<PAGE>
CENTURION FUNDS, INC.
Centurion U.S. Contra Fund
Centurion U.S. Equity Fund
Centurion International Equity Fund
ANNUAL REPORT
September 30, 2000
This report is authorized for distribution to shareholders and to others only
when accompanied or preceded by a current prospectus of the Fund.
NOT FDIC INSURED *NOT BANK GUARANTEED* MAY LOOSE VALUE
<PAGE>
Dear Shareholder:
We are pleased to provide the annual report for the Centurion Funds, Inc.
("Fund") for the year ended September 30, 2000. As you may know, our company is
a no-load mutual fund complex currently offering three separate diversified
investment portfolios ("Portfolio(s)")./1/ The Portfolios are designed for
professional money managers and knowledgeable investors who intend to invest in
them as part of a strategic asset allocation investment strategy./2/ In this
report we summarized the period's prevailing economic and market conditions and
outlined our portfolio strategies.
Please note the information provided in this letter represents the opinion of
the Portfolio Managers and is not intended to be a forecast of future events, a
guarantee of future results nor investment advice. Further, there is no
assurance that certain securities will remain in or out of the Portfolios.
Please refer to pages 9 through 14 for a list of each Portfolio's holdings.
Also, please note any discussion of the Portfolios' holdings is as of September
30, 2000 and is subject to change. We hope you find this report to be useful and
informative.
The Performance of the Centurion Funds/3/
Total returns for the year ended September 30, 2000
Centurion U.S. Contra Fund (49.75)%
Centurion U.S. Equity Fund 3.27
Centurion International Equity Fund 12.37
Market Update and Outlook
U.S. Equity Markets
For much of the past twelve months, the stock market has been influenced by two
dominant themes -- the direction of interest rates and the uncertain future of
the Internet. The Federal Reserve Board's ("Fed's") decision to steadily
increase short-term interest rates during the period, in our opinion, caused
many investors to question the durability of broad U.S. economic growth and the
accompanying sustainability of the current bull market in stocks.
Since the beginning of the year, a market shift has occurred, leaving many
investors who invested in technology and high-growth companies distressed and
investors in financial, energy, and utility stocks encouraged. The Standard &
Poor's technology sector gained 80.6% during 1999, but dropped more than 11%
this year through September 30, 2000. The winning sectors within the Standard &
Poor's 500 Index ("S&P 500 Index")/4/ in 2000 have been utilities, financial,
health care and energy sectors which recorded gains of 52.56%, 23.06%, 22.61%
and 13.51%, respectively. It was not that long ago that many investors
________________
1 The fourth investment portfolio, the Centurion International Contra-Fund is
not currently being offered.
2 The Portfolios are not designed to be used as a stand-alone investment
product, but rather, are to be used with certain other investments to provide
a balance to the risks inherent in those investments.
3 The performance figures shown above represent past performance, which is not
indicative of future results. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
4 S&P 500 Index is a market capitalization - weighted measure of 500 widely
held common stocks. Please note An investor cannot invest directly in an
index.
1
<PAGE>
favored owning only technology stocks, which were then valued at lofty price-to-
earnings ratios. By the end of the period, the prices of many of these former
stock favorites have since fallen. Moreover, by the end of the period, there was
a shift in the market's leadership, as "Old Economy"/5/ stocks reemerged and the
prospects for "New Economy"/6/ stocks dimmed. Some analysts viewed the turnabout
as a new aversion to risk and a greater appreciation for the stocks of companies
with underlying value and real profitability. Lackluster performance merely
brought the latest in what, for most investors, has so far been a very
disappointing 2000.
However, despite recent higher stock market volatility, for the year ended
September 30, 2000 the markets' major indices recorded positive returns. For
example, the Dow Jones Industrial Average ("DJIA"),/7/ the S&P 500 Index, the
Russell 2000 Index ("Russell 2000")/8/ and the Nasdaq Composite Index/9/
returned 4.57%, 13.28%, 23.39% and 33.74% for the year ended September 30, 2000,
respectively.
International Equity Markets
Beyond the shores of the U.S., investors in stocks sought positive surprises and
good news but overwhelmingly were left with little to cheer about. Global
investors faced a worrisome combination of rising energy prices, concern about
U.S. interest rates, a plunging euro/10/ and continued concerns about corruption
in Asia. The speculation surrounding technology, media and telecommunications
stocks in the second quarter of 2000 made for a relatively volatile third
quarter, causing these stocks to register significant losses that wiped-out the
previous gains recorded earlier in the year. No particular global region offered
investors a safe-haven from market turbulence.
In Europe, many investors were preoccupied by the coordinated central-bank
intervention on behalf of the euro with optimists betting that a bottom had been
established for the currency. The euro has fallen as much as 28% against the
dollar since its inception in January 1999, closing the third quarter of 2000 at
88 cents.
While we do expect strong European growth this year, rising energy costs and the
interest rate pressures created by the weakness of the euro may reduce economic
growth in continental Europe. Yet, despite rising interest rates, industry may
continue to benefit from the lagging effects of a weak euro, and ongoing
structural reforms.
Earnings growth in Japan is accelerating and 1999 earnings growth marked a
turnaround for many Japanese corporations. In our view, revenue growth was the
primary source of improvement with margins bearing the brunt of R&D and pension
liability write-offs. We think the scope for improving returns for Japan is
sizable and a combination of technological innovation, more transparent
accounting and the unwinding of cross shareholding relationships may induce
Japanese managements to improve shareholder returns. Over the past quarter,
revisions to earnings forecasts in Japan have been positive and despite recent
doubts about European spending, strong technology spending worldwide should help
support technology companies in Japan.
________________
5 The Old Economy represents more established, "blue-chip" companies.
6 The New Economy represents those companies in the technology,
telecommunications and Internet sectors.
7 DJIA is a price-weighted average of 30 actively traded blue-chip stocks. An
investor cannot invest directly in an index.
8 Russell 2000 measures the performance of the 2,000 smallest companies in the
Russell 3000 Index. An investor cannot invest directly in an index.
9 The Nasdaq Composite Index is a market value-weighted index that measures all
domestic and non-U.S. based securities listed on the NASDAQ stock market. An
investor cannot invest directly in an index.
10 The euro is the single currency of the European Monetary Union that was
adopted by Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal and Spain on January 1, 1999.
2
<PAGE>
Centurion U.S. Contra Fund
The Centurion U.S. Contra Fund ("Portfolio") seeks to provide a degree of
protection against declines in the value of the U.S. equity allocation of
certain assets custodied with our company. Credit Swisse Asset Management
("CSAM") is the sub-advisor. We advise CSAM of the level and nature of downside
protection desired by employing statistical and quantitative analysis.
CSAM seeks to provide returns that move counter to the direction of the broad-
based U.S. equity marketplace, as measured by the S&P 500 Index. Centurion makes
use of the Portfolio in combination with other asset class exposures with the
objective of limiting downside return. CSAM invests primarily in S&P 500 Index
put options, S&P 500 Index futures contracts and cash equivalents such as U.S.
Treasury bills. CSAM actively manages their use of S&P 500 put options and
futures contracts in an attempt to minimize the cost of delivering the desired
degree of protection against marketplace declines. We are committed to our
strategy regardless of market conditions and therefore will not invest the
Portfolio's holdings, in the aggregate, in anticipation of rising U.S. stock
prices.
For the year ended September 30, 2000, the Portfolio returned a negative 49.75%.
In comparison, the S&P 500 Index returned 13.28% for the same period.
Centurion U.S. Equity Fund
The Centurion U.S. Equity Fund ("Portfolio") seeks to provide long-term growth
consistent with reasonable efforts to preserve capital. The Portfolio invests
primarily in common stocks and other equity securities of U.S. issuers with
total market capitalizations greater than $1 billion at the time of purchase.
Please note that effective March 15, 2000, Trainer, Wortham & Co. Inc. ("Trainer
Wortham") replaced Parametric Portfolio Associates ("Parametric") as the
Portfolio's new interim sub-advisor pending shareholder approval. At the
shareholder meeting held on March 31, 2000, Trainer Wortham was approved as the
Portfolio's new sub-advisor. CSAM, the Portfolio's other sub-advisor, continues
to conduct the Portfolio's investment program. In addition, effective March 15,
2000, the Portfolio's performance benchmark was changed from the Russell 3000
Index ("Ruseell 3000")/11/ to the S&P 500 Index.
Trainer Wortham employs a "bottom-up" stock fundamental analysis process that
target companies with the following qualities:
. Large capitalization, high quality, industry leaders;
. Financially sound with solid, proven management; and
. Consistent earnings growth rates above those of the market.
For the year ended September 30, 2000, the Portfolio generated a return of
3.27%. In comparison, the S&P 500 Index returned 13.28% for the same period.
Centurion International Equity Fund
The Centurion International Equity ("Portfolio") seeks to provide long-term
growth consistent with reasonable efforts to preserve capital. The Portfolio
continues to be managed by two sub-advisors, Friends, Ivory and Sime ("FISI")
and CSAM. FISI seeks to provide investment returns that over the long-term
________________
11 Russell 3000 measures the performance of the 3,000 largest U.S. companies
based on total market capitalization. An investor cannot invest directly in
an index.
3
<PAGE>
correspond to the performance of the Morgan Stanley Capital International
Europe, Australasia and Far East Index ("MSCI EAFE Index")/12/. FISI invests
primarily in common stocks and other securities of non-U.S. issues with total
market capitalizations greater than $1 billion at the time of purchase, while
CSAM uses certain hedging techniques designed to protect against or otherwise
cushion price declines in the value of the Portfolio's holding.
For the year ended September 30, 2000, the Portfolio returned 12.37%. In
comparison, the MSCI EAFE Index returned 3.18% for the same period.
Thank you for investing with Centurion Funds, Inc. We are committed to seeking
to provide you with competitive performance in the years ahead, and we look
forward to serving your financial needs in the future.
Sincerely,
Gerard P. Dipoto, Jr.
Chairman
October 17, 2000
________________
12 MSCI EAFE is an unmanaged index of common stocks of companies located in
Europe, Australasia and the Far East. An investor cannot invest directly in
an index.
4
<PAGE>
Centurion U.S. Contra Fund
Historical Performance
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
================================================================================
9/30/00 $ 7.55 $3.62 $0.22 $0.00 (49.75)%
--------------------------------------------------------------------------------
12/7/98* - 9/30/99 10.00 7.55 0.00 0.00 (24.50)**
================================================================================
Total $0.22 $0.00
================================================================================
Centurion U.S. Equity Fund
Historical Performance
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
================================================================================
9/30/00 $10.40 $10.74 $0.00 $0.00 3.27%
--------------------------------------------------------------------------------
12/7/98* - 9/30/99 10.00 10.40 0.00 0.00 4.00**
================================================================================
Total $0.00 $0.00
================================================================================
Centurion International Equity Fund
Historical Performance
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
================================================================================
9/30/00 $10.73 $11.53 $0.10 $0.46 12.37%
--------------------------------------------------------------------------------
12/7/98* - 9/30/99 10.00 10.73 0.00 0.00 7.30**
================================================================================
Total $0.10 $0.46
================================================================================
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
Average Annual Total Returns/(1)/
Centurion Centurion Centurion
U.S. Contra U.S. Equity International
Fund Fund Equity Fund
================================================================================
Year Ended 9/30/00 (49.75)% 3.27% 12.37%
--------------------------------------------------------------------------------
12/7/98* through 9/30/00 (41.35) 4.01 10.85
================================================================================
Cumulative Total Returns/(1)/
Centurion Centurion Centurion
U.S. Contra U.S. Equity International
Fund Fund Equity Fund
================================================================================
12/7/98* through 9/30/00 (62.06)% 7.40% 20.57%
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions.
* Commencement of operations.
** Total return is not annualized, as it may not be representative of the
total return for the year.
5
<PAGE>
Historical Performance (unaudited)
Growth of $10,000 Invested in Shares of
Centurion U.S. Contra Fund vs. Standard & Poor's 500 Index*
December 1998 -- September 2000
<TABLE>
<CAPTION>
Centurion 2500
Date U.S. Contra Fund -- $3,794 Stock Index Index -- $11,935
<S> <C> <C> <C>
12/7/98 10,000 10,000 0.00%
12/31/1998 9,300 10,000 0.00%
3/31/1999 8,250 10,498 4.98%
6/30/1999 6,780 11,238 7.05%
9/30/1999 7,550 10,537 -6.24%
12/31/1999 4,800 12,104 14.87%
3/31/2000 3,847 12,381 2.29%
9/30/2000 3,794 11,935 -3.60%
</TABLE>
* Hypothetical illustration of $10,000 invested in shares of Centurion U.S.
Contra Fund on December 7, 1998 (commencement of operations), assuming
reinvestment of dividends and capital gains, if any, at net asset value
through September 30, 2000. The Standard & Poor's 500 Index is composed of
widely held common stocks listed on the New York Stock Exchange, American
Stock Exchange and the over-the-counter market. Figures for the index
include reinvestment of dividends. The index is unmanaged and is not subject
to the same management and trading expenses as a mutual fund. An investor
cannot invest directly in an index.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and the
redemption value may be more or less than the original cost. No adjustment
has been made for shareholders tax liability on dividends or capital gains.
6
<PAGE>
Historical Performance (unaudited)
Growth of $10,000 Invested in Shares of Centurion U.S. Equity Fund
vs. Standard & Poor's 500 Index and Russell 3000 Index*
December 1998--September 2000
<TABLE>
<CAPTION>
Date Centurion U.S. Equity Fund -- Standard & Poor's 500 Russell 3000 Index** -- $12,296
$10,740 Index** -- $11,935
<S> <C> <C> <C>
12/7/98 10,000 10,000 10,000
12/31/1998 10,340 10,000 10,000
3/31/1999 10,480 10,498 10,339
6/30/1999 10,900 11,238 11,136
9/30/1999 10,400 10,537 10,402
12/31/1999 11,560 12,104 12,090
3/31/2000 11,590 12,381 12,642
9/30/2000 10,740 11,935 12,296
</TABLE>
* Hypothetical illustration of $10,000 invested in shares of Centurion U.S.
Equity Fund on December 7, 1998 (commencement of operations), assuming
reinvestment of dividends and capital gains, if any, at net asset value
through September 30, 2000. The Standard & Poor's 500 Index is composed of
widely held common stocks listed on the New York Stock Exchange, American
Stock Exchange and the over-the-counter market. Figures for the index
include reinvestment of dividends. The Russell 3000 Index is composed of the
3,000 largest U.S. Securities, as determined by total market capitalization.
This portfolio of securities represents approximately 98% of the investable
U.S. equity market. The index is unmanaged and is not subject to the same
management and trading expenses as a mutual fund. An investor cannot invest
directly in an index.
** It is the opinion of management that the Standard & Poor's 500 Index is a
more appropriate broad-based benchmark for the market in which the Portfolio
invests than the Russell 3000 Index. In future reporting, the Standard &
Poor's 500 Index will be used as a basis of comparison of total return
performance rather than the Russell 3000 Index.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and the
redemption value may be more or less than the original cost. No adjustment
has been made for shareholders tax liability on dividends or capital gains.
7
<PAGE>
Historical Performance (unaudited)
Growth of $10,000 Invested in Shares of
Centurion Internation Equity Fund vs. MSCI EAFE Index*
December 1998--September 2000
<TABLE>
<CAPTION>
Date Centurion International Equity MSCI EAFE
Fund -- $12,057 Index -- $11,198
<S> <C> <C> <C>
12/7/98 10,000 10,000 0.00%
12/31/1998 10,280 10,000 0.00%
3/31/1999 10,290 10,139 1.39%
6/30/1999 10,570 10,397 2.54%
9/30/1999 10,730 10,853 4.39%
12/31/1999 13,395 12,697 16.99%
3/31/2000 13,688 12,683 -0.11%
9/30/2000 12,057 11,198 -11.71%
</TABLE>
* Hypothetical illustration of $10,000 invested in shares of the Centurion
International Equity Fund on December 7, 1998 (commencement of operations),
assuming reinvestment of dividends and capital gains, if any, at net asset
value through September 30, 2000. The Morgan Stanley Capital International
("MSCI") EAFE Index is a composite portfolio consisting of equity total
returns for the countries of Europe, Australasia and the Far East. The MSCI
EAFE Index is weighted based on each company's market capitalization. The
index is unmanaged and is not subject to the same management and trading
expenses as a mutual fund. An investor cannot invest directly in an index.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and the
redemption value may be more or less than the original cost. No adjustment
has been made for shareholders tax liability on dividends or capital gains.
8
<PAGE>
Schedules of Investment September 30, 2000
CENTURION U.S. CONTRA FUND
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
=============================================================================================
<S> <C> <C>
U.S. TREASURY BILL - 5.1%
$1,000,000 U.S. Treasury Bill, 6.067% due 3/1/01
(Cost - $974,940) $ 974,940
=============================================================================================
CONTRACTS SECURITY VALUE
=============================================================================================
PURCHASED OPTIONS - 94.9%
102,300 S&P 500 Index, Put @ 1525, Expire 12/00* 9,130,275
45,900 S&P 500 Index, Put @ 1650, Expire 12/00* 8,944,763
---------------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS
(Cost - $15,038,546) 18,075,038
=============================================================================================
TOTAL INVESTMENTS - 100%
(Cost - $16,013,486**) $ 19,049,978
=============================================================================================
</TABLE>
* All or a portion of this security is segregated for futures contracts
commitments.
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
9
<PAGE>
Schedules of Investment (continued) September 30, 2000
CENTURION U.S. EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
---------------------------------------------------------------------------------------------------
COMMON STOCK - 97.5%
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Banking - 3.5%
26,175 Wells Fargo & Co. $ 1,202,414
---------------------------------------------------------------------------------------------------
Biotechnology - 8.5%
16,890 Amgen Inc.* 1,179,397
14,800 PE Corp. - PE Biosystems Group 1,724,200
---------------------------------------------------------------------------------------------------
2,903,597
---------------------------------------------------------------------------------------------------
Computers - 12.7%
20,171 Cisco Systems, Inc.*+ 1,114,448
16,338 EMC Corp.* 1,619,504
13,794 Sun Microsystems, Inc.* 1,610,450
---------------------------------------------------------------------------------------------------
4,344,402
---------------------------------------------------------------------------------------------------
Electric - 3.0%
14,925 The AES Corp.* 1,022,363
---------------------------------------------------------------------------------------------------
Electronics - 3.5%
13,015 Sanmina Corp.* 1,218,529
---------------------------------------------------------------------------------------------------
Financial Services - 3.3%
12,254 Morgan Stanley Dean Witter & Co. 1,120,475
---------------------------------------------------------------------------------------------------
Insurance - 3.4%
12,187 American International Group, Inc. 1,166,144
---------------------------------------------------------------------------------------------------
Media - 6.5%
46,300 AT&T Corp. - Liberty Media Corp., Class A Shares*+ 833,400
6,800 Clear Channel Communications, Inc.* 384,200
13,100 Time Warner Inc. 1,025,075
---------------------------------------------------------------------------------------------------
2,242,675
---------------------------------------------------------------------------------------------------
Miscellaneous Manufacturer - 3.7%
21,849 General Electric Co. 1,260,414
---------------------------------------------------------------------------------------------------
Pharmaceutical - 3.9%
30,112 Pfizer Inc. 1,353,158
---------------------------------------------------------------------------------------------------
Retail - 2.6%
15,350 Kohl's Corp.* 885,503
---------------------------------------------------------------------------------------------------
Semiconductor - 9.8%
17,738 Altera Corp.* 846,990
7,325 Broadcom Corp., Class A Shares* 1,785,469
18,288 Intel Corp. 760,095
---------------------------------------------------------------------------------------------------
3,392,554
---------------------------------------------------------------------------------------------------
Software - 11.9%
10,450 Inktomi Corp.* 1,191,300
8,920 Microsoft Corp.* 537,430
13,275 Oracle Corp.* 1,045,406
11,675 Siebel Systems, Inc.* 1,299,573
---------------------------------------------------------------------------------------------------
4,073,709
---------------------------------------------------------------------------------------------------
Telecommunication Equipment - 17.8%
13,125 JDS Uniphase Corp.* 1,242,773
11,475 Network Appliance, Inc.* 1,461,628
26,375 Nokia Oyj - Sponsored ADR 1,050,055
</TABLE>
See Notes to Financial Statements
10
<PAGE>
Schedules of Investments (continued) September 30, 2000
CENTURION U.S. EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
==============================================================================================
<S> <C> <C>
Telecommunication Equipment - 17.8% (continued)
17,900 Nortel Networks Corp. $ 1,066,169
18,225 QUALCOMM Inc.* 1,298,531
----------------------------------------------------------------------------------------------
6,119,156
----------------------------------------------------------------------------------------------
Telecommunications - 3.4%
24,250 Qwest Communications International Inc.* 1,165,516
----------------------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost - $29,178,329) 33,470,609
==============================================================================================
CONTRACTS SECURITY VALUE
==============================================================================================
PURCHASED OPTIONS - 1.9%
1,300 NASDAQ 100 Stock Index, Put @ 3500, Expire 12/00 305,500
4,000 S&P 500 Index, Put @ 1525, Expire 12/00 357,000
----------------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS
(Cost - $571,159) 662,500
==============================================================================================
FACE
AMOUNT SECURITY VALUE
==============================================================================================
SHORT-TERM INSTRUMENT - 0.6%
==============================================================================================
U.S. Treasury Bill - 0.6%
$200,000 U.S. Treasury Bill, 6.067% due 3/1/01
(Cost - $194,988) 194,988
==============================================================================================
TOTAL INVESTMENTS - 100%
(Cost - $29,944,476**) $ 34,328,097
==============================================================================================
</TABLE>
* Non-income producing security.
+ All or a portion of this security is segregated for futures contracts
commitments.
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
11
<PAGE>
Schedules of Investments (continued) September 30, 2000
CENTURION INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
===========================================================================================================
COMMON STOCK - 87.1%
===========================================================================================================
<S> <C> <C>
Finland - 3.7%
19,812 Nokia Oyj (a) $ 788,768
8,241 Sonera Oyj (b) 209,454
-----------------------------------------------------------------------------------------------------------
998,222
-----------------------------------------------------------------------------------------------------------
France - 13.4%
12,900 Aventis S.A. (a) 967,665
3,200 France Telecom S.A. (b) 342,834
14,000 Societe Generale, Class A Shares (b) 782,692
3,375 Suez Lyonnaise des Eaux S.A. (b) 523,313
4,600 Total Fina Elf S.A. (b) 673,067
4,915 Vivendi S.A. (b) 365,217
-----------------------------------------------------------------------------------------------------------
3,654,788
-----------------------------------------------------------------------------------------------------------
Germany - 5.1%
1,250 Allianz A.G. (b) 413,121
2,100 Sap A.G. (b) 530,031
3,500 Siemens A.G. (b) 457,754
-----------------------------------------------------------------------------------------------------------
1,400,906
-----------------------------------------------------------------------------------------------------------
Italy - 1.0%
50,317 ENI S.p.A. (b) 267,317
-----------------------------------------------------------------------------------------------------------
Japan - 21.9%
47,000 The Bank of Tokyo - Mitsubishi, Ltd. (b) 555,422
33,000 Kao Corp. (b) 900,888
44 Nippon Telegraph & Telephone Corp. (a) 431,612
36 NTT Data Corp. (b) 333,148
5,800 ORIX Corp. (b) 693,466
3,400 Rohm Co., Ltd. (b) 931,649
7,000 Secom Co., Ltd. (a) 562,928
7,700 Sony Corp. (c) 780,973
11,000 Takeda Chemical Industries, Ltd. (b) 726,818
6,000 TOSHIBA Corp. (b) 48,362
-----------------------------------------------------------------------------------------------------------
5,965,266
-----------------------------------------------------------------------------------------------------------
Netherlands - 6.8%
11,308 ING Groep N.V. (b) 753,241
14,778 Koninklijke Philips Electronics N.V. (b) 636,040
9,129 VNU N.V. (b) (d) 459,213
-----------------------------------------------------------------------------------------------------------
1,848,494
-----------------------------------------------------------------------------------------------------------
Spain - 3.8%
51,120 Banco Santander Central Hispano, S.A. (b) 561,212
23,830 Telefonica, S.A.(b) (d) 472,140
-----------------------------------------------------------------------------------------------------------
1,033,352
-----------------------------------------------------------------------------------------------------------
Sweden - 5.2%
15,631 Securitas AB, Class B Shares 341,568
22,656 Skandia Forsakrings, AB 449,215
41,200 Telefonaktiebolaget LM Ericsson AB, Class B Shares 626,575
-----------------------------------------------------------------------------------------------------------
1,417,358
-----------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Schedules of Investments (continued) September 30, 2000
CENTURION INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
----------------------------------------------------------------------------------------------
<S> <C> <C>
Switzerland - 2.8%
373 Nestle S.A., Registered Shares (b) $776,903
----------------------------------------------------------------------------------------------
Taiwan - 0.7%
9,728 Taiwan Semiconductor Manufacturing Co., Ltd. (d) 198,208
----------------------------------------------------------------------------------------------
United Kingdom - 20.6%
40,932 British Telecommunications PLC (b) 430,283
27,925 Glaxo Wellcome PLC (b) 842,688
39,856 Kingfisher PLC (b) 260,605
33,068 Marconi PLC (b) 452,731
38,442 Prudential PLC (b) 523,465
21,412 Reuters Group PLC (a) 405,535
28,480 Royal Bank of Scotland Group PLC (b) 600,457
89,511 Shell Transport & Trading Co. (b) 730,529
365,847 Vodafone Group PLC (a) 1,364,434
----------------------------------------------------------------------------------------------
5,610,727
----------------------------------------------------------------------------------------------
United States - 2.1%
48,000 iShares MSCI Hong Kong 582,000
----------------------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost - $20,127,606) 23,753,541
----------------------------------------------------------------------------------------------
CONTRACTS SECURITY VALUE
----------------------------------------------------------------------------------------------
PURCHASED OPTIONS - 2.0%
----------------------------------------------------------------------------------------------
Call Options - 0.4%
640 Amsterdam Stock Index, Call @ 680, Expire 12/00 9,037
170 CAC 40 Stock Index, Call @ 6700, Expire 12/00 21,419
150 DAX Stock Index, Call @ 7250, Expire 12/00 16,242
160 FTSE 100 Stock Index, Call @ 6675, Expire 12/00 24,106
10,740 Nikkei 225 Stock Index, Call @ 16500, Expire 12/00 32,302
110 Swiss Market Stock Index, Call @ 8150, Expire 12/00 8,299
----------------------------------------------------------------------------------------------
111,405
----------------------------------------------------------------------------------------------
Put Options - 1.6%
Amsterdam Stock Index:
640 Put @ 680, Expire 12/00 18,074
800 Put @ 680, Expire 10/00 14,332
170 CAC 40 Stock Index, Put @ 6700, Expire 12/00 74,647
150 DAX Stock Index, Put @ 7250, Expire 12/00 65,698
160 FTSE 100 Stock Index, Put @ 6675, Expire 12/00 100,183
10,740 Nikkei 225 Stock Index, Put @ 16500, Expire 12/00 109,328
Swiss Market Stock Index:
110 Put @ 7900, Expire 12/00 15,879
110 Put @ 8150, Expire 12/00 24,203
----------------------------------------------------------------------------------------------
422,344
----------------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS
(Cost - $482,691) 533,749
----------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Schedules of Investments (continued) September 30, 2000
CENTURION INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INSTRUMENT - 10.9%
Commercial Paper - 10.9%
$ 2,980,000 Homeside Lending Inc., 6.700% due 10/2/00
(Cost - $2,978,891) $ 2,978,891
-----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100%
(Cost - $23,589,188*) $27,266,181
-----------------------------------------------------------------------------------------------
</TABLE>
(a) All or a portion of this security is segregated for futures contracts
commitments.
(b) All or a portion of this security is segregated for open forward foreign
currency contracts.
(c) All or a portion of this security is segregated for extended settlements.
(d) Non-income producing security.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
14
<PAGE>
Statements of Assets and Liabilities September 30,2000
<TABLE>
<CAPTION>
Centurion
Centurion Centurion International
U.S. Contra U.S. Equity Equity
Fund Fund Fund
==========================================================================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost - $16,013,486,
$29,944,476 and $23,589,188, respectively) $ 19,049,978 $ 34,328,097 $ 27,266,181
Cash & foreign currency segregated for futures
at value (Cost - $1,399,903) - - 1,387,963
Cash 5,884,110 1,580,001 -
Dividends and interest receivable 23,715 3,634 64,756
Receivable from broker - variation margin 228,575 22,300 171,675
Receivable from manager 24,270 - -
Receivable from affiliate 11,644 - -
Receivable for Fund shares sold 23,411 9,727 8,766
Receivable for securities sold - 139,731 250,783
Receivable for open forward foreign currency
contracts (Note 8) - - 13,977
-----------------------------------------------------------------------------------------------------------------------
Total Assets 25,245,703 36,083,490 29,164,101
-----------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for Fund shares redeemed 27,767 53,215 48,928
Administration fees payable 6,729 5,466 4,335
Management fees payable 3,010 21,561 15,714
Consulting fees payable - 1,381 1,179
Payable for open forward
foreign currency contracts (Note 8) - - 160,023
Payable for securities purchased - - 48,513
Payable to bank - - 22,109
Options written (Premiuns received - $28,863) (Note 6) - - 18,242
Accrued expenses 19,967 31,118 43,101
-----------------------------------------------------------------------------------------------------------------------
Total Liabilities 57,473 112,741 362,144
-----------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 25,188,230 $ 35,970,749 $ 28,801,957
=======================================================================================================================
NET ASSETS:
Par value of capital stock $ 6,952 $ 3,350 $ 2,498
Capital paid in excess of par value 55,654,349 32,426,307 22,271,983
Undistributed net investment income 301,431 - -
Accumulated net realized gain (loss) from security
transactions, futures contracts and options (34,630,482) (922,479) 2,829,428
Net unrealized appreciation of investments,
futures contracts, options and foreign currencies 3,855,980 4,463,571 3,698,048
-----------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 25,188,230 $ 35,970,749 $ 28,801,957
=======================================================================================================================
Shares Outstanding 6,952,059 3,350,100 2,497,963
-----------------------------------------------------------------------------------------------------------------------
Net Asset Value, per share $ 3.62 $ 10.74 $ 11.53
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
15
<PAGE>
Statements of Operations For the Year Ended September 30, 2000
<TABLE>
<CAPTION>
Centurion
Centurion Centurion International
U.S. Contra U.S. Equity Equity
Fund Fund Fund
====================================================================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 853,203 $ 113,224 $ 208,267
Dividends - 205,513 338,587
Less: Foreign withholding tax - - (36,800)
--------------------------------------------------------------------------------------------------------------------
Total Investment Income 853,203 318,737 510,054
--------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 279,316 244,538 238,192
Audit and legal 54,000 45,954 49,773
Administration fees (Note 2) 50,000 67,825 63,518
Registration fees 25,000 21,140 32,310
Shareholder and system servicing fees 15,500 16,526 15,526
Consulting fees (Note 2) 11,638 16,951 16,411
Directors' fees 10,000 14,958 15,961
Insurance 10,000 9,938 9,872
Shareholder communications 5,000 5,979 5,976
Custody 1,000 12,959 17,044
Pricing service fees - - 4,384
Other 5,001 9,960 7,969
--------------------------------------------------------------------------------------------------------------------
Total Expenses 466,455 466,728 476,936
Less: Management fee and consulting fee waiver (Note 2) (117,376) - -
--------------------------------------------------------------------------------------------------------------------
Net Expenses 349,079 466,728 476,936
--------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 504,124 (147,991) 33,118
--------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES
CONTRACTS, OPTIONS AND FOREIGN CURRENCIES (NOTES 3, 5, 6 AND 8):
Realized Gain (Loss) From:
Security transactions (excluding short-term securities) - 3,637,856 3,597,772
Futures contracts (1,519,748) (481,096) (989,497)
Options purchased (16,865,696) (1,438,349) (636,709)
Foreign currency transactions - - 1,153,408
--------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) (18,385,444) 1,718,411 3,124,974
--------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Unrealized Appreciation
of Investments, Futures Contracts, Options and
Foreign Currencies:
Beginning of year 3,299,315 5,659,083 2,793,709
End of year 3,855,980 4,463,571 3,698,048
--------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Unrealized Appreciation 556,665 (1,195,512) 904,339
--------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) on Investments, Futures Contracts,
Options and Foreign Currencies (17,828,779) 522,899 4,029,313
--------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations $ (17,324,655) $ 374,908 $ 4,062,431
====================================================================================================================
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Statements of Changes in Net Assets For the Year Ended September 30, 2000
<TABLE>
<CAPTION>
Centurion
Centurion Centurion International
U.S. Contra U.S. Equity Equity
Fund Fund Fund
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 504,124 $ (147,991) $ 33,118
Net realized gain (loss) (18,385,444) 1,718,411 3,124,974
Increase (decrease) in net
unrealized appreciation 556,665 (1,195,512) 904,339
----------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Operations (17,324,655) 374,908 4,062,431
----------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (980,335) - (275,003)
Net realized gains - - (1,228,544)
----------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (980,335) - (1,503,547)
----------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Net proceeds from sale of shares 22,612,972 18,376,350 10,162,683
Net asset value of shares issued for
reinvestment of dividends 980,335 - 1,503,547
Cost of shares reacquired (8,692,668) (15,108,984) (16,841,194)
----------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions 14,900,639 3,267,366 (5,174,964)
----------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (3,404,351) 3,642,274 (2,616,080)
NET ASSETS:
Beginning of year 28,592,581 32,328,475 31,418,037
----------------------------------------------------------------------------------------------------------------
End of year* $ 25,188,230 $ 35,970,749 $ 28,801,957
================================================================================================================
* Includes undistributed net investment
income of: $ 301,431 $ - $ -
----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
17
<PAGE>
Statements of Changes in Net Assets For the Year Ended September 30, 1999(a)
<TABLE>
<CAPTION>
Centurion
Centurion Centurion International
U.S. Contra U.S. Equity Equity
Fund Fund Fund
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 736,559 $ (57,186) $ 218,367
Net realized gain (loss) (16,245,038) (2,645,165) 688,578
Increase in net unrealized appreciation 3,299,315 5,659,083 2,793,709
------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Operations (12,209,164) 2,956,732 3,700,654
------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - - -
------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From
Distributions to Shareholders - - -
------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Net proceeds from sale of shares 87,816,165 68,184,942 87,912,971
Cost of shares reacquired (47,014,420) (38,813,199) (60,195,588)
------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 40,801,745 29,371,743 27,717,383
------------------------------------------------------------------------------------------------------------------
Increase in Net Assets 28,592,581 32,328,475 31,418,037
NET ASSETS:
Beginning of period - - -
------------------------------------------------------------------------------------------------------------------
End of period* $ 28,592,581 $ 32,328,475 $ 31,418,037
==================================================================================================================
* Includes undistributed (overdistributed)
net investment income of: $ 777,642 - $ (166,744)
==================================================================================================================
(a) For the period from December 7, 1998 (commencement of operations) to September 30, 1999.
</TABLE>
See Notes to Financial Statements
18
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
Centurion Funds, Inc. ("Fund"), a Maryland Corporation, is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund consists of three separate investment
portfolios ("Portfolios"): Centurion U.S. Contra Fund ("U.S. Contra Fund"),
Centurion U.S. Equity Fund ("U.S. Equity Fund") and Centurion International
Equity Fund ("International Equity Fund").
The significant accounting policies consistently followed by the Fund are:
(a) security transactions are accounted for on trade date; (b) securities traded
on national securities markets are valued at the closing prices on such markets;
securities for which no sales price was reported and U.S. government and agency
obligations are valued at the mean between bid and ask prices; (c) securities
for which market quotations are not available will be valued in good faith at
fair value by or under the direction of the Board of Directors; (d) securities
maturing within 60 days are valued at cost plus accreted discount, or minus
amortized premium, which approximates value; (e) dividend income is recorded on
the ex-dividend date; foreign dividend income is recorded on the ex-dividend
date or as soon as practical after the Fund determines the existence of a
dividend declaration after exercising reasonable due diligence; (f) interest
income, adjusted for amortization of premium and accretion of discount, is
recorded on the accrual basis; (g) gains or losses on the sale of securities are
calculated by using the specific identification method; (h) dividends and
distributions to shareholders are recorded on the ex-dividend date; (i) the
accounting records are maintained in U.S. Dollars. All assets and liabilities
denominated in foreign currencies are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, and income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian bank;
(j) the character of income and gains distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. At September 30, 2000, reclassifications were made to the capital
accounts of U.S. Equity Fund and International Equity Fund to reflect permanent
book/tax differences and income and gains available for distributions under
income tax regulations. Accordingly, a portion of accumulated net investment
income (loss) amounting to $(151,254) and and $(211,423) was reclassified to
paid-in capital for U.S. Equity Fund and International Equity Fund,
respectively. Net investment income, net realized income and net assets were not
affected by this change; and (k) estimates and assumptions are required to be
made regarding assets, liabilities and changes in net assets resulting from
operations when financial statements are prepared. Changes in the economic
environment, financial markets and any other parameters used in determining
these estimates could cause actual results to differ.
In addition, the International Equity Portfolio may enter into forward
exchange contracts in order to hedge against foreign currency risk. These
contracts are marked to market daily, by recognizing the difference between the
contract exchange rate and the current market rate as an unrealized gain or
loss. Realized gains or losses are recognized when the contracts are settled.
2. Management Agreement
Centurion Trust Company ("Centurion") acts as investment manager of the
Portfolios. U.S. Equity Fund and International Equity Fund pay Centurion a
management fee calculated at an annual rate based on the average daily net
assets as follows:
<TABLE>
<CAPTION>
U.S. Equity Fund International Equity Fund
-------------------------------------------- -------------------------------------------------
Annual Annual
Average Daily Net Assets Rate Average Daily Net Assets Rate
-------------------------------------------- -------------------------------------------------
<S> <C> <C> <C>
First $25 Million 0.750% First $50 Million 0.750%
Over $25 Million 0.700 Next $50 Million 0.725
Over $100 Million 0.700
</TABLE>
19
<PAGE>
Notes to Financial Statements (continued)
U.S. Contra Fund pays Centurion a management fee calculated at an annual rate
of 1.20% of the average daily net assets. These fees are calculated daily and
paid monthly. For the year ended September 30, 2000, Centurion waived a portion
of its management fee for U.S. Contra Fund in the amount of $105,738.
SSB Citi Fund Management LLC ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as the Portfolios' administrator for which each Portfolio
pays a fee calculated at an annual rate of 0.20% of the respective Portfolio's
average daily net assets or a minimum of $50,000 for each portfolio depending
upon which amount is greater. This fee is calculated daily and paid monthly.
Salomon Smith Barney Inc., another subsidiary of SSBH, through its Consulting
Group, also receives a fee for consulting services at an annual rate of 0.05% of
the respective Portfolio's daily net assets. This fee is calculated daily and
paid monthly. For the year ended September 30, 2000, SSBC waived all of its
consulting fees for U.S. Contra Fund in the amount of $11,638.
Centurion has entered into sub-advisory agreements with Credit Suisse Asset
Management, Trainer, Wortham & Company Inc. and Friends Ivory & Sime, Inc.
Pursuant to the sub-advisory agreement, each sub-advisor is responsible for the
day-to-day portfolio operations and investment decisions of the Portfolio. The
sub-advisors for each Portfolio are as follows:
<TABLE>
<CAPTION>
Sub-Advisor
Portfolio Sub-Advisors Fee
====================================================================================================
<S> <C> <C>
U.S. Contra Fund Credit Suisse Asset Management 0.850%
U.S. Equity Fund Trainer, Wortham & Company, Inc.:
on the first $25 million 0.300
on the amount over $25 million 0.250
Credit Suisse Asset Management 0.100
International Equity Fund Friends Ivory & Sime, Inc.:
on the first $50 million 0.300
on the next $50 million 0.275
on the amount over $100 million 0.250
Credit Suisse Asset Management 0.100
====================================================================================================
</TABLE>
3. Investments
During the year ended September 30, 2000, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
<TABLE>
<CAPTION>
International
U.S. Contra U.S. Equity Equity
Fund Fund Fund
====================================================================================================
<S> <C> <C> <C>
Purchases --- $44,479,798 $ 4,996,790
----------------------------------------------------------------------------------------------------
Sales --- 44,580,911 15,468,701
====================================================================================================
</TABLE>
At September 30, 2000, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
<TABLE>
<CAPTION>
U.S. Contra U.S. Equity International
Fund Fund Equity Fund
====================================================================================================
<S> <C> <C> <C>
Gross unrealized appreciation $3,036,492 $7,054,033 $ 5,036,212
Gross unrealized depreciation --- (2,670,412) (1,359,219)
----------------------------------------------------------------------------------------------------
Net unrealized appreciation $3,036,492 $4,383,621 $3,676,993
====================================================================================================
</TABLE>
20
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
4. Repurchase Agreements
The Portfolios purchase (and its custodian takes possession of) U.S.
government securities from banks and securities dealers subject to agreements to
resell the securities to the seller at a future date (generally, the next
business day) at an agreed-upon higher repurchase price. The Portfolios require
maintenance of the market value (plus accrued interest) of the collateral in
amounts at least equal to the repurchase price.
5. Futures Contracts
Initial margin deposits made upon entering into futures contracts are
recognized as assets. Securities or cash equal to the initial margin amount are
segregated by the custodian in the name of the broker. Additional securities are
also segregated up to the current market value of the futures contract. During
the period the futures contract is open, changes in the value of the contract
are recognized as unrealized gains or losses by "marking to market" on a daily
basis to reflect the market value of the contract at the end of each day's
trading. Variation margin payments are made or received and recognized as assets
due from or liabilities due to broker, depending upon whether unrealized gains
or losses are incurred. When the contract is closed the Portfolios record a
realized gain or loss equal to the difference between the proceeds from (or cost
of) the closing transactions and the Portfolio's basis in the contract.
The Portfolios enter into such contracts to hedge a portion of its portfolio.
The Portfolios bear the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts) and the credit
risk should a counterparty fail to perform under such contracts.
At September 30, 2000, the Portfolios had the following open futures
contracts:
<TABLE>
<CAPTION>
U.S. Contra Fund
# of Basis Market Unrealized
Contracts Expiration Value Value Gain
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sold Contracts:
S&P 500 Index 41 12/00 $15,719,913 $14,900,425 $819,488
-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
U.S. Equity Fund
# of Basis Market Unrealized
Contracts Expiration Value Value Gain
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sold Contracts:
S&P 500 Index 4 12/00 $1,533,650 $1,453,700 $79,950
-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
International Equity Fund
# of Basis Market Unrealized
Contracts Expiration Value Value Gain (Loss)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sold Contracts:
Marche A Terme International
de France Cac 40 Euro Index 17 10/00 $ 940,886 $ 944,036 $ (3,150)
London Financial Times
Stock Exchange 100 Index 19 12/00 1,843,789 1,785,780 58,009
Simex Nikkei 225 Index 27 12/00 2,042,754 1,970,781 71,973
Eurex Deutschland DAX Index 5 12/00 803,133 758,291 44,842
-----------------------------------------------------------------------------------------------------------------------------------
$5,630,562 $5,458,888 $ 171,674
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Notes to Financial Statements (continued)
6. Option Contracts
Premiums paid when put or call options are purchased by the Portfolios
represent investments which are marked-to-market daily. When a purchased option
expires, the Portfolios will realize a loss in the amount of the premium paid.
When the Portfolios enter into a closing sales transaction, the Portfolios will
realize a gain or loss depending on whether the proceeds from the closing sales
transaction are greater or less than the premium paid for the option. When the
Portfolios exercise a put option, it will realize a gain or loss from the sale
of the underlying security and the proceeds from such sales will be decreased by
the premium originally paid. When the Portfolios exercise a call option, the
cost of the security which the Portfolios purchase upon exercise will be
increased by the premium originally paid.
At September 30, 2000, U.S. Contra Fund, U.S. Equity Fund and International
Equity Fund held purchased put options with a total cost of $15,038,546,
$571,159 and $248,326, respectively. In addition, the International Equity Fund
held purchased call options with a total cost of $234,365.
When a Portfolio writes a call or put option, an amount equal to the premium
received by the Portfolio is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Portfolio realizes a
gain equal to the amount of the premium received. When the Portfolio enters into
a closing purchase transaction, the Portfolio realizes a gain or loss depending
upon whether the cost of the closing transaction is greater or less than the
premium originally received without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is eliminated.
When a call option is exercised the proceeds of the security sold will be
increased by the premium originally received. When a put option is exercised,
the amount of the premium originally received will reduce the cost of the
security which the Portfolio purchased upon exercise. When written index options
are exercised, settlement is made in cash.
The risk associated with purchasing options is limited to the premium
originally paid. The Portfolio enters into options for hedging purposes. The
risk in writing a call option is that the Portfolio gives up the opportunity to
participate in any increase in the price of the underlying security beyond the
exercise price. The risk in writing a put option is that the Portfolio is
exposed to the risk of loss if the market price of the underlying security
declines.
The covered call option transactions for the International Equity Fund which
occurred during the year ended September 30, 2000 were as follows:
<TABLE>
<CAPTION>
Number of
Contracts Premium
============================================================================================================================
<S> <C> <C>
Options written, outstanding at September 30, 1999 3 $ 4,154
Options written 4,351 267,189
Options cancelled in closing purchase transactions (3,543) (242,480)
----------------------------------------------------------------------------------------------------------------------------
Options written, outstanding at September 30, 2000 811 $ 28,863
============================================================================================================================
</TABLE>
The following represents the covered call option written contracts open at
September 30, 2000:
<TABLE>
<CAPTION>
Number of Strike
Contracts Expiration Price Value
============================================================================================================================
<S> <C> <C> <C>
800 Amsterdam Exchanges Stock Index 10/00 $ 680 $ (2,471)
11 Swiss Market Stock Index 12/00 7,900 (15,771)
-------------------------------------------------------------------------------------------------------------------------
Total Covered Call Options Written
(Premium received - $28,863) $(18,242)
============================================================================================================================
</TABLE>
22
<PAGE>
Notes to Financial Statements (continued)
7. Foreign Securities
Investing in securities of foreign companies and foreign governments involve
special risks and considerations not typically associated with investing in U.S.
companies and the U.S. government. These risks include revaluation of currencies
and future adverse political and economic developments. Moreover, securities of
many foreign companies and foreign governments and their markets may be less
liquid and their prices more volatile than those of securities of comparable
U.S. companies and the U.S. government.
8. Forward Foreign Currency Contracts
At September 30, 2000, International Equity Fund had open forward foreign
currency contracts as described below. The Portfolios bear the market risk that
arise from changes in foreign currency exchange rates. The unrealized gain
(loss) on the contracts reflected in the accompanying financial statements were
as follows:
<TABLE>
<CAPTION>
Local Market Settlement Unrealized
Foreign Currency Currency Value Date Gain (Loss)
=============================================================================================================================
<S> <C> <C> <C> <C>
To Sell:
British Pound 1,194,000 $1,768,077 12/20/2000 $ (88,071)
Euro 1,925,000 1,705,775 12/20/2000 (54,318)
Japanese Yen 3,777,550 34,985 10/3/2000 15
Japanese Yen 119,245,000 1,119,546 12/20/2000 13,962
Swiss Franc 984,000 573,566 12/20/2000 (17,634)
==============================================================================================================================
Total Net Unrealized Loss on Forward
Foreign Currency Contracts $(146,046)
==============================================================================================================================
</TABLE>
9. Shares of Capital Stock
At September 30, 2000, the Fund had 350,000,000 shares of capital stock
authorized with a par value of $0.001 per share. Each share represents an equal
proportionate interest and has an equal entitlement to any dividends and
distributions made by the Fund.
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
Year Ended Period Ended
September 30, 2000 September 30, 1999(a)
===========================================================================================================================
<S> <C> <C>
U.S. Contra Fund
Shares sold 4,855,088 9,964,500
Shares issued on reinvestment 204,663 -
Shares reacquired (1,893,857) (6,178,335)
---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 3,165,894 3,786,165
===========================================================================================================================
U.S. Equity Fund
Shares sold 1,612,230 6,762,541
Shares reacquired (1,370,949) (3,653,722)
---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 241,281 3,108,819
===========================================================================================================================
International Equity Fund
Shares sold 825,482 8,672,435
Shares issued on reinvestment 124,157 -
Shares reacquired (1,379,143) (5,744,968)
---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (429,504) 2,927,467
===========================================================================================================================
</TABLE>
(a) For the period December 7, 1998 (commencement of operations) to September
30, 1999.
23
<PAGE>
Notes to Financial Statements (continued)
10. Capital Loss Carryforwards
At September 30, 2000, the Fund had, for Federal income tax purposes,
approximately the following unused capital loss carryforwards available to
offset future capital gains expiring on September 30 of the year below:
Portfolio 2008
-------------------------------------------------------------------------------
U.S. Contra Fund $19,655,000
U.S. Equity Fund 577,000
To the extent that these capital carryforward losses are used to offset capital
gains, it is probable that the gains so offset will not be distributed.
24
<PAGE>
Financial Highlights
For a share of capital stock outstanding throughout each year ended September
30:
CENTURION U.S. CONTRA FUND 2000/(1)/ 1999/(1)(2)/
================================================================================
Net Asset Value, Beginning of Year $ 7.55 $ 10.00
--------------------------------------------------------------------------------
Income (Loss) From
Operations:
Net investment income/(3)/ 0.09 0.17
Net realized and unrealized loss (3.80) (2.62)
--------------------------------------------------------------------------------
Total Loss From Operations (3.71) (2.45)
--------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.22) -
--------------------------------------------------------------------------------
Total Distributions (0.22) -
--------------------------------------------------------------------------------
Net Asset Value, End of Year $ 3.62 $ 7.55
--------------------------------------------------------------------------------
Total Return (49.75)% (24.50)%*
--------------------------------------------------------------------------------
Net Assets, End of Year $ 25,188 $ 28,593
(000s)
--------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses/(3)(4)/ 1.50% 1.50%**
Net investment income 2.17 2.57 **
--------------------------------------------------------------------------------
Portfolio Turnover Rate 0% 0%
================================================================================
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from December 7, 1998 (commencement of operations) to
September 30, 1999.
(3) The manager has waived a portion of its fees for the year ended September
30, 2000 and for the period from December 7, 1998 (commencement of
operations) to September 30, 1999. If such fees were not waived, the per
share effect on net investment income and actual expense ratios would have
been as follows:
Per Share Decrease Expense Ratios Without
in Net Investment Income Fee Waiver
------------------------- ----------------------
2000 $0.02 2.00%
1999 0.03 2.02
(4) As a result of a voluntary expense limitation, the expense ratio will not
exceed 1.50%.
* Total return is not annualized, as it may not be representative of the total
return for the year.
** Annualized.
25
<PAGE>
Financial Highlights (continued)
For a share of capital stock outstanding throughout each period ended September
30:
CENTURION U.S. EQUITY FUND 2000 1999/(1)//(2)/
================================================================================
Net Asset Value, Beginning of Year $ 10.40 $ 10.00
--------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.04) (0.01)
Net realized and unrealized gain 0.38 0.41
--------------------------------------------------------------------------------
Total Income From Operations 0.34 0.40
--------------------------------------------------------------------------------
Less Distributions From:
Net investment income - -
--------------------------------------------------------------------------------
Total Distributions - -
--------------------------------------------------------------------------------
Net Asset Value, End of Year $ 10.74 $ 10.40
--------------------------------------------------------------------------------
Total Return 3.27% 4.00%*
--------------------------------------------------------------------------------
Net Assets, End of Year (000s) $75,090 $32,328
--------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.38% 1.45%**
Net investment loss (0.44) (0.14)**
--------------------------------------------------------------------------------
Portfolio Turnover Rate 141% 89%
================================================================================
(1) Per share amounts have been calculated using the monthly average shares
method
(2) For the period from December 7, 1998 (commencement of operations) to
September 30, 1999.
* Total return is not annualized, as it may not be representative of the total
return for the year.
** Annualized.
26
<PAGE>
Financial Highlights (continued)
For a share of capital stock outstanding throughout each period ended September
30:
CENTURION INTERNATIONAL EQUITY FUND 2000 1999/(1)//(2)/
================================================================================
Net Asset Value, Beginning of Year $ 10.73 $ 10.00
--------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss 0.00# 0.04
Net realized and unrealized gain 1.36 0.69
--------------------------------------------------------------------------------
Total Income From Operations 1.36 0.73
--------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.10) -
Net realized gains (0.46) -
--------------------------------------------------------------------------------
Total Distributions (0.56) -
--------------------------------------------------------------------------------
Net Asset Value, End of Year $ 11.53 $ 10.73
--------------------------------------------------------------------------------
Total Return 12.37% 7.30%*
--------------------------------------------------------------------------------
Net Assets, End of Year (000s) $28,802 $31,418
--------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.45% 1.46%**
Net investment loss 0.10 0.51**
--------------------------------------------------------------------------------
Portfolio Turnover Rate 17% 102%
================================================================================
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from December 7, 1998 (commencement of operations) to
September 30, 1999.
# Amount represents less than $0.01 per share.
* Total return is not annualized, as it may not be representative of the total
return for the year.
** Annualized.
27
<PAGE>
Independent Auditors' Report
The Shareholders and Board of Directors of
Centurion Funds, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Centurion U.S. Contra Fund, Centurion U.S.
Equity and Centurion International Equity Fund of Centurion Funds, Inc. as of
September 30, 2000 the related statements of operations for the year then ended,
and the statements of changes in net assets and the financial highlights for the
year then ended and for the period December 7, 1998 (commencement of operations)
to September 30, 1999. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 2000, by correspondence with the custodian
and brokers. As to securities purchased and sold but not yet received or
delivered, we performed other appropriate auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material aspects, the financial position of the
Centurion U.S. Contra Fund, Centurion U.S. Equity Fund and Centurion
International Equity Fund of Centurion Funds, Inc. as of September 30, 2000, the
results of their operations for the year then ended, and the changes in their
net assets and their financial highlights for the year then ended and for the
period December 7, 1998 (commencement of operations) to September 30, 1999, in
conformity with accounting principles generally accepted in the United States of
America.
New York, New York
November 16, 2000
<PAGE>
Tax Information (unaudited)
For Federal tax purposes the Centurion Funds, Inc. hereby designates for the
fiscal year ended September 30,2000:
* Total long-term capital gain distributions paid:
International Equity Fund $144
Percentage of ordinary dividends paid by the Fund from net investment income are
derived from Federal obligations and may be exempt from taxation at the state
level:
U.S. Contra Fund 0.29%
International Equity Fund 0.82
The total foreign sourced income received by the International Equity Fund was
$0.1355 per share (or a total amount of $338,587). The total amount of foreign
taxes paid was $0.0147 per share (or a total amount of $36,800).
29
