charge transaction fees for
the purchase or sale of Fund shares, depending on
your arrangement with the broker. If you have an
IRA, your account will be charged a maintenance
fee of $20 per year.
Minimum Investments. The following table
provides you with information on the various
investment minimums, sales charges and expenses
that apply to each class. Under certain
circumstances the Fund may waive the minimum
initial investment for purchases by officers,
directors and employees of the Company, and its
affiliated entities and for certain related
advisory accounts, retirement accounts, custodial
accounts for minors and automatic investment
accounts as detailed below under "Waiver of Sales
Charges."
Clas
s A
Clas
s B
Clas
s C
Minimum
Initial
Investment
$
1,00
0
$
1,00
0
$
1,00
0
Minimum
Subsequent
Investment
$
250*
$
250*
$
250*
For automatic investments made at least
quarterly, the minimum subsequent investment is
$100.
By Mail. You may 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
"Monument Series Fund," c/o PFPC, Inc., at P.O.
Box 61503, King of Prussia, PA 19406-0903. PFPC,
Inc. is the Company's subtransfer and dividend
disbursing agent. See "Proper Form." Third-party
checks are not accepted for the purchase of Fund
shares.
By Wire. You may also wire payments for Fund
shares to the wire bank account for the
appropriate Fund. You will be charged a fee of
$15 for shares purchased by wire. Before wiring
funds, please call 1-888-420-9950 to advise the
Fund of your investment and to receive further
instructions. Please remember to return your
completed and signed application to PFPC, Inc.,
P.O. Box 61503, King of Prussia, PA 19406-0903.
See "Proper Form."
Public Offering Price. When you buy shares of
a Fund, you will receive the public offering
price per share as determined after your order is
received in proper form, as defined below under
the section entitled "Proper Form." The public
offering price of Class A and Class C Shares is
equal to the Fund's net asset value plus the
initial sales charge. The public offering price
of Class B Shares is equal to the respective
Fund's net asset value.
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. EST. If you
purchase your shares through a broker, the Fund
will be deemed to have received your order when
the order is accepted as being in proper form by
the broker. However, your broker must receive
your request before the close of the regular
trading on the Exchange to receive that day's net
asset value ("NAV").
Net Asset Value. Each Fund's share price is
equal to the 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.
DISTRIBUTION ARRANGEMENTS
If you purchase your shares through a broker-
dealer, the broker-dealer firm is entitled to
receive a percentage of the sales charge you pay
in order to purchase Fund shares. The following
schedule governs the percentage to be received by
the selling broker-dealer firm.
Class A Sales Charge and Broker-Dealer
Commission and Service Fee
Sales
Charge
Broker-
Dealer
Percenta
ge
Less than $50,000
5.75%
5.00%
$50,000 but less
than $100,000
4.50%
3.75%
$100,000 but less
than $250,000
3.50%
2.75%
$250,000 but less
than $500,000
2.50%
2.00%
$500,000 but less
than
$1,000,000
2.00%
1.75%
$1,000,000 or
more
1.00%
1.00%
After a one-year holding period, broker-
dealers will be entitled to receive an ongoing
service fee of 0.25% per year, payable quarterly.
Class B Broker-Dealer
Commission and Service Fee
Broker-
Dealer
Percenta
ge
Up to
$250,000
4.00%
After a one-year holding period, broker-
dealers will be entitled to receive an ongoing
service fee of 0.25% per year, payable quarterly.
Class C Broker-Dealer
Commission and Service Fee
Sales
Charge
Broker-
Dealer
Percenta
ge
All
purchas
es
1.00%
1.00%
At the end of each calendar quarter, broker-
dealers will be entitled to receive an ongoing
service fee from the Fund of 0.25% per year,
payable quarterly. The Distributor may elect to
provide additional compensation to broker-dealers
for undertaking activities designed to result in
the sale of Class C Shares of the Fund.
Rule 12-b 1 Fees. The Board of Trustees has
adopted a Plan of Distribution pursuant to Rule
12b-1 under the Investment Company Act of 1940
("1940 Act") for each class of shares ("Rule 12b-
1 Plan"). Pursuant to the Rule 12b-1 Plans, each
Fund may finance any activity or expense that is
intended primarily to result in the sale of its
shares. Each Fund may pay a fee ("Rule 12b-1
fee") to Distributors, on an annualized basis of
its average daily net assets, up to a maximum of
1.00% for Class B and Class C Share expenses and
0.50% for Class A Share expenses. Up to 0.25% of
the total Rule 12b-1 fee may be used to pay for
certain shareholder services provided by
institutions that have agreements with the Funds'
distributor to provide those services. Each Fund
may pay Rule 12b-1 fees for activities and
expenses borne in the past in connection with the
distribution of its shares as to which no Rule
12b-1 fee was paid because of the maximum
limitation. The Funds may also pay up to .75% of
the daily net assets of the Class B and Class C
shares to finance activities relating to the
distribution of its shares. Because these fees
are paid out of the a Fund's assets on an ongoing
basis, over time these fees will increase the
cost of your investment and may cost more than
paying other types of sales charges.
Sales Charge Waivers
Waiver of Front-End Sales Charges. No sales
charge shall apply to:
(1) reinvestment of income dividends and
capital gain distributions;
(2) exchanges of one Fund's shares for
those of another Fund;
(3) 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, and employees (including
immediate family members) of a broker-dealer
distributing Fund shares;
(4) purchases of Fund shares by
Distributors for its own investment account for
investment purposes only;
(5) a "qualified institutional buyer," as
that 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, and small business investment companies;
(6) a charitable organization, as defined
in Section 501(c)(3) of the Internal Revenue Code
("Code"), as well as other charitable trusts and
endowments, investing $50,000 or more;
(7) 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;
(8) investment advisors or financial
planners who place trades for their own accounts
or the accounts of their clients and who charge a
management, consulting or other fee for their
services; and clients of those investment
advisors or financial planners who place trades
for their own accounts if the accounts are linked
to the master account of the investment advisor
or financial planner on the books and records of
the broker or agent;
(9) institutional retirement and deferred
compensation plans and trusts used to fund those
plans, including those defined in section 401(a),
403(b) or 457 of the Code and "rabbi trusts"; and
(10) the purchase of Fund shares, if
available, through certain third-party fund
"supermarkets." Some fund supermarkets may offer
Fund shares without a sales charge or with a
reduced sales charge. Other fees may be charged
by the service-provider sponsoring the fund
supermarket, and transaction charges may apply to
purchases and sales made through a broker-dealer.
Waiver Of Contingent Deferred Sales Charge.
The contingent deferred sales charge is waived
for:
(1) certain post-retirement withdrawals from an
IRA or other retirement plan if you are over 70.5
(2) redemptions by certain eligible 401(a) and
401(k) plans and certain retirement plan
rollovers;
(3) redemptions resulting from shareholder death
or disability provided that the redemption is
requested within one year of death or disability;
and
(4) redemptions through Systematic Monthly
Investment (systematic redemption plan), limited
to 10% per year of an account's net asset value.
For example, if you maintain an annual balance of
$10,000 you can redeem up to $1,000 annually free
of charge.
Reduced Sales Charges
Right Of Accumulation. After making an
initial purchase in any Monument Fund series, you
may reduce the sales charge applied to any
subsequent purchases. 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 are still
held in the Fund and that were sold subject to
the sales charge 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 your payment
and request to combine purchases, please specify
your account number.
Letter of Intent. If you intend to purchase
at least $50,000 of Class A Shares of any of the
Funds, you may elect to complete a Letter of
Intent. By doing so, you agree to invest a
certain amount over a 13-month period. You would
pay a sales charge on any Class A shares you
purchase during the 13 months based on the total
amount to be invested under the Letter of Intent.
You can apply any investments you made in Class A
shares in any Monument Fund during the preceding
90-day period toward fulfillment of the Letter of
Intent (although there will be no refund of sales
charges you paid during the 90-day period). You
should inform the Fund's transfer agent that you
have a Letter of Intent each time you make an
investment.
You are not obligated to purchase the amount
specified in the Letter of Intent. If you
purchase less than the amount specified, however,
you must pay the difference between the sales
charge paid and the sales charge applicable to
the purchases actually made. The Fund's custodian
will hold the amount in escrow. The Funds'
custodian will pay the escrowed funds to your
account at the end of the 13 months unless you do
not complete your intended investment.
Additional information regarding the waiver or
reduction of sales charges may be obtained by
calling 1-888-420-9950. All account information
is subject to acceptance and verification by
Monument Distributors.
General. The Company reserves the right in
its sole discretion to withdraw all or any part
of the offering of shares of any Fund when, in
the judgment of the Fund's management, such
withdrawal is in the best interest of the Fund.
An order to purchase shares is not binding on,
and may be rejected by, Distributors until it has
been confirmed in writing by Distributors and
payment has been received.
Exchanging Fund Shares
You may exchange shares of one fund for the
same class of shares of any other Monument fund,
under the Company's exchange privilege ("Exchange
Privilege"), by submitting your order in proper
form, as defined below under the section entitled
"Proper Form." Shareholders may also exchange
their Monument Series Fund shares for shares of
the Sansom Street Money Market Fund. You may
obtain information about the Sansom Street Money
Market Fund by calling 1-888-420-9950 for a free
prospectus. The prospectus is also available on
the Fund's website at
http://www.monumentfunds.com.
Exchange Price. Your exchange request will be
processed based on the NAV of the Fund shares to
be exchanged and the Fund shares to be bought, as
determined after receipt of your order in proper
form. Exchanges are taxable transactions. See
"Additional Information on Distributions and
Taxes" in the SAI.
Contingent Deferred Sales Charges.
Shareholders may exchange their shares for shares
of the same class of another Monument Fund on the
basis of the relative net asset value per share,
without the payment of any CDSC that would
otherwise be due as a result of the redemption of
the outstanding shares. Class B shareholders will
continue to be subject to the CDSC and automatic
conversion schedules of the Fund from which
shares have been redeemed, even if the CDSC and
automatic conversion schedules of the Fund into
which they have exchanged is lower. For the CDSC
schedule see above under "Distribution
Arrangements."
Minimum Account. The minimum amount permitted
for each exchange between existing accounts in
the Funds is $250. The minimum amount permitted
for an exchange that establishes a new Fund
account is $1,000.
Modification or Termination. Excessive
trading can adversely impact Fund performance and
shareholders. Therefore, the Company reserves the
right to temporarily or permanently modify or
terminate the Exchange Privilege. The Company
also reserves the right to refuse exchange
requests by any person or group if, in the
Company's judgment, a Fund would be unable to
invest the money effectively in accordance with
its investment objective and policies, or would
otherwise potentially be adversely affected. The
Company further reserves the right to restrict or
refuse an exchange request if the Company has
received or anticipates simultaneous orders
affecting significant portions of a Fund's assets
or detects a pattern of exchange requests that
coincides with a "market timing" strategy.
Although the Company will attempt to give you
prior notice when reasonable to do so, the
Company may modify or terminate the Exchange
Privilege at any time.
Redeeming Fund Shares
You may redeem shares of the Funds by
submitting your order either through your
authorized broker or by submitting it directly to
the Fund. Redemption requests to the Fund should
be directed in writing to PFPC Inc. at P.O. Box
61503, King of Prussia, PA 19406-0903, or by
telephoning 1-888-420-9950. See "Proper Form."
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 $1,000 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.
Systematic Redemption Plan. If you have, in
the aggregate, a minimum of $50,000 in your
Monument Fund accounts, you may arrange to
receive monthly redemptions from your Fund. The
minimum amount required for each redemption is
$1,000, and redemptions are made on the 25th of
each month. If you hold Class B Shares of a Fund,
and the total amount of your redemptions is less
than 10% of your average total account value
invested in Monument Series Fund, then the CDSC
imposed on Class B Share redemptions will be
waived. To the extent you have redeemed in excess
of 10% of your total average investment in
Monument Series Fund, the excess amount will be
charged the CDSC. See "Buying Fund Shares" for
details about the CDSC. Call 1-888-420-9950 to
set up a Systematic Redemption Plan.
Redemption Price. Your redemption request
will be processed based on the net asset value
("NAV") of the applicable Fund's shares as
determined after receipt of your order in proper
form, less any applicable CDSC.
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 the Fund's
transfer agent of your redemption order in proper
form. 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, trading in the
markets that a Fund normally utilizes is
restricted, or redemption is otherwise permitted
to be suspended by the SEC. You will be charged a
fee of $15 for shares redeemed by wire.
Redemptions In Kind. The Company reserves the
right to redeem its shares in kind. In other
words, upon tendering shares of a Fund, the Fund
has the right to pay you the value of your
redemption in assets other than cash. The Company
will, however, pay cash in response to all
requests for redemption by any shareholder of
record, limited in amount with respect to each
shareholder during any 90-day period to the
lesser of $250,000 from a Fund or one percent of
the net asset value of a Fund at the beginning of
such period. See "Buying, Redeeming, and
Exchanging Shares" in the SAI for more
information.
DIVIDENDS AND DISTRIBUTIONS
Each of the Funds 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 in additional Fund shares at
current net asset value (i.e., without payment of
a sales charge). Each of the Funds declares and
pays income dividends from its net investment
income, usually in December. Capital gains
distributions, if any, are also made in December.
Income dividends and capital gain
distributions are calculated and distributed the
same way for each Fund. The amount of any income
dividends will differ as a result of the
individual investment strategies of each Fund.
Income dividend payments are not guaranteed, are
subject to the Board's discretion, and may vary
from time to time. None of the funds pays
"interest" or guarantees any fixed rate of return
on an investment in its shares.
Each Fund will automatically 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 the sub-transfer agent by mail at
PFPC, Inc., P.O. Box 61503, King of Prussia, PA
19406-0903. Please allow at least seven days
prior to the record date for us to process the
new option.
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.
Dividends and certain interest income earned
from foreign securities by the Fund may be
subject to foreign withholding or other taxes.
The Fund may be permitted to pass on to its
shareholders the right to a credit or deduction
for income or other tax credits earned from
foreign investments and currently intends to do
so if possible. These deductions or credits may
be subject to tax law limitations. Generally,
distributions are taxable to you for the year in
which they are paid. In addition, certain
distributions that are declared in October,
November or December, but which, for operational
purposes, are paid the following January, are
taxable as though they were paid by December 31st
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 tax advisor about your
particular tax situation.
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 the transfer agent by mail.
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
1-888-420-9950. We may be liable for losses
resulting from unauthorized telephone
transactions only 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
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 annual and 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 1-888-420-
9950 if you would like an additional free copy of
the Funds' financial reports.
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. Registered owners must
sign any written instructions. To avoid any delay
in processing your transaction, such instructions
should include:
your name,
the Fund's name,
a description of the request,
for exchanges, the name of the Fund into which
you are exchanging,
your account number, the dollar amount or
number of shares, and
your daytime or evening telephone number.
Signature Guarantees. For our mutual
protection, we require a signature guarantee in
the following situations:
if you wish to redeem over $50,000 worth of
shares,
if you want redemption proceeds to be paid to
someone than the registered owners,
if you want redemption proceeds to be sent to an
address other than the address of record, a
preauthorized bank account, or a preauthorized
brokerage firm account,
if we receive instructions from an agent, not
the registered owners, or if 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. The Company reserves the right to
issue share certificates on behalf of each of the
Funds at any time.
Retirement Plan Accounts. You may not change
distribution options for retirement plan accounts
by telephone. While you may sell or 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
1-888-420-9950.
FINANCIAL HIGHLIGHTS INFORMATION
The financial highlights table is intended to
help you understand the Company's financial
performance for the period January 6, 1998 to
October 31, 1999. Certain information reflects
financial results for a single Fund share. The
total returns in the table represent the rate
that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of
all dividends and distributions). This
information has been audited by Deloitte & Touche
LLP, independent public accountants for each of
the Funds. The report of Deloitte & Touche LLP on
the financial statements of each of the Funds
appears in the Company's Annual Report, which is
incorporated by reference into the SAI and is
available upon request. The information that
follows should be read in conjunction with the
financial statements contained in the Company's
annual report.
Monument Digital Technology Fund
(Formerly Monument Internet Fund)
Financial Highlights
For a Share Outstanding Throughout the Period
Class A
Shares
Period
ended
October
31, 1999*
Class B
Shares
Period ended
October 31,
1999*
Per Share Operating
Performance
Net asset value, beginning
of period
$ 10.00
$ 27.09
Income from investment
operations -
Net investment income
(loss)
(0.58)
(0.06)
Net realized and
unrealized gain on
investments
20.56
2.92
Total from
investment operations
19.98
2.86
Net asset value, end of
period
$ 29.98
$ 29.95
Total Return
185.53%***
10.55%***
Ratios/Supplemental Data
Net assets, end of period
(000's)
$ 63,745
$ 1,552
Ratio to average net
assets -
Expenses
2.76%**
2.40%**
Expenses including soft
dollars
2.84%**
2.40%**
Net investment gain
(loss)
(2.45%)**
(3.23%)**
Portfolio turnover rate
112.00%***
112.00%***
* Commencement of operations November 16, 1998
for A shares and October 6, 1999 for B shares.
** Annualized
*** Not annualized
Average shares method used to calculate the
financial highlights for Class A and B shares.
Monument Medical Sciences Fund
Financial Highlights
For a Share Outstanding Throughout the Period
Class A
Year ended
October
31, 1999
Shares
Period
ended
October
31, 1998*
Class B
Shares
Period
ended
October
31, 1999*
Per Share Operating
Performance
Net asset value,
beginning of period
$ 10.32
$ 10.00
$ 16.95
Income from
investment
operations -
Net investment
income (loss)
(0.10)
0.04
(0.01)
Net realized and
unrealized gain on
investments
5.89
0.28
(0.83)
Total from
investment
operations
5.79
0.32
(0.84)
Net asset value, end
of period
$ 16.11
$ 10.32
$ 16.11
Total
Return
56.11%
3.20%***
(4.98%)**
Ratios/Supplemental
Data
Net assets, end of
period (000's)
$ 1,401
$ 214
$ 25
Ratio to average net
assets -
Expenses
16.73%
51.07%**
17.43%**
Expenses including
soft dollars
16.81%
17.43%**
Expenses - net
1.87%
0.00%
2.40%**
Net investment
income (loss)
(1.00%)
0.66%**
(1.51%)**
Portfolio turnover
rate
61.00%
82.00%
61.00%
* Commencement of operations January 6, 1998
for Class A shares and October 12, 1999 for Class
B shares.
** Annualized
*** Not annualized
Average shares method used to calculate the
financial highlights for Class B shares.
Monument Telecommunications Fund
Financial Highlights
For a Share Outstanding Throughout the Period
Class A
Year ended
October 31,
1999
Shares
Period
ended
October 31,
1998*
Class B
Shares
Period
ended
October 31,
1999*
Per Share Operating
Performance
Net asset value,
beginning of period
$ 10.78
$ 10.00
$ 17.65
Income from investment
operations -
Net investment
income (loss)
(0.14)
0.04
(0.02)
Net realized and
unrealized gain on
investments
9.33
0.74
2.34
Total from
investment operations
9.19
0.78
2.32
Net asset value, end
of period
$ 19.97
$ 10.78
$ 19.97
Total Return
85.24%
7.80%***
13.17%***
Ratios/Supplemental
Data
Net assets, end of
period (000's)
$ 593
$ 181
$ 65
Ratio to average net
assets -
Expenses
37.06%
58.25%**
37.15%**
Expenses including
soft dollars
37.15%
58.25%**
37.15%**
Expenses-net
1.84%
0.00%
2.40%**
Net investment income
(loss)
(1.40%)
0.70%**
(1.95%)**
Portfolio turnover
rate
250.00%
88.00%
250.00%
* Commencement of operations January 6, 1998
for Class A shares and October 9, 1999 for Class
B shares.
** Annualized
*** Not annualized
Average shares method used to calculate the
financial highlights for Class B shares.
(This Page Intentionally Left Blank)
(This Page Intentionally Left Blank)
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 view that information free of charge
at the SEC's public reference room in Washington,
D.C., and you may, with payment of a duplicating
fee, order copies of the information.
For more information about the Funds, you may
wish to refer to the Company's Statement of
Additional Information ("SAI"), dated November
15, 2000, and the Company's audited annual and
unaudited semi-annual reports, each of which is
on file with the Securities and Exchange
Commission ("SEC") and incorporated by reference
into this Prospectus. You can obtain a free copy
of the SAI by writing to Monument Series Fund,
7201 Wisconsin Avenue, Suite 650 Bethesda,
Maryland 20814, or by calling 1-888-420-9950.
General inquiries regarding the Funds may also be
directed to the above address or telephone
number, and may be found on the Company's website
at http://www.monumentfunds.com. Information
about the Company, including the SAI, can be
reviewed and copied at the SEC's Public Reference
Room in Washington D.C. Information about the
operation of the Public Reference Room may be
obtained by calling the SEC at 202-942-8090. The
SEC maintains a website (http://www.sec.gov) that
contains reports, the Prospectus, SAI, material
incorporated by reference, and other information
regarding the Company.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL FUND SHARES IN ANY STATE OR JURISDICTION IN
WHICH THE FUNDS ARE NOT AUTHORIZED TO CONDUCT
BUSINESS. 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.
[MONUMENT FUNDS GROUP LOGO]
Monument Series Fund
Monument Digital Technology Fund
(formerly Monument Internet Fund)
Monument Genomics Fund
Monument Medical Sciences Fund
Monument Telecommunications Fund
PROSPECTUS
dated November 15, 2000
MONUMENT SERIES FUND, INC.
MONUMENT DIGITAL TECHNOLOGY FUND
MONUMENT MEDICAL SCIENCES FUND
MONUMENT GENOMICS FUND
MONUMENT TELECOMMUNICATIONS FUND
MONUMENT NEW ECONOMY FUND
STATEMENT OF ADDITIONAL INFORMATION DATED
NOVEMBER 15, 2000
This Statement of Additional Information ("SAI")
is not a Prospectus. It contains additional
information that you should read in conjunction
with the prospectus, dated November 15, 2000
("Prospectus"), for the Monument Series Fund,
Inc. Capitalized terms appearing in this SAI
that are not otherwise defined in this document
have the same meaning given to them in the
Prospectus. You may obtain a copy of the
Prospectus by writing Monument Series Fund, Inc.
7920 Norfo1k Avenue, Suite 500, Bethesda,
Maryland 20814, or by calling (888) 420-9950.
TABLE OF CONTENTS
Investment Policies
Potential Risks
Investment Restrictions
Trustees and Officers
Committees Established by the Board of Trustees
Principal Holders of Securities
Investment Advisory and Other Services
Portfolio Transactions and Brokerage
Further Description of the Company's Shares
Buying, Redeeming, and Exchanging Shares
Valuation of Fund Shares
Additional Information On Distributions and Taxes
Performance Information
Performance Comparisons
Financial Information
THE COMPANY. Effective June 30, 2000, the
Company became a Delaware business trust. It was
previously organized as a Maryland corporation on
April 7, 1997. The Company is registered with
the SEC as a open-end management investment
company. Each of its Funds is diversified. The
Company currently offers, on a continuous basis,
the common stock of five series: Monument
Digital Technology Fund, Monument Medical
Sciences Fund, Monument Genomics Fund, Monument
Telecommunications Fund, and Monument New
Economy Fund. Each series is authorized to offer
four separate classes of shares:
? Class A Shares imposing a front-end sales charge
up to a maximum of 5.75%, and a sales charge of
1% if shares are redeemed within the first year
after purchase;
? Class B Shares charging a maximum back-end sales
charge of 5% if redeemed within six years of
purchase, carrying a higher Rule 12b-1 fee than
Class A Shares but converting to Class A Shares
in approximately eight years after purchase;
? Class C Shares charging a front-end sales charge
of 1%, and a sales charge of 1% if shares are
redeemed within the first year after purchase,
and carrying a higher Rule 12b-1 fee than Class A
Shares with no conversion feature; and
? Class Y Shares for certain institutional
investors.
The Company may offer additional series or
classes of shares in the future.
When issued, shares of each Fund are fully-paid,
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.
INVESTMENT STRATEGIES AND RISKS
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.
DEPOSITARY RECEIPTS. Each of the Funds may
invest on a global basis to take advantage of
investment opportunities both within the U.S.
and other countries. The Funds will buy foreign
securities indirectly through the use of
depositary receipts. The Funds may invest in
sponsored and unsponsored American Depository
Receipts ("ADRs"), and other similar depositary
receipts to the extent they are traded in the
U.S. market in U.S. currency. ADRs are issued
by an American bank or trust company and evidence
ownership of underlying securities of a foreign
company. The foreign country may withhold taxes
on dividends or distributions paid on the
securities underlying ADRs, thereby reducing the
dividend or distribution amount received by
shareholders.
Unsponsored ADRs are issued without the
participation of the issuer of the underlying
securities. As a result, information concerning
the issuer may not be as current as for sponsored
ADRs. Holders of unsponsored ADRs generally bear
all the costs of the ADR facilities. The
depositary of an unsponsored facility frequently
is under no obligation to distribute shareholder
communications received from the issuer of the
deposited securities or to pass through voting
rights to the holders of such receipts in respect
of the deposited securities. Therefore, there
may not be a correlation between information
concerning the issuer of the security and the
market value of an unsponsored ADR.
FOREIGN SECURITIES.
General. Foreign investments involve certain
risks that are not present in domestic
securities. For example, foreign securities may
be subject to currency risks or to foreign
government taxes which reduce their
attractiveness. There may be less information
publicly available about a foreign issuer than
about a United States issuer, and a foreign
issuer is not generally subject to uniform
accounting, auditing and financial reporting
standards and practices comparable to those in
the United States. Other risks of investing in
foreign securities include political or economic
instability in the country involved, the
difficulty of predicting international trade
patterns and the possibility of imposition of
exchange controls. The prices of foreign
securities may be more volatile than those of
domestic securities. With respect to certain
foreign countries, there is a possibility of
expropriation of assets or nationalization,
imposition of withholding taxes on dividend or
interest payments, difficulty in obtaining and
enforcing judgments against foreign entities or
diplomatic developments which could affect
investment in these countries. Losses and other
expenses may be incurred in converting between
various currencies in connection with purchases
and sales of foreign securities.
Foreign stock markets are generally not as
developed or efficient as, and may be more
volatile than, those in the United States. While
growing in volume, they usually have
substantially less volume than United States
markets and a Fund's investment securities may be
less liquid and subject to more rapid and erratic
price movements than securities of comparable
United States companies. Equity securities may
trade at price/earnings multiples higher than
comparable United States securities, and those
levels may not be sustainable. There is
generally less government supervision and
regulation of foreign stock exchanges, brokers,
banks and listed companies abroad than in the
United States. Moreover, settlement practices
for transactions in foreign markets may differ
from those in United States markets. Such
differences may include delays beyond periods
customary in the United States and practices,
such as delivery of securities prior to receipt
of payment, which increase the likelihood of a
"failed settlement", which can result in losses
to a Fund.
The value of foreign investments and the
investment income derived from them may also be
affected unfavorably by changes in currency
exchange control regulations. Although the Funds
will invest only in securities denominated in
foreign currencies that are fully exchangeable
into United States dollars without legal
restriction at the time of investment, there can
be no assurance that currency controls will not
be imposed subsequently. In addition, the value
of foreign fixed income investments may fluctuate
in response to changes in United States and
foreign interest rates.
Foreign brokerage commissions, custodial expenses
and other fees are also generally higher than for
securities traded in the United States.
Consequently, the overall expense ratios of
international or global funds are usually
somewhat higher than those of typical domestic
stock funds. Moreover, investments in foreign
government debt securities, particularly those of
emerging market country governments, involve
special risks. Certain emerging market countries
have historically experienced, and may continue
to experience, high rates of inflation, high
interest rates, exchange rate fluctuations, large
amounts of external debt, balance of payments and
trade difficulties and extreme poverty and
unemployment. See "Emerging Market Securities"
below for information on additional risks.
Fluctuations in exchange rates may also affect
the earning power and asset value of the foreign
entity issuing a security, even one denominated
in United States dollars. Dividend and interest
payments will be repatriated based on the
exchange rate at the time of disbursement, and
restrictions on capital flows may be imposed.
In less liquid and well developed stock markets,
such as those in some Eastern European, Southeast
Asian, and Latin American countries, volatility
may be heightened by actions of a few major
investors. For example, substantial increases or
decreases in cash flows of mutual funds investing
in these markets could significantly affect stock
prices and, therefore, share prices.
Additionally, investments in emerging market and
certain other regions are subject to more
specific risks.
Emerging Markets. Investments in emerging market
country securities involve special risks. The
economies, markets and political structures of
emerging market countries generally do not
compare favorably with those of the United States
and other mature economies in terms of wealth and
stability. Therefore, investments in these
countries may be riskier than U.S. investments,
and pricing may be more volatile. Emerging
market economies are less well developed and less
diverse than those of more developed countries,
and more vulnerable to circumstances relating to
international trade, trade barriers and other
protectionist or retaliatory measures. Many
countries are also subject to inflation,
recession, high levels of national debt, currency
exchange problems and government instability. In
addition, governmental authorities may choose not
to repay debt, and the relative size of the debt
service burden to the economy may be excessive.
Investments in some countries may be deemed
speculative. Under such circumstances, a Fund
may have limited legal recourse against the
issuer or guarantor. The ability to seek
recourse in a foreign jurisdiction may be
influenced by the current political climate.
ILLIQUID AND RESTRICTED SECURITIES. Each Fund
may invest up to 15% of its net assets in
illiquid securities, including repurchase
agreements with maturities in excess of seven
days. Subject to this limitation, the Board of
Trustees 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
Trustees 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 Trustees 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) other such factors as Advisors may
determine to be relevant.
OPTIONS. The Funds may purchase put and call
options and engage in the writing of covered call
options and put options on securities that meet
each Fund's investment criteria, and may employ a
variety of other investment techniques, such as
options on futures. The Funds will engage in
options transactions only to hedge existing
positions, and not for purposes of speculation or
leverage. As described below, the Funds may
write "covered options" on securities in standard
contracts traded on national exchanges, or in
individually-negotiated contracted traded over-
the-counter for the purpose of receiving the
premiums from options that expire and to seek net
gains from closing purchase transactions with
respect to such options.
BUYING CALL AND PUT OPTIONS. Each Fund may
purchase call options. Such transactions may be
entered into in order to limit the risk of a
substantial increase in the market price of the
security that the Fund intends to purchase.
Prior to its expiration, a call option may be
sold in a closing sale transaction. Any profit
or loss from the sale will depend on whether the
amount received is more or less than the premium
paid for the call option plus the related
transaction costs.
Each Fund may purchase put options. By buying a
put, the Fund has the right to sell the security
at the exercise price, thus limiting its risk of
loss through a decline in the market value of the
security until the put expires. The amount of
any appreciation in the value of the underlying
security will be partially offset by the amount
of the premium paid for the put option and any
related transaction costs. Prior to its
expiration, a put option may be sold in a closing
sale transaction and any profit or loss from the
sale will depend on whether the amount received
is more or less than the premium paid for the put
option plus the related transaction costs.
WRITING (SELLING) CALL AND PUT OPTIONS. Each
Fund may write covered options on equity and debt
securities and indices. This means that, in the
case of call options, so long as the Fund is
obligated as the writer of a call option, it will
own the underlying security subject to the option
and, in the case of put options, it will, through
its custodian, deposit and maintain either cash
or securities with a market value equal to or
greater than the exercise price of the option.
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 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.
Each Fund may purchase securities which may be
covered with call options solely on the basis of
considerations consistent with the investment
objectives and policies of the Fund. The Fund's
turnover may increase through the exercise of a
call option; this will generally occur if the
market value of a "covered" security increases
and the Fund has not entered in to a closing
purchase transaction.
As a writer of an option, the Fund receives a
premium less a commission, and in exchange
foregoes the opportunity to profit from any
increase in the market value of the security
exceeding the call option price. The premium
serves to mitigate the effect of any depreciation
in the market value of the security. The premium
paid by the buyer of an option will reflect,
among other things, the relationship of the
exercise price to the market price, the
volatility of the underlying security, the
remaining term of the option, the existing supply
and demand, and the 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. Exercise of a call option by the
purchaser will cause the Fund to forego future
appreciation of the securities covered by the
option. Whether or not an option expires
unexercised, the writer retains the amount of the
premium. This amount 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.
Thus, during the option period, the writer of a
call option gives up the opportunity for
appreciation in the market value of the
underlying security or currency above the
exercise price. It retains the risk of loss
should the price of the underlying security or
foreign currency decline. Writing call options
also involves risks relating to a Fund's ability
to close out options it has written.
Each Fund may write exchange-traded call options
on its securities. Call options may be written
on portfolio securities, securities indices, or
foreign currencies. With respect to securities
and foreign currencies, the Fund may write call
and put options on an exchange or over-the-
counter. Call options on portfolio securities
will be covered since the Fund will own the
underlying securities. Call options on
securities indices will be written only to hedge
in an economically appropriate way portfolio
securities that are not otherwise hedged with
options or financial futures contracts and will
be "covered" by identifying the specific
portfolio securities being hedged. Options on
foreign currencies will be covered by securities
denominated in that currency. Options on
securities indices will be covered by securities
that substantially replicate the movement of the
index.
A put option on a security, security index, or
foreign currency gives the purchaser of the
option, in return for the premium paid to the
writer (seller), the right to sell the underlying
security, index, or foreign currency at the
exercise price at any time during the option
period. When the Fund writes a secured put
option, it will gain a profit in the amount of
the premium, less a commission, so long as the
price of the underlying security remains above
the exercise price. However, the Fund remains
obligated to purchase the underlying security
from the buyer of the put option (usually in the
event the price of the security falls below the
exercise price) at any time during the option
period. If the price of the underlying security
falls below the exercise price, the Fund may
realize a loss in the amount of the difference
between the exercise price and the sale price of
the security, less the premium received. Upon
exercise by the purchaser, the writer of a put
option has the obligation to purchase the
underlying security or foreign currency at the
exercise price. A put option on a securities
index is similar to a put option on an individual
security, except that the value of the option
depends on the weighted value of the group of
securities comprising the index and all
settlements are made in cash.
During the option period, the writer of a put
option has assumed the risk that the price of the
underlying security or foreign currency will
decline below the exercise price. However, the
writer of the put option has retained the
opportunity for an appreciation above the
exercise price should the market price of the
underlying security or foreign currency increase.
Writing put options also involves risks relating
to a Fund's ability to close out options it has
written.
The writer of an option who wishes to terminate
his or her 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 also 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. Effecting a closing
purchase transaction will also 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 OVER-THE-COUNTER ("OTC") OPTIONS. A Fund
may engage in options transactions that trade on
the OTC market to the same extent that it intends
to engage in exchange traded options. Just as
with exchange traded options, OTC options give
the holder the right to buy an underlying
security from, or sell an underlying security to,
an option writer at a stated exercise price.
However, OTC options differ from exchange traded
options in certain material respects.
OTC options are arranged directly with dealers
and not, as is the case with exchange traded
options, through 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. Since OTC options are available
for a greater variety of securities and in a
wider range of expiration dates and exercise
prices, the writer of an OTC option is paid the
premium in advance by the dealer.
A writer or purchaser of a put or call option can
terminate it voluntarily only by entering into a
closing transaction. There can be no assurance
that a continuously liquid secondary market will
exist for any particular option at any specific
time. Consequently, a Fund may be able to
realize the value of an OTC option it has
purchased only by exercising it or entering into
a closing sale transaction with the dealer that
issued it. Similarly, 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 it originally wrote the option. If a
covered call option writer cannot effect a
closing transaction, it cannot sell the
underlying security or foreign currency until the
option expires or the option is exercised.
Therefore, the writer of a covered OTC call
option may not be able to sell an underlying
security even though it might otherwise be
advantageous to do so. Likewise, the writer of a
secured OTC put option may be unable to sell the
securities pledged to secure the put for other
investment purposes while it is obligated as a
put writer. Similarly, a purchaser of an OTC put
or call option might also find it difficult to
terminate its position on a timely basis in the
absence of a secondary market.
The staff of the Securities and Exchange
Commission ("SEC") has been deemed to have taken
the position that purchased OTC options and the
assets used to "cover" written OTC options are
illiquid securities. The Funds will adopt
procedures for engaging in OTC options
transactions for the purpose of reducing any
potential adverse effect of such transactions on
the liquidity of the Fund.
FUTURES CONTRACTS. Each Fund may buy and sell
stock index futures contracts traded on domestic
stock 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
contracts, 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 so long as 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. Such assets may
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.
RISKS ASSOCIATED WITH 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 a contract. Successful use of
futures contracts depends upon Advisors' ability
to correctly predict movements in 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 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
sanctions or restrictions. These trading and
positions limits will not have an adverse impact
on a Fund's strategies for hedging its
securities.
REPURCHASE AGREEMENTS. Each Fund may enter into
repurchase agreements. Repurchase agreements
allow a Fund to acquire ownership of a debt
security which the seller agrees (at the time of
the sale) to repurchase at a mutually agreed upon
time and price. The security's yield during the
Fund's holding period is thus predetermined.
SECURITIES LOANS. All securities loans will be
made pursuant to agreements requiring the loans
to be continuously secured by collateral in cash
or high grade debt obligations at least equal at
all times to the market value of the loaned
securities. The borrower pays to the Portfolios
an amount equal to any dividends or interest
received on loaned securities. The Portfolios
retain all or a portion of the interest received
on investment of cash collateral or receive a fee
from the borrower. Lending portfolio securities
involves risks of delay in recovery of the loaned
securities or in some cases loss of rights in the
collateral should the borrower fail financially.
Securities loans are made to broker-dealers or
institutional investors or other persons,
pursuant to agreements requiring that the loans
be continuously secured by collateral at least
equal at all times to the value of the loaned
securities marked to market on a daily basis.
The collateral received will consist of cash,
United States Government securities, letters of
credit or such other collateral as may be
permitted under a Portfolio's investment program.
While the securities are being loaned, a
Portfolio will continue to receive the equivalent
of the interest or dividends paid by the issuer
on the securities, as well as interest on the
investment of the collateral or a fee from the
borrower. A Portfolio has a right to call each
loan and obtain the securities on five business
days' notice or, in connection with securities
trading on foreign markets, within such longer
period for purchases and sales of such securities
in such foreign markets. A Portfolio will
generally not have the right to vote securities
while they are being loaned, but its Manager or
Adviser will call a loan in anticipation of any
important vote.
REPURCHASE AGREEMENTS. Although each Fund will
enter into repurchase agreements only with
institutions that Advisors believes present
minimal credit risks, 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: (1) a possible decline in the
value of the underlying security while the Fund
seeks to enforce its rights thereto; (2) possible
subnormal levels of income and lack of access to
income during this period; (3) a possible loss on
the sale of the underlying collateral; and (4)
the expense of enforcing its rights.
SECURITIES LOANS. The risks in lending portfolio
securities, as with other extensions of secured
credit, consist of possible delay in receiving
additional collateral or in the recovery of the
securities or possible loss of rights in the
collateral should the borrower fail financially.
Loans will only be made to firms deemed by
Advisors to be of good standing and will not be
made unless, in the judgment of Advisors, the
consideration to be earned from such loans would
justify the risk.
WARRANTS. Each Fund may invest in warrants. A
warrant is a security that gives the holder the
right, but not the obligation, to purchase a
given number of shares of a particular company at
a fixed price within a certain period of time.
Warrants generally trade in the open market and
may be sold rather than exercised.
The purchaser of a warrant expects the market
price of the security underlying the warrant to
exceed the purchase price of the warrant plus the
exercise price of the warrant, thus yielding a
profit. It is possible, however, that the market
price of the security underlying a warrant will
not exceed the exercise price of the warrant
before the expiration date. Consequently, the
purchaser of a warrant risks the loss of the
entire purchase price. Price movements in the
security underlying a warrant are generally not
as great as the warrant's price movements.
Therefore, the price of a warrant tends to be
more volatile and may not correlate exactly to
the price of its underlying security.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions
The Company has adopted the following
restrictions as fundamental policies for each
Fund. These restrictions may not be changed for
any given Fund without the approval of the lesser
of (1) more than 50% of the outstanding voting
securities of the Fund or (2) 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,
or as otherwise provided by law, governing
documentation or applicable interpretation.
Under the restrictions, each Fund MAY NOT:
1. with respect to 75% of the Fund's assets,
purchase securities of any issuer (other than
obligations of, or guaranteed by, the United
States government, its agencies or
instrumentalities) if, as a result, more than 5%
of the value of the Fund's total assets would be
invested in the securities of that issuer;
2. with respect to 75% of the Fund's assets,
purchase more than 10% of the outstanding voting
securities of any issuer;
3. issue senior securities, except to the
extent permitted by the 1940 Act, including
permitted borrowings;
4. 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;
5. 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). As a nonfundamental operating
policy, no Fund will purchase securities when its
borrowings exceed 5% of its total assets;
6. underwrite the securities of other issuers,
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;
7. 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 applicable exemptions;
8. 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;
9. 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. 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: (1)
more than 3% of the issuer's outstanding voting
stock; (2) more than 5% of the Fund's total
assets,; and (3) 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.
Nonfundamental Investment Policies
In addition to the fundamental policies
identified above, it is the present operating
policy of each Fund (which may be changed without
shareholder approval) not to:
1. pledge, mortgage or hypothecate its assets
as security for loans, or engage in joint or
joint and several trading accounts in securities,
except that it may participate in joint
repurchase arrangements, 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);
2. invest more than 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; or
3. engage in short sales, unless at the time
the Fund owns securities equivalent in kind and
amount to those sold.
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 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. Monument Advisors
does not expect the annual portfolio turnover
rates for a Fund to exceed 120%.
TRUSTEES AND OFFICERS
The Board of Trustees has the responsibility for
the overall management of the Company, including
general supervision and review of its investment
activities. The Board of Trustees also elects the
officers of the Company, who are responsible for
administering day-to-day operations.
Affiliations for the Officers and Board of
Trustees (including principal occupations for the
past five years) are shown below. Members of the
Board of Trustees who are considered "interested
persons" of the Company under the 1940 Act are
indicated by as asterisk (*).
Name
(Age)
Address
Position
Held with
Company
Principal
Occupatio
n During
the Past
Five
Years
*David A. Kugler
(40)
7920 Norfolk
Avenue
Suite 500
Bethesda, MD
20814
Trustee, President
and Treasurer, 1997 -
present
President and
Director, The
Monument Group, Inc.
(a holding company);
Monument Funds
Group, Inc. (a
mutual funds
development
company); Monument
Advisors, Ltd.;
Monument
Distributors, Inc.;
Monument Shareholder
Services, Inc., 1997
- present; Account
Vice President,
Paine Webber, Inc.,
1994 - 1997;
Financial
Consultant, Merrill
Lynch & Co., 1990 -
1994.
Peter L. Smith
(68)
7920 Norfolk
Avenue
Suite 500
Bethesda, MD
20814
Vice President and
Assistant Secretary
Senior Vice
President and
Secretary, The
Monument Group,
Inc.; Monument Funds
Group, Inc.;
Monument Advisors,
Ltd.; Monument
Distributors, Inc.;
Monument Shareholder
Services, Inc., 1998
- present; Special
Investigator (Senior
Examiner), National
Association of
Securities Dealers
Regulation, Inc.,
District 10 (New
York City), 1997 -
1998; Senior Staff
Accountant, Office
of Compliance and
Examinations, U.S.
Securities and
Exchange Commission,
Washington, D.C.,
1974 - 1997.
Frederic White II
(46)
3107 Albemarle
Road
Wilmington, DE
19808
Trustee, Secretary
Business Manager,
Trinity Episcopal
Parish, 1997 -
present; Management
Consultant, Small
Business Management,
1985 - 1996.
Francine F. Carb
(41)
421 Woodland
Circle
Radnor, PA 19087
Trustee
President,
Markitects, Inc.
(marketing
consulting), 1994 -
present; Francine
Carb & Associates
(marketing
consulting), 1992 -
1994.
Victor Dates (62)
2107 Carter Dale
Road
Baltimore, MD
21209
Trustee
Adjunct Professor,
Coppin State
College, 1998 -
present; Assistant
Professor, Howard
University, 1988 -
1998.
Name (Age)
Address
Position Held
with Company
Principal Occupation
During the Past Five Years
George DeBakey
(50)
19 Blue Hosta
Way
Rockville, MD
20850
Trustee
Director, Business
Development,
Technolognet.com, 2000 -
present; Director of
International Operations,
ESI International, Inc.,
1998 - 1999; Instructor,
American University, 1992
- 1998.
David Gregg III
(67)
2200 Clarendon
Blvd.
Suite 1410
Arlington, VA
22201
Trustee
Chairman, Gator
Broadcasting Corp., 1986 -
present; Managing
Director, Pierce Financial
Corp., 1984 - present.
Rhonda Wiles
Roberson, Esq.
(48)
2001
Pennsylvania
Ave., N.W.,
Suite 600
Washington, D.C.
20006
Trustee
Director of Development,
Futures Industry
Institute, 1999 - present;
Senior Vice President,
Institutional Funding and
Development, Hispanic
Radio Network, Inc., 1998
- 1999; Principal, RWR
Consults (Business
Advisors), 1995 - present;
Counsel, NAPWA Services
(pharmaceutical company)
1995; Associate General
Counsel, Calvert Group,
Ltd. (mutual fund
sponsor), 1990 - 1993.
Trustees and officers of the Company who are
affiliated with Advisors and/or Distributors
receive no remuneration from the Company. Each
Trustee who is not an interested person of the
Company receives a fee of $2,000 annually, plus
an additional fee of $500 per day for attendance
at any meeting of the Board of Trustees or one of
its committees (including any meeting held by
telephonic conference). Trustees also receive
reimbursement for any expenses incurred in
attending board and committee meetings. The
Board of Trustees generally meets quarterly.
In addition, those Trustees and officers of the
Company who are also shareholders of The Monument
Group, Inc., the parent company of Advisors and
Distributors, may also receive indirect
remuneration by virtue of their indirect
interests in Advisors and Distributors,
respectively.
Trustee White provided business consultation
services to Monument Advisors on two limited
projects in 1997 for compensation totaling less
than $1,500.
COMMITTEES ESTABLISHED BY THE BOARD OF TRUSTEES
The Company has an Audit Committee, an Executive
Committee, a Pricing and Investment Committee,
and a Nominating Committee. The duties of these
four Committees and their present membership are
as follows:
AUDIT COMMITTEE: The Audit Committee assists the
Board of Trustees in fulfilling its
responsibilities for the Company's accounting and
financial reporting practices, and acts as a
liaison between the Board of Trustees and
Deloitte & Touche LLP, the Company's independent
public accountant. Trustees Carb, Dates,
DeBakey, White, and Wiles-Roberson are members of
the Audit Committee.
EXECUTIVE COMMITTEE: The Executive Committee may
exercise its powers during those intervals
between meetings of the full Board of Trustees.
The Executive Committee possesses all of the
powers of the Board of Trustees in the management
of the Company except as to those matters that
specifically require action by the Board of
Trustees. Trustees Kugler and Wiles-Roberson are
members of the Executive Committee.
PRICING AND INVESTMENT COMMITTEE: The Pricing
and Investment Committee determines in good faith
a fair value for any of the Company's portfolio
investments that do not have a readily available
market quotation or sales price. The Committee
then presents such valuations and the basis
therefor at the next meeting of the Board of
Trustees for their good faith confirmation or
change. Trustee Kugler is a member of the
Pricing and Investment Committee. Bob Grandhi,
the Chief Investment Officer of Monument
Advisors, is also a member of the Pricing and
Investment Committee.
NOMINATING COMMITTEE: The Nominating Committee
nominates candidates for election to the Board of
Trustees, whether such candidates be interested
or non-interested persons of the Company.
Trustees Carb, Dates, DeBakey, White, and Wiles-
Roberson are members of the Nominating Committee.
PRINCIPAL HOLDERS OF SECURITIES
As of November 9, 2000: Charles Schwab & Co.,
Inc. owned of record 5.06% of the Monument
Digital Technology Fund Class A Shares; First
Clearing Corporation owned of record 24.85% of
the Monument Digital Technology Fund Class C
Shares; Dain Rauscher, custodian for Jimmie M.
Farmer, owned of record 18.61% of the Monument
Digital Technology Fund Class C Shares; NFSC
F/B/O Joseph W. Hug owned of record 7.96% of the
Monument Digital Technology Fund Class C Shares;
Stifel Nicolaus & Co., Inc. F/B/O Gary P. Laun
owned of record 7.72% of the Monument Digital
Technology Fund Class C Shares.
As of November 9, 2000: First Union Securities,
Inc. owned of record 20.02% of the Monument
Medical Sciences Fund Class C Shares; Manoj K.
Singh owned of record 18.16% of the Monument
Medical Sciences Fund Class C Shares; PaineWebber
owned of record F/B/O of Harriet Raskin 18.14% of
the Monument Medical Sciences Fund Class C
Shares; Donaldson Lufkin Jenrette Securities
Corp., Inc. owned of record 16.45% of the
Monument Medical Sciences Fund Class C Shares;
As of November 9, 2000: U.S. Clearing Corp.
owned of record 46.59% of the Telecommunications
Fund Class C Shares; Robert W. Baird & Co., Inc.
owned of record 26.41% of the Telecommunications
Fund Class C Shares; Bear Stearns Securities
Corp. owned of record 19.12% of the
Telecommunications Fund Class C Shares;
PaineWebber F/B/O Gloria Lazarus owned of record
8.83% of the Telecommunications Fund Class C
Shares;
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISOR. Monument Advisors, Ltd.,
("Advisor") located at 7201 Wisconsin Avenue,
Suite 650, Bethesda, Maryland 20814, 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 is an affiliate of the Company and
Advisors. Advisors also manages the portfolio
investments of qualified individuals, retirement
plans, and trusts.
Under to the Advisory Agreement with the Company,
Advisors receives a monthly fee from each Fund,
payable twice per month. This fee is calculated
as an annualized rate of 1.25% of the monthly
average net assets of each Fund through $250
million; 1.00% of the monthly average net assets
between $250 and $500 million; 0.875% of the
monthly average net assets between $500 million
and $750 million; 0.75% of the monthly average
net assets between $750 and $1 billion; and
0.625% of the monthly average net assets over $1
billion. A voluntary Expense Limitation
Agreement is in effect through May 1, 2001,
pursuant to which the Advisor has agreed to waive
or reimburse the fund for certain expenses. The
expense limit is subject to change at the
discretion of the Board of Trustees. The Board
has exercised its discretion on several occasions
to raise the expense cap for the ultimate benefit
of the Fund and its shareholders. During
contract periods when total expenses are below
the cap, the Funds may reimburse the Advisor for
fees waived or expenses reimbursed under the
expense limitation agreement on a rolling five-
year basis. Reimbursements must be approved
quarterly by the Board of Trustees.
ADVISORY AGREEMENT. Pursuant to the Advisory
Agreement, Advisors provides the following
services to each Fund: (1) furnishing an
investment program (a) determining what
investments a Fund should purchase, hold, sell,
or exchange; (b) 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; (c) rendering
regular reports to the Company regarding the
decisions that it has made with respect to the
investment of the assets of each Fund and the
purchase and sale of its investment securities
(including the reasons for such decisions, the
extent to which it 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); (d) placing orders
for the execution of each Fund's securities
transactions (in accordance with any applicable
directions from the Board of Trustees) and
rendering certain reports to the Company
regarding brokerage business placed by Advisors;
(e) 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 Trustees of any fees or payments of
whatever type that 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 statement, regulatory
reports, periodic reports to shareholders and
other documents (including tax returns), required
by applicable law; (7) providing assistance to
the Company with respect to the development,
implementation, maintenance, and monitoring of a
compliance program; and (8) furnishing, at its
own expense, adequate facilities and personnel
for the Trustees and officers of the Company to
manage the Company's affairs.
The Advisory Agreement for both the Medical
Sciences Fund and the Telecommunications Fund was
originally approved by the Board of Trustees on
October 27, 1997. The Advisory Agreement for the
Internet Fund was originally approved by the
Board of Trustees on June 30, 1998. Each
agreement was subsequently approved by the
initial shareholder of each Fund, following his
investment of each Fund's initial capitalization.
The Board approved a revision of the Advisory
Agreement as to each of the Funds on March 18,
2000, and the shareholders of the Internet,
Medical Sciences and Telecommunications Funds
approved the change on June 28, 2000. The
Advisory Agreement will remain in effect from
year to year as long as its continuance is
specifically approved at least annually by a vote
of the Board of Trustees (on behalf of each Fund)
or by a vote of the holders of a majority of each
Fund's outstanding voting securities (as defined
by the 1940 Act). In either case, the vote must
be cast by a majority of Board members who are
not interested persons or Advisors of the Company
(other than as members of the Board of Trustees).
Voting must occur in person at a meeting
specifically called for that purpose. The
Advisory Agreement may be terminated without
penalty at any time by the Board of Trustees or
Advisors. With respect to an individual Fund,
the Advisory Agreement may be terminated by a
vote of a majority of the Fund's shareholders.
Termination either occurs on 60 days written
notice, or automatically in the event of an
assignment of the agreement, as defined in the
1940 Act.
PRINCIPAL UNDERWRITER. Monument Distributors,
located at 7920 Norfolk Avenue, Suite 500,
Bethesda, Maryland 20814, is a wholly-owned
subsidiary of The Monument Group, Inc. Monument
Advisors, and serves as the principal underwriter
of each Fund. David A. Kugler is an affiliate of
the Company and Monument Distributors.
Pursuant to a "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. On October 27, 1997, the Distribution
Agreement (dated November 27, 1997) was approved
as to each Fund in existence at that time by the
Board of Trustees. The Distribution Agreement
was approved as to each subsequently-formed Fund
at the time the Board authorized the Fund's
creation. The Distribution Agreement is in
effect for two years from the date of its
execution and will continue to be in effect
thereafter if approved annually by a vote of the
Board of Trustees, or by a vote of the holders of
a majority of the Company's outstanding voting
securities. In either case, votes must be cast
by a majority of Board members who are not
parties to the Distribution Agreement or
interested persons of any such party (other than
as members of the Board of Trustees). Votes must
also be cast in person at a meeting called
specifically 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
distributing the Company's shares, including
advertising expenses and the cost of printing
sales materials and prospectuses. 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 commission for the sale of each Fund's shares
(in the amount set forth, and as described, in
the Prospectus).
PLAN OF DISTRIBUTION (RULE 12b-1 PLANS). The
Board of Trustees has adopted a Plan of
Distribution pursuant to Rule 12b-1 under the
1940 Act ("Rule 12b-1 Plan") for the Class A,
Class B and Class C Shares of each Fund. A Plan
was adopted with respect to the Class A Shares of
the Medical Sciences and Telecommunications Funds
on October 27, 1997. A Plan of Distribution was
approved on behalf of the Class A Shares of the
Digital Technology Fund on June 30, 1998. Rule
12b-1 Plans were approved for Class B Shares of
the above Funds effective October 1, 1999,and the
Class B Share Rule 12b-1 Plan was revised
effective September 22, 2000. Plans were
approved for Class C Shares of the Funds listed
above, as well as for Classes A, B and C of the
New Economy Fund, effective June 30, 2000.
Pursuant to these Distribution Plans, 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.
The Board of Trustees adopted the Distribution
Plan for the purpose of increasing the sale of
each Fund's shares, thereby lowering overall Fund
expenses through economies of scale. Each Plan
is in effect for an initial one year period, and
will remain in effect provided that the Board of
Trustees (including a majority of Rule 12b-1
Trustees described below) approves its
continuance by votes cast in person at an annual
meeting called for that purpose. Rule 12b-1
Trustees include those Trustees 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 related agreements.
Pursuant to each Plan, each Fund may finance any
activity or expense that is intended primarily to
result in the sale of its shares. Under the
Plans, each Fund may pay a fee ("12b-1 fee") to
Distributors up to a maximum of 0.50%, on an
annualized basis, of its average daily net assets
for Class A Shares, and up to a maximum of 1.00%
for Class B and Class C Shares. 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:
(1) compensation for expenses (including overhead
and telephone expenses) incurred by employees of
Distributors who engage in the distribution of
the shares of each Fund; (2) printing and mailing
of prospectuses, statements of additional
information, and periodic reports to prospective
shareholders of each Fund; (3) expenses relating
to the development, preparation, printing, and
mailing of advertisements, sales literature, and
other promotional materials describing and/or
relating to each Fund; (4) 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; (5) expenses of holding
seminars and sales meetings designed to promote
the distribution of the shares of each Fund; (6)
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; (7) expenses of
training sales personnel offering and selling
each Fund's shares; and (8) expenses of personal
services and/or maintenance of shareholder
accounts with respect to the shares of each Fund.
A majority of Rule 12b-1 Trustees must approve
material amendments 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. With respect to each individual, the
Plan may be terminated at any time by a majority
of Rule 12b-1 Trustees or by a majority of the
outstanding voting securities of that Fund.
RULE 18f-3 PLAN. At a meeting held on August 7,
1999, the Board adopted a Rule 18f-3 Multiple
Class Plan on behalf of the Fund for the benefit
of each of its series. The key features of the
Rule 18f-3 plan are as follows: (i) shares of
each class of the Fund represent an equal pro
rata interest in the Fund and generally have
identical voting, dividend, liquidation, and
other rights, preferences, powers, restrictions,
limitations qualifications, terms and
conditions, except that each class bears certain-
specific expenses and has separate voting rights
on certain matters that relate solely to that
class or in which the interests of shareholders
of one class differ from the interests of
shareholders of another class; (ii) subject to
certain limitations described in the Prospectus,
shares of a particular class of the Fund may be
exchanged for shares of the same class of another
Fund; and (iii) the Fund's Class B Shares will
convert automatically into Class A shares of the
Fund after a period of eight years, based on the
relative net asset value of such shares at the
time of conversion. At present, each Fund offers
Class A Shares charging a front-end sales charge,
Class B Shares imposing a sales charge upon the
sale of shares within six years of purchase, and
Class C Shares for certain institutional
shareholders.
CODE OF ETHICS. The Fund, its investment advisor
and distributor have adopted a Code of Ethics
pursuant to Rule 17j-1 under the 1940 Act, as
required by applicable law. The Code is designed
to prevent affiliated persons of the Fund, its
advisor and the distributor from engaging in
deceptive, manipulative or fraudulent activities
in connection with securities held or to be
acquired by the Fund. The Code of Ethics permits
personnel subject to the Code to invest in
securities. Personnel may invest in securities
that may be purchased or held by the Fund,
subject to pre-clearance requirements. There can
be no assurance that the Codes of Ethics will be
effective in preventing unlawful activities. The
Code of Ethics may be examined at the office of
the SEC in Washington, D.C. or on the Internet
from the SEC's website at http://www.sec.gov.
CUSTODIAN, ACCOUNTING AGENT AND TRANSFER AGENT.
PFPC Trust, located at 200 Stevens Drive,
Lester, Pennsylvania 19113, acts as custodian of
the assets of each Fund, including securities and
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. Monument Fund Accounting,
Inc., 7920 Norfolk Avenue, Bethesda, Maryland
20814, serves as the investment accounting agent
for each Fund's portfolio securities and other
assets. Monument Fund Accounting has retained
the services of PFPC, Inc., 400 Bellevue Parkway,
Wilmington, Delaware, to assist in providing
investment accounting services. Monument
Shareholder Services, Inc. ("MSSI"), 7920 Norfolk
Avenue, Bethesda, Maryland 20814, serves as the
transfer agent and dividend disbursing agent for
each Fund. Pursuant to a Sub-Transfer Agency
Agreement entered into between MSSI and PFPC,
Inc. dated September 16, 2000, PFPC, Inc. has
assumed the transfer agent, dividend disbursing
and shareholder servicing functions on behalf of
the Funds.
FUND ADMINISTRATION. Pursuant to an
Administrative Services Agreement with the
Company dated September 18, 2000 (the
"Administrative Agreement"), Monument Shareholder
Services, Inc. (the "Administrator"), 7920
Norfolk Avenue, Bethesda, Maryland 20814, serves
as administrator of the Fund and supervises all
aspects of the operation of the Fund except those
performed by the Investment Advisor. The
Administrator has entered into a Sub-
Administration Services Agreement with PFPC, Inc.
to which the Administrator has delegated a
portion of its duties for the benefit of the
Fund. The Administrator and PFPC, Inc. provide
certain administrative services and facilities
for the Fund, including preparing and maintaining
certain books, records, and monitoring compliance
with state and federal regulatory requirements.
As administrator, the Administrator and PFPC,
Inc. receive an asset-based administrative fee,
computed daily and paid monthly, at the annual
rate of 13.5% (10% to the Administrator and 3.5%
to PFPC, Inc., subject to a minimum amount of
$6,250 per year to PFPC, Inc. for a period of two
years from the date of the Administrative
Agreement.
INDEPENDENT PUBLIC ACCOUNTANT. Deloitte & Touche
LLP, located at 116-300 Village Boulevard,
Princeton, New Jersey 08540, serves as the
Company's independent public accountant.
INDEPENDENT COUNSEL. Beth-ann Roth, P.C.,
located at 9204 Saint Marks Place, Fairfax,
Virginia 22031, serves as independent counsel to
the Funds and to the Trustees.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Advisors, pursuant to the Advisory Agreement and
subject to the general control of the Board of
Trustees, 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
extent of the security market, the financial
condition and execution capability of the broker-
dealer, and the reasonableness of any commission.
In the allocation of brokerage business used to
purchase securities for a Fund, Advisors may give
preference to those broker-dealers who provide
brokerage, research, or other services to
Advisors as long as there is no sacrifice in
obtaining best execution. Such services may
include the following: (1) 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); (2)
analyses and reports concerning issuers,
industries, securities, economic factors and
trends, portfolio strategy, and performance of
accounts; and (3) various functions incidental to
effecting securities transactions, such as
clearance and settlement. Research generated by
broker-dealers who execute transactions on behalf
of the Company may be useful to Advisors in
rendering investment management services to other
clients (including affiliates of Advisors).
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 may be used by Advisors in
providing investment advice to all its clients
(including affiliates of Advisors), not all of it
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 supplemental research.
Advisors may use the services of an affiliated
broker-dealer, either Monument Distributors, Inc.
or FISN, to execute portfolio securities
transactions, including transactions that may
otherwise not be feasible to send to other
broker-dealers because of such factors as the
small size of the transaction. Commissions paid
to FISN during the past fiscal years for
securities transactions on behalf of the Funds
amounted to $85,009 for fiscal year ended October
31, 1999, and $158,127 for fiscal year ended
October 31, 2000. During fiscal year ended
October 31, 2000, commissions paid to FISN as a
percentage of the overall total commissions paid
by the Funds was 25.36%. During fiscal year
ended October 31, 2000, the aggregate dollar
amount of commissions paid to FISN as compared to
the total aggregate dollar amount paid by the
Funds was 19.64%. The difference in percentages
resulted from factors related to why FISN was
used as the broker-dealer of choice in a
particular instance, such as the ability to get
execution on trades that other broker-dealers may
not have been able to process for the Funds on as
favorable terms, or at all.
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 Advisors 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 Advisors if it
is legally permissible to do so. The next
advisory fee payable to Advisors will be reduced
by the cash amount received by Advisors, 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 any 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, Advisors 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 customers,
including the Company. In some instances, this
procedure may impact the price and size of the
position obtainable for the Company.
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 Trustees have the ability to elect all of the
Trustees, with the result that the holders of the
remaining voting shares will not be able to elect
any Trustee.
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
Trustees, in its discretion, as well as the
holders of at least 10% of the outstanding shares
of a Fund, may also 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.
FURTHER DESCRIPTION OF THE COMPANY'S SHARES
VOTING RIGHTS. According to the Company's By-
Laws, and under Delaware law, an annual
shareholder meeting need not be held in any year
in which Trustees must be elected (as dictated by
the 1940 Act). On any matter submitted to the
shareholders, each shareholder is entitled to one
vote per share (with proportionate voting for
fractional shares) regardless of the relative NAV
of the Fund's shares. On matters affecting one
Fund differently from the another 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. In other words, holders of more
than 50% of the shares elect 100% of the Board of
Trustees, while the holders of less than 50% of
the shares may not elect any person as a Trustee.
Shareholders of a particular Fund may have the
power to elect all of the Company's Trustees if
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
Trustees determines. This may occur daily, or
with such frequency as the Board of Trustees
determines by resolution. Dividends and
distributions may be paid to shareholders of a
particular Fund from the income and capital
gains, accrued or realized, attributable to the
assets belonging to that Fund, after the Board of
Trustees provides for the Fund's actual and
accrued liabilities. All dividends and
distributions on shares of a particular series or
class will be distributed pro rata to the
shareholders in proportion to the number of
shares held by them on the date and time of
record established for the payment of such
dividends or distributions. The Board of
Trustees may declare and distribute a stock
dividend to shareholders of Fund through 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 Trustees) any of a
Fund's assets that are in excess of its
liabilities. The shareholders of one Fund will
therefore not be entitled to any distribution
upon liquidation of another Fund. The assets
distributed to the shareholders of a Fund will be
in proportion to the number of shares of that
Fund held by each shareholder as recorded on the
Company books. The liquidation of any particular
Fund in which there are outstanding shares may be
authorized by an instrument in writing signed by
a majority of the Trustees 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.
PREEMPTIVE, CONVERSION, AND TRANSFER RIGHTS.
When issued, each Fund's shares are fully paid,
non-assessable, have no pre-emptive or
subscription rights, and are fully transferable
(the Board of Trustees may, however, adopt lawful
rules and regulations with reference to the
method of transfer). Subject to the 1940 Act,
the Board of Trustees has the authority to allow
a shareholder the option of exchanging his or her
shares for shares of the another Fund in
accordance with such requirements and procedures
as the Board of Trustees may establish.
BUYING, REDEEMING, AND EXCHANGING SHARES
ADDITIONAL INFORMATION ON BUYING SHARES. The
Company currently offers shares of the Funds
through advertisements and mailings. In the
future, shares may be offered on 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 $50 charge against your account for
each returned item. Brokers through which you
buy shares may designate intermediaries to accept
orders on behalf of the Funds.
REINVESTMENT DATE. Fund shares acquired through
the reinvestment of dividends will be purchased
at the Fund's net asset value, as 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 Company, on behalf of
the Funds, will pay in cash (by check) all
requests for redemption by any shareholder of
record of a Fund. The amount is limited,
however, during any 90-day period, to the lesser
of $250,000 or 1% of the value of a Fund's net
assets at the beginning of the 90-day period.
This commitment is irrevocable without the prior
permission of the SEC. If redemption requests
exceed these amounts, the Board of Trustees
reserves the right to make payments in whole or
in part using securities or other assets of a
Fund (if there is an emergency, or if a cash
payment 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 as a
result of 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, we will
reinvest any declared but unpaid income dividends
and capital gain distributions in the new Fund at
its 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 sell
their shares of a Fund under the exchange
privilege, within a short period, the Fund may
have to sell portfolio securities that it would
otherwise have held, thus incurring additional
transactional costs. Increased use of the
exchange privilege may also result in periodic
large inflows of money. If this occurs, it is
each Fund's general policy to initially invest 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 also delay issuing shares 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 your
request for exchange is received in proper form.
See "Buying, Redeeming, and Exchanging Shares" in
the Prospectus.
ADDITIONAL INFORMATION ON SALES CHARGES. Unless
otherwise described in the Prospectus, the
offering price of each Fund's shares is based on
that Fund's NAV per share, plus an initial sales
charge that is paid to Monument Distributors. See
"Public Offering Price," "Redemption Price,"
"Buying Fund Shares", and "Net Asset Value" in
the Prospectus.
Initial sales charges do not apply to certain
share classes, classes of persons, or
transactions, as described in the Prospectus. A
sales charge may be waived because a transaction
involves a different level of expense than the
sale of Fund shares to the general public. See
"Waiver of Sales Charge" in the Prospectus. 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.
CONVERSION OF CLASS B SHARES TO CLASS A SHARES.
Class B Shares of the Fund will automatically
convert to Class A Shares of the respective Fund,
based on the relative net asset values per share
of the aforementioned classes, eight years after
the end of the calendar month in which your Class
B share order was accepted. For the purpose of
calculating the holding period required for
conversion of Class B Shares, order acceptance
shall mean: (1) the date on which such Class B
Shares were issued, or (2) for Class B Shares
obtained through an exchange, or a series of
exchanges, (subject to the exchange privileges
for Class B Shares) the date on which the
original Class B Shares were issued. For
purposes of conversion of Class B Shares, Class B
Shares purchased through the reinvestment of
dividends and capital gain distribution paid in
respect of Class B Shares, Class B Shares will be
held in a separate sub-account. Each time any
Class B Shares in the shareholder's regular
account (other than those shares in the sub-
account) convert to Class A shares, a pro rata
portion of the Class B Shares in the sub-account
will also convert to Class A Shares. The portion
will be determined by the ratio that the
shareholder's Class B Shares converting to Class
A Shares bears to the shareholder's total Class B
Shares not acquired through the reinvestment of
dividends and capital gain distributions. The
conversion of Class B to Class A is not a taxable
event for federal income tax purposes.
WHETHER A CONTINGENT DEFERRED SALES CHARGE
APPLIES. In determining whether a CDSC is
applicable to a redemption, the calculation will
be made in a manner that results in the lowest
possible rate. It will be assumed that the
redemption is made first of amounts representing
(1) shares acquired by reinvestment of dividends
and capital gains distributions, (2) shares held
for over six years, and (3) shares held the
longest during the six-year period.
GENERAL INFORMATION. We will consider dividend
and capital gain distribution 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.
Your account may be classified as "lost" if first
class mailings are returned twice within 30 days
as "undeliverable" and the Postal Service is
unable to provide any forwarding information. In
that event the Fund's transfer agent, at no cost
to you will make at least two searches against
national data bases to attempt to determine your
current address. If we are then still unable to
determine your current mailing address, we may
deduct from your account the cost of our efforts
to find you, as, for example, 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.
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 on 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.
In most cases, 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 values used in computing the
net asset value of each Fund is determined as of
those times. Occasionally, events which affect
the values of these securities occur between the
times they are determined and the scheduled close
of the Exchange and are therefore not 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 Trustees
or their designees.
Securities for which market quotations are
readily available are valued at the current
market price, which may be obtained from a
pricing service. In this case, the security's is
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 by procedures
approved by the Board of Trustees. With the
Board's approval, a Fund may utilize a pricing
service to perform any of the above described
functions.
ADDITIONAL INFORMATION ON DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. You may receive two types of
distributions from a Fund:
1. Income dividends. Each Fund receives
income in the form of dividends, interest, and
other investment-derived income. The total
income, less expenses incurred in the Fund's
operation, 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 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 be
made annually in December, and reflect any net
short-term and net long-term capital gains
realized by the Fund as of October 31 of the
current fiscal year as well as any undistributed
capital gains from the prior fiscal year. Each
Fund may make more than one capital gain
distribution in any year or adjust the timing of
these distributions for operational or other
reasons.
TAXES. Each Fund has elected to be treated as a
regulated investment company under Subchapter M
of the Code. The Board of Trustees reserves the
right to alter a Fund's qualified status as a
regulated investment company if this is deemed
more beneficial to the shareholders. If the
Board elected to take such action, that
individual Fund would be subject to federal and
possibly state corporate taxes on its taxable
income and gains. In either case, distributions
to shareholders are taxable to the extent of the
Fund's available earnings and profits.
In addition 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 stock which is not debt-
financed by the Fund and is held for a minimum
period) is less than 100% of its distributable
income, then the amount of income dividends paid
to corporate shareholders which is eligible for
such deduction may not exceed the aggregate
amount of 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 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 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 the 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 may also 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 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, may be included in the tax base on
which the alternative minimum tax is computed.
Under certain circumstances, this may also result
in a reduction in the shareholder's tax basis in
its Fund shares, 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).
These amounts must be distributed to you by
December 31 of each year in order to avoid the
imposition of a federal excise tax. For tax
purposes, under these rules those capital gain
distributions that are declared in October,
November, or December but for operational reasons
may not be paid to you until the following
January, will be treated 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 any
such capital gain distributions in December and
to pay them in either December or January in
order to avoid the imposition of this tax. Each
Fund does not guarantee, however, that its
capital gain distributions will be sufficient to
avoid any or all federal excise taxes.
Redemptions of a Fund's shares and exchanges of
shares of one Fund for those of another may
result in a gain or loss for federal and state
income tax purposes. For most shareholders, gain
or loss will be 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. 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 a 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 earned through a
Fund's investment in stock or securities, as well
as options or futures based on those stocks or
securities, is considered qualifying income for
purposes of this 90% limitation.
The Funds may be subject to foreign withholding
taxes or other foreign taxes on income (including
capital gains) on certain of its foreign
investments, thus reducing the return on those
investments. In any year in which a Fund
qualifies, it may elect to allow certain
shareholders to take a credit or a deduction for
their shares of qualified foreign taxes paid by
the Fund in their gross income total. Each
shareholder would then include in his or her
gross income (in addition to dividends actually
received) his or her share of the amount of
qualified foreign taxes paid by the Fund. If
this election is made, the Fund will notify its
shareholders annually as to their share of the
amount of qualified foreign taxes paid and the
foreign source income of the 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:
P(l+T)n = 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 reflect
the deduction of a maximum front-end sales
charge, where applicable, from the hypothetical
initial $1,000 purchase, and the reinvestment of
income dividends and capital gain distributions
at net asset value. In calculating the ending
redeemable value for Class A Shares and assuming
complete redemption at the end of the applicable
period, the maximum 5.75% sales charge is
deducted from the initial $1,000 payment and, for
Class B Shares, the applicable CDSC imposed upon
redemption of Class B Shares held for the period
is deducted. For Class C Shares the maximum 1%
front-end sales charge is deducted. The
calculations do not reflect the deduction for the
Rule 12b-1 fee until such charge is actually
assessed. Each Fund may also show average annual
total return calculations.
CUMULATIVE TOTAL RETURN. Each Fund may also
quote its cumulative total return in
advertisements and sales literature. Each Fund
computes cumulative total return in a manner
similar to that used 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.
The Funds calculate cumulative total return
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 also reflect
the deduction of a 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 do 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, performance rankings, averages and other
information prepared by recognized mutual fund
statistical services. 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.
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
Ibbotson 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.
FINANCIAL INFORMATION
Financial Highlights, Statements and Reports of
Independent Accountants. You can receive free
copies of reports, request other information and
discuss your questions about the Funds by
contacting the Funds directly at:
The Monument Funds Group, Inc.
7201 Wisconsin Avenue, Suite 650
Bethesda, Maryland 20814
The books of each Fund will be audited at least
once each year by Deloitte & Touche LLP, of
Princeton, New Jersey.
The Fund's audited financial statements and
associated notes for the year ended October 31,
1999, and the unqualified report of Deloitte &
Touche LLP on the financial statements (the
"Report"), are incorporated by reference into
this SAI and are included in the Fund's 1999
annual report to shareholders (the "Annual
Report"). An investor may obtain a copy of the
Annual Report free of charge by writing to the
Fund or calling 1-888- 420-9950.
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