As filed with the Securities and Exchange Commission on January 18, 2000
Registration Nos.: 333-26223
811-8199
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 7
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 9
MONUMENT SERIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
7920 Norfolk Avenue, Suite 500, Bethesda, Maryland 20814
(address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 301-215-7550
DAVID A. KUGLER BETH ANN ROTH
President Beth-ann Roth, P.C.
The Monument Funds Group, Inc. 9204 Saint Marks Place
7920 Norfolk Avenue, Suite 500 Fairfax, Virginia 22031
Bethesda, Maryland 20814
(Name and Address of Agents for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement becomes effective. It is proposed that this
filing will become effective: (check appropriate box)
________ on _____ pursuant to paragraph (a)(1) of Rule 485
____X___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485*
________ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
________ on _____ days after filing pursuant to paragraph (a)(2) of Rule 485
________ immediately upon filing pursuant to paragraph (b) of Rule 485
________ on _____ pursuant to (b) of Rule485
*Acceleration requested to January 25, 2000.
12
[MONUMENT FUNDS GROUP, INC. LOGO]
MONUMENT SERIES FUND, INC.
MONUMENT INTERNET FUND
MONUMENT MEDICAL SCIENCES FUND
MONUMENT TELECOMMUNICATIONS FUND
PROSPECTUS DATED October 1, 1999, revised as of January 25,
2000.
This Prospectus describes the Monument Internet Fund, Monument Medical Sciences
Fund and the Monument Telecommunications Fund (each, a "Fund"; collectively, the
"Funds"). Each Fund represents a separate series of common stock of the Monument
Series Fund, Inc. (the "Company"). Each series offers three classes of shares:
Class A Shares with a front-end sales charge, Class B Shares subject to a
contingent deferred sales charge, and Class Y Shares for certain institutional
investors. Class A Shares and Class B 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, Inc. (See "Buying Fund Shares.")
MONUMENT INTERNET FUND seeks to maximize long-term appreciation of capital by
investing primarily in a non-diversified portfolio of Internet company equity
securities.
MONUMENT MEDICAL SCIENCES FUND seeks to maximize long-term appreciation of
capital by investing primarily in a non-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 non-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.
<PAGE>
TABLE OF CONTENTS
DESCRIPTION PAGE
- -------------------------------------------------------------------------------
The Funds
Investment Objectives
Principal Investment Strategies
Temporary Defensive Positions
Specific Risk Considerations
General Risk Considerations
Table of Fees and Expenses
The Company
Shareholder Information
Buying Fund Shares
Distribution Arrangements
Redeeming Fund Shares
Exchanging Fund Shares
Dividends and Distributions
Tax Considerations
Services To Help You Manage Your Account
Proper Form
Share Certificates
Retirement Plan Accounts
Financial Highlights Information
Monument Medical Sciences Fund (formerly Monument Washington Regional
Growth Fund)
Monument Telecommunications Fund (formerly Monument Washington
Aggressive Growth Fund)
<PAGE>
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 INTERNET FUND. The Internet Fund's investment objective is to maximize
long-term appreciation of capital.
MONUMENT MEDICAL SCIENCES FUND (formerly Monument Washington Regional Growth
Fund). The Medical Sciences Fund's investment objective is to maximize long-term
appreciation of capital.
MONUMENT TELECOMMUNICATIONS FUND (formerly Monument Washington Aggressive Growth
Fund). The Telecommunications Fund's investment objective is to maximize
long-term appreciation of capital.
PRINCIPAL INVESTMENT STRATEGIES
INTERNET FUND. The Fund seeks to achieve its objective by investing, under
normal circumstances, at least 80% of its total assets in equity securities of
companies principally engaged in Internet or Internet-related businesses. A
company is considered principally engaged in an Internet, Intranet or
Internet-related business if at least 50% of its assets, gross income, or net
profits are committed to, or derived 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 to a company's internal 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. Currently, development is occurring in such areas as infrastructure
deployment, Internet access, content provision, data security, and electronic
commerce.
When selecting investments for the Internet Fund, Monument Advisors, the
investment advisor of each of the Funds ("Advisors") will seek to identify
Internet companies that are developing new or innovative products, services, or
processes that will lead to a future growth in earnings. Such companies are
likely to be relatively unseasoned companies. These companies generally will
have no established history of paying dividends, and any dividend income is
likely to be incidental.
MEDICAL SCIENCES FUND. The Fund seeks to achieve its objective by investing,
under normal circumstances, at least 80% of its total assets in equity
securities 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.
When selecting investments for the Fund, Advisors will seek to identify medical
sciences companies that it believes are likely to benefit from 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 of purchase. Dividend income, if any,
is likely to be incidental.
TELECOMMUNICATIONS FUND. The Fund seeks to achieve its objective by investing,
under normal circumstances, at least 80% of its total assets in equity
securities 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 for the Telecommunications Fund, Advisors will seek
to identify telecommunication 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 or revenue or earnings at the time of purchase. 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 SAI.
SPECIFIC RISK CONSIDERATIONS
INTERNET FUND. The Internet Fund invests primarily in companies 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 Internet Fund may experience greater
volatility than funds not subject to these types of risks. The Internet Fund is
non-diversified, and may also invest in small companies and technology and
research companies, the risks of which are described below under "General Risk
Considerations."
MEDICAL SCIENCES FUND. The economic prospects of health 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 is 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 companies face lawsuits
related to product liability and other issues. Also, many products and services
provided by medical science companies require substantial capital investment and
are subject to rapid obsolescence. The Medical Sciences Fund is non-diversified,
and may also invest in small companies and 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 nondiversified, 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 that the value of Internet, Medical Sciences, and
Telecommunications Fund shares to be more volatile than the shares of mutual
fund 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.
NONDIVERSIFICATION; INDUSTRY CONCENTRATION. The Funds are nondiversified under
the Investment Company Act of 1940 ("1940 Act"), which means that there is no
restriction under the 1940 Act on how much these Funds may invest in the
securities of any one issuer. In addition, each Fund may invest more than 25% of
its assets in what may be considered a single industry sector. Accordingly, each
Fund may be more susceptible to the effects of adverse economic, political or
regulatory developments affecting a single issuer or industry sector than funds
that diversify to a greater extent.
Nonprincipal Investment Strategies. 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, 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.
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 the Funds.
Shareholder Fees (fees paid directly from your investment)
Class A Class B
Maximum Sales Charge (Load)1 5.75% None
Maximum Deferred Sales Charge (Load) None 5.00%2
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends and Distributions None 5.00%2
Redemption Fees None None
Exchange Fees None None
Annual Fund Operating Expenses
(expenses that are deducted from fund assets as a percentage of average
net assets)
Internet Fund Medical Sciences Fund Telecommunication Fund
Class A Class B Class A Class B Class A Class B
Advisory Fee 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Distribution
(12b-1) Fees 0.50% 1.00% 0.50% 1.00% 0.50% 1.00%
Other Expenses 1.34% 0.40% 15.31 15.43% 35.65% 35.15%
Total Annual
Fund Operating
Expenses 2.84% 2.40% 16.81% 17.43% 37.15% 37.15%
Fee Waiver
and/or
Expense
Reimbursements --- --- 14.91% 15.03% 35.25% 34.75
Net Expenses 2.84% 2.40% 1.90% 2.40% 1.90% 2.40%
1 As a percentage of offering price. Reduced rates apply to purchase payments
over $50,000. 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
or redemption price, whichever is lower) will apply to any
redemptions made within the first year. During the second year, redeemed
shares will incur a 4.00% sales charge. During years three and four you will
pay 3.00%, during year five 2.00%, and during year six 1.00%. The contingent
deferred sales charge is eliminated after the sixth year.
The Company has approved a Plan of Distribution Pursuant to Rule 12b-1 of the
1940 Act, 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 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 Shares may cause long-term investors may pay more than the economic
equivalent of the maximum front end sales charge permitted by the National
Association of Securities Dealers.
With respect to the 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 1.90%, and
Class B Share total operating expenses at 2.40% of the Fund's average daily
net assets until May 1, 2001.
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:
Internet Fund Medical Sciences Fund Telecommunications Fund
Class A Class B Class A Class B Class A Class B
1 Year $ 846 $ 743 $ 757 $ 743 $ 757 $ 743
3 Years 1,404 1,048 3,021 2,882 4,954 4,875
5 Years 1,988 1,481 5,493 5,446 8,004 7,958
10 Years 3,559 2,736 9,529 9,609 10,233 10,246
With respect to Class A Shares, the above examples assume payment ofthe
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.
*The Medical Sciences Fund and Telecommunications Fund costs shown for the first
year reflect the cap imposed by the expense limitation agreement.
Should the advisor continue this contractual agreement for the periods shown
below, your cost would be:
Medical Sciences Fund Telecommunications Fund
Class A Class B Class A Class B
3 Years $1,138 $1,048 $1,138 $1,048
5 Years 1,542 1,481 1,542 1,481
10 Years 2,669 2,736 2,669 2,736
THE COMPANY
THE COMPANY. Monument Series Fund, Inc. is a Maryland corporation that was
organized on April 7, 1997. It is registered with the SEC as an open-end
management investment company.
THE ADVISOR. Monument Advisors, Ltd. ("Monument Advisors" or "Advisors") serves
as each Fund's investment advisor and provides overall management of the
Company's business affairs. See "Investment Advisory and Other Services" in the
Statement of Additional Information ("SAI").
Monument Advisors, located at 7920 Norfolk Avenue, Suite 500, 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
December 31, 1999, Advisors managed or supervised in excess of $190 million in
assets.
In the interest of limiting expenses of the 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 and B shares of the Funds
covered by the agreement are limited to 1.90% and 2.40%, respectively. 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.
PORTFOLIO MANAGERS. Alexander C. Cheung, CFA, serves as the portfoliomanager for
the Internet and Medical Sciences Fund. Mr. Cheung has nine yearsof investment
management experience and has been employed by Advisors since August, 1997.
Previously, Mr. Cheung served as Managing Director of Lion Rock Capital
Management, Inc., and as a portfolio manager at Anchor Asset Management, Inc.
Before joining Anchor Asset Management, Inc., Mr. Cheung worked as an investment
counselor at W.H. Newbold's Sons & Co.
J. Michael Gallipo, CFA, serves as the portfolio manager of the
Telecommunications Fund. Mr. Gallipo has over four years of investment
experience and joined Advisors in August 1999. Prior to joining Advisors, Mr.
Gallipo was an investment analyst at Van Eck Associates Corp. Mr. Gallipo also
served previously as a compliance analyst for Van Eck and as a legal assistant
for Brown & Wood, LLP.
SHAREHOLDER INFORMATION
PRINCIPAL UNDERWRITER. Monument Distributors, located at 7920 Norfolk Avenue,
Suite 500, Bethesda, Maryland 20814, is a wholly-owned subsidiary of The
Monument Group, Inc. and an affiliate of Monument Advisors, and serves as the
principal underwriter of each Fund. David A. Kugler and Peter L. Smith are
affiliates of the Company and Monument Distributors. Mr. Smith serves as Vice
President and Assistant Secretary of the Company.
BUYING FUND SHARES
SHARE CLASS ALTERNATIVES. The Fund offers investors three different classes of
shares. Class A Shares and Class B 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. If you choose to purchase Class A Shares you will pay an
initial sales charge, which will be deducted from the amount you
invest.
Class B Shares. If you choose to purchase Class B Shares
you will not pay a sales charge at the time of
purchase. However, if you sell your shares within six
years of purchasing them, you will pay a maximum of 5.00% of the
redemption price as a contingent deferred sales charge ("CDSC")
according to the schedule that appears below under "Distribution
Arrangements." Class B Shares automatically convert to Class A
Shares eight years after purchase. For additional information
about Class B Share conversions, see "Conversion of Class B
Shares" in the SAI.
SHARE TRANSACTIONS. You may purchase and redeem Fund shares, or exchange
sharesof one Fund for those of another, by contacting any broker authorized by
thedistributor to sell shares of the Company or by contacting Fund Services,
Inc., the Company's transfer and dividend disbursing agent, at 1500 Forest
Avenue, Suite 111, Richmond, VA 23229 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.
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."
Class A Class B
Minimum Initial Investment $1,000 $1,000
Minimum Subsequent Investment $ 250* $ 250*
Initial Sales Charge Maximum 5.75%, None
with options
for a reduction
or waiver
CDSC None Maximum 5.00%
declines over
six years
Distribution Fee Maximum 0.50% Maximum 1.00%
of Funds net of Funds net
daily assets daily assets
* 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 applicationalong
with a check drawn on a U.S. bank in U.S. funds, to "Monument Series Fund," c/o
Fund Services, Inc., at 1500 Forest Avenue, Suite 111, Richmond, VA 23229. Fund
Services, Inc. is the Company's transfer 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. 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 Fund Services, Inc., 1500 Forest Avenue, Suite 111, Richmond,
VA 23229. 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 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
Class A Shares. Class A Shares are sold at their public offering price, which is
normally the shares NAV plus an initial sales charge. However, if the cumulative
dollar amount of the shares you purchase exceed a certain level, the initial
sales charge may be reduced,as the chart below shows.
Sales Charge Dealer
Percentage
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%, payable quarterly.
Class B Shares. Class B Shares are sold at net asset value per share without an
initial sales charge. However, if Class B shares are redeemed within six years
of their purchase, you will be subject to a contingent deferred sales charge
("CDSC"). The CDSC will be based on the lesser of the net asset value of the
redeemed shares at the time of redemption or the original net asset value. The
CDSC is not imposed on the amount of your account value represented by an
increase in net asset value over the initial purchase price. The CDSC is paid to
the Distributor to compensate it for providing distribution-related services to
the Fund in connection with the sale of Class B Shares. The amount of the CDSC
will depend on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
- ------------------------------------------------------------------------
Years after Purchase 1 2 3 4 5 6 7+
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
Charge 5% 4% 3% 3% 2% 1% 0%
- ------------------------------------------------------------------------
In the table, a "year" is a 12-month period. In applying the sales charge, all
purchases are considered made on the first regular business day of the month in
which the purchase was made. In certain instances the CDSC will not apply to
redemptions. For additional information see "Waiver of Contingent Deferred Sales
Charge" in the SAI.
Although purchasers of Class B Shares do not pay an initial sales charge,
dealers executing these transactions receive commissions according to the
schedule below. 12b-1 fees paid by Class B shareholders offset these
commissions. See "TABLE OF FEES AND EXPENSES".
Class B Distribution Schedule
Dealer Percentage
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%, payable quarterly.
RULE 12-b 1 FEES. The Board of Directors has adopted a Plan of Distribution
pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1 Plan") for Class A and
Class B Shares. 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 Shares expenses and 0.50% for Class A Shares 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. The Company 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. Because
these fees are paid out of the Company's assets on an on-going basis, over time
these fees will increase the cost of your investment and may cost more than
paying other types of 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.
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, but not limited to, 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 1/2;
(2) redemptions by certain eligible 401 (a) and 401(k) plans and certain
retirement plan rollovers;
(3) withdrawals resulting from shareholder death or disability provided that
the redemption is requested within one year of death or disability; and
(4) withdrawals through Systematic Monthly Investment (systematic withdrawal
plan).
Class B shareholders may exchange their Class B shares ("outstanding Class B
shares") for Class B Shares of another Fund ("new Class B shares") on the basis
of the relative net asset value per Class B Share, without the payment of any
CDSC that would otherwise be due upon the redemption of the outstanding Class B
Shares. Class B shareholders of the Fund exercising the exchange privilege will
continue to be subject to the Fund's CDSC schedule (or period) following an
exchange if such schedule is higher (or such period is longer) than the CDSC
schedule (or period) applicable to the new Class B Shares. For purposes of both
the conversion feature and computing the CDSC that may be payable upon the
redemption of the new Class B shares (prior to conversion), the holding period
of the outstanding Class B Shares is "tacked" onto the holding period of the new
Class B Shares. For the CDSC schedule see "Distribution Arrangements" in the
Prospectus.
Additional information regarding the waiver 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.
REDEEMING FUND SHARES
You can redeem shares of the Funds by submitting your order either through
your authorized broker or by submitting it directly to the Fund, either by
writing to Fund Services, Inc. at 1500 Forest Avenue, Suite 111, Richmond, VA
23229, or by telephoning 1-888-420-9950. See "Proper Form."
EXCHANGING FUND SHARES
You can exchange shares of one fund for those of the other 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."
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.
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.
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.
REDEMPTION PRICE. Your redemption request will be processed based on the 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 Fund Services, Inc. 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.
REDEMPTIONS IN KIND. The Company reserves the right to redeem its shares in
kind. In other words, upon tendering shares of a Fund, you could receive assets
other than cash in return. 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
The Internet Fund, Medical Sciences Fund and Telecommunications Fund currently
intend 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 PAY "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 transfer agent by mail at 1500 Forest Avenue, Suite 111, Richmond,
VA, 23229.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 will 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 and payable in October,
November or December, but which, for operational purposes, are paid the
following January, are taxable as though they were paid by December 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.
YEAR 2000. The Funds' operations depend on the seamless functioning of computer
systems in the financial service industry, including those of Advisors, the
Administrator, the Custodian and the Transfer Agent. Many computer software
systems in use today cannot properly process date-related information after
December 31, 1999 because of the method by which dates are encoded and
calculated. This failure, commonly referred to as the "Year 2000 Issue," could
adversely affect the handling of securities trades, pricing and account
servicing for the Funds. Advisors has made compliance with the Year 2000 Issue a
high priority and is taking steps that it believes are reasonably designed to
address the Year 2000 Issue with respect to its computer systems. Advisors has
also been informed that comparable steps are being taken by the Fund's other
major service providers. Advisors does not currently anticipate that the Year
2000 Issue will have a material impact on its ability to continue to fulfill its
duties as investment advisor.
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 only be liable for losses resulting from unauthorized
telephone transactions if we do not follow reasonable procedures designed to
verify the identity of the caller. When you call, we will request personal or
other identifying information, and may also record calls. For your protection,
we may delay a transaction or not implement one if we are not reasonably
satisfied that telephone instructions are genuine. If this occurs, we will not
be liable for any loss. If our lines are busy or you are otherwise unable to
reach us by phone, you may wish to send written instructions to us, as described
elsewhere in this Prospectus. If you are unable to execute a transaction by
telephone, we will not be liable for any loss.
STATEMENTS AND REPORTS. You will receive transaction confirmations and account
statements on a regular basis. Confirmations and account statements will reflect
transactions in your account, including additional purchases and reinvestments
of income dividends and capital gain distributions. PLEASE VERIFY THE ACCURACY
OF YOUR STATEMENTS WHEN YOU RECEIVE THEM. You will also receive semi-annual
financial reports for each Fund in which you have invested. To reduce Fund
expenses, we attempt to identify related shareholders within a household and
send only one copy of a report. Please call 1-888-420-9950 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 you are exchanging into,
- 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 other 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.
<PAGE>
MONUMENT MEDICAL SCIENCES 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 $10.32 $10.00 $16.95
------------- ----------- -------------
Income from investment
operations-
Net investment (0.10) 0.04 (0.01)
income (loss)
Net realized and
unrealized
gain on investments 5.89 0.28 (0.83)
------------- ----------- -------------
Total from 5.79 0.32 (0.84)
investment operations
------------- ----------- -------------
Net asset value, end of $16.11 $10.32 $16.11
period
============= =========== =============
Total Return 56.11% 3.20% *** (4.98%) ***
Ratios/Supplemental Data
Net assets, end of $1,401 $214 $25
period (000's)
Ratio to average net
assets-
Expenses 16.73% 51.07% ** 17.43% **
Expenses including 16.81% 17.43% **
soft dollars
Expenses-net 1.87% 0.00% 2.40% **
Net investment income (1.00%) 0.66% ** (1.51%) **
(loss)
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 Share Calss 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 (0.14) 0.04 (0.02)
income (loss)
Net realized and
unrealized
gain on investments 9.33 0.74 2.34
------------- ----------- -------------
Total from 9.19 0.78 2.32
investment operations
------------- ----------- -------------
Net asset value, end of $19.97 $10.78 $19.97
period
============= =========== =============
Total Return 85.24% 7.80% *** 13.17% ***
Ratios/Supplemental Data
Net assets, end of $593 $181 $65
period (000's)
Ratio to average net
assets-
Expenses 37.06% 58.25% ** 37.15% **
Expenses including 37.15% 58.25% ** 37.15% **
soft dollars
Expenses-net 1.84% 0.00% 2.40% **
Net investment income (1.40%) 0.70% ** (1.95%) **
(loss)
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.
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 (0.58) (0.06)
income (loss)
Net realized and
unrealized
gain on investments 20.56 2.92
------------ ------------
Total from 19.98 2.86
investment operations
------------ ------------
Net asset value, end of $29.98 $29.95
period
============ ============
Total Return 185.53% *** 10.55% ***
Ratios/Supplemental Data
Net assets, end of $63,745 $1,552
period (000's)
Ratio to average net
assets
Expenses 2.76% ** 2.40% **
Expenses including 2.84% ** 2.40% **
soft dollars
Net investment gain (2.45%) ** (3.23%) **
(loss)
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.
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.
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.
[Back Cover]
For more information about the Funds, you may wish to refer to the Company's
Statement of Additional Information ("SAI"), dated October 1, 1999, and the
Company's audited annual and unaudited semi-annual report, 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, Inc., 7920 Norfolk Avenue, Suite 500 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 1-800-SEC-0330. 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.
MONUMENT SERIES FUND, INC.
MONUMENT INTERNET FUND
MONUMENT MEDICAL SCIENCES FUND
MONUMENT TELECOMMUNICATIONS FUND
STATEMENT OF ADDITIONAL INFORMATION DATED October 1, 1999
REVISED AS OF JANUARY 25, 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 October 1, 1999 ("Prospectus"), for the Monument Series Fund,
Inc. Capitalized terms appearing in this SAI that are not otherwise defined
herein have the same meaning given to them in the Prospectus. You may obtain a
copy of the Prospectus by writing Monument Series Fund, Inc. 7920 Norfo1k
Avenue, Suite 500, Bethesda, Maryland 20814, or by calling 1-888-420-9950.
TABLE OF
CONTENTS PAGE
Investment Policies
Potential Risks
Investment Restrictions
Directors and Officers
Committees Established by the Board of Directors
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. The Company is a Maryland corporation organized on April 7, 1997.
It is registered with the SEC as a open-end management investment company. Each
of its three Funds is nondiversified. The Company's authorized capital consists
of 2 billion shares of common stock with a par value of $0.001 per share. The
Company currently offers, on a continuous basis, three series of common stock:
the Monument Internet Fund, the Monument Medical Sciences Fund, and the Monument
Telecommunications Fund. Each series is authorized to offer three separate
classes of shares: Class A Shares imposing a front-end sales charge up to a
maximum of 4.75%; Class B Shares charging a load if redeemed within six years of
purchase, and carrying a higher Rule 12b-1 fee than Class A Shares, and Class Y
Shares for certain institutional investors. The Internet Fund is authorized to
issue up to 250 million shares for each class of shares, and the Medical
Sciences and Telecommunications Funds may issue up to 100 million shares for
each class. The Company may offer additional series or classes 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 POLICIES
The Prospectus describes the fundamental investment objectives and certain
investment policies and restrictions applicable to each Fund. The following is
additional information for your consideration.
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.
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 Directors has
authorized each Fund to invest in restricted securities where such investment is
consistent with that Fund's investment objective, and has authorized such
securities to be considered liquid to the extent Advisors determines that there
is a liquid institutional or other market for such securities -- for example,
restricted securities that may be freely transferred among qualified
institutional buyers under Rule 144A of the Securities Act of 1933 ("1933 Act"),
and for which a liquid institutional market has developed. The Board of
Directors will review any determination by Advisors to treat a restricted
security as a liquid security on an ongoing basis, including Advisors'
assessment of current trading activity and the availability of reliable price
information. In determining whether a restricted security is properly considered
a liquid security, Advisors and the Board of Directors will take into account
the following factors: (1) the frequency of trades and quotes for the security;
(2) the number of dealers willing to buy or sell the security and the number of
other potential buyers; (3) dealer undertakings to make a market in the
security; (4) the nature of the security and marketplace trades, including the
time needed to dispose of the security, the method of soliciting offers, and the
mechanics of transfer; and (5) 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 deprciation 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 ona
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 optio 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.
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. 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 a Portfolio's Adviser to be of good
standing and will not be made unless, in the judgment of the Adviser, 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.
POTENTIAL RISKS
OPTIONS AND FUTURES. Although each Fund may write covered call options and
purchase and sell stock index futures contracts to hedge against declines in
market value of its portfolio securities, the use of these instruments involves
certain risks. As the writer of covered call options, a Fund receives a premium
but loses any opportunity to profit from an increase in the market price of the
underlying securities above the exercise price during the option period. A Fund
also retains the risk of loss if the price of the security declines, though the
premium received may partially offset such loss.
Although stock index futures contracts may be useful in hedging against adverse
changes in the value of a Fund's portfolio securities, they are derivative
instruments that are subject to a number of risks. During certain market
conditions, purchases and sales of stock index futures contracts may not
completely offset a decline or rise in the value of a Fund's Portfolio. In the
futures markets, it may not always be possible to execute a buy or sell order at
the desired price, or to close out an open position due to market conditions,
limits on open positions and/or daily price fluctuations. Changes in the market
value of a Fund's portfolio may differ substantially from the changes
anticipated by the Fund when it established its hedged positions, and
unanticipated price movements in a futures contract may result in a loss
substantially greater than a Fund's initial investment in such 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. 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.
WARRANTS. 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
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. Thus, the investment
restrictions of one Fund may be changed without affecting those of the another
Fund. Under the restrictions, each Fund MAY NOT:
1. issue senior securities, except to the extent permitted bythe 1940
Act, including permitted borrowings;
2. make loans, except for collateralized loans of portfolio securities in
an amount not exceeding 33 1/3% of the Fund's total assets (at the time
of the most recent loan). This limitation does not apply to purchases
of debt securities or to repurchase agreements;
3. borrow money, except for temporary or emergency purposes in an amount
not exceeding 33 1/3% of the Fund's total assets (including the amount
borrowed) less liabilities (other than borrowings). No Fund will
purchase securities when its borrowings exceed 5% of its total assets;
4. act as an underwriter, except to the extent that (in connection with
the disposition of portfolio securities) the Fund may be deemed to be
an underwriter for purposes of the 1933 Act;
5. invest in securities for the purpose of exercising management or
control of the issuer, except that each Fund may purchase securities of
other investment companies to the extent permitted by the 1940 Act,
regulations thereunder, or exemptions herefrom;
6. 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;
7. effect short sales, unless at the time the Fund owns securities
equivalent in kind and amount to those sold;
8. purchase or sell real estate or any interest therein, except that each
Fund may (as appropriate and consistent with its investment objectives
and policies) invest in securities of corporate and governmental
entities secured by real estate or marketable interests therein, or
securities of issuers that engage in real estate operations or
interests therein, and may hold and sell real estate acquired as a
result of ownership of such securities; or
9. invest in the securities of other investment companies, except that
each Fund may acquire securities of another investment company pursuant
to a plan of reorganization, merger, consolidation or acquisition,
or except where the Fund would not own, immediately after the
acquisition, securities of other investment companies which exceed in
the aggregate:(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.
In addition to these fundamental policies, it is the present operating policy of
each Fund (which may be changed without shareholder approval) not to pledge,
mortgage or hypothecate its assets as security for loans, nor to engage in joint
or joint and several trading accounts in securities, except that it may
participate in joint repurchase arrangements, or invest its short-term cash in
shares of a money market mutual fund (pursuant to the terms of any order, and
any conditions therein, issued by the SEC permitting such investments). It is
also the present policy of each Fund not to 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.
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%.
DIRECTORS AND OFFICERS
The Board of Directors has the responsibility for the overall management of the
Company, including general supervision and review of its investment activities.
The Board of Directors also elects the officers of the Company, who are
responsible for administering day-to-day operations. Affiliations for the
Officers and Board of Directors (including principal occupations for the past
five years) are shown below. Members of the Board of Directors who are
considered "interested persons" of the Company under the 1940 Act are indicated
by as asterisk (*).
Position Held Principal Occupations During
Name, Address and Age With the Company the Past Five
Years
- ---------------------------------------------------------------------
*David A Kugler (40) Director, President President and Director, the
7920 Norfolk Avenue, and Treasurer, 1997- Monument Group, Inc. Bethesda
Suite 500, Present; President and MD (a holding company); 1997-
Bethesda, MD 20814 Director, Monument Present; Account Vice President,
Advisors, Ltd; MonumentPaine Weber, Inc.,1994-1997;
Distributors, Inc. Financial Consultant 1997-
Present; President and Director
Merrill Lynch & Co., 1990-1994.
Peter L Smith (67) Vice President and Special Investigator (Senior
7920 Norfolk Avenue Assistant Secretary Examiner) National Association
Suite 500 of Securities Dealers Regulation
Bethesda, MD 20814 District 10 (New York City),
1997-1998; Senior Staff
Accountant, Office of Compliance
Inspections and Examinations,
U.S. Securities and Exchange
Commission, Washington, D.C.
1974-1997.
Francine F. Carb (41) Director President; Markitects, Inc.
421 Woodland Circle (marketing consulting);
Radnor, PA 19087-4640 1994-Presdent; President,
Francine Carb & Associates
(marketing consulting) 1992-
1994.
Victor Dates (62) Director Adjunct Professor, Coppin State
2107 Carter Dale Road College, 1998-Present;
Baltimore, MD 21209 Assistant Professor, Howard
University, 1988-1998.
George DeBakey (50) Director Director of International
19 Blue Hosta Way Operations at ESI International
Rockville, MD 20850 Inc., 1998-Present; Instructor
at American University, 1992-
1998.
G Frederick White III Director, Secretary Management Consultant (small
(45) business management consulting);
3107 Albemarle Road Trinity Episcopal Parish,
Wilmington, DE 19808 1997-Present; 1985-1997;
Business Manager.
Rhonda Wiles Roberson, Director Sr. Vice President,
J.D. (46) Institutional Funding & Business
1227 Boucher Avenue Development, Hispanic Radio
Annapolis, MD 21403 Network Inc., 1998-Present;
Principal RWF Consults (business
Advisors), 1995-Present,General
Counsel, NAPWA Services, Inc.
(pharmaceutical company),1993-
1995; Associate General Counsel,
Calvert Group, Ltd.(sponsor of
Investment companies) 1990-1993.
Directors and officers of the Company who are affiliated with Advisors and/or
Distributors receive no remuneration from the Company. Each Director who is not
an interested person of the Company receives a fee of $2,000 annually, plus an
additional fee of $500 per day for attendance at any meeting of the Board of
Directors or one of its committees (including any meeting held by telephonic
conference). Directors also receive reimbursement for any expenses incurred in
attending board and committee meetings. The Board of Directors generally meets
quarterly.
In addition, those Directors 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.
Director 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 DIRECTORS
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 Directors in
fulfilling its responsibilities for the Company's accounting and financial
reporting practices, and acts as a liaison between the Board of Directors and
Deloitte & Touche LLP, the Company's independent public accountant. Directors
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 Directors. The Executive
Committee possesses all of the powers of the Board of Directors in the
management of the Company except as to those matters that specifically require
action by the Board of Directors. Directors 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 Directors for their good faith confirmation or
change. Director Kugler is a member of the Pricing and Investment Committee.
Alexander Cheung, an employee 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 Directors, whether such candidates be interested or
non-interested persons of the Company. Directors Carb, Dates, DeBakey, White,
and Wiles-Roberson are members of the Nominating Committee.
PRINCIPAL HOLDERS OF SECURITIES
As of December 31, 1999, Samuel M. Hunn of 7909 Hermitage Road, Richmond,
Virginia, 23228, owned (both record and beneficially) 5.77% of the Medical
Sciences Fund Class A shares.
As of Deember 31, 1999, U.S. Clearing Corp. 26 Broadway, New York, N.Y. 10004
owned of record: 7.74% of the Medical Sciences Fund Class A Shares; 5.69% of
the Medical Sciences Fund Class B Shares; and 8.85% of the Telecommunications
Fund Class A Shares.
As of December 31, 1999, Lewco Securities Corp, 34 Exchange Place, Jersey City,
N.J. 07311 owned of record 10.12% of the Medical Sciences Class B Shares.
As of December 31, 1999, The Joseph B. Haddad Profit Sharing Plan, Joseph B.
Haddad Trsutee, 5901 Patterson Avenue, Richmond, VA 23226 owned of record 6.98%
of the Internet Fund Class B Shares.
As of December 31, 1999; the following owned (both of record and benefically)
shares of the Telecommunications Fund Class B Shares: Kathy Farr, 2312 Rogers
Avenue, Fort Worth, TX 76109, 6.50%; Largoza Family Living Trust, 3232 So West,
Visalia, CA 93277, 8.14%; William Z. Shulman, 32 Esmond Place, Tenafly, N.J.
07670, 6.01%, George H. Vago, 111 East Kilbourn Avenue, Milwaukee, WI 53202,
5.70%.
As of December 31, 1999, Bear Stearns Securities Corp, 1 Metrotech Center North,
Brooklyn, N.Y. 11201, owned of record 10.49% of the Telecommunications Class B
Shares and 5.12% of the Medical Sciences Fund Class B Shares.
As of December 31, 1999, National Financial Services, Corp. 82 Devonshire Street
Boston, Massachusetts 02109 owned of record 7.79% of the Telecommunications Fund
Class A Shares.
As of December 31, 1999 the Company's directors and officers, as a group, had
beneficial ownership of 1.34% of the shares of the Medical Sciences Fund Class A
Shares, 1.27% of the shares of the Telecommunications Fund Class A Shares and
less than 1% of the InternetFund.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISOR. Monument Advisors, LLC, ("Advisor") located at 7920 Norfolk
Avenue, Suite 500, 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 is a recently organized
company that also manages the portfolio investments of qualified individuals,
retirement plans, and trusts. As of August 31, 1999, Advisors managed or
supervised in excess of $70 million in assets.
Under to the Advisory Agreement with the Company, Advisors receives a monthly
fee from each Fund. This fee is calculated as an annualized rate of 1.00% of the
monthly average net assets of each Fund through $50 million; 0.75% of the
monthly average net assets between $50 and $10 million; and 0.625% of the
monthly average net assets exceeding $100 million. An 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. See the Prospectus
for further detail.
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 Directors) 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 Directors 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
Directors 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 approved by the Board of Directors on October 27,
1997. The Advisory Agreement for the Internet Fund was approved by the Board of
Directors 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 Advisory Agreements will remain in effect for two
years from the date of their execution and will continue in effect from year to
year as long as its continuance is specifically approved at least annually by a
vote of the Board of Directors (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 Directors). 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 Directors 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 ("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 by the Board of Directors. 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
Directors, 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 Directors).
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. The Board of Directors has adopted a Plan of Distribution
pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1 Plan") for Class A Shares
and Class B Shares of each Fund.
RULE 12b-1 PLANS. The Board of Directors, on behalf of the Medical Sciences Fund
and the Telecommunications Fund, unanimously approved a Plan of Distribution
pursuant to Rule 12b-1 ("Plan") on October 27, 1997. A Plan of Distribution was
approved on behalf of the Internet Fund on June 30, 1998. Rule 12b-1 Plans were
approved for Class B Shares effective October 1, 1999.
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 Directors 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. The Plan is
in effect for an initial one year period, and will remain in effect provided
that the Board of Directors (including a majority of Rule 12b-1 Directors
described below) approves its continuance by votes cast in person at an annual
meeting called for that purpose. Rule 12b-1 Directors include those Directors
who are not interested persons of the Company, and who have no direct or
indirect financial interest in the operation of the Plan or any related
agreements.
Pursuant to the Plan, each Fund may finance any activity or expense that is
intended primarily to result in the sale of its shares. Under the Plan, 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 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 Directors 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 Directors 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.
CUSTODIAN, ACCOUNTING AGENT AND TRANSFER AGENT. Star Bank, N.A. located at 425
Walnut Street, Cincinnati, Ohio 45202, Star Bank, N.A. 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. Commonwealth Fund
Accounting, Inc., 1500 Forest Avenue, Suite 111, Richmond, VA 23229, serves as
an investment accounting agent for each Fund's portfolio securities and other
assets. Fund Services, Inc., 1500 Forest Avenue, Suite 111, Richmond, VA 23229,
serves as the transfer agent and dividend dispersing agent for each Fund.
FUND ADMINISTRATION. Pursuant to an Administrative Services Agreement with the
Company dated October 20, 1998 (the "Administrative Agreement"), Commonwealth
Shareholder Services, Inc. ("CSS"), 1500 Forest Avenue, Suite 223, Richmond,
Virginia 23229 serves as administrator of the Fund and supervises all aspects of
the operation of the Fund except those performed by the Investment Advisor. CSS
provides 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, CSS receives an
assets-based administrative fee, computed daily and paid monthly, at the annual
rate of 0.20% subject to a minimum amount of $18,000 per year for a period of
two years from the date of the Administrative Agreement. CSS receives an hourly
rate, plus certain out-of-pocket expenses, for shareholder servicing and state
securities law matters.
INDEPENDENT PUBLIC ACCOUNTANT. Deloitte & Touche LLP, located at 116-300 Village
Boulevard, Princeton, New Jersey 08540, serves as the Company's independent
public accountant.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Advisors, pursuant to the Advisory Agreement and subject to the general control
of the Board of Directors, places all orders for the purchase and sale of
securities of each Fund. In executing portfolio transactions and selecting
brokers and dealers, it is the Company's policy to seek the best combination of
price and execution ("best execution") available. Advisors will consider such
factors as it deems relevant, including the 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.
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
Directors have the ability to elect all of the Directors, with the result that
the holders of the remaining voting shares will not be able to elect any
Director.
The Company does not intend to hold annual shareholder meetings, though it may,
from time to time, hold special meetings of Fund shareholders, as required by
applicable law. The Board of Directors, in its discretion, as well as the
holders of at least 10% of the outstanding shares of a Fund, 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 Maryland law, an
annual shareholder meeting need not be held in any year in which Directors 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 Directors, while the holders
of less than 50% of the shares may not elect any person as a Director.
Shareholders of a particular Fund may have the power to elect all of the
Company's Directors 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 Directors
determines. This may occur daily, or with such frequency as the Board of
Directors 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
Directors 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 Directors 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
Directors) 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 Directors then in office, subject to the
affirmative vote of "a majority of the outstanding voting securities" of that
Fund, as the quoted phrase is defined in the 1940 Act.
PRE-EMPTIVE, 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 Directors may, however, adopt lawful rules
and regulations with reference to the method of transfer). Subject to the 1940
Act, the Board of Directors 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 Directors 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 Directors 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 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 Directors.
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 Directors. 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 Directors 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.
For federal and state income tax purposes, redemptions of a Fund's shares and
exchanges of shares of one Fund for those of another. 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:
n
P(l+T) = ERV
Where:
P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 investment made
at the beginning of the one-, five-, ten-year or shorter period
shown
Average annual total return calculations 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 4.75% 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.] 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 Lbbotson
Associates-historical measure of yield, price, and total return for common
and small company stock, long-term government bonds, Treasury bills, and
inflation.
15. Morningstar - information published by Morningstar, Inc., including
Morningstar proprietary mutual fund ratings. The ratings reflect
Morningstar's assessment of the historical risk adjusted performance of a
fund over specified time periods relative to other funds within its class.
Advertisements also may compare a Fund's performance to the return on
certificate of deposits ("CDs") or other investments. You should be aware,
however, that an investment in a Fund involves the risk of fluctuation of
principal value, a risk generally not present in an investment in a CD issued by
a bank. For example, as the general level of interest rates rise, the value of a
Fund's fixed-income investments, if any, as well as the value of its shares that
are based upon the value of such portfolio investments, can be expected to
decrease. Conversely, when interest rates decrease, the value of a Fund's shares
can be expected to increase. CDs are frequently insured by an agency of the U.S.
Government. An investment in a Fund is not insured by any federal, state or
private entity.
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.
7920 Norfolk Avenue, Suite 500
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 notes thereto for the year ended
October 31, 1999 and the unqualified report of Deloitte & Touche LLP, on such
financial statements (the "Report") are incorporated by reference in 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 (888) 420-9950.
PART C - OTHER INFORMATION
ITEM 23. EXHIBITS
(a) (1) Articles of Incorporation of the
Registrant are herein incorporated by
reference to the Registrant's Initial
Registration from the Statements on
Form N-1A (File Nos. 333-26233 and 811-
8199)filed with the Securities and
Exchange Commission (the "SEC") on
April 30, 1997. Articles Supplementary
of the Registrant are herein incorporated by
reference to Pre-Effective Amendment No. 1
to Registrant's Registration Statement on
Form N-1A (File Nos. 333-26233 and 811-
8199) as filed with the SEC on October 21,
1997.
(2) Articles Supplementary of the Registrant
creating the Monument Internet Fund are herein
incorporated by reference to Post-Effective
Amendment No. 3 to Registrant's Registration
Statement on Form N-1A File Nos. 333-26233 and
811-8199) as filed with the SEC on November 3,
1998.
(3) Articles Supplementary of the Registrant adding
classes of shares to the series of the Registrant
is incorporated by reference to Exhibit
23(a)(3) of Post-Effective Amendment No. 6
to the Registrant's Registration Statement
on Form N-1A (File Nos. 333-26233 and
811-8199) as filed with SEC on August 3,
1999.
(b) By-Laws of the Registrant are incorporated by reference herein
to the Registrant's Registration Statement on Form N-1A (File
Nos. 333-26233 and 811-8199) filed with the SEC on April
30, 1997.
(c) Not Applicable.
(d) (1) Investment Advisory Agreement dated
October 20, 1997 between Monument
Advisors, Ltd. and the Registrant
is herein incorporated by reference to
Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form
N-1A (File Nos. 333-26233 and 811-8199)
as filed with the SEC on December 22,
1997.
(2) Amendment to Schedule A of the Investment
Advisory Agreement dated October 20, 1997
between Monument Advisors, Ltd. and the
Registrant is herein incorporated by
reference to Post-Effective Amendment
No. 3 to Registrant's Registration Statement
on Form N-1A (File Nos. 333-26233 and 811-
8199) as filed with the SEC on November 3,
1998.
(e) (1) Distribution Agreement dated November 27,
1997 between Monument Distributors, Inc. and
the Registrant is herein incorporated by
reference to Pre-Effective Amendment No. 2
to Registrant's Registration Statement on
Form N-1A (File Nos. 333-26233 and 811-8199)
as filed with the SEC on December 22, 1997.
(2) Amendment to the Distribution Agreement
dated November 27, 1997 between Monument
Distributors, Inc. and the Registrant
is herein incorporated by reference to
Post-Effective Amendment No. 3 to
Registrant's Registration Statement on Form
N-1A (File Nos. 333-26233 and 811-8199) as
filed with the SEC on November 3, 1998.
(f) Not Applicable.
(g) (1) Custody Agreement dated October 15, 1998
between Star Bank, N.A. and the Registrant
is incorporated by reference to Post
Effective Amendment No. 5 to Registrant's
Registration Statement on Form N-1A File
Nos. 333-26223 and 811-8199 as filed with
the SEC on April 15, 1999.
(h) (1) Transfer Agency Service Agreement dated
October 1, 1998 between Fund Services, Inc.
and the Registrant is herein incorporated
by reference to Post-Effective Amendment
No. 3 to Registrant's Registration
Statement on Form N-1A (File Nos.
333-26233 and 811-8199) as filed with
the SEC on November 3, 1998.
(2) Administrative Services Agreement dated
October 20, 1998 between Commonwealth
Shareholder Services, Inc. and the
Registrant is herein incorporated by
reference to Post-Effective Amendment No.
3 to Registrant's Registration Statement
on Form N-1A (file Nos. 333-26233 and
811-8199) as filed with the SEC on November 3,
1998.
(3) Accounting Services Agreement between
Commonwealth Fund Accounting and the
Registrant is herein incorporated by
reference to Post Effective Amendment
No. 3 to Registrant's Registration Statement
On Form N-1A (File Nos. 333-26233 and 811-8
8199 as filed with the SEC on November 3,
1998.
(4) Expense Limitation Agreement dated May 1,
1999 between Monument Advisors, Ltd. and Monument
Series Fund, Inc. is incorporated by
reference to Exhibits 23(h)4 of
Post-Effective Amendment No. 6 to the
Registrant's Registration Statement on Form
N-1A (File Nos. 333-26233 and 811-8199) as
filed with SEC on August 3, 1999. Revised
Schedule A to the Expense Limitation
Agreement is filed herewith as Exhibit
23(h)(4).
(i) Opinion and Consent of Counsel as to the legality
of the securities being registered is filed
herewith as Exhibit 23(i).
(j) Consent of Independent Accountants is filed herewith
as Exhibit 23(j).
(k) Not Applicable.
(l) (1) Subscription Agreement, dated November 17,
1997, by and between Monument Series Fund,
Inc. and The Monument Group, Inc. is herein
incorporated by reference to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-26233 and
811-8199) as filed with the SEC on December 22,
1997.
(2) Subscription Agreement, dated December 11,
1997, by and between Monument Series Fund,
Inc. and The Monument Group, Inc. is herein
incorporated by reference to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-26233 and
811-8199) as filed with the SEC on December 22,
1997.
(3) Subscription Agreement, dated December 12,
1997, by and between Monument Series Fund,
Inc. and The Monument Group, Inc. is herein
incorporated by reference to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-26233 and
811-8199) as filed with the SEC on December 22,
1997.
(4) Subscription Agreement, dated November 26,
1997, by and between Monument Series Fund,
Inc. and David A. Kugler is herein incorporated
by reference to Pre-Effective Amendment No. 2
to Registrant's Registration Statement on Form
N-1A (File Nos. 333-26233 and 811-8199) as
filed with the SEC on December 22, 1997.
(5) Subscription Agreement, dated November 21,
1997, by and between Monument Series Fund, Inc.
and Herbert Klein, III is herein incorporated
by reference to Pre-Effective Amendment No.2
to Registrant's Registration Statement on Form
N-1A (File Nos. 333-26233 and 811-8199) as
filed with the SEC on December 22, 1997.
(6) Subscription Agreement, dated December 5,
1997, by and between Monument Series Fund,
Inc. and Herbert Klein, III is herein
incorporated by reference to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-26233 and
811-8199) as filed with the SEC on December 22,
1997.
(7) Subscription Agreement, dated November 18,
1997, by and between Monument Series Fund, Inc.
and John H. Vivadelli is herein incorporated by
reference to Pre- Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-
1A (File Nos. 333-26233 and 811-8199) as filed
with the SEC on December 22, 1997.
(8) Subscription Agreement, dated November 18,
1997, by and between Monument Series Fund,
Inc. and John B. Siewers, II is herein
incorporated by reference to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-26233 and
811-8199) as filed with the SEC on December 22,
1997.
(9) Subscription Agreement, dated November 24,
1997, by and between Monument Series Fund,
Inc. and Francine and Brian Carb is herein
incorporated by reference to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-26233
and 811-8199)as filed with the SEC on December 22, 1997.
(10) Subscription Agreement, dated November 25,
1997, by and between Monument Series Fund,
Inc. and Richard E. and Sarah H. Collier is
herein incorporated by reference to Pre-
Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos.
333-26233 and 811-8199) as filed with the SEC
on December 22, 1997.
(11) Subscription Agreement, dated November 26,
1997, by and between Monument Series Fund,
Inc. and G. Frederic White, III is herein
incorporated by reference to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-26233 and
811-8199) as filed with the SEC on December 22,
1997.
(12) Subscription Agreement, dated December 2,
1997, by and between Monument Series Fund,
Inc. and Victor H. Dates is herein incorporated
by reference to Pre-Effective Amendment No. 2
to Registrant's Registration Statement on Form
N-1A (File Nos.333-26233 and 811-8199) as filed with the
SEC on December 22, 1997.
(13) Subscription Agreement, dated December 3,
1997, by and between Monument Series Fund,
Inc. and Heather and Thomas Young is herein
incorporated by reference to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-2633
and 811-8199) s filed with the SEC on
December 22, 1997.
(14) Subscription Agreement, dated December 5,
1997, by and between Monument Series Fund, Inc.
and Janine and Jeff Coyle is herein
incorporated by reference to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-26233
and 811-8199) as filed with the SEC on December
22, 1997.
(15) Subscription Agreement, dated December 5,
1997, by and between Monument Series Fund,
Inc. and Paul E. Raposo is herein incorporated
by reference to Pre-Effective Amendment No. 2
to Registrant's Registration Statement on Form
N-1A (File Nos. 333-26233 and 811-8199) as
filed with the SEC on December 22, 1997.
(16) Subscription Agreement, dated December 5,
1997, by and between Monument Series Fund,
Inc. and Lynda F. Williams is herein
incorporated by reference to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-26233 and
811-8199) as filed with the SEC on December 22, 1997.
(17) Subscription Agreement, dated December 5,
1997, by and between Monument Series Fund,
Inc. and Jason Alexander is herein incorporated
by reference to Pre-Effective Amendment No. 2
to Registrant's Registration Statement on Form
N-1A (File Nos. 333-26233 and 811-8199) as
filed with the SEC on December 22, 1997.
(18) Subscription Agreement, dated December 10,
1997, by and between Monument Series Fund,
Inc. and Alexander C. Cheung is herein
incorporated by reference to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-26233 and
811-8199) as filed with the SEC on December 22,
1997.
(19) Subscription Agreement, dated December 11,
1997, by and between Monument Series Fund,
Inc. and George DeBakey is herein incorporated
by reference to Pre-Effective Amendment No. 2
to Registrant's Registration Statement on Form
N-1A (File Nos. 333-26233 and 811-8199) as
filed with the SEC on December 22, 1997.
(m) (1) Distribution Plan pursuant to Rule 12b-1 to
Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos.
333-6233 and 811-8199) as filed with the SEC on
December 22, 1997.
(2) Amended Distribution Plan pursuant to Rule
12b-1 dated September 9, 1998 is herein
incorporated by reference to Post-Effective
Amendment No. 3 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-26233 and
811-8199) as filed with the SEC on November 3,
1998.
(n) Rule 18f-3 Multiple Class Plan relating to Class A, Class B and
Class Y is filed herewith as Exhibit 23(n)(1).
(o) Not Applicable.
(p) Powers of Attorney of Francine Carb, Victor Dates,
George DeBakey, G. Frederic White, III and Rhonda
Wiles-Roberson are incorporated by reference to
Exhibits 23(p) 1 through 5 of Post-Effective Amendment
No. 6 to the Registrant's Registration Statement on
Form N-1A (File Nos. 333-26233 and 811-8199) as filed
with SEC on August 3, 1999.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT.
None.
ITEM 25. INDEMNIFICATION.
Under Section 2-418 of Maryland General Corporation Law, a corporation may
indemnify certain Directors, officers, employees, or agents. Consistent with
Maryland law, Article Seventh of Registrant's Articles of Incorporation
("Articles") permits it to indemnify its Directors and officer to the fullest
extent permitted by law. In addition, Section 10 of Registrant's By-Laws permits
it to insure and indemnify its Directors, officers, employees and agents to the
fullest extent permitted by law. The above-cited provisions of Registrant's
Articles and By-Laws, which were filed with the initial filing of this
Registration Statement, are incorporated by reference into this Item.
The Registrant has entered into agreements with various service providers,
pursuant to which Directors, offices and employees of the Registrant have been
indemnified, to the extent permitted by applicable law. These agreements have
been filed as exhibits to this Registration Statement, and are hereby
incorporated by reference into this Item to the extent necessary.
Insofar as indemnification for liabilities arising under Securities Act of
1933 (the "1933 Act") may be permitted to Directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer of controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISOR.
Monument Advisors, Ltd., ("Advisors"), the Registrant's investment adviser,
located 7920 Norfolk Avenue, Suite 500, Bethesda, Maryland 20814, acts as
manager or adviser to qualified individuals, retirement plans, charitable
foundations and trusts. David A. Kugler is an officer of Advisors. Mr. Kugler
was an account executive for Paine Webber, Inc., located at 100 East Pratt
Street, Baltimore, Maryland 21202, from September 1994 through January 1997. Mr.
Kugler now serves as President of The Monument Group, Inc., Monument
Distributors, Inc., and the Registrant, in addition to Advisors. The principal
business address for each of the Monument entities listed above is identical to
that of Advisors.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) None
(b)
Name and Principal Position and Office Positions and
Business Address with Underwriter Offices with Fund
David A. Kugler President, Chairman, President
7920 Norfolk Avenue Treasurer and and Treasurer
Suite 500 Director
Bethesda, MD 20814
(c) Not Applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books or other documents of the Registrant required to be
maintained by Section 31 (a) of the Investment Company Act of 1940, as amended,
and the rules promulgated thereunder are kept in several locations:
(a) Shareholder account records (including share
ledgers, duplicate confirmations, duplicate account
statements and applications (forms)of the Registrant
are maintained by its transfer agent, Fund Services,
Inc., at 1500 Forest Avenue, Suite 111, Richmond,
VA. 23229.
(b) Investment records including research information, Records
relating to the placement of brokerage transactions,
memorandums regarding investment recommendations for
supporting and/or authorizing the purchase or sale of assets,
information relating to the placement of securities
transactions, certain records and compliance records
concerning investment recommendations
of the Monument Series Fund, Inc. are maintained
at the series' investment advisor, Monument
Advisors, Ltd., at 7929 Norfolk Avenue, Suite 500,
Bethesda, Maryland 20814.
(c) Accounts and records for portfolio securities and
other investment assets, including cash, are
maintained in the custody of the Registrant's
custodian bank, Star Bank, N.A., 425 Walnut Street,
P.O. Box 1118, Cincinnati, Ohio 45201-1118.
(d) Accounting records, including general ledgers, supporting
ledgers, pricing computations, etc. are maintained by the
Registrant's accounting services agent, Commonwealth Fund
Accounting, 1500 Forest Avenue, Suite 111, Richmond, Virginia
23229.
(e) Administrative records, including copies of the
charter, by-laws, agreements, and reports, certain
shareholder communications, etc., are kept by the
Registrant's Administrator, Commonwealth Shareholder
Services, Inc. at 1500 Forest Avenue, Suite 223,
Richmond, Virginia 23229.
(f) Records relating to distribution of shares of the
Registrant are maintained by the Registrant's
distributor, Monument Distributors, Inc. at 7920
Norfolk Avenue, Suite 500, Bethesda, Maryland 20814
ITEM 29. MANAGEMENT SERVICES
There are no management-related service contracts not discussed in
Parts A or B of this Form.
ITEM 30. UNDERTAKINGS.
The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post Effective Amendment No. 7 to the Registration Statement has been
signed by the following persons in the capacities and on the date indicated
below.
(Signature) (Title) (Date)
/s/David A. Kugler President and Director January 18, 2000
David A. Kugler
* Director January 18, 2000
Francine F. Carb
* Director January 18, 2000
Victor Dates
* Director January 18, 2000
George DeBakey
* Director January 18, 2000
G. Frederic White, III
* Director January 18, 2000
Rhonda Wiles-Roberson
*By ___________________
David A. Kugler
(Attorney-in-Fact)
Exhibit No. EXHIBIT INDEX EDGAR
EXHIBIT #
- -----------------------------------------------------------------------------
Exhibit 23(h)(4) Revised Schedule A to Expense
Limitation Agreement Ex.99.85.1
Exhibit 23(i) Opinion and Consent of Counsel Ex.99.85.2
Exhibit 23(j) Consent of Independent Accountants Ex.99.85.3
Exhibit 23(n) 18f-3 Plan Ex.99.85.4
Exhibit 27.1 Financial Data Schedule Ex.99.85.6
Monument Medical Sciences Fund
Exhibit 27.2 Monument Telecommunications Fund Ex.99.85.7
Exhibit 27.3 Monument Internet Fund Ex.99.85.8
Exhibit 23(h)(4)
SCHEDULE A
OPERATING EXPENSE LIMITS
October 1, 1999
This Agreement relates to the following Portfolios of the Fund:
Maximum Operating
Expense Limit
(as a percentage of
Name of Portfolio average net assets)
- --------------------------- -------------------
Monument Telecommunications Fund (formerly Washington Aggressive
Growth Fund)
Class A Shares 1.90%
Class B Shares 2.40%
Monument Medical Sciences Fund
Class A Shares 1.90%
Class B Shares 2.40%
Exhibit 23(i)
January 11, 2000
Opinion and Consent of Counsel
Monument Series Fund, Inc.
7920 Norfolk Avenue
Suite 500
Bethesda, Maryland 20814
Ladies and Gentlemen:
This opinion is given in connection with the filing with the Securities
and Exchange Commission ("SEC") by Monument Series Fund, Inc., a Maryland
corporation ("Company"), of Post-Effective Amendment No. 7 to the Registration
Statement on Form N-1A ("Registration Statement") under the Securities Act of
1933, as amended ("1933 Act") and Amendment No. 9 under the Investment Company
Act of 1940 ("1940 Act") (File Nos. 333-26223 and 811-8199) relating to Class A,
Class B and Class Y shares of beneficial interest, at a par value of $.001 per
share, of three separate series of the Trust: (i) Monument Medical Sciences
Fund; (ii) Monument Telecommunications Fund; and (iii) Monument Internet Fund.
The authorized shares of beneficial interest of the Portfolios are referred to
in this opinion as the "Shares."
This firm has examined the following documents: Articles of Incorporation;
Articles of Amendment; By-Laws; Registration Statement on Form N-1A filed on
April 30, 1997; Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A filed on October 21, 1997; Pre-Effective Amendment No. 2 to the
Registration Statement on Form N-1A filed on December 27, 1997; Post-Effective
Amendment No. 1 to the Registration Statement on Form N-1A filed on June 12,
1998; Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A
filed on September 29, 1998; Post-Effective Amendment No. 3 to the Registration
Statement on Form N-1A filed on November 3, 1998; Post-Effective Amendment No. 4
to the Registration Statement on Form N-1A filed on March 1, 1999;
Post-Effective Amendment No. 5 to the Registration Statement on Form N-1A filed
on April 15, 1999; Post-Effective Amendment No. 6 to the Registration Statement
on Form N-1A filed on August 3, 1999; and Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A to be filed on or about January 14, 2000;
pertinent provisions of the laws of the State of Maryland; and such other
corporate records, certificates, documents and statutes that this firm has
deemed relevant in order to render the opinion expressed in this letter.
Based on the examination, this firm is of the opinion that:
1. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the
State of Maryland; and
2. The Shares to be offered for sale by the Company, when issued in the
manner contemplated by the Registration Statement, as amended, will
be legally issued, fully-paid and non-assessable.
This letter expresses the firm's opinion as to the Maryland General
Corporation Law, governing matters such as the due organization of the Company
and the authorization and issuance of the Shares, but does not extend to the
securities or "Blue Sky" laws of Maryland or to federal securities or other
laws.
This firm consents to the use of this opinion as an exhibit to the
Registration Statement, as amended.
Very truly yours,
BETH-ANN ROTH, P.C.
<PAGE>
Exhibit 23(j)
CONSENT OF INDEPENDENT AUDITORS
Monument Series Fund, Inc.:
We consent to the incorporation by reference in this Post-Effective Amendment
No. 7 to Registration Statement No. 333-26223 of our auditors' reports included
in the Annual Reports to Shareholders for the year ended October 31, 1999 and to
the reference to us under the caption "Financial Highlights Information"
appearing in the Prospectus, which is a part of such Registration Statement.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
January 13, 2000
Exhibit 23(n)
RULE 18f-3
MULTIPLE CLASS PLAN
WHEREAS, Monument Series Fund, Inc., a Maryland corporation
(the "Corporation"), engages in business as an open-end
management investment company and is registered as such under the
Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Corporation is authorized to create separate series, each
with its own separate investment portfolio, and the beneficial interest in each
such series will be represented by a separate series of shares (each series is
hereinafter individually referred to as a "Fund" and collectively, the "Funds");
WHEREAS, the Corporation, on behalf of the Funds listed on Schedule A, as
such Schedule A may be amended from time to time, desires to adopt a Multiple
Class Plan pursuant to Rule 18f-3 under the 1940 Act ("Plan");
WHEREAS, the Corporation, on behalf of the Funds, employs
Monument Advisors, Inc. ("the Advisor") as its investment
adviser; Commonwealth Shareholder Services, Inc. ("the
Administrator") as its administrator; and Fund Services,
Inc.("the Transfer Agent") as its transfer agent; and Monument
Distributors, Inc. (the "Distributor") as distributor of the
securities of the Funds; and
WHEREAS, the Board of Directors of the Corporation, including a majority
of the Directors of the Corporation who are not "interested persons", as defined
in the 1940 Act, of the Corporation, the Advisor, or the Distributors
("Independent Directors") have found the Plan, as proposed, to be in the best
interests of each class of shares individually, each Fund, and the Corporation
as a whole;
NOW, THEREFORE, the Corporation, on behalf of the Funds, hereby adopts the
Plan, in accordance with Rule 18f-3 under the 1940 Act on the following terms
and conditions:
1. Features of the Classes. Each of the Funds shall offer, at
the discretion of the Board and as indicated on
Schedule A, up to three classes of shares: "Class A
Shares," "Class B Shares," and "Class I Shares."
Shares of each class of a Fund shall represent an equal
pro rata interest in such Fund and, generally, shall
have identical voting, dividend, distribution,
liquidation, and other rights, preferences, powers,
restrictions, limitations, qualifications, and terms
and conditions, except that: (a) each class shall have
a different designation; (b) each class of shares shall
bear any Class Expenses, as defined in Section 3 below;
(c) each class shall have exclusive voting rights on
any matter submitted to shareholders that relates
solely to its distribution arrangements; and (d) each
class shall have separate voting rights on any matter
submitted to shareholders in which the interests of one
class different from the interests of any other class.
In addition, Class A, Class B, and Class I Shares of a
Fund shall have the features described in Sections 2,
3, and 4 below.
2. Distribution Fee Structure.
(a) Class A Shares. Class A Shares of a Fund shall be offered
at their then current net asset value ("NAV") plus an
initial sale charge as set forth in the then-current
prospectus. Pursuant to Rule 12b-1 under the 1940 Act,
on behalf of the Funds, the Corporation has adopted a
distribution plan ("Distribution Plan"), as amended.
The Distribution Plan authorizes a Fund to make
payments for distribution services at an annual rate of
up to .50% of the average daily net assets of a Fund's
Class A Shares. Class A Shares of a Fund may be
exchanged for Class A Shares of another Fund of the
Company.
(b) Class B Shares. Class B Shares of a Fund shall be offered
at their then current NAV without the imposition of an
initial sales charge but are subject to a contingent
deferred sales charge ("CDSC") payable upon certain
redemptions as set forth in the Fund's then-current
prospectus. Class B Shares may be exchanged for Class B
Shares of another Fund of the company. Class B Shares
of a Fund will automatically convert to Class A Shares
of the Fund on the first business day of the month in
which the eighth anniversary of the issuance of the
Class B Shares occurs. The conversions will be
effected at the relative net assets values per share of
the two classes. Class B Shares pay a Rule
12b-1-service fee of up to .50% (annualized) of the
average daily net assets of a Fund's Class B Shares, as
described in the Distribution Plan, as amended.
Brokers, dealers and other institutions may maintain
Class B shareholder accounts and provide personal
services to Class B shareholders. Services related to
the sale of Class B Shares may include, but not limited
to, preparation, printing and distribution of
prospectuses, sales literature and advertising
materials by the Company's distributor, or, as
applicable, brokers, dealers or other institutions;
commissions, incentive compensation to, and expenses
of, account executives or other employees of the
Company's distributor or brokers, dealers and other
institutions; overhead and other office expenses of the
Company's distributor attributable to distribution or
sales support activities; opportunity costs related to
the foregoing (which may be calculated as a carrying
charge on the Company's distributor unreimbursed
expenses) incurred in connection with distribution or
sales support activities. The overhead and other
office expenses referenced above may include, without
limitation, (a) the expenses of operating the Company's
distributor's offices in connection with the sale of
the Class B Shares of the Funds, including lease costs,
the salaries and employee benefit costs of
administrative, operations and support activities, (b)
the costs of client sales seminars and travel related
to distribution and sales support activities, and (c)
other expenses relating to distribution and sales
support activities.
(c) Class I Shares. Class I Shares of a Fund shall be offered
at their then-current NAV without the imposition of an
initial sales charge, CDSC, asset-based sales or
service fee under the Distribution Plan (discussed
above). Class I Shares are only offered to certain
investors meeting the minimum investment as described
in the then-current prospectus offered to Class I Share
investors.
3. Allocation of Income and Expenses.
(a) The net asset value of all outstanding shares representing interests
in a Fund shall be computed on the same days and at the same time. For purposes
of computing net asset value, the gross investment income of each Fund shall be
allocated to each class on the basis of the relative net assets of each class at
the beginning of the day adjusted for capital share activity for each class as
of the prior day as reported by the Fund's transfer agent. Realized and
unrealized gains and losses for each class will be allocated based on relative
net assets at the beginning of the day, adjusted for capital share activity for
each class of the prior day, as reported by the Fund's transfer agent. To the
extent practicable, certain expenses, (other than Class Expenses as defined
below, which shall be allocated more specifically), shall be allocated to each
class based on the relative net assets of each class at the beginning of the
day, adjusted for capital share activity for each class as of the prior day, as
reported by the Fund's transfer agent. Allocated expenses to each class shall be
subtracted from allocated gross income. These expenses include:
(1) Expenses incurred by the Corporation (for example, fees of
Directors, auditors, insurance costs, and legal counsel) that
are not attributable to a particular Fund or class of shares of
such Fund ("Corporation Level Expenses"); and
(2) Expenses incurred by each Fund that are not attributable to any
particular class of the Fund's shares (for example, advisory fees,
custodial fees, banking charges, organizational costs, federal and Blue
Sky registration fees, or other expenses relating to the management of the
Fund's assets) ("Fund Expenses").
(b) Class Expenses. Expenses attributable to a particular class ("Class
Expenses") shall be limited to: (i) payments made pursuant to the Distribution
Plan; (ii) transfer agent fees attributable to a specific class; (iii) printing
and postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current shareholders of a
specific class; (iv) the expense of administrative personnel and services to
support the shareholders of a specific class, including, but not limited to,
fees and expenses under an administrative service agreement; (v) litigation or
other legal expenses relating solely to one class; and (vi) directors' fees
incurred as a result of issues relating to one class. Expenses in category (i)
above must be allocated to the class for which such expenses are incurred. All
other "Class Expenses" listed in categories (ii)-(vi) above may be allocated to
a class but only if an officer of the Corporation has determined, subject to
Board approval or ratification, which of such categories of expenses will be
treated as Class Expenses consistent with applicable legal principles under the
1940 Act and the Internal Revenue Code of 1986 ("Code").
(c) Therefore, expenses of the Fund shall be apportioned to each class of
shares depending on the nature of the expense item. Corporation Level Expenses
and Fund Expenses shall be allocated among the classes of shares based on their
relative net asset values. Approved Class Expenses shall be allocated to the
particular class to which they are attributable. In addition, certain expenses
may be allocated differently if their method of imposition changes. Thus, if a
Class Expense can no longer be attributed to a class, it shall be charged to the
Fund for allocation among the classes, as determined by the Board of Directors.
Any additional Class Expenses not specifically identified above that are
subsequently identified and determined to be properly allocated to one class of
shares shall not be so allocated until approved by the Board of Directors of the
Corporation in light of the requirements of the 1940 Act and the Code.
4. Exchange Privileges. The Class A, Class B, and Class I Shares of a Fund
may be exchanged at their relative NAVs for: (i) Class A, Class B, or Class I
Shares within the same Class of another Monument Series Fund or (ii) if the
Monument Series Fund does not have multiple classes of shares, the existing
shares of another Monument Series fund. Purchases of Fund shares by exchange are
subject to the same minimum investment requirements and other criteria imposed
for purchases made in any other manner.
5. Conversion Features. 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 two classes, no later than the month following the
eighth anniversary of the initial issuance of such Class B shares of the Fund.
Class A or Class I Shares will not have conversion features.
6. Quarterly and Annual Report. The Directors shall receive quarterly and
annual written reports concerning all allocated Class Expenses and expenditures
under the Distribution Plan complying with paragraph (b)(3)(ii) of Rule 12b-1.
The reports, including the allocations upon which they are based, shall be
subject to the review and approval of the Independent Directors in the exercise
of their fiduciary duties.
7. Waiver or Reimbursement of Expense. Expenses may be
waived or reimbursed by the Advisor or any other provider of
services to the Funds without the prior approval of the
Corporation's Board of Directors.
8. Effectiveness of Plan. The Plan shall not take effect until it has been
approved by votes of a majority of both (a) the Directors of the Corporation and
(b) those Directors of the Corporation who are not "interested persons" of the
Corporation, the Advisor, or the Distributor (as defined in the 1940 Act) and
who have no direct or indirect financial interest in the operation of this Plan,
cast in person at a meeting (or meetings) called for the purpose of voting on
this Plan.
9. Material Modifications. This Plan may not be amended
to materially modify its terms unless such amendment is approved
in the manner provided for initial approval in Paragraph 8 hereof.
10. Limitation of Liability. The Directors and the shareholders of the
Funds shall not be liable for any obligations of the Funds under this Plan, and
any person in asserting any rights or claims under this Plan shall look only to
the assets and property of the Funds in settlement of such right or claim and
not to such Directors or shareholders.
IN WITNESS WHEREOF, the Corporation, on behalf of the Funds, has adopted
this Multiple Class Plan effective as of the 7th day of August, 1999.
Monument Series Fund, Inc.
By: David A. Kugler
Title: President
<PAGE>
SCHEDULE A
The Funds of the Corporation currently subject to this Multiple Class Plan
are as follows:
Date of Addition
Fund/Class to this Multiple Class Plan
Monument Internet Fund August 7, 1999
* Class A
* Class B
* Class I
Monument Medical Sciences Fund August 7, 1999
* Class A
* Class B
* Class I
Monument Telecommunications Fund August 7, 1999
* Class A
* Class B
* Class I
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001037813
<NAME> MONUMENT SERIES FUND
<SERIES>
<NUMBER> 1
<NAME> MONUMENT MEDICAL SCIENCES FUND
<S> <C> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999 OCT-31-1999
<PERIOD-END> OCT-31-1999 OCT-31-1999
<INVESTMENTS-AT-COST> 1337257 1337257
<INVESTMENTS-AT-VALUE> 1436452 1436452
<RECEIVABLES> 31833 31833
<ASSETS-OTHER> 69279 69279
<OTHER-ITEMS-ASSETS> 0 0
<TOTAL-ASSETS> 1537564 1537564
<PAYABLE-FOR-SECURITIES> 105993 105993
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 6038 6038
<TOTAL-LIABILITIES> 112031 112031
<SENIOR-EQUITY> 0 0
<PAID-IN-CAPITAL-COMMON> 1265513 1265513
<SHARES-COMMON-STOCK> 86920 1554
<SHARES-COMMON-PRIOR> 22003 0
<ACCUMULATED-NII-CURRENT> (5218) (5218)
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 66043 66043
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 99195 99195
<NET-ASSETS> 1425533 25029
<DIVIDEND-INCOME> 1738 1738
<INTEREST-INCOME> 3504 3504
<OTHER-INCOME> 0 0
<EXPENSES-NET> 11227 11227
<NET-INVESTMENT-INCOME> (5985) (5985)
<REALIZED-GAINS-CURRENT> 79912 79912
<APPREC-INCREASE-CURRENT> 95953 95953
<NET-CHANGE-FROM-OPS> 169880 169880
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 0 0
<DISTRIBUTIONS-OF-GAINS> 0 0
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 77108 1554
<NUMBER-OF-SHARES-REDEEMED> 10972 0
<SHARES-REINVESTED> 0 0
<NET-CHANGE-IN-ASSETS> 1211084 1211084
<ACCUMULATED-NII-PRIOR> 0 0
<ACCUMULATED-GAINS-PRIOR> 0 0
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 6009 6009
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 100521 100521
<AVERAGE-NET-ASSETS> 599794 20512
<PER-SHARE-NAV-BEGIN> 10.32 16.95
<PER-SHARE-NII> (.10) (.01)
<PER-SHARE-GAIN-APPREC> 5.86 (.83)
<PER-SHARE-DIVIDEND> 0 0
<PER-SHARE-DISTRIBUTIONS> 0 0
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 16.08 16.11
<EXPENSE-RATIO> 1.87 2.40
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> MONUMENT TELECOMMUNICATIONS FUND
<S> <C> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999 OCT-31-1999
<PERIOD-END> OCT-31-1999 OCT-31-1999
<INVESTMENTS-AT-COST> 502476 502476
<INVESTMENTS-AT-VALUE> 588820 588820
<RECEIVABLES> 104473 104473
<ASSETS-OTHER> 71035 71035
<OTHER-ITEMS-ASSETS> 0 0
<TOTAL-ASSETS> 764328 764328
<PAYABLE-FOR-SECURITIES> 98281 98281
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 7842 7842
<TOTAL-LIABILITIES> 106123 106123
<SENIOR-EQUITY> 0 0
<PAID-IN-CAPITAL-COMMON> 465276 4657276
<SHARES-COMMON-STOCK> 29713 3247
<SHARES-COMMON-PRIOR> 19032 0
<ACCUMULATED-NII-CURRENT> (3104) (3104)
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 109688 109688
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 86345 86345
<NET-ASSETS> 593347 64858
<DIVIDEND-INCOME> 41 41
<INTEREST-INCOME> 1092 1092
<OTHER-INCOME> 0 0
<EXPENSES-NET> 4825 4825
<NET-INVESTMENT-INCOME> (3692) (3692)
<REALIZED-GAINS-CURRENT> 118345 118345
<APPREC-INCREASE-CURRENT> 81187 81187
<NET-CHANGE-FROM-OPS> 195840 195840
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 0 0
<DISTRIBUTIONS-OF-GAINS> 0 0
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 29967 3247
<NUMBER-OF-SHARES-REDEEMED> 17064 0
<SHARES-REINVESTED> 0 0
<NET-CHANGE-IN-ASSETS> 477046 477046
<ACCUMULATED-NII-PRIOR> 0 0
<ACCUMULATED-GAINS-PRIOR> 0 0
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 2621 2621
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 97157 97157
<AVERAGE-NET-ASSETS> 259830 36166
<PER-SHARE-NAV-BEGIN> 10.78 17.65
<PER-SHARE-NII> (.14) (.03)
<PER-SHARE-GAIN-APPREC> 9.33 2.35
<PER-SHARE-DIVIDEND> 0 0
<PER-SHARE-DISTRIBUTIONS> 0 0
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 19.97 19.97
<EXPENSE-RATIO> 1.84 2.40
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> MONUMENT INTERNET FUND
<S> <C> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999 OCT-31-1999
<PERIOD-END> OCT-31-1999 OCT-31-1999
<INVESTMENTS-AT-COST> 56518599 56518599
<INVESTMENTS-AT-VALUE> 64587540 64587540
<RECEIVABLES> 2178282 2178282
<ASSETS-OTHER> 9724 9724
<OTHER-ITEMS-ASSETS> 0 0
<TOTAL-ASSETS> 66775546 66775546
<PAYABLE-FOR-SECURITIES> 1310289 1310289
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 168069 168069
<TOTAL-LIABILITIES> 1478358 1478358
<SENIOR-EQUITY> 0 0
<PAID-IN-CAPITAL-COMMON> 57965640 57965640
<SHARES-COMMON-STOCK> 2126190 51834
<SHARES-COMMON-PRIOR> 0 0
<ACCUMULATED-NII-CURRENT> (697707) (697707)
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> (39686) (39686)
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 8068941 8068941
<NET-ASSETS> 63744908 1552280
<DIVIDEND-INCOME> 1048 1048
<INTEREST-INCOME> 88526 88526
<OTHER-INCOME> 0 0
<EXPENSES-NET> 787281 787281
<NET-INVESTMENT-INCOME> (67700) (67700)
<REALIZED-GAINS-CURRENT> (39686) (39686)
<APPREC-INCREASE-CURRENT> 8068941 8068941
<NET-CHANGE-FROM-OPS> 7331548 7331548
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 0 0
<DISTRIBUTIONS-OF-GAINS> 0 0
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 2793649 51834
<NUMBER-OF-SHARES-REDEEMED> 667459 0
<SHARES-REINVESTED> 0 0
<NET-CHANGE-IN-ASSETS> 65297188 65297188
<ACCUMULATED-NII-PRIOR> 0 0
<ACCUMULATED-GAINS-PRIOR> 0 0
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 288039 288039
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 787281 787281
<AVERAGE-NET-ASSETS> 29773087 611634
<PER-SHARE-NAV-BEGIN> 10.00 27.09
<PER-SHARE-NII> (.33) (.03)
<PER-SHARE-GAIN-APPREC> 20.31 2.88
<PER-SHARE-DIVIDEND> 0 0
<PER-SHARE-DISTRIBUTIONS> 0 0
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 29.98 29.94
<EXPENSE-RATIO> 2.84 3.54
</TABLE>
Beth-ann Roth, P.C.
9204 Saint Marks Place
Fairfax, Virginia 22031-3046
(703) 352-0095
(703) 352-2329 (fax)
(admitted in Florida and the District of Columbia)
January 18, 2000
Filing Desk
Securities & Exchange Commission
450 Fifth St., N.W.
Washington, D.C. 20549
RE: Monument Series Fund, Inc. (the "Fund")
File Nos. 33-26223 and 811-8199
Dear Commissioners:
Electronically transmitted for filing, under the Securities Act of 1933
("1933 Act") and the Investment Company Act of 1940 ("1940 Act") pursuant to
Rule 485(a) under the 1933 Act, is Post-Effective Amendment No. 7 under the 1933
Act and Amendment No. 9 under the 1940 Act to the Fund's Registration Statement.
The primary purpose of this filing is to reflect a change to the sales
charge applicable to each of the series of the Fund, which is being raised from
4.75% to 5.75%. In addition, the Fund will begin to engage in options
transactions and securities lending. Accordingly, appropriate disclosure is
being added to the prospectus, and the disclosure in the Statement of Additional
Information is being enhanced.
We hereby respectfully request acceleration of this filing to January 26
or sooner, if possible. As soon as this filing becomes effective, the Fund
intends to file Post-Effective Amendment No. 8 in order to add disclosure
relating to several material changes that are proposed to be adopted, as well as
to add two additional series. The Fund believes it is in the best interest of
the Fund for the changes proposed in this filing to become effective as soon as
possible, rather than to await the effectiveness of the changes proposed to be
made in the Fund's next filing.
If you have any questions, please call me at (703) 352-0095.
Sincerely,
Beth-ann Roth
cc: David A. Kugler
Mary Cole
