ANNUAL REPORT TO SHAREHOLDERS
MONUMENT FUNDS GROUP, INC.
MONUMENT SERIES FUND, INC.
MONUMENT INTERNET FUND
MONUMENT MEDICAL SCIENCES FUND
MONUMENT TELECOMMUNICATIONS FUND
For the Period Ended
October 31, 1999
<PAGE>
MONUMENT
FUNDS GROUP, INC.
Monument Series Fund, Inc.
7920 Norfolk Ave., Suite 500
Bethesda, MD 20814
888-420-9950
November 23, 1999
To our Shareholders:
This has been another excellent year at the Monument Series fund, Inc. Our
flagship fund, the Monument Internet Fund, completed its first year of
operations on November 3, 1999. Since its inception on November 4, 1998, the
Fund's Class A Shares returned 185.53% through October 31, 1999.
During the year we changed the investment strategy of our Monument
Washington Regional Growth Fund and Monument Washington Regional Aggressive
Growth Fund to better reflect the investment opportunities we saw for the
future. Accordingly, effective May 4, 1999, the Monument Washington Regional
Growth Fund became the Monument Medical Sciences Fund. On October 1, 1999, the
Monument Washington Aggressive Growth Fund became the Monument
Telecommunications Fund. We also substantially increased our research and
professional staff.
There are fundamental changes taking place in the world economies. These
changes will dramatically alter how profits are distributed among different
types of companies. Our investment strategy is to invest in these New Economy
companies. Because of this strategy, we believe our portfolios have the
potential to perform very well in the marketplace.
We believe that telecommunications, the Internet, and medical sciences are
vital components of the New World Economy. The future looks highly encouraging.
We appreciate your confidence and we will continue to work diligently on
your behalf.
Than you.
Davis A. Kugler
President
"Past performance does not guarantee future results. Performance returns reflect
the deduction of a maximum sales charge of 4.75%. The investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost."
<PAGE>
MONUMENT INTERNET FUND
The Internet Economy has continued to out-perform even the most optimistic
forecasts.
According to the latest study by researchers at the University of Texas,
the Internet Economy grew from 64 billion in the first three quarters of 1998,
to 108 billion during 1999, an increase of 68 percent.1 With its universal
availability and always-on characteristics, the Internet has quickly become the
most cost efficient information exchange and communications medium, distribution
platform, and the preferred carrier of business transactions. These are major
components of the U.S. economy and world commerce. While there can be no
guarantee that this development will necessarily translate into positive fund
performance, the impact of these changes should not be underestimated.
According to several forecasts recently released by media consultants IDC
and Media Metrix, there will be 180 - 200 million people worldwide joining the
rank of Internet consumers by the end of 1999; of these, about 105 million will
be in the United States. It is projected that by the end of 2003 the number of
Internet users worldwide will swell to 500 million, of which 165 million will be
in the United States.2
FISCAL YEAR 1999
The stunning growth of the Internet has caught the attention of investors,
many of whom are already Internet users. The attention began after several
initial public offerings of Internet companies met with unprecedented success in
the autumn of 1998. With only a limited supply of Internet shares available in
the market in early 1999, a sudden increase of demand quickly inflated share
prices and market volatility at rates much faster than the underlying growth off
the Internet Economy.
Seasonality and profit taking were perhaps the most important contributors
to the drop in share prices during early April to late August. But by earl
autumn, investors again focused their attention on the tremendous revenue and
market share growth of well-known Internet companies, and share prices responded
accordingly.
FISCAL YEAR 2000 OUTLOOK
Although the Internet Economy is growing at an unprecedented rate, the
Internet Economy and most of its members are still very young. Therefore, we
continue to expect high volatility for the foreseeable future.
Many technologies will emerge to improve the availability of high speed
Internet access. High speed and always-on access to the Internet provides a
vastly improved user experience when compared with what was previously
available. This improved user experience drives growth, utilization, and the
demand for new, high profit margin products and services.
In the near future, high speed Internet access will expand to wireless
telephones. Several vendors already sell first generation wireless phones with
Internet access and the response from customers has been tremendous. This is
leading to developments that in time will make the Internet truly ubiquitous.
Sun MicroSystems' new slogan: "anytime, anywhere, and device" appears to be the
emerging reality for the next five years.
Beyond all these wonderful developments, Corporate America, as well as
companies from around the world are realizing the business opportunities of the
Internet. One after another, large corporations are being forced to study the
implications of the New Internet Economy on their existing businesses. No matter
what Corporate America's response is, it is now clear that consumers worldwide
will be the major beneficiaries of the Internet.
Alexander C. Cheung, CFA
Senior Portfolio Manager
MONUMENT TELECOMMUNICATIONS FUND
In October of this year your Fund changed its investment strategy to
telecommunications.
The telecommunications industry was one of the best performing segments of
the stock market over the past year. The industry is experiencing very rapid
growth as companies endeavor to make the goal of "communications anytime,
anywhere, any device" a reality. New technological developments in fiber optics
and wireless communications, as well as traditional cable and wireline, are
greatly increasing the amount of available bandwidth. In order to provide this
bandwidth, carriers are spending aggressively to upgrade their networks. Capital
spending by telecommunications carriers - both established companies as well as
new entrants - is projected to increase more than significantly from 1998
levels.
This increase in available bandwidth is allowing the rollout of a variety
of exciting broadband systems. Broadband is defined as high speed Internet
access -- often coupled with advanced voice and video services. The Chairman of
the FCC has publicly stated that he wants each home in the U.S. to have a t
least one available broadband entrance ramp to the Internet by the end of his
term. 3 Widespread broadband access will allow a multitude of new Internet
applications to flourish. Our Fund has positioned itself to take advantage of
this deployment of broadband through a variety of investments including
equipment companies such as Com21 and Nortel Networks, as well as carriers such
as AT&T and Qwest Communications.
One of the other major exciting developments in telecommunications over the
past year has been the continued growth of wireless communications. Total
wireless usage soared as penetration rtes rose and costs per minute declined. In
addition, the development of pre-paid wireless plans expanded the reach of
wireless to groups who had previously been left out. Despite the growth of the
past few years, the United States still lags far behind Europe in terms of
penetration rates, while the emerging economies of Asia and Latin America
provide excellent growth opportunities. New technology will be available over
the next several years that will allow high-speed access to the Internet and
other data services using wireless devices such as cellular phones and Personal
Digital Assistants (PDAs). As with broadband, our Fund has taken positions in
both equipment companies such as Nokia and Motorola, as well as carriers such as
Vodafone and Airtouch.
The Monument Telecommunications Fund generated a 12-month return of 50.79%
through September 30, 1999. Since inception on January 2, 1998, the Fund
returned 53.81% through September 30, 1999. Despite the strong performance of
the Fund over the past year, we caution shareholders that we expect the Fund to
be volatile and encourage you to maintain a long-term investment horizon.
J. Michael Gallipo. CFA
Portfolio Manager
MONUMENT MEDICAL SCIENCES FUND
In May this year your fund changed its investment strategy to medical
sciences.
In recent years the healthcare system has undergone significant changes.
Rising healthcare costs and the control of healthcare delivery and entitlements
have sparked heated debates and legislative initiatives. This creates
opportunities for innovative solutions. We see numerous reasons to be optimistic
about the future prospects for our Fund:
(1) We expect that medical sciences and technologies will be a leading
investment sector for the next 25 years. Demographic changes, rising life
expectancy, enhanced drug efficacy, increased treatment options, and cost
containment efforts will raise the importance of medical sciences in
everyone's life.
(2) It is estimated that between now and the year 2025 the percentage of the
U.S. population 65 years of age or older will increase from approximately
35 million to 62 million persons. Further, it is estimated that life
expectancy of males will rise from 71.8 years to 77.9 years, and female's
life expectancy will rise from 78.2 to 84.2 years.4
(3) The medical research and development community is trying to bring to market
more than 136 medicines or vaccines to treat infectious diseases; more than
100 medicines to combat heart disease and stroke; 85 medicines to treat
mental illness; and 113 medicines to combat AIDS.5
(4) Cost consciousness will drive healthcare providers to adopt more advanced
technologies and more cost efficient delivery systems. The Internet has
heightened consumers' awareness and will continue to enhance the healthcare
choices available to them. Clearly, a larger proportion of healthcare,
expenditures will shift to drugs and medical devices that offer better cost
to outcome ratios.
(5) Advances in medical science, especially the human genome project, will
produce new cost-effective treatments based on protein and gene therapies.
Exciting new drugs will address diseases that previously had no treatment.
Additionally, new treatments will be created enhancing the quality of our
lives; we believe that healthcare consumers will gladly spend their own
discretionary monies on those treatments considered to be desirable.
(6) Maturing of the biotechnology sector has substantially increased the
pipeline of novel and promising new drugs. Small and medium sized companies
developed many of these promising new drugs, and for these companies the
market success of a new drug or treatment can have a dramatic impact on the
performance of the company's stock.
The Monument Medical Sciences Fund has returned a 12-month return of 54.62%
through September 30, 1999. Since commencement of operations of January 2,
1998 the fund has returned 51.89% through September 30, 1999.
OUTLOOK
We believe that by this time next year the human genome will likely be
completely mapped. In time, it will revolutionize medicine, not only in drug
design, but also in treatment delivery. Other exciting developments include a
more rational drug design process and rapid screening tools such as gene, gene
chips and bioinformatics. These advances will further shorten the development
cycle of new drugs and thus lower costs.
In the near future, healthcare costs will continue to increase above
inflation as healthcare providers, payers and payees settle on an acceptable
price to quality trade-off. While physicians have regained some control over the
course of treatment they deem appropriate to their patients, healthcare premiums
will be adjusted upward, albeit at rates far lower than what we experienced in
the 1970s and 1980s.
As the big pharmaceutical companies settle in their relative positions
among their competitors, they will have to invest more money to strengthen their
product pipelines, particularly in emerging biotechnology companies. Hence we
expect that merger and acquisition, alliance, and partnership activities between
the big pharmaceutical companies and the biotechnology companies will rise
rapidly for the next several years. While there cannot be any guarantee, and
past performance is not indicative of future results, we believe that the
conditions in the industry will favorable impact the performance of the
investment in our funds.
Alexander C. Cheung, CFA
Senior Portfolio Manager
<PAGE>
1 University of Texas/Cisco Study, www.cisco.com
2 International Data Group website www.idc.com, 1999.
3 Address of William E. Kenmard, Chairman, FCC before the Western Show,
California Cable Television association, Los Angeles, CA, December 16,
1999.
4 U.S. Bureau of the Census website www.census.gov, December, 1999
5 Pharmaceutical Research $ Manufacturers of America website
www.phma.org.surveys, January to August, 1999.
<PAGE>
[graph goes here]
Monument Internet Fund
Class A Shares
S&P Inter@ctive Wk Internet Fund
--- -------------- -------------
11/16/98 10,000 10,000 9,525
10/31/99 11,999 24,355 29,980
[end graph]
Past performance is not predictive of future performance. Performance
figures include deduction of the maximum applicable sales charge of 4.75%.
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 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, 1999. Effective on March 22, 1999, there was a 3:1 split of the
index.
Average Annual Return for the period ended October 31, 1999
since inception November 16, 1998 185.53%
<PAGE>
[graph goes here]
Monument Internet Fund
Class B Shares
S&P Inter@active Internet Fund
--- ------------- -------------
10/6/99 10,000 10,000 10,000
10/31/99 10,283 10,264 11,052
[end graph]
Past performance is not predictive of future performance.
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 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, 1999. Effective on March 22, 1999, there was a 3:1 split of the
index.
Average Annual Return for the period ended October 31, 1999
since inception October 6, 1999 10.55%
<PAGE>
MONUMENT INTERNET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October
31, 1999
Number
of Market
Shares Security Value
Description
- -------- ---------------- -----------
Common Stock: 92.15%
Access: 10.55%
17,500 At Home Corp* $
654,063
24,000 CAIS Internet
Inc.* 285,000
16,000 Covad Communications
Group* 768,000
13,200 Globix
Corporation* 475,200
6,000 MCI Worldcom*
514,875
20,000 Mindspring Enterprises
Inc.* 513,750
20,012 Pacific
Internet* 625,375
24,000 PSINet Inc.*
864,000
25,000 Qwest Communications
Intl.* 900,000
19,000 Verio Inc.*
708,938
15,000 Winstar Communications
Inc.* 582,188
-----------
6,891,389
-----------
E-Commerce: 10.95%
20,000 Amazon.com
Inc.* 1,412,500
21,000 AmeriTrade
Hldg Corp* 341,250
8,000 Commerce One
Inc.* 1,370,000
15,000 Earthweb Inc.*
466,875
17,000 E*Trade Group
Inc.* 404,812
5,000 eBay Inc.*
675,625
12,000 Net@Bank Inc.*
265,500
21,000 Schwab
(Charles) Corp 817,688
15,000 Telebanc Financial
Corporation* 360,000
13,000 UBID Inc.*
476,125
32,000 Wit Capital
Group Inc.* 562,000
-----------
7,152,375
-----------
-----------
Hub/Virtual 11.72%
Community:
19,000 America Online*
2,464,062
10,000 Cnet
Inc.* 471,875
11,000 Ivillage Inc.*
281,188
10,200 Lycos, Inc.*
545,700
22,000 VerticalNet
Inc.* 1,232,000
13,000 Xoom.com Inc.*
812,500
10,300 Yahoo Inc.*
1,844,344
-----------
-----------
7,651,669
-----------
Infrastructure: 18.60%
25,000 Aware, Inc.*
795,312
9,500 Broadcom Corp*
1,214,219
20,000 Checkfree
Holdings Corp* 747,500
19,200 Cisco Systems
Inc.* 1,420,800
12,500 Clarent Corp*
1,185,938
31,100 Entrust
Technologies* 781,387
20,000 Intel Corp.
1,548,750
8,000 Network
Solutions A* 948,000
20,000 Nortel $
Networks Corp. 1,238,750
31,000 USInternetworking
Inc.* 1,032,688
10,000 Verisign Inc.*
1,235,000
-----------
-----------
12,148,344
-----------
Internet 23.10%
Technology:
15,000 Allaire Corp.*
1,094,062
20,000 Artificial
Life, Inc.* 302,500
33,000 Broadvision
Inc.* 2,409,000
41,500 Commtouch
Software Ltd* 1,198,312
10,000 Inktomi Corp.*
1,014,375
15,000 Liquid Audio*
528,750
20,000 Microsoft
Corp.* 1,851,250
19,000 Real Networks
Inc.* 2,084,062
34,500 Security First
Technologies* 1,386,469
19,200 Sun
Microsystems 2,031,600
Inc.*
7,500 Vignette
Corporation* 1,185,000
-----------
-----------
15,085,380
-----------
Media/Content: 5.13%
35,000 DRKOOP.com
Inc.* 437,500
18,500 Healtheon
Corporation* 610,500
28,000 Infoseek Corp.*
887,250
16,500 Infospace.com
Inc.* 917,812
24,500 Internet.com
Corp.* 490,000
-----------
3,343,062
-----------
Services: 12.10%
20,000 24/7 Media
Inc.* 863,750
22,000 CMG
Information 2,407,625
Services*
13,000 Doubleclick
Inc.* 1,820,000
12,100 Proxicom Inc.*
928,675
30,000 US Web Corp*
1,162,500
33,700 Xceed Inc.*
716,125
-----------
-----------
7,898,675
-----------
Total Common
Stock: 60,170,894
-----------
(Cost:$52,101,953)
Short-term 6.76%
Short Investments:
Term
Investments
4,416,646 Star Treasury
Fund 4,416,646
-----------
(Cost:$4,416,646)
Total
Investments:
(Cost:$56,518,599) 98.91% $64,587,540
Other assets, net 1.09% 709,648
-----------
Net Assets 100.00% $65,297,188
======================
* Non-income producing
** Cost for Federal income tax purposes is $56,518,599 and net unrealized
appreciation consists of:
Gross unrealized
appreciation $13,150,504
Gross unrealized
depreciation (5,081,563)
-----------
Net unrealized
appreciation $ 8,068,941
===========
See Notes to Financial Statements
<PAGE>
MONUMENT INTERNET FUND
Statement of Assets and Liabilities
October 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments at value
(identified
cost of $56,518,599)(Notes 1 & 3) $64,587,540
Capital stock sold 1,734,138
Securities sold 428,840
Interest receivable 15,304
Prepaid expenses 9,724
-----------
TOTAL ASSETS 66,775,546
-----------
LIABILITIES
Investments purchased $1,310,289
Investment management fees 47,463
12b-1 fees Class A shares 21,007
12b-1 fees Class B shares 553
Accrued administration expenses 11,903
Accrued expenses 87,143
-------
TOTAL LIABILITIES 1,478,358
-----------
NET ASSETS $ 65,297,188
===========
Class A Shares
Net assets (2,126,190 shares outstanding) 63,744,908
===========
Net asset value and redemption price
per share $63,744,908/2,126,190 shares
outstanding) $ 29.98
===========
Offering price per share ($29.98 x
100/95.25) $ 31.48
===========
Class B Shares
Net assets (51,834 shares outstanding)
$ 1,552,280
===========
Net asset value and offering price per Class B Share
($1,552,280/51,834 shares outstanding)
$ 29.95
===========
Redemption price per share
($29.95 x .95) $ 28.45
===========
Net assets consist of:
Paid in capital $57,267,933
Accumulated undistributed
realized loss on investments (39,686)
Net unrealized appreciation on
investments 8,068,941
-----------
Net Assets $ 65,297,188
===========
See Notes to Financial Statements
<PAGE>
MONUMENT INTERNET FUND
Statement of Operations
Period ended October 31, 1999 *
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 88,526
Dividends 1,048
----------
Total investment income $ 89,574
----------
EXPENSES
Investment management fees
283,039
12b-1 fee - Class A shares 141,694
12b-1 fee - Class B shares 553
Recordkeeping and administrative services 57,749
Custodian and accounting fees 37,228
Registration fees 29,436
Transfer agent fees 97,519
Legal and audit fees 101,562
Miscellaneous 38,501
------------
Total expenses 787,281
-----------
Net investment loss (697,707)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss on investments (39,686)
Net change in unrealized appreciation on 8,068,941
investments ----------
Net gain on investments 8,029,255
----------
Net increase in net assets
resulting from operations
$ 7,331,548
==========
*Commencement of operations November 16, 1998 for A shares and October 6, 1999
for B shares.
See Notes to Financial Statements
<PAGE>
MONUMENT INTERNET FUND
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
Period ended
October 31, *
1999
-------------
OPERATIONS
Net investment loss $ (697,707)
Net realized loss on investments (39,686)
Net change in unrealized appreciation of 8,068,941
investments -------------
Net increase in net assets resulting from 7,331,548
operations
CAPITAL SHARE TRANSACTIONS
Net increase in net assets
resulting from capital
share transactions** 57,965,640
-------------
Net increase in net assets 65,297,188
Net assets at beginning of period
-
-------------
NET ASSETS at the end of period $ 65,297,188
=============
**A summary of capital share transactions follows:
Period ended
October 31, 1999*
-------------------------
A Shares Shares Value
-------------------------
Shares sold 2,793,649 $73,316,704
Shares reinvested from distributions
- -
Shares redeemed (667,459) (16,837,026)
-------------------------
Net increase 2,126,190 $56,479,678
=========================
-------------------------
B Shares Shares Value
-------------------------
Shares sold 51,834 $ 1,485,962
Shares reinvested from distributions - -
Shares redeemed - -
-------------------------
Net increase 51,834 $ 1,485,962
=========================
*Commencement of operations November 16, 1998 for A shares and October 6, 1999
for B shares.
See Notes to Financial Statements
<PAGE>
MONUMENT INTERNET FUND
Financial Highlights
For a Share Outstanding Throughout The Period
- --------------------------------------------------------------------------------
Class A Class B
Shares Shares
Period Period
ended ended
October * October *
31, 1999 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 19.98 2.86
operations
--------- ------------
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.
See Notes to Financial Statements
<PAGE>
Monument Internet Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1-SIGNIFICANT ACCOUNTING POLICIES- Monument Internet Fund (the "Internet
Fund") is a series of Monument Series Fund, Inc. ("MSF") which is
registered under the Investment Company Act of 1940, as amended, as a
non-diversified open-end management company. The Fund was established on
November 16, 1998 as a series of MSF which has allocated 750,000,000 shares
of its 2,000,000,000 shares of $.001 par value common stock. Prior to
October 5, 1999, the fund added Class B shares which have a contingent
deferred sales charge ("CDSC"). Each class is also subject to different
12b-1 Plan expenses.
The following is a summary of significant accounting policies followed by
the Internet Fund. The policies are in conformity with generally accepted
accounting principles.
A. Use of Estimates- The process of preparing financial statements in
conformity with generally accepted accounting principles require management
to make estimates and assumptions that affect the reported amount of assets
and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements, as well as the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from these estimates.
B. Investment Valuation- Equity securities listed on an established
securities exchange or on the NASDAQ National Market System are valued at
their last sale price on the exchange where primarily traded or, if there
is no reported sale, at the mean between the closing bid and asked price on
that day. Over-the-counter portfolio securities are valued at the mean
between the last bid and asked prices based upon quotes furnished by market
markers for such securities. Exchange listed convertible debt securities
are valued at the mean between the last bid and asked prices obtained from
broker-dealers or a comparable alternative, such as Bloomberg or Telerate.
Other securities for which market quotes are readily available are valued
at the current market price, which may be obtained from a pricing service.
Securities and other assets for which market prices are not readily
available are valued at fair value as determined following procedures
approved by the Board of Directors.
C. Investment Transactions- All securities are recorded on a trade date
basis. Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Realized gains and losses on sales
of securities are determined on the basis of identified cost.
D. Federal Income Taxes- The Internet Fund is treated as a separate entity
for Federal tax purposes. The Internet Fund intends to qualify each year as
a regulated investment company under Subchapter M of the Internal Revenue
Code, as amended. By so qualifying, the Internet Fund will not be subject
to Federal income taxes to the extent that it distributes all taxable
income, including realized capital gains. In addition, by distributing
during each calendar year substantially all net investment income, capital
gains and certain other amounts, if any, the Internet Fund will not be
subject to a Federal income excise tax.
E. Dividends and Distributions to Shareholders- The Internet Fund intends
to pay an annual dividend to shareholders of record representing its entire
net investment income and to distribute all of its realized net capital
gains at least annually. Distributions are recorded on the ex-dividend
date. Income distributions and capital gains distributions are determined
in accordance with Federal income tax regulations, which may differ from
generally accepted accounting principles.
Note 2-INVESTMENT MANAGEMENT AND DISTRIBUTION AGREEMENTS- Monument Advisors,
Ltd. ("Monument Advisors"), a wholly-owned subsidiary of the Monument
Group, Inc. has been retained under an Investment Advisory Agreement (the
"Advisory Agreement") to supervise the management and the investment
program of the Internet Fund. As full compensation for its services under
the Agreement, the Internet Fund will pay the Advisor a monthly fee, equal
to an annualized rate of 1.00% of the monthly average net assets through
$50 million in net assets; 0.75% of the monthly average net assets greater
than $50 million through $100 million in net assets; and 0.625% of the
average monthly net assets exceeding $100 million in net assets.
The Internet Fund has adopted a plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, whereby the Internet Fund or
Monument Distributors, Inc. ("Monument Distributors") may finance
activities which are primarily intended to result in the sale of the
Internet Fund's shares, including, but not limited to, advertising,
printing of prospectuses and reports for other than existing shareholders,
preparation and distribution of advertising materials and sales literature,
and payments to dealers and shareholders servicing agents who enter into
agreements with the Internet Fund or Monument Distributors. The Internet
Fund may incur such distribution expenses at the rate of .50% for its Class
A Shares and 1% for its Class B Shares per annum on each class's average
net assets. For the period ended October 31, 1999 the Internet Fund paid
$141,694 for its Class A Shares and $553 for its Class B Shares for such
expenses.
Note 3--SOFT DOLLAR ARRANGEMENTS- In January 1999, Monument Advisors
entered into a soft dollar arrangement with a broker-dealer who makes a
market in many of the securities in the Fund's portfolio. Under this
arrangement, Monument Advisors received equipment, conferencing, and trade
journals. For the year ended October 31, 1999, the value of these
arrangements was $23,044.
Note 4--INVESTMENTS- Purchases and sales of securities for the Internet Fund,
other than short-term investments aggregated $84,437,703 and $32,296,065
respectively.
<PAGE>
[graph goes here]
Monument Medical Sciences Fund
Class A Shares
S&P Russell 2000 Medical Sciences Fund
---- ------------ ----------------------
1/6/98 10,000 10,000 9,525
10/31/98 11,367 8,731 10,320
10/31/99 14,101 9,897 16,080
[end graph]
Past performance is not predictive of future performance. Performance
figures include deduction of the maximum applicable sales charge of 4.75%.
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 300 total
market capitalization.
Average Annual Return for the year ended October 31, 1999 56.11%
Average Annual Total Return for the period
Ended October 31, 1999 since inception January 6, 1998 61.38%
<PAGE>
[graph goes here]
Monument Medical Sciences Fund
Class B Shares
S&P Russell 2000 Medical Sciences Fund
--- ------------ ---------------------
10/12/99 10,000 10,000 10,000
10/31/99 10,380 10,093 9,504
[end graph]
Past performance is not predictive of future performance.
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 300 total
market capitalization.
Average Annual Total Return for
the period ended October 31, 1999 since
inception October 12, 1999 (4.98)%
<PAGE>
MONUMENT MEDICAL SCIENCES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1999
Number
of Market
Shares Security Value
Description
- ------- ----------------- ---------
Common Stock: 81.48%
Agricultural 2.44%
Biotech:
300 Du Pont De
Nemours $19,331
400 Monsanto Co. 15,400
---------
34,731
---------
Biologics: 40.24%
800 Alkermes Inc.* 28,250
600 Amgen Inc.* 47,850
1,500 Biochem Pharma Inc.* 30,844
600 Biogen Inc.* 44,475
3,000 Biomarin Pharmaceutical
Inc.* 46,125
1,500 Chiron Corp.* 42,844
1,000 COR Therapeutics Inc.* 20,187
1,000 Coulter Pharmacetical Inc.* 17,000
800 Duramed Pharmaceticals Inc.* 6,650
500 Genzyme Corp.* 19,125
600 Gilead Sciences Inc.* 37,912
400 IDEC Pharmaceticals Corp.* 46,475
400 Immunex Corp.* 25,200
800 Inhale Therapeutic Sys
Inc.* 22,050
400 Medimmune Inc.* 44,800
1,100 Protein Design
Labs Inc.* 44,069
500 QLT Phototherapeutics
Inc.* 21,188
1,000 Vertex Pharmaceticals
Inc.* 28,625
---------
573,669
---------
Diagnostics: 2.10%
1,200 Invitrogen Corp.* 30,000
---------
Genetics: 12.05%
500 Affymetrix Inc.* 44,063
600 Human Genome Sciences
Inc.* 52,425
1,000 Incyte Pharmaceuticals
Inc.* 19,250
800 Millennium
Pharmaceuticals* 56,100
---------
171,838
---------
Medical Devices: 8.40%
1,000 Guidant Corp. 49,375
1,400 Medtronic Inc. 48,475
800 St Jude Medical Inc. 21,900
---------
119,750
---------
Medical 1.76%
Information
Systems:
500 Medical Manager
Corporation* 25,063
---------
Pharmaceuticals: 14.49%
500 Abbott
Laboratories 20,187
600 Astrazeneca PLC ADR 27,450
600 Elan Corp PLC ADR* 15,450
300 Glaxo Wellcome PLC ADR 17,963
300 Lilly (Eli) & Co. 20,662
300 Merck & Co., Inc. 23,869
600 Pfizer Inc. 23,700
400 Sepracor Inc.* 33,275
300 Warner-Lambert Co. 23,944
---------
206,500
---------
Total Common
Stock: 1,161,551
---------
(Cost:$1,062,356)
Short-term 19.28%
Short Investments:
Term
Investments:
274,901 Star Treasury Fund $ 274,901
---------
(Cost:$274,901)
Total Investments:
(Cost:$1,337,257) 100.77% $1,436,452
Other assets, net (0.77%) (10,919)
-------- ----------
Net Assets 100.00% $1,425,533
========= ==========
* Non-income producing
** Cost for Federal income tax purposes is $1,337,257 and net unrealized
appreciation consists of:
Gross unrealized appreciation $155,676
Gross unrealized depreciation (56,481)
---------
Net unrealized appreciation $ 99,195
=========
ADR-Security represented is held by the custodian bank in the form of American
Depository Receipt.
See Notes to Financial Statements
<PAGE>
MONUMENT MEDICAL SCIENCES FUND
Statement of Assets and Liabilities
October 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments at value
(identified cost of $1,337,257)(Notes 1 &3) $ 1,436,452
Receivables
Dividend $ 247
Interest 686
---------
933
Securities sold 30,900
Prepaid expenses 9,031
Due from manager 3,014
Deferred organization costs (Note 1) 57,234
-----------
TOTAL ASSETS 1,537,564
-----------
LIABILITIES
12b-1 fees -
Class B Shares(Note 2) 11
Accrued expenses 6,027
Securities purchased 105,993
---------
TOTAL LIABILITIES 112,031
-----------
NET ASSETS $ 1,425,533
===========
Class A Shares
Net assets (86,920 shares outstanding) $ 1,400,504
===========
Net asset value and redemption price per Class A
Share ($1,400,504 /86,920 shares outstanding) $ 16.11
===========
Offering price per share ($16.11 x 100/95.25) $ 16.92
===========
Class B Shares
Net assets (1,554 shares outstanding) $ 25,029
===========
Net asset value and offering price per Class B Share
($25,029/1,554 shares outstanding) $ 16.11
===========
Redemption price per share ($16.68 x .95) $ 15.30
===========
Net assets consist of:
Paid in capital $ 1,265,513
Accumulated net investment income loss (5,218)
Accumulated undistributed realized
gain on investments 66,043
Net unrealized appreciation 99,195
-----------
Net Assets $ 1,425,533
===========
See Notes to Financial Statements
<PAGE>
MONUMENT MEDICAL SCIENCES FUND
Statement of Operations
Year ended October 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 1,738
Interest 3,504
-------------
Total income $ 5,242
EXPENSES
Investment management fees
(Note 2) 6,009
12b-1 fee -
Class A (Note 2) 2,803
12b-1 fee -
Class B (Note 2) 11
Recordkeeping and
administrative services 13,120
Legal and audit fees 11,331
Custodian and
accounting fees 14,050
Registration fees 15,043
Transfer agent fees 12,511
Organization
cost amortization 17,980
Insurance 2,613
Directors fees 3,667
Miscellaneous 1,383
-------------
Total expenses 100,521
Reimbursed expenses (Note 2) (89,294)
-----------
Expenses, net 11,227
-----------
Net investment loss (5,985)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 79,912
Net change in unrealized appreciation on investments 95,953
-----------
Net gain on investments 175,865
-----------
Net increase in net assets resulting from operations $ 169,880
===========
See Notes to Financial Statements
<PAGE>
MONUMENT MEDICAL SCIENCES FUND
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
Year ended Period ended
October 31, 1999* October 31,1998*
---------------- ----------------
OPERATIONS
Net investment income (loss) $ (5,985) $ 766
Net realized gain (loss)
on investments 79,912 (13,868)
Net change in unrealized
appreciation of investments 3,242 95,953
--------- -----------
Net increase (decrease) in net
assets resulting
from operations 169,880 (9,860)
CAPITAL SHARE TRANSACTIONS
Net increase in net assets
resulting from capital
share transactions** 1,041,204 173,809
---------- ----------
Net increase in net assets 1,211,084 163,949
Net assets at beginning of period 214,449 50,500
---------- ----------
NET ASSETS at the end of the period $ 1,425,533 $ 214,449
========== ==========
**A summary of capital share transactions follows:
Class A Shares
Period
Year ended ended
October 31, October 31,
1999 1998*
--------------------------------------
Shares Value Shares Value
--------------------------------------
Shares sold 77,108 $1,181,978 20,023 $ 220,013
Shares reinvested from dividends - - - -
Shares redeemed (10,972) (166,535) (4,290) (46,204)
-------- ---------- -------- -------
Net increase 66,136 $ 15,733 1,015,443 $ 173,809
======= ========= ========= =========
Class B Shares
Year ended
October
31, 1999*
----------------------
Shares Value
----------------------
Shares sold 1,554 $ 25,761
Shares reinvested from dividends - -
Shares redeemed - -
----------------------
Net increase 1,554 $ 25,761
======= ==========
* Commencement of operations January 6, 1998 for Class A shares and October
12,1999 for Class B shares.
See Notes to Financial Statements
<PAGE>
MONUMENT MEDICAL SCIENCES FUND
Financial Highlights
For a Share Outstanding Throughout The Period
- --------------------------------------------------------------------------------
Class A Share Class B Share
-------------------------- -------------
Period
Year ended Period ended ended
October 31, October 31, October 31,
1999 1998* 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.
See Notes to Financial Statements
<PAGE>
Monument Medical Sciences Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1-SIGNIFICANT ACCOUNTING POLICIES- Monument Medical Sciences Fund (the
"Medical Sciences Fund") (formerly the Monument Washington Regional Growth
Fund) is a series of Monument Series Fund, Inc. ("MSF") which is registered
under the Investment Company Act of 1940, as amended, as a non-diversified
open-end management company. The Medical Sciences Fund was established on
January 6, 1998 as a series of MSF which has allocated 300,000,000 shares
of its 2,000,000,000 shares of $.001 par value common stock. Prior to
October 9, 1999, the fund added Class B shares which have a contingent
deferred sales charge ("CDSC"). Each class is also subject to different
12b-1 Plan expenses.
The following is a summary of significant accounting policies followed by
the Medical Sciences Fund. The policies are in conformity with generally
accepted accounting principles.
A. Use of Estimates- The process of preparing financial statements in
conformity with generally accepted accounting principles require management
to make estimates and assumptions that affect the reported amount of assets
and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements, as well as the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from these estimates.
B. Investment Valuation- Equity securities listed on an established
securities exchange or on the NASDAQ National Market System are valued at
their last sale price on the exchange where primarily traded or, if there
is no reported sale, at the mean between the closing bid and asked price on
that day. Over-the-counter portfolio securities are valued at the mean
between the last bid and asked prices based upon quotes furnished by market
markers for such securities. Exchange listed convertible debt securities
are valued at the mean between the last bid and asked prices obtained from
broker-dealers or a comparable alternative, such as Bloomberg or Telerate.
Other securities for which market quotes are readily available are valued
at the current market price, which may be obtained from a pricing service.
Securities and other assets for which market prices are not readily
available are valued at fair value as determined following procedures
approved by the Board of Directors.
C. Investment Transactions- All securities are recorded on a trade date
basis. Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Realized gains and losses on sales
of securities are determined on the basis of identified cost.
D. Organization Expenses- All expenses incurred in connection with the
organization and initial registration have been assumed by the series of
MSF. The organizational expenses allocable to the Medical Sciences Fund are
being amortized over a period of sixty months from the date it commenced
investment operations. The Medical Sciences Fund has agreed with the
Investment Advisor that if any of the initial shares are redeemed during
the amortization period, the Medical Sciences Fund will reduce the
redemption proceeds for the then unamortized organizational expenses in the
same ratio as the number of redeemed shares bears to the number of initial
shares at the time of such redemption.
E. Federal Income Taxes- The Medical Sciences Fund is treated as a separate
entity for Federal tax purposes. The Medical Sciences Fund intends to
qualify each year as a regulated investment company under Subchapter M of
the Internal Revenue Code, as amended. By so qualifying, the Medical
Sciences Fund will not be subject to Federal income taxes to the extent
that it distributes all taxable income, including realized capital gains.
In addition, by distributing during each calendar year substantially all
net investment income, capital gains and certain other amounts, if any, the
Medical Sciences Fund will not be subject to a Federal income excise tax.
F. Dividends and Distributions to Shareholders- The Medical Sciences Fund
intends to pay an annual dividend to shareholders of record representing
its entire net investment income and to distribute all of its realized net
capital gains at least annually. Distributions are recorded on the
ex-dividend date. Income distributions and capital gains distributions are
determined in accordance with Federal income tax regulations, which may
differ from generally accepted accounting principles.
Note 2-INVESTMENT MANAGEMENT AND DISTRIBUTION AGREEMENTS- Monument Advisors,
Ltd. ("Monument Advisors"), a wholly-owned subsidiary of the Monument
Group, Inc. has been retained under an Investment Advisory Agreement (the
"Advisory Agreement") to supervise the management and the investment
program of the Medical Sciences Fund. As full compensation for its services
under the Agreement, the Medical Sciences Fund will pay the Advisor a
monthly fee, equal to an annualized rate of 1.00% of the monthly average
net assets through $50 million in net assets; 0.75% of the monthly average
net assets greater than $50 million through $100 million in net assets; and
0.625% of the average monthly net assets exceeding $100 million in net
assets.
The Medical Sciences Fund has adopted a plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended, whereby the Medical
Sciences Fund or Monument Distributors, Inc. ("Monument Distributors") may
finance activities which are primarily intended to result in the sale of
the Medical Sciences Fund's shares, including, but not limited to,
advertising, printing of prospectuses and reports for other than existing
shareholders, preparation and distribution of advertising materials and
sales literature, and payments to dealers and shareholders servicing agents
who enter into agreements with the Medical Sciences Fund or Monument
Distributors. The Medical Sciences Fund may incur such distribution
expenses at the rate of .50% for its Class A Shares and 1% for its Class B
Shares per annum on each class's average net assets. For the period ended
October 31, 1999 the Medical Sciences Fund paid $2,803 for its Class A
Shares and $11 for its Class B Shares for such expenses.
Monument Advisors has contractually agreed to waive its fees and to pay
expenses of the Medical Sciences Fund to maintain total operating expenses
to 1.90% of average daily net assets through May 1, 2001. For the period
ended October 31, 1999, expense reimbursements were $89,294.
As of October 31, 1999, Mr. David A. Kugler (controlling shareholder of
Monument Distributors) has a beneficial ownership of 1.76% of the Medical
Sciences Fund. As of that date, Mr. Kugler owned .57% of the Medical
Sciences Fund. The remainder of Mr. Kugler's beneficial ownership (1.19 %)
was due to his ownership interest in Monument Distributors. As of October
31, 1999, Monument Distributors owned 1.9% of the Medical Sciences Fund.
Note 3--SOFT DOLLAR ARRANGEMENTS- In January 1999, Monument Advisors
entered into a soft dollar arrangement with a broker-dealer who makes
a market in many of the securities in the Fund's portfolio. Under this
arrangement, Monument received equipment, conferencing, and trade journals.
For the year ended October 31, 1999, the value of these arrangements was
$23,044.
Note 4-INVESTMENTS- Purchases and sales of securities for the
Medical Sciences Fund, other than short-term investments aggregated
$1,144,126 and $337,159, respectively.
<PAGE>
[graph goes here]
Monument Telecommunications Fund
Class A Shares
S&P NASDAQ Telecomm Telecommunications Fund
--- --------------- ------------------------
1/6/98 10,000 10,000 9,525
10/31/98 11,367 12,969 10,780
10/31/99 14,101 24,143 19,970
[end graph]
Past performance is not predictive of future performance. Performance
figures include deduction of the maximum applicable sales charge of 4.75%.
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.
Average Annual Return for the year ended October 31, 1999 85.24%
Average Annual Total Return for the period Ended
October 31, 1999 since inception January 6, 1998 99.48%
<PAGE>
[graph goes here]
Monument Telecommunications Fund
Class B Shares
S&P NASDAQ Telecom Telecommunications Fund
--- -------------- -----------------------
10/06/99 10,000 10,000 10,000
10/31/99 10,283 11,263 11,314
[end graph]
Past performance is not predictive of future performance.
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.
Average Annual Total Return for the
period ended October 31, 1999 since
inception October 6, 1999 13.17%
<PAGE>
MONUMENT TELECOMMUNICATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1999
Number
Market
Of
Security Value
Shares Description
- ------------------------- ---------
Common 77.56%
Stock:
Carriers-Land-Based:16.40%
600 AT&T $28,050
750 Cincinnati Bell * 15,609
125 MCI Worldcom* 10,727
500 Primus Telecom* 11,063
400 Qwest Communications* 14,400
300 SBC Communications 15,281
150 Telmex 12,825
---------
107,955
---------
Carriers-Wireless: 7.49%
180 Teligent* 8,078
400 Vodafone Airtouch 19,175
625 Triton PCS* 22,031
---------
49,284
---------
Satellite: 2.06%
900 Loral Space & Comm* 13,556
---------
Equipment-Wireline: 35.11%
300 ADC Telecommunications* 14,306
300 Antec Corp* 14,550
425 Ciena* 14,981
300 Cisco Systems* 22,200
875 Com21* 11,594
200 Copper Mountain Network* 14,750
600 ECI Telecom 17,475
200 Lucent Technologies 12,850
300 Nortel Networks 18,581
350 Paradyne Networks* 10,631
300 Scientific Atlanta 17,175
200 Sycamore Networks* 43,000
300 Tellabs* 18,975
---------
231,068
---------
Equipment-Wireless: 9.14%
200 Alpha Industries* 11,050
150 Motorola 14,616
500 Netro* 11,406
200 Nokia 23,113
---------
60,185
---------
Equipment-Services
& Software 1.26%
200 Visual Networks* 8,325
---------
Data Services: 6.11%
1,000 CAIS Internet* 11,875
200 Interwoven* 15,675
350 PSINet* 12,600
---------
40,150
---------
Total Common Stock
(Cost: $424,178) 510,523
---------
Number
Of Market
Security
Shares Description Value
- ------------------------- ---------
Short-term 11.90%
Investments:
78,297 Star Treasury Fund $ 78,297
---------
(Cost: $78,297)
Total Investments:
(Cost: $502,475)** 89.46% $588,820
Other assets, net 10.54% 69,385
------- --------
Net Assets 100.00% 658,205
======== ========
* Non-income producing
**Cost for Federal income tax purposes is $502,475 and
net unrealized appreciation consists of:
Gross unrealized appreciation $ 90,652
Gross unrealized depreciation (4,307)
---------
Net unrealized appreciation $ 86,345
=========
See Notes to Financial Statements
<PAGE>
MONUMENT TELECOMMUNICATIONS FUND
Statement of Assets and Liabilities
October 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments at value (identified
cost of $502,475)(Notes 1 &3) $ 588,820
Receivables
Interest 219
Securities sold 104,254
Prepaid expenses 9,031
Other assets 4,770
Deferred organization costs (Note 1) 57,234
------------
TOTAL ASSETS 764,328
------------
LIABILITIES
12b-1 fees - Class B shares
(Note 2) $ 23
Accrued expenses 7,819
Securities purchased 98,281
--------
TOTAL LIABILITIES 106,123
------------
NET ASSETS $ 658,205
============
Class A Shares
Net assets (29,713 shares outstanding) $ 593,347
============
Net asset value and redemption price per Class A Share
($593,347 /29,713 shares outstanding) $ 19.97
============
Offering price per share ($19.97 x 100/95.25) $ 20.97
============
Class B Shares
Net assets (3,247 shares outstanding) $ 64,858
============
Net asset value and offering price per Class B
Share($64,858/3,247 shares outstanding) $ 19.97
============
Redemption price per share ($19.97 x .95) $ 18.98
============
Net assets consist of:
Paid in capital $ 465,276
Accumulated net investment income loss (3,104)
Accumulated undistributed realized
gain on investments 109,688
Net unrealized appreciation 86,345
------------
Net Assets $ 658,205
============
See Notes to Financial Statements
<PAGE>
MONUMENT TELECOMMUNICATIONS FUND
Statement of Operations
Year ended October 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 41
Interest 1,092
-------------
Total income $ 1,133
EXPENSES
Investment management fees
(Note 2) 2,621
12b-1 fee - Class A (Note 2) 1,133
12b-1 fee - Class B (Note 2) 23
Recordkeeping and
administrative services 13,118
Legal and audit fees 12,797
Custodian and accounting fees 13,836
Registration fees 16,097
Transfer agent fees 12,197
Organization cost amortization 17,980
Insurance 2,613
Directors fees 3,667
Miscellaneous 1,075
-------------
Total expenses 97,157
Reimbursed expenses (Note 2) (92,332)
------------
Expenses, net 4,825
------------
Net investment loss (3,692)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 118,345
Net change in unrealized appreciation on investments 81,187
------------
Net gain on investments 199,532
------------
Net increase in net assets resulting from operations $ 195,840
============
See Notes to Financial Statements
<PAGE>
MONUMENT TELECOMMUNICATIONS FUND
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
Year ended Period ended
October 31, 1999 October 31,1998*
----------------- ------------------
OPERATIONS
Net investment income (loss) $ (3,692) $ 706
Net realized gain (loss)
on investments 118,345 (8,657)
Net change in unrealized
appreciation of investments 81,187 5,158
---------- -----------
Net increase (decrease) in net 195,840 (2,793)
assets resulting from operations
CAPITAL SHARE TRANSACTIONS
Net increase in net assets
resulting from capital
share transactions** 281,206 134,452
---------- -----------
Net increase in net assets 477,046 131,659
Net assets at beginning of period 181,159 49,500
--------- -------------
NET ASSETS at the end of the period $ 658,205 $181,159
========= =============
** A summary of capital share transactions follows:
Class A Shares
Year ended Period ended
October 31, 1999 October 31, 1998*
-------------------- ----------------------
Shares Value Shares Value
-------------------------------------------------
Shares sold 29,967 $461,054 12,522 $ 141,837
Shares reinvested from
dividends - - - -
Shares redeemed (17,064) (238,058) (662) (7,385)
--------- ---------- -------- ----------
Net increase 12,903 $222,996 11,860 $ 134,452
========= ========== ======== ==========
Class B Shares Year ended
October 31, 1999*
--------------------
Shares Value
----------------------
Shares sold 3,247 $ 58,210
Shares reinvested
from dividends - -
Shares redeemed - -
--------- -----------
Net increase 3,247 $ 58,210
========= ===========
* Commencement of operations January 6, 1998 for Class A shares and October 9,
1999 for Class B shares.
See Notes to Financial Statements
<PAGE>
MONUMENT TELECOMMUNICATIONS FUND
Financial Highlights
For a Share Outstanding Throughout The Period
- --------------------------------------------------------------------------------
Class A Share Class B Share
------------------------------ ----------------
Year ended Period ended Period ended
October 31, October 31, October 31, *
1999 1998* 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.
See Notes to Financial Statements
<PAGE>
Monument Telecommunications Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1-SIGNIFICANT ACCOUNTING POLICIES- Monument Telecommunications Fund (the
"Telecommunications Fund") (formerly the Monument Washington Regional
Aggressive Growth Fund) is a series of Monument Series Fund, Inc. ("MSF")
which is registered under the Investment Company Act of 1940, as amended,
as a non-diversified open-end management company. The Telecommunications
Fund was established on January 6, 1998 as a series of MSF which has
allocated 300,000,000 shares of its 2,000,000,000 shares of $.001 par value
common stock. Prior to October 5, 1999, the fund added Class B shares which
have a contingent deferred sales charge ("CDSC"). Each class is also
subject to different 12b-1 Plan expenses.
The following is a summary of significant accounting policies followed by
the Telecommunications Fund. The policies are in conformity with generally
accepted accounting principles.
A. Use of Estimates- The process of preparing financial statements in
conformity with generally accepted accounting principles require management
to make estimates and assumptions that affect the reported amount of assets
and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements, as well as the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from these estimates.
B. Investment Valuation- Equity securities listed on an established
securities exchange or on the NASDAQ National Market System are valued at
their last sale price on the exchange where primarily traded or, if there
is no reported sale, at the mean between the closing bid and asked price on
that day. Over-the-counter portfolio securities are valued at the mean
between the last bid and asked prices based upon quotes furnished by market
markers for such securities. Exchange listed convertible debt securities
are valued at the mean between the last bid and asked prices obtained from
broker-dealers or a comparable alternative, such as Bloomberg or Telerate.
Other securities for which market quotes are readily available are valued
at the current market price, which may be obtained from a pricing service.
Securities and other assets for which market prices are not readily
available are valued at fair value as determined following procedures
approved by the Board of Directors.
C. Investment Transactions- All securities are recorded on a trade date
basis. Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Realized gains and losses on sales
of securities are determined on the basis of identified cost.
D. Organization Expenses- All expenses incurred in connection with the
organization and initial registration have been assumed by the series of
MSF. The organizational expenses allocable to the Telecommunications Fund
are being amortized over a period of sixty months from the date it
commenced investment operations. The Telecommunications Fund has agreed
with the Investment Advisor that if any of the initial shares are redeemed
during the amortization period, the Telecommunications Fund will reduce the
redemption proceeds for the then unamortized organizational expenses in the
same ratio as the number of redeemed shares bears to the number of initial
shares at the time of such redemption.
E. Federal Income Taxes- The Telecommunications Fund is treated as a
separate entity for Federal tax purposes. The Telecommunications Fund
intends to qualify each year as a regulated investment company under
Subchapter M of the Internal Revenue Code, as amended. By so qualifying,
the Telecommunications Fund will not be subject to Federal income taxes to
the extent that it distributes all taxable income, including realized
capital gains. In addition, by distributing during each calendar year
substantially all net investment income, capital gains and certain other
amounts, if any, the Telecommunications Fund will not be subject to a
Federal income excise tax.
F. Dividends and Distributions to Shareholders- The Telecommunications Fund
intends to pay an annual dividend to shareholders of record representing
its entire net investment income and to distribute all of its realized net
capital gains at least annually. Distributions are recorded on the
ex-dividend date. Income distributions and capital gains distributions are
determined in accordance with Federal income tax regulations, which may
differ from generally accepted accounting principles.
Note 2-INVESTMENT MANAGEMENT AND DISTRIBUTION AGREEMENTS- Monument Advisors,
Ltd. ("Monument Advisors"), a wholly-owned subsidiary of the Monument
Group, Inc. has been retained under an Investment Advisory Agreement (the
"Advisory Agreement") to supervise the management and the investment
program of the Telecommunications Fund. As full compensation for its
services under the Agreement, the Telecommunications Fund will pay the
Advisor a monthly fee, equal to an annualized rate of 1.00% of the monthly
average net assets through $50 million in net assets; 0.75% of the monthly
average net assets greater than $50 million through $100 million in net
assets; and 0.625% of the average monthly net assets exceeding $100 million
in net assets.
The Telecommunications Fund has adopted a plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended, whereby the
Telecommunications Fund or Monument Distributors, Inc. ("Monument
Distributors") may finance activities which are primarily intended to
result in the sale of the Telecommunications Fund's shares, including, but
not limited to, advertising, printing of prospectuses and reports for other
than existing shareholders, preparation and distribution of advertising
materials and sales literature, and payments to dealers and shareholders
servicing agents who enter into agreements with the Telecommunications Fund
or Monument Distributors. The Telecommunications Fund may incur such
distribution expenses at the rate of .50% for its Class A Shares and 1% for
its Class B Shares per annum on each class's average net assets. For the
period ended October 31, 1999 the Telecommunications Fund paid $1,133 for
its Class A Shares and $23 for its Class B Shares for such expenses.
Monument Advisors has contractually agreed to waive its fees and to pay
expenses of the Telecommunications Fund to maintain total operating
expenses to 1.90% of average daily net assets through May 1, 2001. For the
year ended October 31, 1999, expense reimbursements were $92,332.
As of October 31, 1999, Mr. David A. Kugler (controlling shareholder of
Monument Distributors) has a beneficial ownership of 6.23% of the
Telecommunications Fund. As of that date, Mr. Kugler owned 3.04 % of the
Telecommunications Fund. The remainder of Mr. Kugler's beneficial ownership
(3.19%) was due to his ownership interest in Monument Distributors. As of
October 31, 1999, Monument Distributors owned 3.19% of the
Telecommunications Fund.
Note 3--SOFT DOLLAR ARRANGEMENTS- In January 1999, Monument Advisors entered
into a soft dollar arrangement with a broker-dealer who makes a market in
many of the securities in the Fund's portfolio. Under this arrangement,
Monument received equipment, conferencing, and trade journals. For the year
ended October 31, 1999, the value of these arrangements was $23,044.
Note 4-INVESTMENTS- Purchases and sales of securities for the
Telecommunications Fund, other than short-term investments aggregated
$746,459 and $572,602, respectively.
<PAGE>
Investment Adviser:
Monument Advisors, Ltd.
7920 Norfolk Avenue, Suite 500
Bethesda, MD 20814
Distributor:
Monument Distributors, Inc.
7920 Norfolk Avenue, Suite 500
Bethesda, MD 20814
Independent Auditors
Deloitte and Touche, LLP
117 Campus Dr., University Square
Princeton, NJ 08540
Transfer Agent:
For account information, wire purchases or redemptions, call or write Monument
Series Fund, Inc's Transfer Agent:
Fund Services, Inc.
P. O. Box 26305
Richmond, VA 23260
(800) 628-4077 Toll Free
More Information:
For 24 hour, 7 days a week price information, and for information on any
series of Monument Series Fund, Inc., investment plans, and other shareholder
services, call (888) 520-8637 Toll Free.
